Car Dealers: “We Were Killing It… Now What?”
We Were Killing It… Now What?
For a variety of reasons (pent-up demand, stimulus checks, fear of public transportation, etc.) year-over-year sales increased for virtually all dealers in the third quarter. Moreover, because of tight supply, dealers were able to hold more front-end gross on the vehicles they sold.
Even the publicly-traded groups – which routinely grow sales while losing share in an up market – reported “record” results in the July-September timeframe.
CEOs, dealers, and managers were breaking their arms patting each other on the back.
The Summer of Love is Over
As the market begins to cool – and it will for most of you if it hasn’t already – many of these same operators are beginning to scratch their heads as they face mediocre (or worse) results in the fourth quarter. Most are still seeing YOY increases in units and gross, though at lower levels than the previous quarter.
When market softness leads to challenges in driving incremental unit sales and gross, many managers turn to their sellers to “do more” or “step it up” or “make some calls.”
This is what happens if you weren’t honest about why your results were breaking records. Because you didn’t acknowledge it was market conditions and not sales-focused activities or superior leadership or processes that drove your growth – and because your team likely abandoned your processes in the face of so much demand – you may have no idea how to continue growing in a flat or down market.
For many of you, this will not just mean sluggish results, but also the return to high sales team turnover.
(Ugh. We thought we had turnover solved…)
The Winter of Our Discontent is Looming
If you’ve already begun experiencing declining growth (growing YOY, though at lower rates) and/or increased sales team turnover, it’s time to acknowledge that the market (and not your team) was the primary driver in the third quarter.
Think of this as the first step in a twelve-step program: admitting you have a problem. If you’d like to grow market share and hold more gross through the rest of this year and into next, it’s time to start looking for solutions beyond just telling your salespeople to “step it up.”
The great news is that the answers (and the solutions) are relatively easy.
Your Team has the Answers
Let’s agree on two axioms in the business world:
- Most people quit bosses, not jobs.
- Sales is a numbers game.
Given that most people quit bosses, not jobs, any unwanted increase in sales team turnover should be viewed as a systemic problem that needs solving. The solution to this one is both easy and hard. It’s easy to identify the problem (you just need a mirror), while the changes required in style and culture will certainly take more effort.
To solve this requires being honest about the issues and the answers. It requires you to critically assess your role in driving higher turnover; though, this assessment only involves answering a few hard questions:
- Do your salespeople love working for you?
- If not, why not?
- What can you change (approach, style, culture, interactions, etc.) to ensure they love working for you?
- Are you doing everything you can to help them individually succeed?
- If you are, and they’re still not succeeding, then what needs to be solved and how do we solve it?
The great news is you (or your managers, if you’re the CEO or Dealer Principal) already have the answers to these… you just need to (1) recognize the issues and (2) develop concrete plans to resolve them.
(Might I recommend my newest book, Ridiculously Simple Sales Management, for those not quite sure how to ensure their salespeople love working for them? Additionally, if you’re seeking some free advice on how to improve your culture in a declining market, here’s a post from 2017: Car Dealerships and Culture.)
Because Sales is a Numbers Game
Since we all agree sales is a numbers game, the primary question that needs answering when faced with flat or declining sales is simply: What numbers need to change?
- Do we need more/better marketing? (If so, what and how much?)
- Do we need more salespeople?
- Do we need a better pay plan?
- Are we properly priced to market?
- Do we need more/better inventory?
- Are we driving enough of the right sales-focused activities?
Here’s a hint: for nearly all dealerships, the questions above are presented in reverse order of impact and importance. That is, your results are almost never related to marketing and almost always related to driving the right sales-focused activities.
Turnover and Market Share Losses
Neither turnover or losing share is new to automotive retail, and others have permanently solved these. Of course, they did so by being honest about what drives turnover and market share, and then they did something about these.
They reviewed and improved their processes… and then they enforced them.
They made certain that every salesperson and manager had exactly what they needed to be successful.
And finally, they ensured that every salesperson and manager used their time in the dealership wisely. That is, they kept their teams focused on getting warm butts in seats. This means, if you’re not in front of a prospect, you’re completing those activities that will put a warm butt in the seat in front of you.
I call these Moneymakers, and if your team is not in front of a customer or working on a Moneymaker, they’re just wasting their time… and yours.
The great news is tightening your processes while driving sales-focused activities and creating a culture where salespeople are happy and productive are not mutually exclusive. In fact, they go hand in hand at those dealerships enjoying incremental growth in the face of a cooling market.
Automotive Sales Books by Steve Stauning: