How Can Dealerships Adapt to New Workplace Values?
Like most businesses in other industries, automotive dealerships continuously rely on their employees to stay open, serve the customers, and stay in business. In recent years however, this has proven difficult as the demographic of potential hires shifts to the younger generation known as Millennials.
Unfortunately there seems to be a disconnect between dealerships and Millennials, especially when it comes to hiring practices. If not addressed and corrected, this will lead to instability and quite a few staffing difficulties for dealerships moving forward.
In order to continue to be successful and relevant, dealerships need to embrace this younger generation of the workforce. By implementing new employment strategies, eliminating preconceived notions, and adapting to the current customer market, dealerships can attract younger workers and continue to turn a profit in the modern market.
Adjustments in Hiring
One of the major issues plaguing dealerships is that they tend to not have a structured hiring strategy. In the fast paced environment of a car dealership, the more salespeople you have in one place, the more competition there is for a sale. The result is a lean staff with few to no backups or extras. This also means that if someone leaves, there’s an immediate gap in the salesforce.
In the fast paced environment of a car dealership, the more salespeople you have in one place, the more competition there is for a sale.
When dealers are playing catchup to fill in for recent departures, this puts a strain on the current workforce. This can be remedied by consistently seeking out new hires so that someone is already on-deck to take over those responsibilities when needed.
The Turnover Issue
It’s also important for dealerships to track why turnover is happening. By identifying the source of the turnover, it can make addressing the issue that much easier in the future. While some forms of turnover are inevitable—aging out or retiring—others are easier to act on.
The 2016 NADA Dealership Workforce Study found that 28% of turnover occurs within 90 days of initial hiring. This is often because the hire was not a good fit for the position or the company.
28% of turnover occurs within 90 days of initial hiring
Bad hires can be the result of a desperate need to fill in the gap with anyone available. The simple solution to this is to constantly be searching the market for fresh talent. This keeps your sales team stacked and ready to adapt to changes without the scramble to find someone right away.
Your Team Is An Investment
Another reason for turnover is that some employees at dealerships don’t look at it as a long term career, or at least don’t plan on it initially. This is partially because many hiring strategies don’t focus on the long term career goals of new hires. Instead, dealerships are focused on getting a body to sell, rather than hiring a long term member of the team. Practicing the idea of “if they stick around, they’re a part of the team” isn’t a good strategy, and employees won’t feel valued.
In order to bring that sense of value to employees, training and onboarding should include discussions about career growth within the dealership. Part of this is fully training new staff on the kinds of skills and knowledge they’ll be expected to demonstrate on the job. When staff feel they are being invested in, they’re more likely to stick around and offer a return on that investment!
Who are Millenials?
Anyone born between 1981 and 1996 (ages 23 to 38 in 2019) is considered a Millennial.
As the current generation continues to retire or age out of the business, dealerships need to replenish the workforce with new blood. The most effective and plentiful resource for new hires is the Millennial generation.
The Next Wave Of Sales
Millennials continue to make up more and more of the dealership workforce. With that changing demographic, dealerships need to step up and change their strategies and perceptions.
According to a Cox Automotive staffing study, many dealerships look at Millennials as a collection of strengths and weaknesses. These strengths include being able to identify with the younger buying demographic, understanding new technology, and adapting to new technology quickly. Some of the weaknesses are common criticisms from one generation to the next. In particular, the ideas that Millennials are entitled, technology-dependent, and not self-motivated are most often stated.
The Millennial generation grew up with technology advancing rapidly all around them, and so they were forced to adapt quickly or be left behind. As these technologies begin to permeate more of the existing industries, like car dealerships, these younger generations are more necessary than ever. Vehicles are incorporating more advanced technologies, so having a more informed and younger team will allow them to explain these features better to potential customers.
Having a younger sales team that is capable of identifying with emerging customer bases is crucial. When you have someone closer to the level of the buyer and can share similar concerns and address them in ways that customers can understand.
The “Entitlement” Issue
The next generation of salespeople is looking for stable sources of income more frequently than commission-based roles, because many of them carry debt from school. This expectation of regular pay is commonly seen as a sense of entitlement to pay without hard work. In many cases however, commission is simply not enough to cover the costs of living for current salespeople, let alone those new to the industry carrying large amounts of student debt. Adjustments to how vehicles are being sold are necessary to attract the future of the dealership workforce.
Commissions are paying out less overall. This cut in commissions comes from the fact that customers aren’t uninformed and have plenty of options to do their own research. Given access to the internet, customers are coming more prepared to ask for lower prices, and they’re ready to go where the best prices are. This cuts salespeople’s ability to achieve substantial commissions. As most salespeople are paid primarily by commission, this results in lower and more inconsistent pay.
In many cases commission is simply not enough to cover the costs of living.
Some dealers have already made the switch to a different commission style. One such dealer is Adam Kraushaar, the president of Lester Glenn Auto Group based in New Jersey. After noticing the continual drop in gross profit in overall vehicle sales, he changed up the method of payment. Instead of relying on individual profit on each vehicle, he pays his employees based on the number and types of vehicles sold.
As this kind of payment becomes more commonplace, and pay is more stable, more Millennials are likely to move into this part of the workforce.
Cut Out The Haggle
Because customers are coming to the dealership with more information already in hand, they generally know what a vehicle is worth. Because of this, they don’t want to haggle; they want what they know the vehicle is worth. In a situation where a salesperson is trying to upsell, it can raise ethical questions. Younger generations are less likely to want to participate in convincing customers to pay more, seeing it as a dishonest or shady practice.
Millennials don’t want to drag customers through the long process of negotiating prices for a vehicle. Customers don’t want to sit through several hours of bargaining for lower prices. As commission models shift to ones similar to those mentioned earlier, it’s easier to bypass those steps. It’s less about trying to charge more, and more about getting the customer into a vehicle they love and can afford.
Some dealers are looking to streamline the whole process further with the One-Price One-Person method.By basing someone’s rate on their credit score, rather than bargaining power, it eliminates the need to bargain over an hour or two for better pricing.
Transparency Is Key
One of the benefits of the One-Price One-Person strategy is that it’s transparent for customers and sales staff. When it’s easy for customers to understand what is being presented to them by the salesperson, they’re more likely to trust the dealer and go ahead with the purchase.
This also eliminates the concept of the “used-car salesman” who is consistently trying to pull one over on the buyer. If everything is out there on the table for both sales staff and customers, the sale generally moves more smoothly and both parties can walk away happy when the deal is complete. This allows Millennials to feel comfortable and confident in the job they’re doing, which in turn makes them better salespeople.
The Next Generation Of Dealerships
There’s no doubt that the next five to ten years will be telling for dealerships. Depending on their ability to adapt, some may not be around that much longer as their staff retires or ages out. Attracting and keeping Millennial hires is crucial to maintaining a strong workforce, and part of that process is adapting to the requirements of the market and expectations of the potential workforce.