An automotive retail development company.
Convergent Alliance, Automotive retail development company, dealership remodel, dealership assembly, dealership profits, dealership software, automotive industry, dealership construction
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  |   Business

If you think about all of the initiatives that you have taken last year or even few years before, most of you would find yourselves to have repeated the same practices under various different camouflage and expected things to get better. Most of the retailers enjoyed a great year and the industry broke a record of 17.4MM vehicles in 2015. As I stated in my holiday message, not to be negative, but unlike some other predictions I said that the party is over and it’s time to buckle up.


Manager with office workers

There really is only one thing left to focus on in order to prosper in the coming years and it is how you, hire, train and compensate your employees. While it is quite different when it comes to various job descriptions in a car dealership, the common denominator is the organizational culture.



Needless to say the most challenging job title to deal with would be the salesperson. In 2015 annualized sales person turnover in the industry was 71.9% against a private sector national average of 42% and it was up 5.6% year over year. Statistics also showed that the one year retention rate of the salesperson was 60% and the three year came in at 32.8%. Most of the entry level sales employees were gen Y age group primarily because if it was their first job they took it not by choice. However it would have been the time to embrace these fresh minds, revise compensation plans, rethink the entire sales process, train them with a relationship psychology, give them a reason to stay and an opportunity to grow into a fantastic career.


Of course the key here is what are you thinking? Whether you are an owner, a principal or a general manager, are you prepared to invest in your employees and change your paradigm? If you say yes to this the next thing to do is to find out if your thoughts are in line with your emotions. If they are not your initiative will be short lived and you will go back to your old ways. This is a journey not a fantasy, it requires conviction, compassion, vision and above all guts since it is not easy. If you want to do it right you may be sacrificing even taking a step back for a while.


Here is what I would recommend to initiate this process:


1- Find yourself an apostle. We are only as good as the people we surround ourselves with. If you share your vision with your leadership team who believe in you, this change and its effectiveness will be a walk in the park. You can’t do it alone.
2- Develop a profiling process to scrutinize the selection for each job title. There are literature and resources out there that provides this information.
3- Starting with your sales department significantly revise your pay and benefit structure. Be prepared to pay some significant salaries and performance bonuses. Keep in mind that some of you paid over $700 per vehicle retailed to unqualified sales persons last year. One that sold the average number of 8 units went home with $5,600. You can build a lot of young fresh professionals in a short amount of time if you are willing to pay them to learn and do it the way it should be done in the 21st century and keep them forever.
4- Invest in an organizational culture development process which will perpetually improve the level of service that each employee delivers as a result of buying into a common purpose.
5- Take personal interest in your employee’s personal and family lives and help them to make work an integral part of their everyday life and not just a place to go eight hours a day.
6- Instead of creating a bunch of rules and policies empower them to do the right thing naturally and autonomously. Your culture development efforts will ultimately provide that.
7- It is important that people believe in what they sell. If you have selected and hired people with integrity, wisdom and enthusiasm but ask them to conduct themselves in a deceptive and inconspicuous fashion and or ask them to sell something that has no redeeming value you will ultimately lose them. Therefore apart from the vehicle sales itself, your negotiation process, other products that you sell whether upfront or in finance and all the services that you profess to provide all has a significant impact on who you attract and how long they stay around as employees.

 I also would like to remind you that based on the turn rates we have mentioned above, average dealership will waste over $45,000 per year just on turnover of salespeople not to mention the lost sales and disgruntled customers. Big picture, this change is not as expensive as you might think. However the alternative which is business as usual might cost you a lot.


As always we provide services in the areas of organizational culture development as well as providing some of those tools and resources, I am only a phone call or an e-mail away.


Be great in 2016!




Phone: (310) 717 1876
Fax : (310) 883 0019
E-mail: Arlan@tarhangroup.com