Most dealerships are losing money because they fail to invest in training their sales staff, according to world-leading automotive sales and dealership management consultant, Tom Stuker.
“Starting with the management – because nine out of 10 managers lack the skill of what I call opportunity management, the process to manage and maximise opportunities.” Mr Stuker said.
“Nine out of 10 managers are lacking the skills to properly recruit, hire, develop, a sales staff – because they went from a salesman on Friday to a manager on Monday and didn’t go to any management school and process to do it. And if a dealership wanted to dominate in the market, it starts with training. It starts with training the manager, then setting the bar with the manager and working its way down.”
Mr Stuker said the average sales person should go through at least two weeks of training before they even talk to a customer. But we still seem to hire people on the fly and operate on the principle of ‘learn as you go’ – not ‘train as you go’.
“This industry operates under the theory of ‘equal incompetence’ – everybody makes the same mistakes but no dealership gets hurt because customers still have to buy from somebody. Imagine how many thousands and thousands of vehicles are sold every week in the States, in spite of the salesmen and the process,” he said.
“It’s funny that a Dealer can spend a million dollars on advertising a year, but wouldn’t spend 10 per cent of that to make sure the opportunities that are developed are handled and managed effectively through training, through skills.”
Mr Stuker reiterated the old wisdom that a happy customer will whisper to his neighbour about his experience, but an unhappy person will scream it from the mountaintops.
Dealerships cost several million dollars to buy and around half a million dollars a month to run. Every Dealer should have a training regime, to protect their reputation, to improve the skills of their people. If it’s not all about closing, ironically the gross will increase. Domination is not about increasing enquiry, it’s about managing it.
“I would say they 95 per cent of the dealerships in Australia – minimum – could not give me an accurate count of the visitors they’ve had at the dealership,” Mr Stuker said.
“You spend all that money to advertise, but you don’t have 100 per cent accountability. Ninety-five per cent of those dealerships have no idea what the closing ratios are of their sales people. So, if a sales person sold 16 for the month, is he truly a 16-car-a-month sales person, or is he more like an eight? In other words, did he close a good percentage of his customers to justify the 16 sales, or did he take so many customers that he sold that many in spite of how bad he is because he took more than anybody else?
“We don’t know if he sold 12 out of 36, or 12 out of 136. All the store recognises is the final result was 12, and if he sold 12 units then he’s much better than the eight, yet the eight could have sold eight out of 16, the other guy sold 12 out of 100, but they think the 12 is the better salesman because he’s sold four more units.”
Mr Stuker compared the laissez faire attitude of sales departments with the full accountability of service departments.
“You take the average dealership’s service department, and 99 per cent can tell me, ‘We had 68 customers, to the exact number, in our service department yesterday. The average customer spent X amount of dollars and X amount of cents. The average customer was billed X amount of hours labour. We sold this many quarts of oil and had this many tune-ups, and we had this many tyre rotations.’
“A service manager could take his 12 mechanics and know the exact proficiency, how many hours did each one bill, how much money per customer, what happened per representative of the service department. They manage the service department 100 per cent spot-on, but it’s a free-for-all in the front of the showroom, where a dealership is lucky to log and be accountable for 80 per cent of its visitors.”
For example, a dealership might spend $50,000 a month on advertising, but only be accountable for 80 per cent of the showroom business and not be aware of the 20 per cent that were on the property looking at cars. Those people leave without the dealership registering their name and information.
“So, in essence, a dealership that spends $50,000 a month and only keeps track of 80 per cent of its visitors, they’ve wasted $10,000 every single month. If they took that $10,000 that they’re wasting and put in accountability – for which there’s programs for a couple of hundred dollars a month for 100 per cent accountability – and management skills and sales skills, they would sell more units. “It’s been said a million times in the car business: if you think training is expensive, try ignorance.
“We still lack the proactiveness in dealerships to build customer relationships. It seems like everybody talks about building customers for life, but without training you’ll lose customers for life. With a good buying experience and, more importantly, ownership experience, you’ll build customers for life who’ll keep coming back and referring their friends and relatives.”
Mr Stuker said if a person has a bad experience at a dealership, a) they don’t buy the car, and b) they tell everybody else not to.
“What value do you put on the impression, because most sales are lost in the first three minutes they talk to a sales person, whether it’s on the phone, an internet enquiry or on the lot.
“The amount of money that’s lost in revenue from the lack of proper skills is exponentially larger than the investment a dealership would have to make in reducing that problem dramatically.
“At least 95 per cent of dealerships don’t train their sales people to sell vehicles; they train them how to wait on someone who wants to buy something. There’s no such thing as a born sales person. Sales people are made, not born, and the only way you make sales people is with proper training.”