The key to raising front-end grosses is to hire a higher caliber of sales consultant – ones that look like your customer base (relatively educated, highly knowledgeable about the product, and diverse). The traditional model (any version of 4-square) has now proven ineffective in gross profit generation. Ask yourself the following questions: “What value does a desk manager add for your customers?” The answer is none. So, the traditional models’ key player – the person desking the deal – adds no value for the end user.

When you add value to a transaction you can charge more. Customers define value – not the dealership. Most customers would agree that adding value includes:

• A fast process?
• A simple process
• A process that is fair for everyone
• A process they can control
• A knowledgeable sales consultant who answers questions and works as the customer’s advocate
• A process that is pressure free and transparent

Look around your showroom floor. Do your sales consultants respect customers for the homework they have done? Do they know more about the products they are presenting than the average customer? Do they make the sales process easier and quicker? Are they empowered to quote prices and payments when the customer asks for this information? If so, you are undoubtedly earning more front-end gross than your competition. If you assess your showroom honestly, chances are 4 in 5 you won’t see any of the above.

Of course, our industry has never been very good at recruiting quality salespeople. Top sales consultants have wound up in our dealerships almost entirely by accident. They knew someone at the dealership. Or thought they’d try selling cars in between “real” jobs. Or we landed an old warhorse bouncing from one hot brand to another who finally got tired of job hopping. The ones who made it had natural selling skills and liked the business. They made very good livings from straight commissions and most, ultimately, wound up in sales management (where they still are today).

While there are still some grizzled veterans and lucky hires appearing from time to time, we just aren’t seeing the kinds of people today’s customers want to work with. What that means, sadly, is the retail auto industry is headed for a staffing crisis in the sales department; and that includes individuals capable of becoming sales managers in the future.

Today, there is virtually no way someone under the age of 28 with natural selling skills will even consider taking a job in a traditional dealership. Why?

• They expect high quality training … and to be paid for it
• They will not work 50+ hours a week
• They will not work for straight commission
• They will not tolerate the old-fashioned “command and control” desking environment

Younger people with natural sales skills are now choosing entry level sales positions in consumer electronics goods, selling computers/software, shoes or even real estate; a career in auto sales is not on their radar screens.

If mature professional men and male Gen Y’ers aren’t available, what about women? Unfortunately, again, the ability of the traditional automobile dealership to attract and retain women sales consultants has been pretty dismal. Today, women make up less than 7% of retail auto sales consultants. So, when we really need to find as many qualified sales candidates as possible, we’ve basically said “we don’t want you” to 50% of the population. So removing Gen Y males and 93% of women leaves us with a pretty small piece of the pie in which to find high-quality salespeople…

…and we make that slice even smaller by searching for people our society doesn’t produce: good negotiators. In some parts of the world, negotiating for goods and services is a way of life, but that’s not the case in the good old U.S. of A. Without good negotiators to represent you on the showroom floor, you’re playing the sales game with one hand tied behind your back…and they are awfully difficult to find.

The traditional role of retail auto sales management is broken … so we ought to try and fix it. One of the key problems is that the model is management-centric, as opposed to relying on sales consultants to create value. The average dealership today has one variable department manager (including F&I) for every 2.3 sales consultants. This heavy layer of middle management drains compensation away from the people who are supposed to be building customer relationships and selling cars. No other retail industry has this costly imbalance of managers to line personnel! Also, supply and demand works in raising compensation to higher than necessary levels as we’re paying for specialized management tasks (desking, closing, negotiating, financing, appraising) as opposed to using cross-functional management like every other retail industry.

As long as dealerships employ sub-standard sales consultants, they will need to have layers of management. It is these layers of management that close deals on the showroom floor and conduct F/I transactions. A more enlightened model would have higher-caliber sales consultants trained to close the majority of their own deals and would utilize a limited amount of cross-functional managers to perform the other sales functions.

Sales Management and most GM’s will tell you that more of the same is just fine, but I’m not going to do that. It’s time to stop trying to perfect buggy whips and start reinventing the way we retail automobiles. The reality is that dealership executive teams have to make significant changes or continue to face the consequences of sales consultants who don’t add value for customers. You can choose to change your model to attract better sales consultants by doing some or all of the following:

• 40-hour work weeks
• Training salaries
• Salary and escalating flat fee pay plans that reward volume, not gross
• Limited or no price negotiation
• Comprehensive and continuous sales and management training
• Benefits packages comparable to other retail industries
• Employ managers that are rewarded for developing sales consultants and managing a process (therefore eliminating the traditional “command and control” environment)
• Integrating technology throughout the entire sales process
• Establishing recruiting strategies that attract the people your customers want to deal with…and that means using new media rather than newspapers

We’re talking about meeting some significant challenges head on. I’d like to close by quoting three of Jack Welch’s “Six Rules for Successful Leadership”:

Control your destiny, or someone else will.
Face reality as it is, not as it was or as you wish it to be.
Change before you have to.

Mr. Dealer, the decision is yours.