When your sales team turns over, it can be difficult to decide when to hire new staff. Deciding how many to hire can be even more daunting. In this article, we're going to look at some simple yet effective dealership hiring tips.
The way that dealerships traditionally make these decisions can be baffling, and is often not in their own best interests. We’ve had dealers come to us looking for four new staff members, and when asked why they need four, they say “because that’s how many desks we have open!” Does that sound like a data-backed decision to you?
Sometimes new sales managers start and bring their team from previous jobs with them. Sometimes we see dealers do math based on the number of potential clients and touchpoints. On the other hand, sometimes it is simply a guess. While this is slowly changing, and we like to think that you’re not making your hiring decisions this way, it’s easy to see why these strategies simply don’t work and staff end up without proper training.
It’s all about returns
The reasoning behind the law of diminishing returns from a dealer’s point-of-view, in terms of hiring employees, can be simplified into three stages:
- In the first stage, the addition of more salespeople allows for specialization of job responsibilities and increased production efficiency. The result is a larger output return for each additional unit of input.
- The second stage is where inputs equal outputs. Each new salesperson added will continue to increase production, but only at the same rate as the increased input of labor.
- The third stage is when additional salespeople will start to decrease production efficiency because the work environment is fixed in the short-run. This results in returns that are less than the labor input.
Imagine this dealership hiring situation
You have hired a teenager to tend to your garden. He plants 4 saplings in an area of 10 square feet in 4 hours. The next day, he brings another friend along and you decide to hire him as well. The time and the area don’t increase, but the number of saplings planted increases to 8. Another boy comes along and is hired by you. Again the area and the time limit is the same. But the number of boys is now 3. And the number of total saplings planted is now 9. If you hire another boy and maintain the same condition, you will notice that the number of saplings planted may increase overall, but the number of saplings planted by each boy will reduce, until eventually it will be 0. The above explained situation is a classic law of diminishing returns example.
My question is, do we have any idea where that third stage is? We are in the car business, our outcome should be to have as many people as possible buy our products and services at the highest possible profit margins we can with 100% customer satisfaction. We can’t do that unless we have pushed the envelope with a quantity of quality, properly recruited, screened, interviewed and trained salespeople.
I don’t want to flood my floor
That’s admirable, and I applaud your moral judgment in trying to make sure your salespeople all make a good living, but how many times have you invested in having a special sale or event? Or your product is super hot and huge new incentives came out? Perhaps you invested millions in your facility and you look around to see that several of your salespeople decided to come in late, stay home or move on to the next “Hot Store?”
The law of diminishing return is a bit different in our business. How many hours are your salespeople currently scheduled to be at the dealership? Wouldn’t additional shifts or teams allow them to work less hours, be more effective, and in turn, more productive and actually have lives outside of work as well? Couldn’t that also help the talented person at your store that has “Manageritis” and if you don’t move him or her up, make them a team captain, they are going to leave you?
How much real time do your salespeople have to truly prospect, develop their own client base, properly handle all the internet leads, take vehicles off site for test drives, and be involved in the community to create more business when they are at the dealership bell to bell?
We make it easy with one question
Did you, or did you not sell more cars when you had more salespeople? Why are some dealers that are in the middle of nowhere selling 5 to 10 times the number of cars dealers in major metro areas selling? Marketing, proper use of the internet are important, but remember that at this point in time in our industry, our property goes well beyond the amount of acreage you own. Take advantage of that opportunity and dominate your competition. To do that, you need better recruited and trained people. Now, at some point, too many really is too many and morale goes down along with productivity. But with that being said, I’ll bet very few if any have ever come close to that point that are reading this.
Judy B. Margolis writes: “Employees who grow too comfortable and complacent lose their edge. The more they know, or think they know about how their particular slice of the business world works, the less likely they are to challenge their old tried-and-true methodologies and to innovate. The same holds true for companies that fail to embrace change and, instead, have it foisted upon them, often when it is too late."
Don’t let your employees get to that point. Let AutoMax Recruiting help you find and source the best candidates that will stay with you for the long haul and help you win more business. Contact us today.