Solving the Eternal Sales and Marketing Riddle
For over 30 years I have worked more than 40 hours a week on creating, managing and measuring various strategies and tactics designed to optimize the results from sales and marketing investments in planning, people, tools, technologies, procedures, and campaigns by car dealers… Along the way I have frequently encountered challenges created by an imbalance between dealership organizational competencies around either “marketing” or “sales.” These challenges often remind me of the Greek Mythology I was once forced to read by the nuns who taught me in grade school.
One of these plays (by Sophocles, I think) involved “The Riddle of the Sphinx” and went something like this: a Sphinx with a nasty attitude sat on a road and asked all travelers who wanted to pass by to answer her riddle. Travelers who failed to solve the riddle were promptly killed. If a traveler answered the riddle correctly, the traveler would be on his merry way (and you thought New Jersey toll booths sucked!). Here is the riddle: “What goes on four legs in the morning, on two legs at noon, and on three legs in the evening?” The solution to the riddle: “A man—He crawls on all fours as a baby, walks on two legs as an adult, and walks with a cane in old age.”
Which brings me to the riddle that messes with our mission of optimizing the balance between marketing and sales in the business of automotive retail; it is a two part riddle.
Question number one
How do you know when your marketing is optimized?
Answer: When the sales department cannot handle all the opportunities for business being generated by your marketing strategies, programs, and advertising campaigns.
Question number two
How do you know when your sales team has reached its optimum capacity?
Answer: When the dealership’s marketing programs cannot overwhelm the sales team’s capacity to convert opportunities generated into sales and profits.
The simple reality of “Sales and Marketing” in automotive retail is that when marketing is working well, it uncovers weaknesses in a dealership’s sales operations; and, when a dealership’s sales team is set up right and running like a well oiled machine, the marketing strategies used can rarely keep the sales team operating at its maximum production capacity. This in turn makes that latter situation look like marketing is not delivering as many opportunities to do business as it should be.
So, what’s a dealer to do? In my experience this is not a chicken or egg quandary, and it certainly is not the riddle of the Greek Sphinx that Sophocles wrote about. Let’s examine the tensions that will drive increased growth, market share and a dealership’s overall profitability lifecycle.
What are the factors at work in optimizing the relationship between marketing results and sales capacity? Let’s make a list specific to automotive retail:
- Marketing effectiveness is impacted by factors both within and outside the dealer’s direct control. Factors include OEM marketing and advertising, economic cycles, product availability, and other issues that include the costs of media and its availability (such as in election years).
- Dealership sales teams are almost exclusively controlled by the dealer and management team. There are many more people available to hire than there are unfilled dealership sales jobs.
- A properly capitalized dealership can increase or decrease marketing and advertising budgets on a short term cycle, often in units of time less than 30 days.
- Increasing a sales team’s real world capacity can take months, yet a sales team can be decimated in a single day (I’ve seen it happen). Recruiting, screening, hiring, and then properly training dealership sales professionals is a much more time consuming and resource intensive project than creating and executing a marketing program or advertising campaign.
- Sales compensation expenses within most car dealerships involve a variable component based on sales results.
- Marketing investments made by most car dealerships are based on predetermined costs and budget allocations and rarely include performance based variable costs.
Since it takes longer to grow the actual “business opportunity to revenue conversion” capacity of a dealership sales team than it does to increase the output of marketing and advertising in the form of those business opportunities, the right strategy seems clear: sales team capacity should always be managed with a focus on growth.
Of course, growing a sales team’s capacity means that you have to be able to accurately determine who should be recruited, which candidates should be allowed to get an interview. Preventing managers from interviewing the wrong candidates is an effective way to stop making bad hires. The concept of hiring anybody who can “fog a mirror” to work in a dealership’s sales department is ludicrous and possibly the most damaging “worst practice” in the auto industry today.
Chris Saraceno, the COO of the Kelly Auto Group with dealerships in Pennsylvania and Florida solved that problem awhile ago, and so did the dealer I worked for when I was hiring sales professionals at Courtesy Chevrolet in Phoenix. Chris, myself and dozens of other dealers use “The Car Sales Simulator” from www.HireTheWinners.com to determine who gets interviewed and eliminate those candidates that would almost surely be a disaster if a sales manager falls in love with them and makes the mistake of employing the wrong person in your dealership.
Here is the bottom line—stop the madness of hiring incompetent sales people whose very nature and personality profile have predetermined their failure in an automotive sales environment. Stop trying to make up for a sales team capacity deficit by increasing your investment in marketing and advertising! Throwing more money at marketing technologies and advertising campaigns when your actual problem is a sales team capacity deficit is not a profitable solution.
Now that there are web based automotive specific screening tools like The Car Sales Simulator with automated scoring and personality profiling from Hire The Winners, the excuse for hiring losers is gone. The only excuse your dealership has for hiring sales people who cannot be trained to sell cars is management incompetence.
Do I sound a little harsh? I hope so, because there are still far too many sales operations in dealerships across America that are not capable of maximizing the conversion of sales opportunities generated by highly effective digital marketing and advertising strategies.
If you want to try out The Car Sales Simulator without spending any money, I was able to get a trial usage deal set up with Steve Munyan, the owner of Hire The Winners for all members of www.AutomotiveDigitalMarketing.com by using the link provided in the middle of the site’s home page.
Ralph Paglia is vice president of digital for Tier 10 Marketing and editor-in-chief of the Automotive Digital Marketing Professional Community (www.automotivedigitalmarketing.com).