Since the industrial revolution, the clock has been ticking on human labor. As luck would have it, as jobs were eliminated, more jobs were created to take the place of those that became redundant. After decades of automated task encroachment, the western world is finding itself facing a chasm between a qualified workforce and jobs that need filling. For the average person, retail automotive isn’t at the top of the list.
Time is Unforgiving
As I wrote previously in my piece, Remember to Be Human, compared to the previous four generations of car salespeople, the incoming crop has it extremely hard. Yes, compared to banker’s hours, having enough markup to make gross, smoking in the showroom, then the subsequent smoke breaks throughout the day, the seniors had, and still have it pretty easy. The Internet brought about transparent pricing, nearly infinite inventory selection, social media, streaming video, geotargeting, mobile showrooming, and the whole spectrum in between. Pandemics notwithstanding, the equivalent learning and effort curve for a new salesperson is the equivalent of bench pressing 300 pounds without ever touching a weight. Unless you are a genetic mutant or lost Viking stock from Iowa, more than 99% of new hires will fail the test immediately. Some will never get there. Yet, the expectation still remains that it’s completely achievable
Setting People up to Fail
As managers and strategists, our expectations are informed by our experience. What we perceive as simple or intuitive is done with the mind shaped by years, sometimes decades, of experience. It’s often forgotten it took hundreds of iterative steps to evolve to a certain level. How far would Michael Jordan’s degree in geography have propelled him if he didn’t become a professional basketball player? That’s a bit of a dumb question because he first needed to learn how to dribble, shoot, and defend, along with how to coordinate, build, and maintain his body. The slashing through the lane for an epic dunk came much later. It took seven years of being the best player in the NBA just to win his first championship. If he never made that commitment to show up to practice, learning first to handle the ball, he may never have developed the obsession to be the best he could be. Instead, he would’ve probably been a lousy geography teacher, with the average person never knowing his name.
With nearly everything in life, we inherently know to start small. We learn to swim in a pool, not the middle of the Pacific Ocean. We learn to run by jogging a few hundred feet, not the Boston Marathon. A BB gun before an AR-15. A bicycle before a Ducati Panigale. Three pounds before 300 pounds. While there are always fractional, minuscule, infinitesimal exceptions to the rule, for the 99.99%, it starts the exact same way.
As we bring on new people, we should consider the years it took to master phone calls, or sending emails, or shooting videos. Regular training with tangible metrics certainly helps, but for the average dealership, it’s not feasible. Employees should be proficient and consistent with a small series of tasks before they move on to others. If phones haven’t been mastered, then chat will not be any different. If they can’t send cogent emails, then it will be more of the same with text messages. If time management isn’t good with a few tasks, it’s going to be a burning toxic waste dump with even more tasks, expecting the uninitiated to perform the same as the seasoned professional is wildly optimistic, at best.
The Division of Labor
In light of current events, it’s a great time to review the division of labor inside dealerships. Not the current division where people have the vague ownership of a customer (best demonstrated by an acquired lead where a non-commissioned BD agent confirms pricing, and availability, then sets an appointment for a salesperson to make a full commission for simply shuffling paperwork to make the “sale”). I propose we take a harder look at division created around task ownership, not customer ownership. Let’s consider the following…
One portion of the tasks is pre-transactional. Performing communications like phone calls, exchanging emails and fostering text conversations to nurture potential opportunities into showroom visitors. Some activities add value, like gathering and providing research materials, while recording and sharing videos are far more time-consuming (and becoming the norm). Especially with digital retailing, payment calculations, credit applications, and digital trade appraisals are joining those tasks. A great deal of heavy lifting takes place just to convince a potential customer to show up.
The second portion of the tasks is associated with the transaction. These activities include vehicle presentations and test drives. Naturally, these tasks also include the presentation of numbers and any negotiation. This also includes the delivery of the vehicle, whether at the store or remotely, including the review of paperwork and vehicle how-tos. These actions are supported by one, maybe two, and sometimes three different managers. Smiles and handshakes are exchanged, then on to the next portion of tasks.
The third portion of the tasks are post-transactional. The activities span the time between vehicle purchases on the retail side of the business. From the initial customer satisfaction contacts, spanning the targeted email campaigns, lease return, and end-of-term follow-ups. This portion of the tasks are the most overlooked yet are critically important to ensure the time, money, and energy of bringing a customer in for the first time pays off in the long run.
For a few generations, one person was able to handle all three portions of tasks successfully. But, as human resources have waned, brand loyalty has diminished to nothing, consumer satisfaction is harder to reach, and the Internet has bulldozed every barrier to information, the “one-man bands” died with vaudeville. To say it is any different is asserting our lives haven’t changed since the 80s. It’s been a while since I saw a mullet on the showroom floor. (Not long enough, though.)
Being brutally objective, with the current division of labor, a traditional salesperson is paid the exact same way if they complete 20% or 100% of the three portions of tasks. Moreover, there is no incentive to get better at any portion of the other tasks without a penalty. Therefore, it’s currently necessary for dealerships to employ additional people to perform those other tasks, which typically overlap the tasks of yet another employee. This means paying much more for the exact same work.
As a proposed alternative, Instead of paying on a customer transaction, dealerships should pay on the percentage of tasks completed per transaction (e.g., 80% salesperson task completion + 20% BDC task completion = 80% salesperson pay, 20% BDC pay). This solves the problem by incentivizing skill mastery while at the same time reducing dealer costs. If a member of the team can perform 100% of the tasks in an equally measured way, they can receive full commission. If any of the personnel wants to contribute less, then that person becomes a specialist, with a pay plan to reflect it.
We’re past the point where anyone can effectively argue that selling a vehicle is the same as it was during the pre-Internet era. The COVID-19 Pandemic drives that last nail into the coffin. If dealerships want to stop being the victim of change, then they must be willing to shake off the chains of tradition, embracing that which will protect their future. A new division of labor will be a strong foundation for that which is yet to come.
Latest posts by Bill Playford
- Whose Task Is It Anyway: Dividing Labor to Save the Future - December 1, 2020
- Remember to Be Human - July 7, 2020
- The Sales Funnel & The Shape of Water - March 6, 2020