Opinions & Advice

Too much risk and effort for too little pay and time?

As everyone knows, I sometimes like to share some of the emails we get here at DealerRefresh. This is an email from Pete out in Chicago, Illinois…

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Hi Jeff,

Great to have found your site and your common sense approach to selling.

I started in the retail automotive business over 20 years ago and the one thing I know to always be true is that people sell vehicles and web product services promote and market.

I can’t stop wondering in amazement when people in the auto industry and dealer principles believe that this process can be fully automated using CRM or lead generators and quick pricing quotes alone.

There is the law of diminishing returns can apply to the level of customer satisfaction with regard to how well internet salespeople are paid and treated.

Why would anybody want to follow up on a bunch of maybes when the customer calling and walking through the door is the most likely to buy?

When I started we all had salaries and demos. I felt a sense of obligation and consideration of the well being of the dealership I worked for because I would not starve…never did and always made a living till it became too much risk and effort for too little pay and time.

I would bet that half the internet managers where so so salespeople that are willing to work for less than what the top 20% make.

People say the profits aren’t as high. Not true. Pay plans are lower and the front margin has been put into the "do not talk about" holdback.

I still remember dealer principles laughing at Carmax not so long ago, or was that a billion dollars ago?

A person won’t get rich but at least they can earn a living and be treated well. (So I heard)

Too much said and all the best.

Pete, Chicago Illinois

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    Lao Shi
  • March 26, 2008

The number of U.S. dealerships dropped from about 45,000 in the late 40's to some 22,000 in 2000.The last 8 years have shown even more change and yet more vehicles are being sold…..

Back in the "Good ole Days" many car sales professionals had perks, salaries and demos. It was a happy feeling then, times were good and people were fat and happy and the living was easy. OEM's splurged and courted the dealers, gave bonuses and gifts, free trips and other "goodies" so everyone could feel good and sell, sell, sell. There were mostly US Brands with a few European Brands that catered to a small niche market.

Then the cursed foreign OEM's moved in and began upsetting the happiness and the car rental agencies decided to crash the party, then the Internet came into a reality that the dealers had to face, more cars being sold how come I am making less and suddenly many people wanted to know hey, "someone moved my cheese"

In free market economies change happens and the professionals that acknowledge and embrace the change are the likely survivors and succeed.

I remember meeting a professional in Japan a couple of years ago at the Tokyo Car Show. I have not seen him for 6-7 years. He had become a "Ronin" or a " Samurai with out a Master"

He was well connected, his "smart world phone/PDA", a laptop with wireless connection and he was active. I was a bit surprised as I always thought he was behind the times with regard to technology and he admitted he was until one day he saw the light.

Years of working in various west coast dealerships he had built up quite a list of clients in his little black data book which he always kept up and current. Many people laughed and joked he should have been a CPA or something. Management did not seem to care that he kept his data book as long as he sold cars.

Eventually this list was quite extensive and one day his high school daughter said Dad let me put this information in an Excel program for you and show you how to work with it. Well he did and the rest was history as he could see the benefits right away.

He left the dealership day-to-day business and became a successful broker. His clients trust and respect his advice. He stays connected with his clients. He sends newsy email updates on his travels and what he and the family are doing. He knows where and who to contact to get the best price for his clients, he knows the rebates and incentive programs that are available. He services his clients, they trust him.

I met this lady from Texas, Dallas area, who went from dealer to dealer and took their cars on consignment; she placed them on ebay and Craig's List. She was selling 6-10 cars a week, a one-person operation.

They say that a window closes and another opens. There have been many changes in the industry over the years and there will be many more to come.



A
Pete,

Maybe I'm optimistic, but I believe the industry isn't as ignorant to the new marketing endeavors as it used to be. There are still many cases to back what you're thinking, but they weaken daily. CRM systems do not replace people - they are another technology to help manage process. Unfortunately, most businesses let their CRM systems dictate the process, and I think this is where you are coming from. It is just a matter of understanding what your CRM is for and tasking the right person to make it happen.....not that so-so guy who will work for less.

Lao -

Absolutely! However, when one window shuts, I think 500 open today! It is such an amazing time to be in the positions we're in - this is the Wild West of Internet/technology.....enjoy every minute of it!
J
oooo.. well done Lao! 2 thumbs up!~!
M
Lao,
Spot on and well said. Opportunity knocks on the door of those who are willing to listen.

Pete,
Alex is right. Technology does not replace the people and too often us technologists build something that doesn't mesh with how it's really done. It's our job to listen and be guided by the practitioners so that we not only service or customers to the best of our ability but we learn from the aggregate insight of the front-line.

Worst thing that can happen that way is we have happy customers and an ever-evolving service.
J
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    Jeff Larsen
  • March 27, 2008
Based on my experience just outside the Chicago market-

Dealerships in general don't take the time to properly train an ISM/BDC rep on product knowledge or CRM usage, and have little or no internet process in place for an internet/bdc dept to take hold. Why? Because most management/owners have never taken a customer from lead to sale via internet themselves. That is not what made them successful.

For an ISM/BDC to be successful there must a clear, concise process (aka Road to the Sale in the showroom) starting with buy-in from management top to bottom so the dept can be streamlined to handle the constant bombardment of incoming leads and phone calls properly, per dealership protocol.

I still see the classified ads for ISM's as if they were hiring showroom sales reps, with the qualification of computer usage, advertising absurd, "possible" yearly incomes.

Dealerships know where consumers are finding their vehicles, understand the importance of a quality ISM/BDC dept, hear the stories of other dealerships selling 30, 40, 60 a month from the internet dept, but dont have a clue on how to get there.

As others wrote above... This a great day in the automotive market to be inventive! Great story Lao!
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    Rick
  • March 27, 2008
"...Pay plans are lower and the front margin has been put into the "do not talk about" holdback"

Nobody has addressed this and it's really the truth. I often wonder if being a "floor" sales person would be just as financially rewarding with a well advertisied popular brand considering the "maybe" internet lead voumes worked vs the "serious" walk in.
B
@Rick
What if showroom and internet leads are one in the same?
Seems to be the trend lately and I sure have more salespeople hanging out in my office these days waiting for those hybrid customers..... Just sayin

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    Pete
  • March 27, 2008
Hello to all.

Great comments and insight.

Thanks for not having the knee jerk reaction that usually follows when talking about pay plans and money of "go sell some more cars if you want to make more money".

Dealers I feel would like to maintain a stable and familiar faced sales force but again is it not asking much if you give nothing but the immediate $$$ for someone to stick around for what 2-3 years for a repeat sale?

Ya sure networking I know but be real if you will. When is the last time a customer gave you their friends and neighbors info to see if the "want to buy a car"? Who are you! Click...

The person that took their book of contacts and got into another industry that pays an residual for managing customers portfolios with an opportunity for growth and are no minis in that business.

Selling vehicles is a point of sale business so every time I see ads for recent grads welcome with an opportunity to earn up to a 100k automatically know that most likely that is a high turn over dealership with a crappy pay plan.

I remember as a GSM the GM telling me to implement a new sales initiative for sales people to cold called previous owners that might be interested in trading their cars for a new one.

Not without paying them was my response. After the first 30 days I was fired and blamed that I wasn't managing correctly and that was why truly nothing was sold except for the ones that where "fresh up/marked sold" to be shown as such. Funny enough in 90 days 12 of 16 salespeople quit.

I have seen this same archaic plan used with business development centers with the same result...turnover.

Lao, I agree it is about the right person but differ a bit on the who. Tasking to an under link in which the position has no authority is what I feel is what needs to change.

If I owned a dealership(never wanted to or pursued) the ISM would be second in command just under the owner or GM. Otherwise the ISM is for the most part a babysitter with the UC or NC manger the angry parent.

So all the analytics and pie charts that the ISM produces are worthless and a waste of time and just keep the UC and NC a tool to defend their positions and bus drive to cast blame of the powerless to change...the ISM.

Anybody ever seen that one?

(Apologize for any bad grammar in advance because I do not review when I post)

The best to all,

Pete-Chicago


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    Steve Branders
  • March 27, 2008
Alot of honesty in Pete's remarks. I'm convinced the automotive sales business has driven away many quality people, the turnover is substantial for a reason. I'll venture a guess that most ISM's leave the business for too much effort & hours and not enough compensation. I know of more veteran people in the business looking to get out of it now than ever before and I've been involved w/it for 12 years.
J
The winds of change are upon us...

I ask this question.
Who is the 1st to know if the battle is changing? The Soldier on the line or the General? The Soldier. The General's job is to review & challenge existing battle strategy to put his Soldier into winning situations. This way, the General keeps his men from getting slaughtered and abandoning camp.

Sound all too familliar?
Any Gerneral worth his salt would see the defections and realize the game is changing. This industry is smack dab in the midst of a revolution and the proof is in this thread.

Joe
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    Gerald
  • March 28, 2008
Joe-

Your last post is pretty spot-on, but I will add a caveat. The soldier is the first to notice a change in TACTICS of the enemy, while a General (hopefully) will notice a change in STRATEGY of the enemy.

The unfortunate difference between a soldier and General and the sales person and GM, the latter is typically more concerned about his bottom line and maximizing HIS paycheck rather than caring for his "troops".

As a former leader in the Army, I always made sure my guys got fed and paid before me. Where is that attitude in our business? And these GMs wonder why CSI and retention is so difficult. Do you really think the average GM is able (willing) to see and make changes? I don't!
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    Steve Branders
  • March 28, 2008
Looks as if there is alot of desertion going on in the industry from lack of rations & effective battle strategy. Granted battle maps & the frontline changes constantly but I have a feeling many are being sent to the frontlines with weapons but not enough leadership buy in to win the battle, either that or it's plain old cut & run budget strategy and dealerships are willing to just have a replacement soldier pick up the weapon of the dead soldier on the field and keep on marching.
D
"THE WINDS OF CHANGE ARE UPON US"

C'mon Guys...Lets face it! This is the CAR BUSINESS! The only thing thats constant IS CHANGE! Our industry goes through cycles. You need to be ready for them. You know regardless of whats happening in the economy...you need to ration money made during Spring/Summer/Fall for the typically "not as busy" Winter months.

There will always be a new tool for analytical customers to help weigh their options, and use as leverage while negotiating their best deal, whether it be the Consumer Reports of the 1980's, good old pac bell (yes, remember "PHONE POPS"- practically obsolete) or the World Wide Web of today! (Always something for the "OLD CAR DINOSAURS" to complain about) Same information available to the consumer, just a new delivery system! It still comes down to Salesmanship! (Sorry! I know you didn't want to hear that!)

Building value in the vehicle. Using all your knowledge of the product and it's availablity. Knowing your competition. Is it a limited production vehicle? How many of this color or model are in the region (or in existence for that matter?) Regardless of any new tools that have come along in my 24 years in the business The GAME is pretty much still the SAME! Just get the customer in the door! That's right! Okay there's one thing! Can you believe it? I actually found ONE THING that hasn't changed in the car business! GET THE CUSTOMER IN THE DOOR! I'm having an epiphany! Wow!

Honestly, in an industry where we as consumers can purchase the same product for the same price just down the road it truly is the people (and the exceptional service we provide) that sets our industry apart! And the fact is you really do need to be exceptional to get the business right now.

I cannot tell you how many times I have walked into a store intending to purchase a big ticket item, only to have walked out without purchasing, because of the salesperson! By the same token...I've inadvertently walked into a store and walked out with a BIG TICKET item, (never intending to buy a thing) Again... all because of the Saleperson!

The fact of the matter is, I still love this business like I did the very first day I got in it. I am grateful for the opportunities it has provided to me and my family. I speak to people everyday who jumped out of the business and are trying to get back in! I have to tell ex Managers you're starting back on the Sales Floor! Lets just say that doesn't go over well.

The bottom line is if you are not passionate about the Car Business you simply should not be in it. Yes, we have shifts in our income due to the economy. What industry doesn't? I've learned over the last 24 years to roll with the punches and remember the only thing that is constant in our business is change! I realize every day how lucky I am to make the kind of income I do! Even when I am the very last person to leave the dealership after the final deal is contracted and I still have to eat dinner...There is always somebody working even later serving me my dinner or checking me outat the Grocery Store!!! So I guess it could always be a lot worse! Let's face it, how many people without a formal education can say they make $50,000-$150,000 annually? Plus as an added bonus, have as much fun as we all do? ;)

Diane Uzelac
www.QueenofCars.net
www.DealerClassified.com


D
"THE WINDS OF CHANGE ARE UPON US"

C'mon Guys...Lets face it! This is the CAR BUSINESS! The only thing thats constant IS CHANGE! Our industry goes through cycles. You need to be ready for them. You know regardless of whats happening in the economy...you need to ration money made during Spring/Summer/Fall for the typically "not as busy" Winter months.

There will always be a new tool for analytical customers to help weigh their options, and use as leverage while negotiating their best deal, whether it be the Consumer Reports of the 1980's, good old pac bell (yes, remember "PHONE POPS"- practically obsolete) or the World Wide Web of today! (Always something for the "OLD CAR DINOSAURS" to complain about) Same information available to the consumer, just a new delivery system! It still comes down to Salesmanship! (Sorry! I know you didn't want to hear that!)

Building value in the vehicle. Using all your knowledge of the product and it's availablity. Knowing your competition. Is it a limited production vehicle? How many of this color or model are in the region (or in existence for that matter?) Regardless of any new tools that have come along in my 24 years in the business The GAME is pretty much still the SAME! Just get the customer in the door! That's right! Okay there's one thing! Can you believe it? I actually found ONE THING that hasn't changed in the car business! GET THE CUSTOMER IN THE DOOR! I'm having an epiphany! Wow!

Honestly, in an industry where we as consumers can purchase the same product for the same price just down the road it truly is the people (and the exceptional service we provide) that sets our industry apart! And the fact is you really do need to be exceptional to get the business right now.

I cannot tell you how many times I have walked into a store intending to purchase a big ticket item, only to have walked out without purchasing, because of the salesperson! By the same token...I've inadvertently walked into a store and walked out with a BIG TICKET item, (never intending to buy a thing) Again... all because of the Saleperson!

The fact of the matter is, I still love this business like I did the very first day I got in it. I am grateful for the opportunities it has provided to me and my family. I speak to people everyday who jumped out of the business and are trying to get back in! I have to tell ex Managers you're starting back on the Sales Floor! Lets just say that doesn't go over well.

The bottom line is if you are not passionate about the Car Business you simply should not be in it. Yes, we have shifts in our income due to the economy. What industry doesn't? I've learned over the last 24 years to roll with the punches and remember the only thing that is constant in our business is change! I realize every day how lucky I am to make the kind of income I do! Even when I am the very last person to leave the dealership after the final deal is contracted and I still have to eat dinner...There is always somebody working even later serving me my dinner or checking me outat the Grocery Store!!! So I guess it could always be a lot worse! Let's face it, how many people without a formal education can say they make $50,000-$150,000 annually? Plus as an added bonus, have as much fun as we all do? ;)

Diane Uzelac
www.QueenofCars.net
www.DealerClassified.com


D
"THE WINDS OF CHANGE ARE UPON US"

C'mon Guys...Lets face it! This is the CAR BUSINESS! The only thing thats constant IS CHANGE! Our industry goes through cycles. You need to be ready for them. You know regardless of whats happening in the economy...you need to ration money made during Spring/Summer/Fall for the typically "not as busy" Winter months.

There will always be a new tool for analytical customers to help weigh their options, and use as leverage while negotiating their best deal, whether it be the Consumer Reports of the 1980's, good old pac bell (yes, remember "PHONE POPS"- practically obsolete) or the World Wide Web of today! (Always something for the "OLD CAR DINOSAURS" to complain about) Same information available to the consumer, just a new delivery system! It still comes down to Salesmanship! (Sorry! I know you didn't want to hear that!)

Building value in the vehicle. Using all your knowledge of the product and it's availablity. Knowing your competition. Is it a limited production vehicle? How many of this color or model are in the region (or in existence for that matter?) Regardless of any new tools that have come along in my 24 years in the business The GAME is pretty much still the SAME! Just get the customer in the door! That's right! Okay there's one thing! Can you believe it? I actually found ONE THING that hasn't changed in the car business! GET THE CUSTOMER IN THE DOOR! I'm having an epiphany! Wow!

Honestly, in an industry where we as consumers can purchase the same product for the same price just down the road it truly is the people (and the exceptional service we provide) that sets our industry apart! And the fact is you really do need to be exceptional to get the business right now.

I cannot tell you how many times I have walked into a store intending to purchase a big ticket item, only to have walked out without purchasing, because of the salesperson! By the same token...I've inadvertently walked into a store and walked out with a BIG TICKET item, (never intending to buy a thing) Again... all because of the Saleperson!

The fact of the matter is, I still love this business like I did the very first day I got in it. I am grateful for the opportunities it has provided to me and my family. I speak to people everyday who jumped out of the business and are trying to get back in! I have to tell ex Managers you're starting back on the Sales Floor! Lets just say that doesn't go over well.

The bottom line is if you are not passionate about the Car Business you simply should not be in it. Yes, we have shifts in our income due to the economy. What industry doesn't? I've learned over the last 24 years to roll with the punches and remember the only thing that is constant in our business is change! I realize every day how lucky I am to make the kind of income I do! Even when I am the very last person to leave the dealership after the final deal is contracted and I still have to eat dinner...There is always somebody working even later serving me my dinner or checking me outat the Grocery Store!!! So I guess it could always be a lot worse! Let's face it, how many people without a formal education can say they make $50,000-$150,000 annually? Plus as an added bonus, have as much fun as we all do? ;)

Diane Uzelac
www.QueenofCars.net
www.DealerClassified.com


B
Nice Diane! I concur! I was beginning to think I had wasted the last 10 years of my life, I guess I can put away the razor I was going to use on my wrist :)
V
Yikes Brian - put the razor down!

I'm not yet 22 and started in the industry last May. As the ISM of my Nissan dealership, I find each day exciting and fresh. I'm grateful I'm compensated as well as I am, and I'm having fun doing it.

I have always tackled change aggressively, and I look forward to the next swing in the business. Several above posters are correct: It's all about salesmanship. If you treat your customers with fairness and professionalism you are likely to earn their business. Happy selling everyone.

Dealer Refresh rocks!
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    Domestic Mini Deal
  • March 29, 2008
"...ration money" yeah, there's a great testimony to attract better sales people to the industry.
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    IGNORANCE iS BLISS IN ANY INDUSTRY!
  • March 29, 2008
??? I can't even respond to this one. The "USER NAME" "Domestic Mini Deal" says it all! "DOOMestic" Mini Deal, maybe! If you're living on "Mini Commissions" there's no wonder you can't afford to ration aka "SAVINGS". Didn't know "savings" was a new concept! Anyone else? Clearly some people see the cup as half full. It is attitudes like this that are cancerous in our industry. It is my sincere hope to combat the typical stereotype of the "Car Salesman" while providing good products and services and make one hell of a living doing it! Maybe you should consider another industry? Good Luck Mr. Doom & Gloom!!
J
"customer calling and walking through the door is the most likely to buy?"

lol - and the majoity of the time when they DO buy, they are really an "under-cover" internet shopper!

My experience, which most of the people in our store refuse to accept regardless of the stats: the WORSE up is the fresh un-announced walk-up who really WAS a drive-by (not someone who shopped the net first - or called the day before). Yet this is the target market that 95% of a dealerships effort is based around! The staff will ignore the phones (and their email) to race to every warm body that shows up..

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    Pete
  • March 31, 2008
I am glad everbody agrees selling is about salesmanship but for the "blissful" it is about having a market value based pay plan and value earnings for the sales work that is required.

That is wonderful that people enjoy the industry so did I, most of the time.

So you don't have a degree so you are less valuable than say a software or pharma salesperson? but work 12 hour days and weekends.

I know of those other industries and have friends in them and I will tell you auto sales requires more ability and hard work so where is the pay?

Some people might want to work below scale but I never did.
Unfortunately it took 7 dealers in 20 years but I always made sure I was at 35% and never made less than over 100k.

The one thing that was forgotten to be mentioned is that yes you have to be a pro but to be the best but auto sales requires many sacrifices that one should be compensated for other than by commission only.

I always took most of my customers with me. So when the dealer principle would call and complain, I would always correct them in saying that they are MY customers and I am the one who has the relationship.

Cut the percentage, make me pay more for health insurance, axe the demo program, etc...I looked out for me and never looking back.

The largest percentage of autosales rep's make less than $26,000 per year. I know it shows higher but once you take out the top 2% of highline rep's over 100k that is what it is.

Most don't even know of the effort in past to be unionized and do you know why? I will save that for another time.

For anybody out there that is an ISM at a store that sell 150+ cars
month and not making 100k/yr your getting shorted.

If you have less than say 5 years in the business and an ISM your probably working too cheap(but definitely can be qualified, so don't take offense).

Thanks to all and I love to rattle things up to make this blog fun and usefull :-)

D
WOW! I love that Pete likes to rattle and stir things up too!!!! :) I am actually stradling both sides of the fence!
A
About the ISM pay scales. Are you refering to an ISM that sells the vehicles as well as manage the department? Or just responding to leads and selling the vehicles? Which do you think should be making 100K or more per year?
With the many differnt roles that ISM's have depending on the dealership-I think it is tough to nail down a fair payplan.
I have been an ISM for 7 years and not making 100K. I dont sell the vehicle myself anymore, but manage the department in a store that sells about 200 vehicles per month. Any input is much appreciated.

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    Pete
  • July 9, 2008
Hi Angela,

Clarify? 200 total a month new and used combined or...

Here is what a big problem that still exists, not fully validating o elevating the position of ISM to the second in a chain of command.

Nobody seems to talk about it but the biggest threat in the auto monarch to the GM and GSM is the ISM.

Why? Smarter and get's the techonology and how it applies to selling vehicles.

I would bet to say that more authority is given to the FSM than the ISM. That's just crazy in todays business.

How many ISM have authority over working deals?

My guess? 8 out of 10 UCM have NO clue of e-selling but make 100-200-300k a year. It's a case of the dog waging the tail.

Make a % point maybe on the back because of buy rate being lower than the consumer can get walking into the bank...whoopee.

Sorry FSM's I don't mean to be little just trying to make a point here.

Most FSM's that I know make WELL over 100k for about 60-100 booked deals or so a month.

So my rule is minimul $50/car sold is a good start.

Heck, buyers make 100-250 per car to buy inventory, ridiculus and know of people making 200k.

Bottom line is that I feel and ISM should be paid also on a % of monthly net profit or gross that is pretty standard for a sales manager's position.



P