Turnover impacting CSI and dealership profits

Posted by Insignia Group on May 12, 2014 8:30:00 AM

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What causes high turnover in a dealership, and what can management do about it? 

First, take a look at the breakdown. 

At a high level, the 2013 Dealership Workforce Industry Report released by the NADA stated that:

  • Nearly 40% of the people who are hired into sales consultant positions leave the dealership within 90 days
  • The 90-day revolving door is due to two factors: poor “fit” hiring decisions and commission-based pay plans
  • About 62% of sales consultants quit or are terminated over the course of a year
  • The change rate for female sales consultants is 76%
The Customer and Employee Retention Impact

Customer loyalty bears a direct relationship to employee retention. Have you ever had a job where you were dissatisfied? How did that impact your attitude and job performance? If your position involves direct contact with customers, how did your satisfaction impact their experience?

Now flip it. Have you ever interacted with an employee that obviously did not like their job? The non-verbal presentation (body language) is one aspect, while many times they will tell you directly.

Take it one step further…with how many people did you share this experience? Did you share it online as well?

Here’s an interesting observation from this study: 

The NADA report noted that sales consultants working 50 to 60 hours per week earn 4 percent more a year than their counterparts working 40 to 45 hours—albeit there's a caveat.

When employees work over 45 hours, turnover increases and retention decreases, implying a change to the incentive system may be due.

The True Cost of the Revolving Door

Everyone's income depends on the performance of the store. In our research, customers have stated it can cost between $4,000 and $5,000 to recruit a new employee. How many new salespeople have you hired in the last 12 months? Now do the math.

Once you add in the loss of possible sales, the productivity of others, and training, the number rises much higher. 

In a survey, published by CareerBuilder, 41% of companies estimate a bad hire in the last year had cost them at least $25,000, while 25% of companies surveyed say that a bad hire had cost them at least $50,000, in the last year. How many new salespeople have left in the last 12 months? 

As discussed earlier, the true cost is the store's customer retention. The marketplace reputation which is primarily driven by its employees is your most valuable asset. 

For several automakers, such as Ford and VW, employee retention is becoming a global retail KPI (Key Performance Indicator). How is it measured in your store? What is your turnover rate? And, what have you identified as the root causes of this issue? 

Accessories Are a Win-Win-Win 

Accessories are a great source of additional revenue for dealers. While actual amounts vary by both brand and store, we typically see a 40-50% margin—more if selling aftermarket. This additional revenue is shared across sales, parts, and service. 

Customer Win

The customer takes delivery of the vehicle “personalized”, feeling great about their purchase and ready to share the experience. That’s great (free) word-of-mouth advertising and an increased probability for your retention efforts! 

Sales Consultant Win

Dealers typically pay 10% of the gross sale as a commission. So now they are selling more, earning more, and excited to offer personalization.

Dealership Win

CSI increases resulting in more revenue! Sales Consultants have a new revenue stream, improving retention, and reducing turnover expenses. And of course, the increased front-end gross revenue, per new unit, generates more revenue.

How Insignia Group Can Help

Insignia Group is the leading provider of digital accessory-selling platforms nationwide. Our digital interface helps dealerships across the country sell accessories at the point of sale, whether in-store or online.

With the Insignia Group Accessories Selling System, your dealership can communicate seamlessly across departments about accessories. Custom pricing and labor times are input into your system for easy reference and are updated in real-time. 

Selling accessories at the point of sale is proven to increase front-end gross, improve departmental communication, increase CSI scores, and reduce turnover. 

Contact us today to find out how you can get started. 

Topics: Improve CSI, Reducing Turnover