3 Ways That High Salesperson Turnover Can Hurt Your Dealership

This article could easily be titled 12 ways that high Salesperson turnover is hurting your dealership but I really want to focus on the three most critical areas you need to be aware of.  The topic has a lot of personal meaning to me because I was able to spend eight years working in the automotive industry and cherish the experiences and knowledge I gained there.  Unfortunately, there is a trend of high turnover among sales staffs that just isn’t going away.

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The most recent NADA workforce study shows average turnover among sales staff at 71.9% and at 80% for non-luxury brand dealerships.  In 2012 the average was at 62% which was a significant drop from the 100% plus days of the previous decade.  I’m hoping that this isn’t where we’re headed because there are some very significant ways that high turnover is hurting your dealership.

  • Money. I’m starting here because it seems that in some cases we try to convince ourselves that commission based sales people cost us nothing to bring on and then let go if they don’t work out.  Unfortunately, nothing could be further from the truth.  Part of the studies that NADA has done shows us that the average cost of turnover for a salesperson is $25,000.  If you’ve got a 10 person sales force and you turnover 6 people this year, that’s $150,000 walking out the door.  If you could cut your turnover in half, you just put $75,000 back in your pocket.
  • Morale. One of the intangible costs of high turnover is the effect it has on the rest of your employees.  It’s hard to put a dollar cost on it but we know that high turnover has a negative effect on the morale of the employees left behind.  Whether they have to pick up the slack of those who are gone, put in extra hours, or just start to doubt how management sees their role and their future.  A constantly revolving door with new salespeople has an incredibly negative impact on your sales staff.  This directly impacts the level of difficulty you’ll have when you’re out there trying to recruit new people to step into that situation.
  • Customer Service. I’m putting this last but this very well could be the area where high turnover is hurting your dealership the most.  There are a couple of ways that high turnover affects customer service.  First, when your sales department is constantly turning over you lose those connections between customers and their sales adviser.  This also may be why 20% of your sales staff are selling 80% of your vehicles just by being the only constants in the show room.  This is a major purchase, if not the major purchase in most people’s lives.  Relationships of trust with a salesperson that a customer knows and likes can be more important than the marketing promises of the dealership.  Secondly, loss of morale has an enormous effect on customer service.  It is an immutable law of business that your customers experience will never be greater than your employee’s experience.  If your salesperson is not enjoying their job or career it will be impossible for them to create memorable customer experiences for the people coming into your dealership.

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As you can see, high turnover in your sales staff is a pretty severe handicap to your dealership’s success.  Fortunately, there are strategies and tactics you can employ that will help you reduce turnover and overcome these harmful side effects.  Over the past decade I’ve been able to work with many organizations, including auto groups, that have greatly reduced their turnover.  One key is to understand some of the causes for turnover.

In my experience, high turnover is caused by a combination of a couple of key factors.  First a poor fit between the employee and the job and second, a lack of leadership skill in the employee’s immediate supervisor.  This means that you can reduce turnover by implementing processes that help you accurately job-match your candidates and develop critical leadership skills in your sales managers.  Learn how one of our clients did this by downloading our case study here.

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Download our case study to find out how one dealer group solved the problem.

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