|Sales teams have a notoriously high turnover rate, but when it comes to auto dealership showrooms, the numbers only seem to be getting worse.
According to the National Automobile Dealers Association’s 2014 Dealership Workforce Study, the average dealership had a sales consultant turnover rate of 66%. That’s up 4% from the previous year, and significantly higher than the 42% national average for private sector sales people.
High turnover causes a multitude of problems. According to the Sales Readiness Group, the average sales person only stays in a job for two years or less, and sales managers only stick around for 19 months on average. Unfortunately, almost half of companies told CSO Insights that it takes 10 months or more for new sales people to become fully productive at their jobs.
This means that many sales people leave shortly after it becomes profitable to employ them, forcing companies to waste money hiring and training more sales people to become just as effective.
In order to actually make money off a sales person in just over a year, they’d have to do two years worth of business during a period of time that consists largely of onboarding, which seems unlikely, since CSO Insights reports that only 58% of sales reps make quota.
When it comes to dealerships specifically, it seems that pay is a major factor in turnover. While luxury dealerships that pay well only have an average turnover rate of 41%, non-luxury dealerships’ sales forces turn over at a rate of 74%.
People pursuing a career in cars sales often start at the lower-paying non-luxury dealerships and move up to the luxury dealerships once they’ve gained some experience. It’s not hard to tell why. Luxury brand sales consultants make an average of $83,257, while non-luxury brand sales consultants make $58,773.
Bad hires made out of desperation to fill a spot quickly can also cause high turnover. An alarming 40% of people responsible for that 66% turnover number last fewer than 90 days.
Ted Kraybill, president of ESI Trends and compiler of the recent study, told AutoNews.com that moving toward set prices instead of negotiation might keep sales consultants around longer and forge a more structured career path for employees. Other dealerships have tried promoting sales people between non-luxury and luxury brands in their own company.
Kraybill says the situation is severe enough that many dealerships and manufacturers are taking action, but it’s not clear yet what that action will be.