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Sales Team Motivation: Challenging The Industry’s Standards

May 14, 2018 0 Comments

Compensation Still Drives Motivation, but Other Motivations Drive More Committed Employees

Sales Team Motivation Study DrivingSales

Historically the automotive industry has focused efforts for attracting and retaining sales teams primarily on financial incentives. However, new studies show that potential hires, particularly millennials, are looking for additional benefits beyond compensation and commission such as development plans or career growth opportunities.

As the external industry research directly conflicts with traditional dealer pay plans, DrivingSales launched a survey to see if and how motivations inside of dealership sales teams are shifting. The survey was completed by more than 700 active dealer representatives with the majority of that group representing sales representatives. Along with their current employment position, the individual’s time in the dealership, training experience, and intentions of remaining within their dealership were collected. The results of this survey can provide direction to dealerships if they are looking to shift their employee retention models to improve team motivation.

Motivated to Stay, Committed to Perform

The basic hypothesis is: dealerships are not aligning their employee engagement activities with current employees’ and job searchers’ main motivating factors causing higher turnover and inability to attract prospective hires from outside the automotive industry. With the current turnover rates in automotive sales teams as high as they are, the question of why these people leave is a concern. A potential cause may be
that many of the new hires are simply seeing a car sales position as a temporary position. However, the survey results showed a different thought process. 44% of the sales representatives who were in their positions shorter than a year said that they planned on being in the industry for more than 10 years. In fact, only 5% of the sale people with less than a year of current employment said that they only planned
on being in the industry for less than a year.

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This indicates that an early departure was not planned, even though based on the 2016 NADA Workforce Study 67% of these salespeople will leave within a year of being hired, and 40% will leave within the first 90 days. Salespeople who enter the industry plan on making the retail industry a long-term career decision. Also, salespeople who reported they planned to stay in the industry longer also reported they sold vehicles at a higher rate than those who reported they planned on exiting the industry sooner. The sales rates were self-reported so their actual sales records were not captured, but these results do show that those who had a longer-term focus of their career also reported having more positive views of their sales records.

Automotive Workforce Study Statistics

Shifting Motivations, New Opportunities

With so many studies outside the industry indicating that new employees were looking for benefits from their employer outside of financial incentives, the question is whether these desires extended to salespeople in automotive. The survey indicated that compensation is still the leading motivator at work, but many salespeople are interested in other long-term benefits. The general breakdown shows that, as expected,
the majority of salespeople reported that they were primarily motivated by compensation. 45% said that it was their primary motivator. This number may seem lower than many expected as most sales teams are focused entirely on financial incentives. Of all the salespeople surveyed, 21% reported that they were motivated by opportunities to improve themselves and build their skills. Likewise, 15% of salespeople said they were motivated by the chance to grow into a General Manager position. An additional 15% were motivated by the opportunity to serve the
customer while 4% were motivated by team dynamics. There was an interesting shift in motivations when focusing results on salespeople that had only been at their dealerships for a year. When focusing on people who planned to leave within a year, and had been there less than a year, 63% reported they were motivated by money at work.

Main Motivators Sales Reps Auto Industry

New salespeople, employed less than a year, who planned to stay longer than 10 years were still motivated first by money (32%), however 26% of individuals were motivated by the chance for self improvement or career growth opportunities. This finding indicates that newer, committed salespeople are more often motivated by factors outside of compensation.

Offering More than a Paycheck

This research indicates that although compensation is the main motivation for salespeople, dealerships should incorporate opportunities for training and career growth to inspire their teams. Compensation still remains the leading way to drive performance, but there are more factors to consider when motivating and attracting employees. Similar to what studies found from outside the automotive industry new factors are weighing heavier on employees’ reasons to stay or join a particular employer. However, most dealerships are not investing in new career paths or development programs to attract and retain salespeople.

In a joint study from DrivingSales and Hireology dealers indicated that they were aware of their turnover problems and had made changes to policy to address the issues. 37% said they made changes to entering compensation and 38% said they changed their base pay vs. commission structure. Additionally, only 15% reported promoting career opportunities on their website.

Attracting and Retaining More Committed Employees

Dealers looking to motivate their current team and potential employees should continue to improve their compensation plans. However, based on this survey, dealers who also invest in career and professional growth could create a competitive advantage in attracting and retaining long-term, motivated teams. These plans should include detailed process for training and a structured career path. Examples of companies who have achieved this structure from outside the retail automotive industry include rental-car magnate Enterprise. Enterprise lists as one of its competitive advantages their ability to attract college graduates to their entry level workforce despite difficult working situations. The main reason for their success is a structured career path that is available for each employee, from day one. Restrictions from dealership structure and current OEM incentives may make a carbon copy of the Enterprise career path difficult for dealers. But for dealers to attract candidates from outside the automotive industry they have to find ways to compete with other employers who are tapping into
employees looking for development opportunities and career paths.

Motivation and Retention Statistics Car Industry

Sources:
Chertok, Z. (October 7, 2016). Optimizing Rewards & Recognition With Configurable Technology. Aberdeen Group. Retrieved from
http://www.aberdeen.com/research/14031/14031-RR-maximize-return-rewards-management.aspx/content.aspx
Szakaly, S. (2016). NADA Dealership Workforce Study. NADA. Retrieved from https://www.nada.org/workforcestudy/

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