The world has shifted. It is time to stop thinking about mobile AND desktop, and put all the focus on mobile. 

The old way of thinking was that desktops were the platform for people to do their research and mobile was where they got their directions. That is no longer the situation. Most of your customers are bypassing the desktop completely and interacting entirely with your site on a mobile device.

Perhaps you are thinking: Well our site is responsive so we're fine. Being "responsive" usually means that what is built for your desktop version rearranges for people when they get to your site using a mobile device. Let's be clear... that is not enough. In a mobile-first world it's going to take more than a "responsive" website to be a successful strategy. 

It was my privilege April 9 to moderate a pivotal workshop at the DrivingSales Presidents Club event. The topic was Marketing in a Mobile First World with our two presenters Carlos McEwan from Jazel and Eric Brown from LotLinx. There was too much discussion in the room to give you a full tutorial, but here are the top 6 things you need to know:

1. Mobile is King 
   At DrivingSales we collect trends in website traffic from thousands of dealers across the country. Last month 57% of traffic to dealer sites was on a mobile device. The surprising thing about that number is that it is grew at a 10% rate over last year. When you look at your website you need to do it on your phone, or tablet.... not on your computer.


2. User First
   It is tempting to build the website for ourselves. We want to focus on things that are important to us: our beautiful building, our leadership team, fancy technology. News flash, your customer doesn't care about what you care about. Building for the consumer experience first means eliminating everything that gets in the way of what your customer wants to do. This lesson is even more vital on mobile where you only have a small screen to present. One dealer in the room talked about how he removed their chat pop-ups to decrease distractions on their mobile site. The result? They see people spending more time on their site.


3. Think of Your Site as a Live Interaction
   This approach came from Carlos and I feel it is a great way to think through your site strategy. His suggestion is to think about your site as a customer lot visit. Would you attack your customer as soon as they got on the lot to get their phone, email, address, phone number? Would you interrupt them shopping your lot with a service offer? Thinking this way helps you understand how your site should flow, and help eliminate distractions.


4. You Won't be There to Hold Your Customers' Hand
   During the end of the session we had an exercise where dealers sitting next to each other had to exchange their website address with the person next to them. They then had to perform 7 common customer tasks on their mobile sites. It was interesting to see how many people had to ask questions or give directions to each other to perform these basic tasks. The problem is that you can't be there to show your customers how to request information. If someone sitting right next to you can't find the click to call button, neither can your customers.


5. It's Time to Rethink Your Goals
   If you are just measuring your site's performance based on lead generation, you could be vastly disappointed. From one dealer case study we found that the likelihood of a customer filling in a form from the phone decreased by 61%. Simply put, people on mobile devices don't want to fill out forms. 


6. What Happens When There's No Web Searches?
   Eric provided a glimpse into the future when artificial intelligence integrates itself into our buying processes. Think of the amount of data you are sending back to Google, Apple and Amazon about your preferences, frequented locations, sites visited, purchases and habits.
   
   The arms race is on to turn that data into artificial intelligence that will insert itself into our buying processes. Suddenly we'll start getting notifications that inform us that our car has reached maximum trade-in ROI, and that there are 3 cars within a 10 mile radius that would fit our style.
   
   This new approach of artificial intelligence decision making may be only a few years away and the technology is most likely going to outpace the human acceptance of it. However, we are starting to see these automated, decision making applications sneak into our lives. Think of how your phone looks at your calendar, finds events with locations in them and then warns you when you need to leave to get there on time. You probably didn't even notice, but your phone is already taking away decision making. You didn't have to search it, it happened automatically and that is coming from every decision you make. This brave new world may not even need websites.
   
   So, how will we compete when artificial intelligence steps in? It will be based on the speed of information you produce and your experience, ranked by your past customers. In this scenario it is crucial to get your cars on your site as soon as possible and reputation management will be where you sink or swim.

I wish I could capture all of the conversations that happened during the workshop in New York, but I guess that's why you need to be there. The one clear message though was mobile is king and it certainly isn't going away.

One of the comments I made during the session was that I have 5 kids (yes, I'm from Utah) all of them from the 11 year old to the 1 year old know how to operate my phone, but none of them really know how to use it as a PHONE.

Every time I call them I have to explain how to put the receiver near their face and the transmitter to their ear. What happens when that generation starts buying cars? They see devices as an integral part of life and they have a hard time understanding why they're called phones.

We may have a hard time accepting what's next in artificial intelligence decision making, but the next generation won't and we need to prepare. 

If there is one hot topic in your dealership, it’s pay plans. It is the ultimate water cooler discussion, and the most leveraged tool for managers to motivate performance.

But, it seems like you can’t look on the internet without reading about how job searchers are changing what they want from an employer. And with a larger number of millennials entering the workforce, it probably warrants a view into what drives this generation of workers.  Studies suggest they prefer recognition over money, they feel entitled to receive more benefits and perks from their jobs, the list goes on and on. So does that mean that pay plans are losing their luster overall?

We wanted to find out, so we asked this question: do salespeople entering the industry care about pay plans, or instead place more value on other factors (like customer service or career path)?

We surveyed nearly 500 salespeople to see exactly what motivated them to perform at their dealership.

Pay Plans - do they work?

First off let me start by saying I’m not going to blow smoke; pay plans are still the clear cut winner of what motivates salespeople. When asked what motivates them at work, 45% said that compensation was number one.

So that answers the question, right? Time to double down on building the right pay plan. Well…

NADA reported in December 2016 that salesperson turnover was 67%. This is the case in in spite of the fact that financial compensation for dealers grew at 1.4% in the face of only a .4% growth in profitability. That means that compensation grew 250% faster than profit, and it still didn’t really improve turnover.  

Obviously the tried and true philosophy is that your pay plan shouldn’t really outpace profitability, but in an attempt to keep good salespeople it seems profitability was sacrificed. There has to be a better way to keep people than continually throwing more money at them.

Other Motivations

It is true that pay plans are the number one motivator, but that’s not the only thing that motivates salespeople. It may surprise some people, but according to the responses we received, 21% of salespeople were motivated by developing skills, 15% were motivated by a career path and an additional 15% were motivated by delivering good customer service.

This hints at the fact that there may be more to motivating a sales team than just adjusting (again and again) your pay plan. These other motivating factors imply that pay plans are not the end-all-be-all motivator. In fact, it can even by an indication that you could have the wrong hire.

In It For The Long Haul

We also asked all of the salespeople how long they planned to be in the automotive dealership. With all the turnover in the sales department we figured there had to be a large portion of vagrant salespeople who were in it for the short-term payoff. The truth from our findings: 60% of salespeople who had worked in the dealership for less than a year, planned on being there for over 5 years.

Only 5% of the salespeople coming into the dealership for the first time planned on being there for less than a year. 63% of people who planned to leave within the first year said their primary motivation was compensation. Even though 95% of people planned on staying, a year later only 33% of them were still there, with 40% of those leaving in the first 90 days according to NADA.

When we compared  how long salespeople wanted to stay in the dealership, to their motivations at work, an interesting break happened. Salespeople who planned on leaving within a year were 40% more likely to be motivated primarily by compensation.

Salespeople who planned on staying were more likely to be motivated by something other than the pay plan. Don’t get me wrong, pay plans were still number one at 32% (down 10% from the average), but this group was 23% more likely to be motivated by developing skills and an impressive 73% more likely to be motivated by career paths.

Here’s the good news, not only did these individuals want to stay at the dealership, but they also closed more deals. Salespeople who planned on staying longer reported outselling their peers by 9% on average.

Looking Past the Pay Plan

Pay plans are still king when it comes to motivation, but only when the other factors are addressed. Ignoring other aspects of employee motivation could turn into a detriment to your dealership. You can download our full study here to see other factors that impact motivation.

All salespeople are not created equal. Those who want to stay are looking for you to invest in them beyond a monthly check, they want to know there is a path for developing skills and a their career.

Dealer Executives Underestimate Cost of Staff Turnover by $97,000 Despite Investments to Improve Employee Retention

A study from DrivingSales, in partnership with Hireology, found that dealer executives underestimate their turnover by 20% for their entire dealership and 27% among their sales team. This indicates a major disconnect in the dealership that is coming at a potentially significant cost to dealership profitability. Adding to the issue is the fact that dealers are not effectively addressing the problem: according to the survey most dealerships are potential incorrectly devoting resources to reversing this costly trend.

On average, the overall dealership turnover rate reported by Dealer Principals, General Managers and Owners was 22% compared to the 42% that the 2016 NADA Workforce Study identified. The discrepancy for the sales team was even larger, with dealer executives reporting an average 40% sales teams turnover rate versus the 67% reported by NADA.

Based on research performed by DrivingSales, each sales person that leaves a dealership can cost the bottom line $45,000 (other sources estimate this number higher) and the total turnover cost per dealership averages nearly $439,000 annually. This means, based on the underestimation in sales turnover, that dealer executives are underestimating the cost staff turnover of their dealership by $97,000, assuming they are even aware of the bottom line loss.

The survey further revealed that most dealers are unaware of the financial impact turnover has within their dealerships and, with a lack of transparency into this impact. The majority (over 80%) of dealerships report that they do not have a dedicated person/team focused on hiring, training or retraining their staff. These responsibilities overwhelmingly are assigned to individual department managers. Not only does the lack of focused attention indicate why dealer executives are unaware of their true turnover rate and the costs associated with it, but it reveals a core issue underlying the problem of staff turnover.

Dealers Are Addressing Turnover, But Is It Working?

Although dealer executives underestimate their turnover rate, they do not ignore the issue of turnover completely. 60% plus executives reported that turnover had a major impact to their operations in all departments except their Internet/BDC department (49%). Dealer executives felt that the sales department was impacted the most by turnover.

64% of dealers report that they have made  some sort of changes to their policies to address the issue of sales turnover. The two most frequent changes to policies were:

1. Changing Commission vs. Base Pay Structure
2. Increasing Entering Compensation.

The majority of dealers focused their Human Resources changes on activities to attract candidates, such as improving income pay structures and increasing employment outreach, instead of making investments in post-hire experience (days worked, vacation policy and career opportunities).

Is This Motivating Employees?

The investments that dealers have made in compensation structure shows that they feel their best tool to attract and retain candidates is through financial incentives. But studies outside of the automotive industry indicate that dollars are not as impactful on retention as other incentives, such as on-the-job career development and flexible schedules. Initial research from DrivingSales indicates that while less than half as many dealerships invested in career development for their employees as those that focused on cash incentives, these alternative incentives are significant (and less costly) retention and recruitment motivators.

In a study, to be fully released in 2017, DrivingSales surveyed more than 1,000 dealer professionals to identify their motivations at work. 47% of sales people surveyed said their top motivator was money, as expected. However, 36% stated that their largest motivations were personal development and career progress.

Although the majority of salespeople are motivated financially, it is important to point out that by not investing in post-hire development many dealers are missing an additional point of motivation. Balancing financial incentives with career development can result in increased retention of their total sales teams.

The results of both this study and the 2016 NADA Workforce Study indicate that turnover is impacting dealer operations -- and the bottom line. Although most dealers are underestimating the impact it is making in their business, they are aware of the issue and are trying to make adjustments to decrease turnover. But are they the right adjustments?

Company culture has become the buzzword of our business generation. However, a debate remains: can a culture have a tangible financial impact?

There seems to be two very polarized sides to this conversation. Those who feel culture is just another hippy-dippy millenialized concept. And on the other end, the believers swear that culture is the most important and defining factor of any business.

If there was one company that has proven financial benefits from culture it has been Southwest Airlines. Somehow in the aftermath of 9/11, the worst economic period ever faced by the airline industry, Southwest found a way to survive and thrive into the future. How did it happen?

Southwest CEO Focuses on “Do the Right Thing”

During DrivingSales Executive Summit in October we will hear Jim Parker, former CEO of Southwest whose tenure included 9/11, discuss how culture sustained the company during the aftermath of 9/11.

While CEO, Parker focused his efforts in creating an internal culture that built the confidence of their employees first so they could feel confident in addressing their customers. He even went so far as cutting executive and board of directors’ wages to ensure that there were no layoffs and no pay cuts.

So did Southwest realize a financial benefit to these cultural investments? Let’s put it this way in the fourth quarter after 9/11 Southwest turned a profit and (as his bio states): “During Jim’s tenure as CEO, Southwest was named as the most admired companies in America by Fortune… remaining profitable in every year.” All of these results Parker attributes in large part to the culture they built as a company.

Freedom Auto Group and Culture

An example even closer to home is Freedom Auto Group where they are not a car dealer, but a “Life Improvement Company.” Eric Savage tells the story of how he stepped away from his family’s dealership to run his own, built on the back of a strong company culture.

Savage shared during DrivingSales Presidents Club in 2016 that he saw his company as a power plant that shared energy through developing a strong culture internally. This culture includes “Gratitude Sessions” and affirmation sticky notes from employees.

Savage admits that it was not easy at first, but now his group is more profitable than ever and he attributes that success directly to the culture his team has built and protects every day.

The Bottom Line

To wrap it up let me share my definition of company culture since there are so many different interpretations on the subject. Company culture is the way that employees are taught (passively or purposely) to respond in every situation. A company may have policies and procedures that outline what an employee does, but culture guides the employee executes those processes.

Policy and procedures tell you what. Culture tells you how.

Your accountant may not be able to track it, but your culture is absolutely impacting your bottom line today. If you take control of it, shape it and cultivate it like Parker and Savage it will be come a positive contributor to long-term profitability.