It has been customary for years, that accessories are installed on inventory for a few of reasons. (1) To get rid of overstocked accessory inventory. (2) To build gross for the sales department. (3) To pretty up an ugly unit. Retail on accessories is an issue you must be involved in. If you are asked to submit a stock number for an accessory install, you should be aware how this will affect your profitability. I have never been a fan of pre-loading accessories, unless it is for display purposes only on one vehicle. Next time, do not allow this to happen, unless you are able to appreciate the profitability it adds to the unit. In today’s market, the consumer does not believe the retail on these items anyway. So, you usually do not make more gross profit on the deal. A suggestion would be to, add a process that takes place before F/I, to sell add on accessories. Then add to we-owe or due-bill. Then you will get the gross credit for the additions. Now, if you get paid on the bottom line including the retail of these accessories, just chill out. You are still getting paid, your sales people aren’t.

As a past Sales manager and now a sales person (thankfully) I have been hosed both ways. I can see accessorizing 1 or 2 "show cars" for the showroom for salespeople to sell off of, and have an accessory botique nearby with other items shown, then everybody wins. I know that parts is a Dealer's/GM's focal point and for some reason once they get to that level they don't give a shit about salespeople, or sales managers, but when the sales department out grosses parts and service 10 to 1 in any month maybe it's time to stand up to the "factory guys". Remember the best quote ever made-"We are from the factory, and are here to help you"

This is why most dealers fail to successfully sell accessories. As per the best practices from the most successful dealers selling accessories a dealership should not only pay 7% to 10% of the retail value of products sold, the commission should be paid separate from the car sale commission to build value. Sales managers should also be paid 5% of the retail and here again it should be paid separately for them to appreciate accessory sales. It is although difficult to do this on pre-loads as most of the profit is negotiated away.

I am intrigued by the comment, "Next time, do not allow this to happen, unless you are able to appreciate the profitability it adds to the unit." In many cases that decision is being made by the man or woman whose name is on the building so the only way to "not allow" it to happen is to "not allow" yourself to work there anymore. Just a thought.

Sounds Familiar, except we get Full Retail on Recon for our Used Cars, we get Charged $130.00 an Hour Full Retail for example tires that vehicle needs, but I will say the Accessories on our New Inventory if Custom Wheels & Tires Set are $1050.00 Cost, the Dealer Adds $200.00 for just writing the PO for it!!

Accessories are usually not run at full service rate for install, especially if you are effective at selling accessories. Their are two ways I think accessories should be added: 1.)(most cumbersome) but split the profit with the three departments equally. 2.) Have an internal price. Retail maybe 25% on part and 50 an hour, internal would then be 10% and 35 an hour. The first option, if sales sells the accessories at a discount everyone partakes in moving the product. the second option. We have consistent pricing for all departments and sales can decide if they want to make money on the accessory or discount them and give up their gross. You will never get rich off of accessories but it can make a big difference if everyone works together. Don't be shirts against the skins, at the end of the day the owner has the same profit, but you can all be rewarded for what you do. *David. Used car should be charged full retail, you don't pay that amount the customer who buys the car does and service and parts shouldn't have to make less money just so you can show more profit on your side.

It has been customary for years, that accessories are installed on inventory for a few of reasons. (1) To get rid of overstocked accessory inventory. (2) To build gross for the sales department. (3) To pretty up an ugly unit. Retail on accessories is an issue you must be involved in. If you are asked to submit a stock number for an accessory install, you should be aware how this will affect your profitability. I have never been a fan of pre-loading accessories, unless it is for display purposes only on one vehicle. Next time, do not allow this to happen, unless you are able to appreciate the profitability it adds to the unit. In today’s market, the consumer does not believe the retail on these items anyway. So, you usually do not make more gross profit on the deal. A suggestion would be to, add a process that takes place before F/I, to sell add on accessories. Then add to we-owe or due-bill. Then you will get the gross credit for the additions. Now, if you get paid on the bottom line including the retail of these accessories, just chill out. You are still getting paid, your sales people aren’t.

As a past Sales manager and now a sales person (thankfully) I have been hosed both ways. I can see accessorizing 1 or 2 "show cars" for the showroom for salespeople to sell off of, and have an accessory botique nearby with other items shown, then everybody wins. I know that parts is a Dealer's/GM's focal point and for some reason once they get to that level they don't give a shit about salespeople, or sales managers, but when the sales department out grosses parts and service 10 to 1 in any month maybe it's time to stand up to the "factory guys". Remember the best quote ever made-"We are from the factory, and are here to help you"

This is why most dealers fail to successfully sell accessories. As per the best practices from the most successful dealers selling accessories a dealership should not only pay 7% to 10% of the retail value of products sold, the commission should be paid separate from the car sale commission to build value. Sales managers should also be paid 5% of the retail and here again it should be paid separately for them to appreciate accessory sales. It is although difficult to do this on pre-loads as most of the profit is negotiated away.

I am intrigued by the comment, "Next time, do not allow this to happen, unless you are able to appreciate the profitability it adds to the unit." In many cases that decision is being made by the man or woman whose name is on the building so the only way to "not allow" it to happen is to "not allow" yourself to work there anymore. Just a thought.

Sounds Familiar, except we get Full Retail on Recon for our Used Cars, we get Charged $130.00 an Hour Full Retail for example tires that vehicle needs, but I will say the Accessories on our New Inventory if Custom Wheels & Tires Set are $1050.00 Cost, the Dealer Adds $200.00 for just writing the PO for it!!

Accessories are usually not run at full service rate for install, especially if you are effective at selling accessories. Their are two ways I think accessories should be added: 1.)(most cumbersome) but split the profit with the three departments equally. 2.) Have an internal price. Retail maybe 25% on part and 50 an hour, internal would then be 10% and 35 an hour. The first option, if sales sells the accessories at a discount everyone partakes in moving the product. the second option. We have consistent pricing for all departments and sales can decide if they want to make money on the accessory or discount them and give up their gross. You will never get rich off of accessories but it can make a big difference if everyone works together. Don't be shirts against the skins, at the end of the day the owner has the same profit, but you can all be rewarded for what you do. *David. Used car should be charged full retail, you don't pay that amount the customer who buys the car does and service and parts shouldn't have to make less money just so you can show more profit on your side.

Bryant, Great question, and the real answer that we found is you just have to look harder. We ditched the "waiting till auction day" and hoping I can fill my list mentality quite a while ago and it's worked pretty well for us. I haven't been to a live auction since probably Sept. or Oct. last year. We do a lot online, and out of our area, but with the shipping cost added to already high prices has hurt our margin, but it's still necessary to get enough cars. The biggest area we improved has been purchasing direct from the public. We get nice, local owned cars without fees and shipping, and the margins are good. It just takes work! We commission our salespeople if they buy a car. It gives them another avenue to make money and they are good at it for the most part.

Bryant, coming from the auction world I've seen a few "tricks" that out-of-the-box thinking dealers have used. (1) Don't just go to "whole-car" auctions, take a look at the damaged vehicle auctions like Copart, IAA, and Manheim's TRA. Yes, you're bodyshop will have some work to do, but you can increase your margin. (2) Try to work directly with your local rental car company reps. All have folks in place that handle their vehicles being pulled from the fleet and while their may be "rules" in place concerning how they are supposed to sell these vehicle there are always deals being cut. You just have to be willing to take that Ford Fusion to get that 2012 Camry that you really want.

Bryant, great question and something we all are dealing with. I run a used car store without a new car franchise, so I definitely feel your pain. Have you tried buying cars out of your service lane? There are several different processes that have been discussed in the forums here about how to go about it.We can scan our next days service appointments in our CRM system to see the year, make and models of cars that are coming in the next day. From there, we can zero in on vehicles we are looking for. If the salesperson who sold the customer the car is in, we will alert them that the customer will be coming in. Through conversation we find out if they would like to get an offer for the car while they are there and you would be surprised at how many say yes. I also run a "We Buy Cars" ad in the automotive services section of Craigslist that generates 5 to 10 purchases from private owners. The other system that has helped me fill my lot without going to the auction is buying off of Manheim Simulcast and OVE with the help of vAuto Provision tool. Hope this helps.

Bryant, Great used cars are hard to find! We do a lot of the same things Bill is talking about & it works very well. We have a sign in service stating "We Buy Cars" and have started having our ASM's ask customers if they are interested in an appraisal, after all who doesn't want to know what their vehicle is worth? We also do a lot of marketing to our customers targeting their trades like blackbook mailers and things like that. When we run different used car ads we always throw in a little "We Buy Cars" starburst. A while back we did some heavy advertising that we would "Beat ANY Carmax appraisal" (Not sure if you have a Carmax near you, but you wouldn't believe the traffic and awesome trades we purchased. Good luck!

Bryant, I would suggest YOUR BEST AUCTION is your Service Drive. Developing a process for Service to Sales is the best way to find the exact vehicles that are otherwise difficult to find. Typically these will be low mileage, one owner, and you will have service history. Dealers that I speak to who have this strategy are typically turning over these vehicles twice as fast vs other used car inventory(on their lot) with higher grosses. Typical dealer comments are: I not bidding against anyone with my Service Customer and I dont transportation costs for the vehicle. You can use data in your DMS to find out more info with your Service Appointments. Hope this helps !!

Bryant The best way to acquire better, nicer, newer pre-owned inventory is 1) recognize those customers in your database that can replace their current car with a newer one and keep their payments about the same, and 2) develop a process around the SVC drive. My best stores have outreach to their database EVERY day, AND have a Manager, and a Salesperson, or a 2-3 person sales team attached to the service drive. Even the smallest stores have 3-5 of their own customers per day coming back to them to service their cars, and many stores have 10+ returning customers. There is also that group of conquest business, those people that service with you but didn't buy from you. Are they driving cars you'd like to acquire, you bet!! You'll need a tool to help you, or the workload will become tedious. ROI if you choose to go this route is STAGGERING. And to think this additional acquisition center, profit center, CSI enhancement, and SVC gross center has been under our nose the entire time. Seek out the best references in your market, or peer group, and 1 or 2 names will surface every time. Best of luck.

Bryant, Great question, and the real answer that we found is you just have to look harder. We ditched the "waiting till auction day" and hoping I can fill my list mentality quite a while ago and it's worked pretty well for us. I haven't been to a live auction since probably Sept. or Oct. last year. We do a lot online, and out of our area, but with the shipping cost added to already high prices has hurt our margin, but it's still necessary to get enough cars. The biggest area we improved has been purchasing direct from the public. We get nice, local owned cars without fees and shipping, and the margins are good. It just takes work! We commission our salespeople if they buy a car. It gives them another avenue to make money and they are good at it for the most part.

Bryant, coming from the auction world I've seen a few "tricks" that out-of-the-box thinking dealers have used. (1) Don't just go to "whole-car" auctions, take a look at the damaged vehicle auctions like Copart, IAA, and Manheim's TRA. Yes, you're bodyshop will have some work to do, but you can increase your margin. (2) Try to work directly with your local rental car company reps. All have folks in place that handle their vehicles being pulled from the fleet and while their may be "rules" in place concerning how they are supposed to sell these vehicle there are always deals being cut. You just have to be willing to take that Ford Fusion to get that 2012 Camry that you really want.

Bryant, great question and something we all are dealing with. I run a used car store without a new car franchise, so I definitely feel your pain. Have you tried buying cars out of your service lane? There are several different processes that have been discussed in the forums here about how to go about it.We can scan our next days service appointments in our CRM system to see the year, make and models of cars that are coming in the next day. From there, we can zero in on vehicles we are looking for. If the salesperson who sold the customer the car is in, we will alert them that the customer will be coming in. Through conversation we find out if they would like to get an offer for the car while they are there and you would be surprised at how many say yes. I also run a "We Buy Cars" ad in the automotive services section of Craigslist that generates 5 to 10 purchases from private owners. The other system that has helped me fill my lot without going to the auction is buying off of Manheim Simulcast and OVE with the help of vAuto Provision tool. Hope this helps.

Bryant, Great used cars are hard to find! We do a lot of the same things Bill is talking about & it works very well. We have a sign in service stating "We Buy Cars" and have started having our ASM's ask customers if they are interested in an appraisal, after all who doesn't want to know what their vehicle is worth? We also do a lot of marketing to our customers targeting their trades like blackbook mailers and things like that. When we run different used car ads we always throw in a little "We Buy Cars" starburst. A while back we did some heavy advertising that we would "Beat ANY Carmax appraisal" (Not sure if you have a Carmax near you, but you wouldn't believe the traffic and awesome trades we purchased. Good luck!

Bryant, I would suggest YOUR BEST AUCTION is your Service Drive. Developing a process for Service to Sales is the best way to find the exact vehicles that are otherwise difficult to find. Typically these will be low mileage, one owner, and you will have service history. Dealers that I speak to who have this strategy are typically turning over these vehicles twice as fast vs other used car inventory(on their lot) with higher grosses. Typical dealer comments are: I not bidding against anyone with my Service Customer and I dont transportation costs for the vehicle. You can use data in your DMS to find out more info with your Service Appointments. Hope this helps !!

Bryant The best way to acquire better, nicer, newer pre-owned inventory is 1) recognize those customers in your database that can replace their current car with a newer one and keep their payments about the same, and 2) develop a process around the SVC drive. My best stores have outreach to their database EVERY day, AND have a Manager, and a Salesperson, or a 2-3 person sales team attached to the service drive. Even the smallest stores have 3-5 of their own customers per day coming back to them to service their cars, and many stores have 10+ returning customers. There is also that group of conquest business, those people that service with you but didn't buy from you. Are they driving cars you'd like to acquire, you bet!! You'll need a tool to help you, or the workload will become tedious. ROI if you choose to go this route is STAGGERING. And to think this additional acquisition center, profit center, CSI enhancement, and SVC gross center has been under our nose the entire time. Seek out the best references in your market, or peer group, and 1 or 2 names will surface every time. Best of luck.

I don't know if there is a 'magic formula', but if customers aren't being taken care of and ups are being missed, it is time to add another person or two. I think if you want o get to 100 cars, you should have about 10 sales consultants. An average of 10 per person is a reasonable amount.

Establishing goals for the dealership based on realistic expectations of achievable market share plus providing resources sufficient to accomplish said goals is a senior manager responsibility. Adequate inventory, marketing, support services in get ready and service, F&I and office staff are critical but none more so than having a trained sales staff ready willing and able to not only process your existing traffic but to contribute their own network of customers. One sales consultant for every sale and one sales manager for every five salespeople has become an accepted formula to achieve realistic sales goals, however, if your objective is to maximize the ROI from your dealership then technically there is no limit. A properly managed sales consultant with sufficient inventory and support should be self sufficient and not depend solely on your natural showroom traffic. Hire professional self motivated sales consultants and the size of your staff becomes irrelevant since their performance will only be limited by your ability to support them with product and processes.

Agree with both Jim and Phil, there is no actual formula,lots of "experts" will tell you there is,but alas they are just opinions...and here is mine. “The Decision” “I’ll be taking my talents to South Beach”….oh, sorry, wrong decision [Clevelander joke] The way many dealerships make the decision when to bring on more salespeople and how many or replace under-performing salespeople has always baffled me. I have seen countless “formulas, statistical data, seasonal hiring decisions, you name it. We have had managers tell us they need 4 salespeople, we ask them why 4?” That’s how many desk we have open” Really, hiring due to number of desks? New manager starts at store and brings his “team” with him. This one is very exact “Salesperson can properly “wait on” 2.25 clients per day x 6 day work week =13.5 clients a week X 4.2 weeks per month = 56.7 clients per month, so we are “logging” 425 clients a month which would mean we need 7.49 salespeople on our floor??? “It’s the first of the year, in with the new, out with the old” I know none of you make your decisions these ways, but you know what I’m saying. Law of Diminishing Return The reasoning behind The Law of Diminishing Returns from a Dealers point-of-view in terms of hiring employees can be simplified into three stages: • In the first stage, the addition of more salespeople allows for specialization of job responsibilities and increased production efficiency. The result is a larger output return for each additional unit of input. • The second stage is where inputs equal outputs. Each new salesperson added will continue to increase production, but only at the same rate as the increased input of labor. • The third stage is when additional salespeople will start to decrease production efficiency because the work environment is fixed in the short-run. This results in returns that are less than the labor input. • Imagine this situation. You have hired a teenager to tend to your garden. He plants 4 saplings in an area of 10 square feet in 4 hours. The next day, he brings another friend along and you decide to hire him as well. The time and the area don’t increase, but the number of saplings planted increases to 8. Another boy comes along and is hired by you. Again the area and the time limit is the same. But the number of boys is now 3. And the number of total saplings planted is now 9. If you hire another boy and maintain the same condition, you will notice that the number of saplings planted may increase overall, but the number of saplings planted by each boy will reduce, until eventually it will be 0. The above explained situation is a classic law of diminishing returns example. My question is, do we have any idea where that third stage is? We are in the car business, our outcome should be to have as many people as possible buy our products and services at the highest possible profit margins we can with 100% customer satisfaction. We can’t do that unless we have pushed the envelope with a quantity of quality, properly recruited, screened, interviewed and trained salespeople. “I don’t want to flood my floor” That’s admiral and I applaud your moral judgment in trying to make sure your salespeople all make a good living, but how many times have you invested in having a special sale or event, or your product is super hot and huge new incentives came out or you invested millions in your facility and you look around and several of your salespeople decided to come in late, stay home or move on to the next “Hot Store?” The law of diminishing return is a bit different in our business. How many hours are your salespeople currently scheduled to be at the dealership? Wouldn't an additional sift or shifts or teams allow them to work less hours, be more effective and in turn more productive and actually have lives outside of work as well? Couldn't that also help the talented person at your store that has “Manageritis” and if you don’t move him or her up, make them a team captain, they are going to leave you? How much real time do your salespeople have to actually truly prospect, develop their own client base, properly handle all the internet leads, take vehicles to people’s homes or businesses ,be involved in the community to create more business when they are at the dealership bell to bell? Simple question did you or did you not sell more cars when you had more salespeople? Why are some dealers that are in the middle of nowhere selling 5 to 10 times the number of cars dealers in major metro areas selling? Marketing, proper use of the internet for sure, but remember in this point in time in our industry our property goes well beyond the amount of acreage you own, take advantage of that opportunity and dominate your competition .To do that, you need better recruited and trained people. Now of course at some point to many really is to many and moral goes down and productivity would suffer, but I’ll bet very few if any have ever come close to that point that are reading this. Judy B. Margolis, writes: “Employees who grow too comfortable and complacent lose their edge. The more they know, or think they know about how their particular slice of the business world works, the less likely they are to challenge their old tried-and-true methodologies and to innovate. The same holds true for companies that fail to embrace change and, instead, have it foisted upon them, often when it is too late.” Bryant,one last thought..if your current staff has an issue with adding people,chances are that's a very sure sign you don't have enough!

I've got stores that have both large sales staffs and minimal crews. The managers style and concept in gaining the most out of his staff has a lot to do with what works or doesn't. With that said I agree with Jim, you can't count on much more of an average of 10 per guy. In which case don't set your standard at 100 and only have 6 sales guys. As far as your sales guys being disrupt about the situation, there is no way around it. I remember when I first got in the business and every sales floor was flooded because it was up to you make deals NOT the dealership to make sure their is enough to go around.

I don't think I'm processing one of Philip's comments properly. "One sales consultant for every sale and one sales manager for every five salespeople has become an accepted formula to achieve realistic sales goals" Is that saying that if we forecast to sell 100 cars we need 100 sales consultants? Also, I subscribe to the adage, "Don't let the inmates run the asylum." Fun topic to discuss.

Sorry Ron, TYPO! One consultant for every ten units. That, but again, there really is no need to set the goals for a professional sales consultant since the right ones will set their own.

Well, I'm about to make a bunch of people mad... Let's get this straight... The days of backing in to the number of sales people as a ratio of sales is over. Seriously! There is ZERO direct correlation between the number of cars sold and the number of sales people on staff... "Hi, I'm 1980 and want my pointy toe heels back!" Craig is closest to bringing this conversation into reality, but really? We are going to choose staffing levels based on how many cars we sell? Really? With apologies to certain people, there is NO WAY you staff your sales departments on the number of cars you sell. First of all, the days of backing in to the average sales person sells a total over 10 cars a month are over. The national average depending on what data you use is between 11.5 and 13 cars per sales salesperson. That's reality and I'm happy to email anyone the actual numbers. My stores run closer to the 13... Interesting that there is no mention of closing ratios. "1980" says I want my 20% of closed to upps represented. Industry average? Well, I don't want to be average. I'm helping manage stores with solid processes that close near 30%. Bottom line... Traffic counts... Period! Your sales people can effectively work on average 75 upps/opps a month. So you staff based on traffic... Some salespeople will be higher, and some will be lower. But you staff based on traffic and then work on your processes to get you closing rates in the 23% to 30% range. With all due respect to everyone posting, my goal is to get you to think about your business differently. Phil quotes average numbers (which I disagree with), but I'm hoping the people that read this are not satisfied with average. You staff your stores based on the number of people that walk in/call in/email in/send leads in - and NOT how many cars you sell. Anyone that tells you differently isn't really engaged on the "new" car business. It's 2013... Let's build and run our businesses with this in mind... just sayin'

Back in the 80 or 90's, I asked my dealer (and friend) why we were putting on so many more salespeople (5 I think) to our staff. He told me, that Chrysler says that every salesperson will produce 10 sales, and this move would help the store sell more cars. I asked if he really believed that crap? If that was true, why isn't every dealer in the country hiring 1,000 to 2,000 salespeople and backing up a Brinks truck three times a day to make the deposits ??? He looked at me...and walked away....Myth Busters ....#1...I worked for him for 15 years, too. You have to be "certified" to get the bonus money from Chrysler. (Craig has met me, he knows that I am certifiable...lol) Dealers are spending a lot of money for these programs for each individual. That doesn't include any other training investments, vacation and benefits, to add to the cost of each person. Would you rather have eight well trained and loyal salespeople or have 15 that half of them spin on a revolving door? We have only one person with less than ten years on our floor. Our customers walks in and sees familiar faces in our dealership. This makes a great reputation for us. Perhaps the number of salespeople isn't the issue, perhaps it could be the sales process, too. Does your process drag the salesperson off the floor for hours? Could some of the process be handled by another person? Do you train your salespeople to "sell" or be masters of bureaucracy??? Be sure to check your processes from appraisals, pencils, wait times from sales to F&I to delivery. Keep it easy and quick for both the customer and the salesperson....hope this helps...

I agree with Tom. The notion of one salesperson for every 10 sales is archaic. Traffic is the real issue. How many customers can one salesperson handle per day. At my store, I feel 2/day is the right number. One of the big changes over the past 5 years is that traffic is declining while closing ratios are increasing. Basically, customers are doing most of their work at home on the internet before they every come into your dealership. They used to shop 4 -5 stores before deciding. This translated into low closing ratios and took a lot more time to close a deal. There is no such thing as a "tire kicker" any more as the average customer now physically shops less than 2 dealers before purchasing. The good news for both salespeople and dealers is that we can sell more cars with less salespeople. Potentially allowing the dealer to have more efficient, higher quality staff, and allowing the salespeople greater earning potential.

You start with an accurate "Up Count." Without that you are shooting in the dark. A sales person can professionally handle about 60 - 75 OTDBs (Opportunities To Do Busness) per month. If you aren't running a proper rotation system you really don't know what your true traffic count is. You are relying on your sales people and managers to tel it like is, which they are NOT going to do. Why? The more prospects logged, the lower the closing percentage looks. Yes, when hiring sales people most dealers will probably hire more than the expect to end up with. AND you can count on your "experienced" sales people to run off as many as they can.

When running a store with a sattelite lot we had run 3 crews of 4. There came a time when we were short a crew and the 2 remaining managers claimed they could handle the storeand a 3rd crew was really unnecessary. I let them have their wish. The result was not only did they not the sales level we had always acheived with 3 crews the sales volume fell well below the level of production the 2 crews remaining had historically averaged. The problem was too many "ups" created an atmosphere amongst the sales people that there was another coming in just a minute. The processes began to be shortcut and laziness ruled. Reinstalled a hird crew and sales returned to the level expected. Here's a short 1 minute videodemonstrating how many salespeople are needed and the sales and gross being missed by too few sales people https://www.youtube.com/watch?v=g1FC1cKQOQo

Personnel count does not equate to units sold. A solid process that is executable, repeatable, and effective is the key to production increases. If you build it, they will come.

I don't know if there is a 'magic formula', but if customers aren't being taken care of and ups are being missed, it is time to add another person or two. I think if you want o get to 100 cars, you should have about 10 sales consultants. An average of 10 per person is a reasonable amount.

Establishing goals for the dealership based on realistic expectations of achievable market share plus providing resources sufficient to accomplish said goals is a senior manager responsibility. Adequate inventory, marketing, support services in get ready and service, F&I and office staff are critical but none more so than having a trained sales staff ready willing and able to not only process your existing traffic but to contribute their own network of customers. One sales consultant for every sale and one sales manager for every five salespeople has become an accepted formula to achieve realistic sales goals, however, if your objective is to maximize the ROI from your dealership then technically there is no limit. A properly managed sales consultant with sufficient inventory and support should be self sufficient and not depend solely on your natural showroom traffic. Hire professional self motivated sales consultants and the size of your staff becomes irrelevant since their performance will only be limited by your ability to support them with product and processes.

Agree with both Jim and Phil, there is no actual formula,lots of "experts" will tell you there is,but alas they are just opinions...and here is mine. “The Decision” “I’ll be taking my talents to South Beach”….oh, sorry, wrong decision [Clevelander joke] The way many dealerships make the decision when to bring on more salespeople and how many or replace under-performing salespeople has always baffled me. I have seen countless “formulas, statistical data, seasonal hiring decisions, you name it. We have had managers tell us they need 4 salespeople, we ask them why 4?” That’s how many desk we have open” Really, hiring due to number of desks? New manager starts at store and brings his “team” with him. This one is very exact “Salesperson can properly “wait on” 2.25 clients per day x 6 day work week =13.5 clients a week X 4.2 weeks per month = 56.7 clients per month, so we are “logging” 425 clients a month which would mean we need 7.49 salespeople on our floor??? “It’s the first of the year, in with the new, out with the old” I know none of you make your decisions these ways, but you know what I’m saying. Law of Diminishing Return The reasoning behind The Law of Diminishing Returns from a Dealers point-of-view in terms of hiring employees can be simplified into three stages: • In the first stage, the addition of more salespeople allows for specialization of job responsibilities and increased production efficiency. The result is a larger output return for each additional unit of input. • The second stage is where inputs equal outputs. Each new salesperson added will continue to increase production, but only at the same rate as the increased input of labor. • The third stage is when additional salespeople will start to decrease production efficiency because the work environment is fixed in the short-run. This results in returns that are less than the labor input. • Imagine this situation. You have hired a teenager to tend to your garden. He plants 4 saplings in an area of 10 square feet in 4 hours. The next day, he brings another friend along and you decide to hire him as well. The time and the area don’t increase, but the number of saplings planted increases to 8. Another boy comes along and is hired by you. Again the area and the time limit is the same. But the number of boys is now 3. And the number of total saplings planted is now 9. If you hire another boy and maintain the same condition, you will notice that the number of saplings planted may increase overall, but the number of saplings planted by each boy will reduce, until eventually it will be 0. The above explained situation is a classic law of diminishing returns example. My question is, do we have any idea where that third stage is? We are in the car business, our outcome should be to have as many people as possible buy our products and services at the highest possible profit margins we can with 100% customer satisfaction. We can’t do that unless we have pushed the envelope with a quantity of quality, properly recruited, screened, interviewed and trained salespeople. “I don’t want to flood my floor” That’s admiral and I applaud your moral judgment in trying to make sure your salespeople all make a good living, but how many times have you invested in having a special sale or event, or your product is super hot and huge new incentives came out or you invested millions in your facility and you look around and several of your salespeople decided to come in late, stay home or move on to the next “Hot Store?” The law of diminishing return is a bit different in our business. How many hours are your salespeople currently scheduled to be at the dealership? Wouldn't an additional sift or shifts or teams allow them to work less hours, be more effective and in turn more productive and actually have lives outside of work as well? Couldn't that also help the talented person at your store that has “Manageritis” and if you don’t move him or her up, make them a team captain, they are going to leave you? How much real time do your salespeople have to actually truly prospect, develop their own client base, properly handle all the internet leads, take vehicles to people’s homes or businesses ,be involved in the community to create more business when they are at the dealership bell to bell? Simple question did you or did you not sell more cars when you had more salespeople? Why are some dealers that are in the middle of nowhere selling 5 to 10 times the number of cars dealers in major metro areas selling? Marketing, proper use of the internet for sure, but remember in this point in time in our industry our property goes well beyond the amount of acreage you own, take advantage of that opportunity and dominate your competition .To do that, you need better recruited and trained people. Now of course at some point to many really is to many and moral goes down and productivity would suffer, but I’ll bet very few if any have ever come close to that point that are reading this. Judy B. Margolis, writes: “Employees who grow too comfortable and complacent lose their edge. The more they know, or think they know about how their particular slice of the business world works, the less likely they are to challenge their old tried-and-true methodologies and to innovate. The same holds true for companies that fail to embrace change and, instead, have it foisted upon them, often when it is too late.” Bryant,one last thought..if your current staff has an issue with adding people,chances are that's a very sure sign you don't have enough!

I've got stores that have both large sales staffs and minimal crews. The managers style and concept in gaining the most out of his staff has a lot to do with what works or doesn't. With that said I agree with Jim, you can't count on much more of an average of 10 per guy. In which case don't set your standard at 100 and only have 6 sales guys. As far as your sales guys being disrupt about the situation, there is no way around it. I remember when I first got in the business and every sales floor was flooded because it was up to you make deals NOT the dealership to make sure their is enough to go around.

I don't think I'm processing one of Philip's comments properly. "One sales consultant for every sale and one sales manager for every five salespeople has become an accepted formula to achieve realistic sales goals" Is that saying that if we forecast to sell 100 cars we need 100 sales consultants? Also, I subscribe to the adage, "Don't let the inmates run the asylum." Fun topic to discuss.

Sorry Ron, TYPO! One consultant for every ten units. That, but again, there really is no need to set the goals for a professional sales consultant since the right ones will set their own.

Well, I'm about to make a bunch of people mad... Let's get this straight... The days of backing in to the number of sales people as a ratio of sales is over. Seriously! There is ZERO direct correlation between the number of cars sold and the number of sales people on staff... "Hi, I'm 1980 and want my pointy toe heels back!" Craig is closest to bringing this conversation into reality, but really? We are going to choose staffing levels based on how many cars we sell? Really? With apologies to certain people, there is NO WAY you staff your sales departments on the number of cars you sell. First of all, the days of backing in to the average sales person sells a total over 10 cars a month are over. The national average depending on what data you use is between 11.5 and 13 cars per sales salesperson. That's reality and I'm happy to email anyone the actual numbers. My stores run closer to the 13... Interesting that there is no mention of closing ratios. "1980" says I want my 20% of closed to upps represented. Industry average? Well, I don't want to be average. I'm helping manage stores with solid processes that close near 30%. Bottom line... Traffic counts... Period! Your sales people can effectively work on average 75 upps/opps a month. So you staff based on traffic... Some salespeople will be higher, and some will be lower. But you staff based on traffic and then work on your processes to get you closing rates in the 23% to 30% range. With all due respect to everyone posting, my goal is to get you to think about your business differently. Phil quotes average numbers (which I disagree with), but I'm hoping the people that read this are not satisfied with average. You staff your stores based on the number of people that walk in/call in/email in/send leads in - and NOT how many cars you sell. Anyone that tells you differently isn't really engaged on the "new" car business. It's 2013... Let's build and run our businesses with this in mind... just sayin'

Back in the 80 or 90's, I asked my dealer (and friend) why we were putting on so many more salespeople (5 I think) to our staff. He told me, that Chrysler says that every salesperson will produce 10 sales, and this move would help the store sell more cars. I asked if he really believed that crap? If that was true, why isn't every dealer in the country hiring 1,000 to 2,000 salespeople and backing up a Brinks truck three times a day to make the deposits ??? He looked at me...and walked away....Myth Busters ....#1...I worked for him for 15 years, too. You have to be "certified" to get the bonus money from Chrysler. (Craig has met me, he knows that I am certifiable...lol) Dealers are spending a lot of money for these programs for each individual. That doesn't include any other training investments, vacation and benefits, to add to the cost of each person. Would you rather have eight well trained and loyal salespeople or have 15 that half of them spin on a revolving door? We have only one person with less than ten years on our floor. Our customers walks in and sees familiar faces in our dealership. This makes a great reputation for us. Perhaps the number of salespeople isn't the issue, perhaps it could be the sales process, too. Does your process drag the salesperson off the floor for hours? Could some of the process be handled by another person? Do you train your salespeople to "sell" or be masters of bureaucracy??? Be sure to check your processes from appraisals, pencils, wait times from sales to F&I to delivery. Keep it easy and quick for both the customer and the salesperson....hope this helps...

I agree with Tom. The notion of one salesperson for every 10 sales is archaic. Traffic is the real issue. How many customers can one salesperson handle per day. At my store, I feel 2/day is the right number. One of the big changes over the past 5 years is that traffic is declining while closing ratios are increasing. Basically, customers are doing most of their work at home on the internet before they every come into your dealership. They used to shop 4 -5 stores before deciding. This translated into low closing ratios and took a lot more time to close a deal. There is no such thing as a "tire kicker" any more as the average customer now physically shops less than 2 dealers before purchasing. The good news for both salespeople and dealers is that we can sell more cars with less salespeople. Potentially allowing the dealer to have more efficient, higher quality staff, and allowing the salespeople greater earning potential.

You start with an accurate "Up Count." Without that you are shooting in the dark. A sales person can professionally handle about 60 - 75 OTDBs (Opportunities To Do Busness) per month. If you aren't running a proper rotation system you really don't know what your true traffic count is. You are relying on your sales people and managers to tel it like is, which they are NOT going to do. Why? The more prospects logged, the lower the closing percentage looks. Yes, when hiring sales people most dealers will probably hire more than the expect to end up with. AND you can count on your "experienced" sales people to run off as many as they can.

When running a store with a sattelite lot we had run 3 crews of 4. There came a time when we were short a crew and the 2 remaining managers claimed they could handle the storeand a 3rd crew was really unnecessary. I let them have their wish. The result was not only did they not the sales level we had always acheived with 3 crews the sales volume fell well below the level of production the 2 crews remaining had historically averaged. The problem was too many "ups" created an atmosphere amongst the sales people that there was another coming in just a minute. The processes began to be shortcut and laziness ruled. Reinstalled a hird crew and sales returned to the level expected. Here's a short 1 minute videodemonstrating how many salespeople are needed and the sales and gross being missed by too few sales people https://www.youtube.com/watch?v=g1FC1cKQOQo

Personnel count does not equate to units sold. A solid process that is executable, repeatable, and effective is the key to production increases. If you build it, they will come.

I'm interested in hearing about success stories here as well. I was on a panel with the ad director for Pandora last year, big brands seem to have a positive experience. I like the potential for greater reach knowing that ~75% of Pandora's user base is mobile. I'm hearing more and more local advertisers - including a couple of dealers in my area.

There's some ongoing discussion about this topic here.

I'm interested in hearing about success stories here as well. I was on a panel with the ad director for Pandora last year, big brands seem to have a positive experience. I like the potential for greater reach knowing that ~75% of Pandora's user base is mobile. I'm hearing more and more local advertisers - including a couple of dealers in my area.

There's some ongoing discussion about this topic here.