The real driver of vehicle sales isn’t your closing questions, or that new online buying web-app, it’s access to credit. So, if your dealerships only goal for 2017 is to “sell more cars,” you might as well just tell your marketing company your goal is to “spend more money on digital ads.”

With so many things out of dealers control, even if you do sell more cars you’re not guaranteed to make more money. Just for fun, how about 3 things dealers have no control over that impact sales:

1. Interest Rates – Until we understand the impact the end of QE and the Fed's December rate hike will have on auto loans, there is no way of knowing if we’ll continue to see 0.9% interest rates. Rates have been low for so long, at this point even 3.9% seems high.
2. Consumer Confidence – I had a Honda dealer tell me the #1 predictor of Honda sales YOY is Consumer Confidence. It might be solid now (up 4.3 points in December 2016), but we all know confidence levels rise and fall with the tide. We’re only starting to understand Millennial consumers, although one thins clear, they're not going to spend more than they have to.
3. Whatever Stunt the OE’s have for 2017 – Emissions, ignition switches, Trump Tweets. You get the idea.

If selling more cars is a terrible goal, what are good goals? Let’s stick with the theme and pick 3:

1. Take One Less Loser Deal Per-Month – Think about the impact to your bottom line if you took 1 less loser deal of -$1,000 or more per month. It’s not just the $12,000, it’s the $200 in commission per-deal you pay your sales people for losing you money, and the loss of income from selling the car at a profit! If one less deal a month keeps you from your OE bonus, you need a new GSM.
2. Make More Money – This is a no-brainer. Do you care if you sell 1,000 new cars, or 500 new cars if you could make more money doing it? The OE’s might not be too happy about it, but it’s not like they asked dealers when they started investing in all that Ride-Sharing technology.
3. Eliminate Waste – I’ll give you a place to start: ask your controller how many LAW forms you purchased in 2016, then subtract your total vehicle sales, and see how many extra forms you paid for. At $2.50+ per form, it adds up quick with all the miss-aligned documents, re-prints, and re-signs, and that’s just one document. How many FEET of documents do your customers sign again?

The point is, having a goal that you can’t fully control is only going to get you as far as you would have gotten anyway. Your sales team should be selling as many cars as they can, it’s the whole reason they exist.

A goal should be something to strive for, something to achieve above and beyond your normal day-to-day. Not what you’re supposed to do anyway.

And who knows what could happen? Maybe interest rates will remain low, Consumer Confidence will sky rocket, and Trump will send enough Tweets to create 2 million new jobs and the SAAR will hit 25 Million. Then when everyone is trumpeting their achievement of “selling more cars,” it won’t matter because everyone sold more cars. You’ll have made more money while doing it.

Trying to hire salespeople is the worst. Finding good people is hard, finding great people is nearly impossible.

The pressure on sales managers to have a “fully-staffed” sales team is incredible: They need to have enough people on staff so they’re not missing deals, but they can’t spend too much time hiring and not enough time managing their current employees, and often they don’t even know how many people they need.

Using data to determine staffing levels is not so much an art, as it is a science. There are several influencing factors that go into determining when to hire, and what types of people work best in each environment.

With that in mind, we’ll look at a couple examples that illustrate two considerations we use when helping dealers determine the optimal size of their sales team:

1 – How consistent is your sales team’s performance? (Image 1)
Image 1: Consistency vs. Hitting an All-Time High

This sales manager was prioritizing the store’s highest volume month, to justify a smaller sales team. His philosophy was, “Our best month had 12 sales people, so our perfect sales team is 12!”

For this dealer, we pointed out that while they had their best month with 12 people, it was over two years ago, and sales are exactly expected to increase in 2017. This dealer is more than 2X as likely to sell 100+ units per-month with 13 or 14 sales people, as they are with only 12.

Not only that, but they are equally as likely to have an under 100-unit month at 12 sales people as they are a 100+ unit month. And if they lose one person, the potential to hit 100+ units with 11 or fewer people is nearly zero.

2 – Volume vs. Cost (Image 2)
Image 2: Sales Volume vs. Cost of Sales

Adding additional people to increase sales isn’t always the answer. In our second example, this dealer has 24 salespeople on staff and was looking to hire 3 or 4 more. His justification? He felt like they sold more cars when they had more people.

“Gut feeling” is not something I ever advocate for, so we made sure to illustrate to this dealer that staffing over 24 sales people was only going to result in an increased cost. When they had more than 24 people, they didn’t sell more cars. In fact, when they had 26 or more they averaged less sales per-month!

Even if they lost a salesperson over the course of a month, they are still likely to have a high performing month with 23 sales people. Ultimately, our recommendation to increase sales had nothing to do with staffing. Where they are, is where they need to be.

Further Consideration:
There are several things that can impact how successful your sales people are, and when trying to determine future staffing levels there is a great deal that needs to be considered.

While analyzing Consistency, and measuring Volume vs. Cost are great places start, they can’t be the only things taken into consideration.

The whole point of this, and similar exercises, is to spend the time analyzing your business today so you can be ready tomorrow. Like I said before, hiring is not so much an art, as it is a science. Without a method, your gut will only get you so far.