You could feel the winds of change from NADA all the way to the east coast, ... and not just for the manufactures.  Today’s automotive retailer has to deal with new technologies that are not only available for their dealerships but automotive shopping and buying technologies that are available directly to the consumer.  There are so many different systems and processes being pitched for eCommerce, BDC, showroom, sales desk; ... for both new and used vehicles.  Great tactical solutions that are necessary to carry out your strategy.  If you have the right strategy?

What’s your Strategy?

With so many options it can be challenging to decide which is best; exactly what and how to change.  There is no one best answer.  The important question is which plan is best for your store, your market, your team and your consumers.

Here’s just a few things to consider:

Staffing & Compensation Structure – Margin compression has made compensation an ever increasing challenging issue for dealers.  Low comp on the Sales Associate side is contributing to a dangerous increase in turnover and high comp on the F&I side simply is not sustainable.  What’s the solution that can level out your comp, increase productivity, lower turnover and keep your store growing in today’s changing marketplace?

• One-Person Selling?
• Two-Person: Product Specialist with Sales/Finance Manager?
• Two-Person: Professional Salesperson who desk their own deals plus a Finance Manager?
• Traditional three-person; Sales Associate; Desk Manager & F&I manager?

Compensation Plans and their Impact on Talent and Results – Our traditional compensation plans make managing human capital extremely challenging.  The best quality millennials don’t want to work for 100% commission.  The elephant in the room is the huge impact disproportionate F&I comp has on our business; the average comp differential between sales managers and F&I managers creates all kinds of negative unintended consequences.  It’s true that comp drives behavior, the question is what kind of behavior do you want to drive?  How can you leverage comp structure to improve your overall human capital ROI?

• Traditional 100% Commission?
• 45% Salary / 55% Variable?
• Focused on volume or gross or both evenly?
• Behavior and/or Activity based variable components?
• Non-commissioned; primarily salary based?

New Vehicle Pricing – I’m not talking about just your eCommerce pricing, but your overall plan?  How should your team handle pricing for walk-in, phone, service, repeat/referral customers?   The same way that we always have?  Do the best they can with each customer?  Is that really a strategy; leave it up to the desk manager?  It’s certainly what we’ve done for generations, then again today’s consumer has unprecedented access to transparency in pricing.  What is the best strategy for the long-term profitability of your store?

• One Price?
• Market-Based pricing with limited negotiation?
• Traditional MSRP based negotiations?

These are just a few of the tough decisions dealers have to make in this changing environment.  What’s best for one store is not necessarily good for another.