Shop Talk: Average Is Expensive

The average expectation from dealers has been steadily decreasing. While I can’t put my finger on specific reasons, I have some theories and ultimately, some concerns for the future.

Studies show… The median price… Estimates reveal… These statements share a commonality in business and in life. Designed to be used to encourage or discourage, depending on context, they all share a costly definition — AVERAGE.

It’s almost like being the new kid in school. The desire to fit in overrides the desire to be successful. Here’s the real kick in the teeth: in the last 40 years, the average has gotten worse. For example, in 1979, my first full year in retail, we had cars with mark-ups ranging from $300 up to $1,600.  Yet, that year I made just over $41,000. 

In powersports today, the mark-ups are relatively close and according to Zip Recruiter in this year’s survey, the average powersports salesperson is making just over $40,000.

How is it possible that incomes can remain stagnant for decades?

The average expectation from dealers has been steadily decreasing. While I can’t put my finger on specific reasons, I have some theories and ultimately, some concerns for the future. For example, I believe I had early success for two specific reasons. First, I had managers who worked with us to make every deal. Second, the dealer had expectations of each salesperson selling and delivering 20 or more units each and every month. In fact back then, anyone who sold less than 20 in two consecutive months was fired.

Dealers today either don’t have any expectations and take what the market gives them, or never spell out what’s expected. I am working with a powersports store with an owner who is a great guy. I’d enjoy being at a barbecue or a ballgame with them. But I can’t fix unknowns. 

When asked his goal for the store, he wants to reach 100 units per month. While he has the right franchises and product mix, he only has four salespeople and one of them is a pretend BDC person. The other three range from the senior guy who sells just enough to beat the other two (which is seldom more than 20 units) and two who have less than six months experience. The sales manager has no powersports experience and came over from a car dealer to lessen the stress in his life.

If the dealer truly wants to sell and deliver 100 units, simple math tells me that each member of the staff must deliver 25 units. Or you have to take the “average” of current production and increase your staff accordingly. Suggesting this to the dealer resulted in, the “I don’t want to upset anyone,” defense. Listen, it’s legal, moral and ethical for a dealer to be happy where they are. They made the investment in time, real estate and money, so they get to decide. That’s the point, they get to decide — but they aren’t.

On one hand, they want to increase sales and profits. On the other, they want things to be as they are. Anyone for the overused cliché — the definition of insanity.

So, if everything I just wrote is true, what’s the solution?

What results are you looking for? If it’s to increase volume, dealers should invest in giving their people the skills and tools to increase their delivery totals. If it’s to increase profits, building value via more professional selling would offer possibilities. Here’s what you’ll see in practice:

Web pricing below invoice and then asking salespeople to get customers to pay more.

Constant turnover, help wanted ads and using “free” hiring companies to staff up.

Little to no money spent on training due to turnover.

Sound familiar? In any successful corporation, the greatest investment has always been in the people. Dealers send their technicians to school all the time to remain certified, learn new techniques and stay up with current auto technology. They invest thousands in “special” tools for specific repairs. They proudly display all service certificates for the world to see.

For sales, not so much.

When professional trainers approach the dealer, they are usually told:

It’s too busy to train

It’s too slow to train

We’re all set

I want the new people to get more experience

I don’t want to upset my experienced people

My managers handle that

It’s not in the budget

It’s a waste of money

What each of those are saying, in reality, is that the dealer is working very hard to be average. Cutting-edge is not for them. Leadership, industry standards, career paths are not what they’re about. When the market picks up, they don’t need training. When it slows down, they can’t pay for training, and when the market is steady, they don’t want to rock the boat.

As their agent, I want to rock the boat. Let me be the bad guy. What could possibly happen?

Here is the expense of average in a particular dealership that I did training with. The dealer brought me in based on a recommendation. He was skeptical but contracted me anyway. It seems that every staff I’ve ever worked with, I find a favorite. Maybe other trainers do as well. There were 12 people to be trained and one was a 22-year-old former bartender.

I was in the dealership for a full week. At the end of the week, the young person came to me and asked if I was serious about making six figures. I told him what I’ve shared for decades. If you do what everyone else does, good and bad, you’ll make what they make. If you come in and work every day like you deserve $100,000, treat your customers as extremely valuable people and always invest in getting better, the answer is “yes.”

About a year went by and I got a call in my office in early February. It was “the kid.” He said, “Mr. Fuhrman, I didn’t make $100,000 this year like you said.” After a pause, he added, “I made $97,980. But, because of the things you showed me, I know which deals I missed, and had I been at my best, those deals would have put me over.”

That was back in 2011. Now, I’m not sharing this to impress you. I want to impress upon you that there were 11 other people in that class. They received the same information, the same advice and the same opportunity. Then they all fit right into the average thinking dealer’s average way of work. Luckily, my young student decided for himself not to be average, so he moved on to even greater success. 

While I’m proud of that, what would that dealership be like if the dealer, after spending the money, decided he wasn’t going to tolerate average anymore? He still contacts me every now and then. He offers to bring me back under the condition that I guarantee him another success like my young bartender.  

John Fuhrman is the senior trainer for Performance Road Agency. He has trained over 15,000 sales, F&I and management professionals for retail operations and dealerships across the U.S., but now focuses on dealers in Maine, NH and VT. Performance Road is one of the only agencies with a 100% sales software reimbursement program, which can eliminate all CRM, menu and desking costs. If you’d like to ask him a question or discuss your dealership situation, email him at [email protected].

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