Swim, don’t sink: Best practices for onboarding new hires at your dealership

Does your dealership have the right stuff to onboard new hires successfully?

Onboarding. You know. The process that occurs after you’ve made the hire and he or she is ready to start a new job with your dealership.

It’s not as simple as just assigning your new hire a desk and starting with administrative paperwork. The idea is to get that new hire up and running – and producing – for your business. And that may mean doing things differently than many dealerships are accustomed to operating.

062717 IL Swim, don’t sink Best practices for onboarding new hires at your dealership

“I think dealers and management teams are realizing that … if you invest in the people side of your business, you have a better, more profitable business. And all sorts of benefits accrue to the dealerships that get this stuff right,” said Adam Robinson, Hireology CEO, in a recent webcast produced by DealerOn, a website, optimization and digital advertising services company.

Hireology’s recruiting and hiring model has been adopted by 700 automotive dealerships in the United States and Canada and by more than 2,500 other companies worldwide.

U.S. Bureau of Labor Statistics data show that turnover among automotive sales consultants annually is about 67 percent – and as high as 72 percent among non-luxury sales consultants. That’s about 1.5 times the 46 percent total turnover the Bureau reports for the private sector.

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And a lot of that, according to Robinson, has to do with the way dealerships onboard new hires. For obvious reasons, the topic is especially important for onboarding sales consultants.

Here is Robinson’s advice for car dealerships who want to start – or improve – their onboarding process:

Customize onboarding for each position – The process and content will differ for a sales consultant versus a service technician, for example. “Nothing says value and respect more than a personalized onboarding program. Sixty-two percent of companies that have a solidified onboarding program experience faster time-to-productivity with 54 percent claiming to have better employee engagement.”

Eliminate your paper-based process – “There is no reason [with] all the technology at your fingertips, not to go completely paperless with employee onboarding.” On average, the dealership onboarding process takes around four hours via an offline, paper-based system. “Make it really easy for them to [provide] what you need from them and do it before they show up.”

Create a form-free first day by having new hires fill out all forms beforehand. “Eighty-three percent of high-performing organizations begin their onboarding prior to the new hire’s first day. … It makes sure their first day is a learning experience and moving forward and not doing administrative work.”

Set clear goals for new hires on Day 1 – Set expectations for 30, 60 and 90 days. “Sixty percent of companies fail to set any milestones or goals for new hires … [Setting expectations] changes this from an emotions-driven, un-transparent process to one that is fact-based, rational and fair for everybody.”

Make Day 1 great – “If you do nothing else, making that [new hire] feel great on Day 1 is the highest impact thing you can do, because when new hires take part in a structured onboarding process, 66 percent of them are likely to remain with a company for longer than three years.”

“A whopping 28 percent of all terminations happen within the first 90 days of employment,” said Robinson. “If you’re turning people over in 90 days as a manager, that’s on you. Consider who you’re hiring, or consider how you’re treating great people when they walk in the door.”

To hear more, listen to 5 Onboarding Best Practices that Save Time & Money at DealerOn.

We’ll have more soon about other practices that can help reduce turnover and associated costs in our series of blog posts, “Hiring for Keeps,” on the Inside Lane blog.

 

Don’t rush to judgment when you’re hiring for keeps

Nine of your dealership’s sales consultants quit in the last year.

And that cost your average-sized dealership more than a half-million dollars over those 12 months, based on calculations using several turnover cost calculators.

Not only does that mean your dealership will spend more money than you would like on hiring, onboarding and training, but it creates continual pressure to find consultants so your team isn’t left shorthanded, costing you sales opportunities.

And your hiring process may be exactly where the trouble starts.

062217 IL Don’t rush to judgment when you’re hiring for keeps

“It’s no secret that employee turnover rate for certain positions in the auto industry is high,” David Druzynski, director of human resources at Auto/Mate Dealership Systems, wrote recently in Dealer Solutions Magazine. “Auto dealers keep making the same hiring mistakes over and over. When you hire the wrong person, chances are that person won’t stay long.”

In fact, U.S. Bureau of Labor Statistics data show that turnover among automotive sales consultants annually is about 67 percent – and as high as 72 percent among non-luxury sales consultants. That’s about 1.5 times the 46 percent total turnover the Bureau reports for the private sector.

These are the some of the “common” hiring mistakes Druzynski says dealers to often make:

  • Hiring too quickly to fill a need. “Dealers may associate an empty seat with lost revenue, but it’s important to realize that the wrong person in that seat could cost you much more.” Hidden costs of making a bad hiring decision may include losing vehicle sales, alienating customers, hurting employee morale, damaging your reputation, etc.
  • Believing what is on a candidate’s resume is true. “It’s hard for many dealers to believe, but candidates lie on their resumes, and they lie during interviews. They lie about their abilities, achievements and experience.” But there’s a lot you can do: form a hiring committee, formulate interview questions, require your top candidates to take pre-employment aptitude, skills and/or personality tests, and require a unanimous approval from the hiring committee.
  • Not properly vetting a candidate. “In a survey of 3,100 hiring managers, 49 percent said they caught a job applicant fabricating their resume. Ask every candidate for at least three references and state that two of them must be previous managers.” Then make sure they are actual managers at legitimate companies, and call to talk to them on the phone.
  • Overselling the job opportunity. “It’s critical not to oversell the opportunities in your dealership. When you exaggerate to convince a candidate to take a job, that employee will feel duped … [and] chances are they will immediately begin looking for a better opportunity.”

But avoiding these mistakes in the hiring process is just the beginning of your efforts to reduce turnover on your sales team and bring more money to the bottom line.

We’ll have more about other practices that can help reduce turnover and associated costs – onboarding, communication and training – in a series of blog posts, “Hiring for Keeps,” on the Inside Lane blog.

Calculating the cost to your dealership of high employee turnover

Employee turnover costs are a burden, costing the average dealership more than $1.5 million a year in replacement costs alone.

That doesn’t count the dollars associated with leads (or customers) burned by inexperienced employees.

And the biggest hit comes with your sales team.

More than one-third of the total, or about $500,000, is what it costs the average dealership with 25 employees to replace nine sales consultants in a year, according to compli, a workforce compliance automation company that specializes in automotive dealerships.

062017 IL Calculating the cost to your dealership of high employee turnover

In fact, U.S. Bureau of Labor Statistics data show that turnover among automotive sales consultants annually is about 67 percent – and as high as 72 percent among non-luxury sales consultants.

That’s about 1.5 times the 46 percent total turnover the Bureau reports for the private sector.

(Turnover among luxury vehicle sales consultants is just slightly higher than the national average, while overall car dealership employee turnover was more than 6 percent lower than average at 39.6 percent.)

What these numbers also mean is that the average dealership must sell about 473 additional cars a year to cover that cost of sales team turnover alone, and nearly 1,300 to cover all turnover, compli says.

You can calculate your turnover costs, based on the number of employees and number of sales people in your dealership, approximate turnover rate and average salary, using compli’s calculator. Of course, the numbers probably will go up if your dealership is larger than average, down if it’s smaller.

So what’s a dealership to do to reduce turnover, the associated costs, and impact on the bottom line?

The answer to that seems to boil down the following practices:

  • Interviewing job candidates
  • The onboarding process
  • Communication
  • Ongoing training

It should be no surprise that your dealership’s approach to hiring can have a big effect on the results, both in terms of meeting sales goals and reducing turnover.

So, avoiding these five mistakes identified in Dealer Solutions Magazine can make the difference:

  • Hiring too quickly to fill a need
  • Believing what is on a candidate’s resume is true
  • Hiring someone because you like them
  • Not properly vetting a candidate
  • Overselling the job opportunity

We’ll have more on avoiding the five mistakes and about onboarding, communication and training in a series of blog posts, “Hiring for Keeps,” on the Inside Lane blog.

There’s nothing idle about live chat for dealerships that are in the game

Live chatting online isn’t new.

But that doesn’t mean you’re doing it right.

There’s more to live chatting with prospects on your dealer website than, well, simply chatting. And that’s where Tom LaPointe’s “Four critical tips to boost sales without killing them” might help.

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“Even though there is great potential to increase sales,” LaPointe, a digital marketing consultant, wrote recently for Dealer Solutions magazine, “there are virtual landmines that can derail your deals, as well.” Here are a few tips LaPointe said will “ensure chat is a profit booster and not a deal killer” …

Make mobile chat your highest priority, “because mobile traffic now accounts for more than half the visits on most dealer websites. It’s critical for that experience to be seamless for shoppers … from page load speeds to the interface tabs on the website, to the chat windows, to the server technology.”

Use the popup, but not on every page. “It’s the digital equivalent of a sales person greeting a shopper on the lot. You want to greet them and offer assistance but not smother them. Too many invites will turn a potential buyer away from your site” and potentially kill the deal.

Ensure operators have a quick response time. “Five to six seconds is ideal, but not more than 10. There’s nothing like delayed response from a chat operator to bound a customer out of a conversation.”

Respond quickly to live-chat customer leads. “More than any other Internet lead, shoppers expect a timely response [from the dealership], since a live person told them the dealership would be in contact, whether the chat conversation took place at noon or midnight.”

A growing number of dealerships have found the opportunity to “power up” to win the sales game via the online live-chat channel, according to digital marketing consultant, because “website leads typically close at the highest ratio and with the higher profit margin.”

Still, fewer than 40 percent of the dealerships we surveyed in or near a major metropolitan area offered live chat to website visitors, which means the rest aren’t even in a position to take LaPointe’s advice.

And raises the question: Is your dealership live-chat channel part of the conversation?

Edmunds sees strong new-car sales if infrastructure program happens

Sales of more than 1.8 million cars.

That’s what a proposed $1 trillion infrastructure commitment would generate in its first year in the most optimistic scenario suggested by Edmunds.com’s chief economist.

The program, which would “give a face-lift” to the nation’s road and bridges and fund projects such as water systems, veterans hospitals and low-income housing could generate 15 million jobs over 10 years – 125,000 jobs per month on average – wrote Larry Plache of Edmunds.com.

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“Based on Edmunds’ analysis, new-car sales could increase at a rate ranging from 1 percent to 3.75 percent in the first year of the program alone,” wrote Plache.

“These estimates do not take into account the multiplier effects of the new jobs throughout the economy … that could generate even more new-car sales. For example, the Bureau of Economic Analysis has estimated that 1.8 jobs are created for each job added in the construction industry.”

Based on last year’s new-car sales of 17.5 million, the highest percentage growth rate, and the BEA estimate on the jobs multiplier, sales would increase about 1,837,500 the first year.

“The high-growth endpoint takes into account the strong likelihood, based on survey evidence, that new job holders will purchase a car,” the economist wrote. “Adding fleet purchases by businesses to accommodate additional employees from job creation would further increase growth in new-car sales.”

A lot still has to happen before an infrastructure program could move forward, including agreement on who will pay for it, although both major political parties agree that something needs to be done. The Edmunds economist rates the chances of implementation as “reasonably high,” although the impact likely won’t happen soon enough for what has been a lackluster year so far.

“Assuming the parties can come to an agreement over funding,” Plache wrote, “we expect to see a plan approved later this year and projects (and jobs and increased car buying) beginning in 2018.”

Until then, Plache wrote, “growing new-car sales poses a challenge for a market that appears to be at equilibrium.”

‘Dynamics’ of first car purchase changing with Millennials, CarGurus reports

Millennials are driving change in the car business.

Just how much comes through in a CarGurus survey about first car purchases.

The change has a lot to do with Millennials, the 18-34 age group (as defined by Pew Research) that now represents the largest consumer population in America.

060117 IL ‘Dynamics’ of first car purchase changing with Millennials, CarGurus reports

“While the excitement of getting a first set of wheels may be universal across generations, a new survey shows that key aspects of the ‘first car’ buying experience have changed for the younger generation,” said CarGurus in announcing results of the April survey.

“Our data shows a clear generational shift in the dynamics of first car purchase,” said Sarah Welch, SVP or Consumer Marketing for CarGurus.

The change involves not only what vehicles Millennials favor compared to other groups – Baby Boomers and Generation X – but also the way they acquire that first vehicle, according to CarGurus.

“When it comes to buying that first set of wheels, Millennials have less influence [and] less financial stake in their first car purchase than Baby Boomers did,” said Car Gurus, an online automotive shopping platform that serves 23 million unique monthly users.

The survey of 1,800 randomly selected participants who have owned a car found that Millennials:

  • are less involved in selecting their first car than Baby Boomers (24 percent vs. 33 percent).
  • contribute less often to the cost of their first car than Baby Boomers or Gen-Xers did (37 percent vs. 65 percent and 53 percent, respectively.
  • were more likely to be given their first car by a family member (23 percent vs. 10 percent).
  • had less say in the purchase of their first car than Baby Boomers did (33 percent vs. 24 percent).

The survey found that Millennials were more likely to be given a car by a family member, said CarGurus. “It was not a gift per se, but rather as a necessity to allow them to fulfill responsibilities.”

The survey did uncover commonality in first-car brands across all three generations, said CarGurus: “Chevrolet cracked all three generations’ top first cars; Ford was among the top three for Baby Boomers and Generation X, and Toyota was in the top three makes of the Generation X and Millennials lists.”

And favorite brands unique to each – Volkswagen and Plymouth for Baby Boomers, Dodge and Pontiac for Generation X drivers and Honda and Nissan for Millennials.

The survey found two other interesting similarities between Millennial and Baby Boomer generations:

  • The proportion of “first cars” bought or given used – 83 percent.
  • How many drivers got their first vehicles between ages 16 and 18 – 55 percent.

So, in some ways, the more things change, the more they stay the same.

Vehicle recalls, online sales leads and the big risk in digital marketing

What worries car owners about recalls

Millions of vehicle owners who don’t respond to recall notices are worried that dealerships will try to sell them additional repairs during their visit.

That’s based on a survey by the University of Michigan Transportation Research Institute (UMTRI).

The UMTRI survey, which involved more than 500 participants, found that nearly four in 10 were worried about sales pressure – the highest response rate among 10 concerns cited.

“There is general recognition of the problem of low response rates,” UMTRI’s Michael Sivak and Brandon Schoettle said in their report, Consumer Preferences Regarding Vehicle-Related Safety Recalls, which also suggested possible ways to increase response to recall notices.

READ MORE

052517 IL Vehicle recalls, online sales leads and the big risk in digital marketing

 

No time to waste with online sales leads

Five minutes.

That’s the optimum amount of time for responding to a sales lead.

With such a narrow opening, less than 40 percent of automotive dealers respond to queries that quickly, based on data from a study by Conversica, a sales-and-marketing software provider.

The study said that the 49 percent of the dealerships who responded to queries met the five-minute standard and that 94 percent of those who responded did so within 24 hours, but that nearly 20 percent of dealerships surveyed did not respond at all to online queries.

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Taking a big risk in age of digital retailing

Now is the time for dealerships to embrace digital retailing.

That was the message from Mark O’Neil, chief operating officer of Cox Automotive in a recent interview with WardsAuto before he spoke at the 2017 Automotive Forum in New York.

He suggested that the ability to do car deals 100 percent online is about a year away, WardsAuto said.

“Fundamentally, the consumer has learned to engage digitally in every other retail category – shoes, pizza, mortgages, electronics, books, pick any category,” O’Neil said, according to WardsAuto. “But the auto industry has held back in letting them do it.”

“When customers want something, they always get it,” the executive told WardsAuto.

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Four ways to boost online lead engagement

Promptness, personalization, persistence and performance.

They are the way into your online prospect’s heart and “crucial to the success of your dealership,” according to Conversica, a sales-and-marketing software company.

“There’s an abundance of research on the importance of these Four Ps for lead engagement, but we wanted to find out whether dealers were putting this information into practice in the field,” wrote Alex Terry, Conversica CEO, in the introduction to its latest Sales Effectiveness Report.

The good news for the auto industry from Conversica’s “secret shopper” survey was that of the nine industries examined, “automotive had by far the highest proportion of top-tier scores.”

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Millennials want cars after all, survey finds

The car culture is alive and well among millennials.

And younger shoppers in general prefer luxury brands to driving in the mainstream, according to The Harris Poll of 102,617 U.S. consumers ages 15 and over conducted earlier this year.

It’s a different picture than the one often described concerning millennials and car ownership.

“Millennials may not be as indifferent to American car culture as is often suggested,” said Harris, based on its annual EquiTrend Study of consumer choices of the strongest brands across 10 industries, and “their aspirations for luxury are driving the U.S. automotive brand landscape.”

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Millennials want cars after all, luxury brands most, Harris survey finds

The car culture is alive and well among millennials.

And younger shoppers in general prefer luxury brands to driving in the mainstream, according to The Harris Poll of 102,617 U.S. consumers ages 15 and over conducted earlier this year.

It’s a different picture than the one often described concerning millennials and car ownership.

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“Millennials may not be as indifferent to American car culture as is often suggested,” said Harris, based on its annual EquiTrend Study of consumer choices of the strongest brands across 10 industries, and “their aspirations for luxury are driving the U.S. automotive brand landscape.”

Seven of the top 10 car brands for millennials are luxury brands, Harris reported, versus five each for Generation X and baby boomers. The bad news is that millennials (consumers born from 1977 to 1995) actually still are less likely to own cars than older generations.

Still, Harris struck a positive tone in a press release accompanying the report.

“Millennials are changing not just what we want to drive, but how we drive and how we shop for cars,” said Joan Sinopoli, vice president of brand solutions at The Harris Poll. “While maybe not a full-blown romance, the flirtation with cars as part of our culture is alive and well with younger generations. Millennials aspire to luxury, and nowhere is this more evident than in the automotive industry.”

While the Harris report didn’t identify the top 10 brands for millennials specifically, the overall leading luxury brands, in order, were Mercedes-Benz, BMW, Genesis, Lexus and Porsche. Top non-luxury brands were Toyota, Honda, Chevrolet, Ford, Subaru, Nissan, GMC and Mazda.

“Mercedes-Benz has millennials to thank for its brand-of-the-year status in luxury automotive,” with 72.5 percent identifying it as a top brand, Harris reported.

A previous Harris Poll indicated that “millennial car owners share many attitudes about vehicle ownership with other age groups,” according to the website nerdwallet.com. And while millennials were surprised by the costs of owning a vehicle – and some believe it’s a hassle – “this doesn’t seem to affect their choice to own a vehicle or their plans to purchase one in the future.”

And, if a millennial shows up at your dealership, nerdwallet reported, they are more likely than other groups to have compared their options online beforehand.

So, get ready. The millennials may be coming to your dealership after all.

Four ways to boost your online lead engagement starting right now

The Four Ps.

Promptness, personalization, persistence and performance.

They are the way into your online prospect’s heart and “crucial to the success of your dealership,” according to Conversica, a sales-and-marketing software company.

“There’s an abundance of research on the importance of these Four Ps for lead engagement, but we wanted to find out whether dealers were putting this information into practice in the field,” wrote Alex Terry, Conversica CEO, in the introduction to its latest Sales Effectiveness Report.

033017 IL Time to move on from tax season and plan for May-hem (and summer)To accomplish that, Conversica commissioned researchers to visit the websites of 538 companies across nine industries – 59 of which were from the automotive industry – for a “secret shopper” survey.

The good news for the auto industry was that of the nine industries examined by the researchers, “automotive had by far the highest proportion of top-tier scores, with nearly four in 10 dealerships (38 percent) receiving an overall ‘A’ grade,” said Conversica. “For comparison, the real estate industry had the second-best proportion of overall ‘A’ grades at 14 percent of respondents.”

Here is the company’s take on the Four Ps:

  • Promptness – “You need to be fast if you want to be first … This is the single most influential variable in the study, and even a few minutes can make a big difference.”

“The likelihood of conversion drops significantly during the first three minutes after the lead’s inquiry,” the company reported, but less than half (49 percent) of the dealerships contacted responded in five minutes or less, and nearly 20 percent took more than an hour.

TIP: “In a category where minutes matter, even small improvements can have big impacts. Automated delivery solutions can make improvements in promptness relatively painless.”

  • Persistence – “One or two [follow-up] tries are rarely enough … The bottom line is that maximizing contact maximizes the likelihood of response and qualification.”

“Attempting contact just three times instead of once will double response rates; companies with the fastest growing revenues were most likely to attempt contact with a lead five to eight times, [and] overall response and conversion rates continue to grow at the eighth attempt and beyond.”

TIP: “Increasing the number of attempted contacts does not have to dramatically impact the cost and effort involved in follow-up efforts. Research has shown that even a few more attempts can significantly improve the odds of conversion.”

  • Personalization – “Prospects want conversation, not promotion … Personalization scores represent the degree of customization employed in email responses.”

Response rates improve when prospective customers receive an email from an address associated with an individual rather than a company name (31 percent), that includes a signature (22 percent), or that resembles a personal letter (137 percent) rather than appearing graphics heavy.

  • Performance – Email follow-ups that land in a prospect’s spam or junk mail folder look like non-responses to the recipient.

TIP: “Personalization and performance go hand-in-hand. Personal design factors not only make leads more receptive to the message, but they also increase the likelihood of it getting past spam filters … Performance grades suffer if emails aren’t frequently updated and adapted.”

Underscoring the significance of the Four Ps, Conversica said that 90 percent of all companies in the survey receiving an overall “A” grade received an “A” in personalization, while 80 percent scored an “A” in promptness, and almost 60 percent received an “A” in persistence.

None of the companies surveyed received an “A” in performance although 95 percent scored a “B”.

“Simply put, no matter how well a dealer scored, there is always room for improvement,” said the Conversica report. “Agendas and priorities can vary greatly from organization to organization; however, incremental improvements … can have a disproportionately positive impact on the bottom line.”

How well would your dealership score on the Four Ps?

Dealerships doing business as usual running high risk in age of digital retailing?

Now is the time for dealerships to embrace digital retailing.

That was the message from Mark O’Neil, chief operating officer of Cox Automotive in a recent interview with WardsAuto before he spoke at the 2017 Automotive Forum in New York.

He suggested that the ability to do car deals 100 percent online is about a year away, WardsAuto said.

033017 IL Time to move on from tax season and plan for May-hem (and summer)“Fundamentally, the consumer has learned to engage digitally in every other retail category – shoes, pizza, mortgages, electronics, books, pick any category,” O’Neil said, according to WardsAuto. “But the auto industry has held back in letting them do it.”

O’Neil’s message comes down to “if the industry doesn’t [change], someone will create a disruptive technology that will put the current dealer or manufacturer at risk.”

“When customers want something, they always get it,” the executive told WardsAuto.

Looking at the data

Although dealers might say they already have embraced digital, “when you look at the data – we look at how enabled websites are to transact electronically – they are woefully under delivering,” O’Neil said.

“Everyone has embraced using digital for merchandising and increasing brand awareness. The industry has done a terrific job of letting customers use the Internet to research, shop and get pricing. But not, ‘OK, now I want to buy it.’ That’s a huge leap. The dealers who enable that will thrive.”

O’Neil said that “all the pieces, absent one, now exist” for 100 percent online transactions.

The missing piece

“That missing piece is the secured, legally binding contract. But we’re getting real close to that,” the executive told WardsAuto. “The four tools that are available online are getting a real payment, getting pre-approved, financing, seeing an F&I presentation – and selecting products that fit needs – and getting an offer on a trade. By embracing those four, you’re 80 percent of the way there.”

O’Neil’s comments echoed a recent report in Automotive News, which cited industry experts who believe that the 80 percent or more of “dealers who lag behind [on technology] must catch up or face a fate similar to that of independent bookstores in the era of Amazon.”

Dealership concerns

Among dealership concerns with going fully digital are the loss of personal contact with prospective buyers and the perception that the sale of F&I products will be hurt, the report suggests.

Although Automotive News cited one dealer, David Kain, president of Kain Automotive in Lexington, KY, who said that “the studies we’ve seen show that consumers actually buy more F&I products using iPads in a dealership on their own than a finance manager can sell them.”

See WardsAuto’s full report on its interview with the Cox Automotive executive.