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4
January
2017

Effective Sales Force Management for Dealerships

Sales force management is a harder form of management than any other form of management. Many dealership sales forces are comprised of lone wolf sales staff which makes it harder to incorporate them into the team structure. On the flip side, there are dealerships that use the dynamic of teamwork so well that a lone wolf salesperson would likely ruin the productivity of the team. In either case, communication is the most important aspect of sales force management. Sales managers must convey with their teams the goals of the dealership as well as create an environment that can accept change in a rapid way. The only way to create such an environment is to utilize the product life cycle.

Creating an Effective Sales Environment Using the Product Life Cycle

We can glean from effective sales techniques that the best way to create an environment that accepts change and meets that change head on is to look at it from the prospective of the product life cycle; of which there are four stages: start-up, growth, maturity, and decline. Effectively recognizing the shift from one stage to another is crucial as well and the success of your sales forces will depend on this. So let’s delve deeper into this.

Recognizing the Startup Stage

In the startup stage the dealership is tasked with creating the sales force, and there are essentially two ways to do so. Dealerships can either create its own organic sales force, or outsource the sales function to another company to keep costs low. The former option can be expensive and most businesses that use this approach use a kind of earn your way size structure. Meaning, that only those who sell best will stay on and earn a place in the company. The latter option will only be available to those dealers that operate solely online. Dealerships that do operate online such as Carvana.com can utilize this option. This can give more financial freedom during the start-up. Your dealership must be able to identify when there is great potential to grow. Keeping an outsourced sales function on board too long will limit the power an organization has to grow when it has left the start-up phase of the life cycle. For most traditional dealers creating a sales force of your own will yield you the best results.

Optimizing the Growth Phase

As a dealer moves from the start-up phase into the growth phase it is presented with a new set of challenges that it must address. There are two problems dealers face in the growth stage: specialization and size of the sales force. First the challenge of specialization. We know that as most dealers grow, the models offered will expand; this can present problems to the existing sales employees. In an ideal situation each salesperson would familiarize his/herself with each new model/car and be able to sell it, but this isn’t always the case. In some cases the need to create a specialized sales team is necessary. These specialists will be better equipped to sell certain models or brands, in particular uncommon makes models. It must be noted that these specialists will cost more to recruit and train, but can lead to higher profits. The second challenge in the growth phase is the challenge of overall sales team size. Dealers that recognize the potential for growth must also recognize the necessity of growing their sales staff. Many dealers miss out on potential profits by not growing the sales staff optimally or quickly enough. How can you accurately forecast the need for more staff as well as specialized staff? The answer is market research. Effective marketing will effectively answer the question how large should my sales staff be. Asking specific questions like: how large is the market? How large is my current/potential market share? and also how fast can we get to this peak? These questions can help your dealership better understand the problem of structure. Without researching the market your dealership could possible not be reaching its maximal potential.

Securing Market Share in the Maturity and Decline Phases

The final two stages of the life cycle are maturity and decline. There are great similarities in these stages. This is because in both stages there is a sense of just holding onto what you have. In the maturity phase dealerships are presented with the issues of optimizing resources and restructuring sales forces and territory. Whereas the decline phase is predicated on mainly the same idea of optimization, just in a different way. In the decline phase a dealership will try to hold onto the market share in the existing territory. In both phases the overall tone is to hang on to what you already have and try best to remove any unneeded costs. The best example of this optimization is the example of a company in Chicago that allow their salespersons to hire an administrative assistant when in the top 2% of sales reps across their national dealership.

Reap the Benefits

As stated before managing a sales force requires more concentrated attention than managing other functional areas. That is because there are more variables in the types of people that you will manage. Sales managers will also have to essentially still be salesperson. As a sales manager you will be responsible not only to your superiors, but to your sales reps as well. This dual track system can be especially difficult as companies are in their start-up and growth phases. To be best prepared for the beginning phases, companies should heavily invest into training their managers & reps. This will in turn create a better environment for new reps & managers to grow in. Also, by investing in training programs you will better set up yourself when it comes to scaling your salesforces.

 

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