Part of being a successful car salesman (or saleswoman) is keeping your eye on your earnings. Your income is the most straightforward single metric to use (as a salesperson) to measure your worth to your company.
I’ve written this article to guide you the simple steps I followed to make my first million selling cars (in six years).
The Right Column is my Gross Income (I started selling cars mid 2012)
Now, make sure you don’t misunderstand my perspective. I don’t think that your earnings are the end-all of who you are as a human being. Instead, I propose that your income most easily quantifies your worth to your company.
Just like a high demand car commands a high value, a high-quality salesperson should demand a high income.
Sales is a brilliant career because your income (assuming it is commission) correlates directly to the profit your business produces.
Consider the alternative. If you had a career in human resources, how do you quantify your value? Your effect on the companies bottom line will have to be extrapolated from abstract numbers such as employee turn over and payroll accuracy.
In sales, if the store makes money, you should too.
I believe in the car sales career because it has worked for my friends and me.
Becoming a Successful Car Salesman
The beauty of the car sales career is that you can learn on the job. Every skill that you need to be successful is taught by the repetition of situations that come up at the dealership.
The car sales career is unique because of it’s short sales cycle. As a salesperson, you can have five attempts to make a sale on one Saturday afternoon.
Compare that to the other sales jobs with similar incomes. In technology sales, your product is often a subscription that needs to be approved by a VP or C-level executive. You pitch your product to whoever you can, and you slowly work your way up the food chain at the company. A sale can take 6-12 months!
What if you made a mistake early in the process (product knowledge misunderstanding, overpromising, annoying the wrong person). You might not realize that the whole deal was going to fall apart for months.
This is a career where, if you are paying attention, you can make mistakes and improve every day. Your sales cycle is measured in hours, not weeks or months.
So how do you create the opportunity for yourself?
You take more chances.
That means you need to talk to more “ups.”
You should be fighting for every opportunity that comes your way. Not because every customer is worth talking to, but because every customer is an opportunity for you to learn something.
The Math of Success (Customers/Day)
Let’s say you want to make a million dollars, like I did, in your first six years.
What does that take?
There is some simple “work-backward” math that we can do together.
For my example, we will assume that you make $500 per car sale if you average out all of your bonus and commissions.
Then, we will assume you close 20% of the customers that you talk to.
Let’s work backward.
One million dollars, divided by six years, is $166,660 per year.
$166,666 per year is $13,888 per month.
$13,888 per month, divided by $500 per car, is 27 cars sold per month.
So you need to sell 27 cars per month, for six years, to make a million dollars (before tax).
We said earlier that you close 20% of the customers that you talk to, which is one in five.
If you sell one in five customers, to sell you 27 cars, you will need to talk to 135 people per month.
If you work 23 days a month, you will need to talk to 5.86 people per working day to make a million dollars in six years.
Taking that one step further… assuming you take one hour a day of “breaks” and work nine-hour days, you will need to talk to a new customer every 1.4 hours.
That sounds very doable to me!
Where to Find Customers
To talk to a new customer every 1.4 hours, you need to be well versed in the different “avenues” that you can find new customers.
The most obvious customer is the walk-in customer who shows up unannounced at the dealership. It should be a given that if you want to make a million dollars in six years that you will need to be the master of getting these opportunities.
In your first few years, while you are handling floor traffic, you need to be on the constant lookout for these customers to arrive. Before doing anything else, master this funnel!
The highest closing rate customers you will find are going to be inbound phone calls. Can you figure out why?
Think about the psychology of someone calling into a dealership in the 21st century. They have access to every online resource, but they decided to call instead.
Calling a dealership is a clear buying sign. They are looking to get answers fast and from the source. They don’t want to wait. To make your million, you are going to need to be fast to pick up inbound phone calls.
So let’s say you have mastered the walk-in traffic and the inbound phone calls. What could hold you back?
Think about the math we did earlier. Consistency is going to be a key to making an outsized income.
If you want to be consistent, you can’t have many “bad days.”
Let’s address this mindset.
Difference Between “Good” and “Bad” Days
I’m going to take a little break to share an idea that a mentor shared with me recently:
Have you ever noticed how some days you wake up and you feel great? You are excited to face the challenges of the day, you are happy to be awake? You can’t wait to get started?
…And have you ever noticed how other days you wake up and things are different? You feel tired and you feel flat. You’re dreading going to work and you wish you could just hide away from it all?
Well I was having one of those “bad” days yesterday. I woke up feeling like cold deli meat. I was just not happy. On a whim, I opened a window and I looked outside.
You know what I found?
I found a nice sunny day.
The fact is that most days here are sunny. The birds wake up and chirp every single day.
All that negative junk? It had nothing to do with that day. It had everything to do with what was going on in my head.
Every day is the same. It’s how we react to it that is different.
Having this type of mindset is a key part of being a successful car salesman.
Successful Car Salesman Mindset: Every Customer has Value
That story brings me to my point. Successful car salespeople don’t see some customers as good and others as bad. They see every single customer like a piece of the puzzle that is going to build their career slowly.
Some customers are going to be lay-downs. They will pay MSRP and leave happily. Others will grind you for hours, test-drive four cars, and then leave in a bad mood, without a new car.
None of that matters in the end.
What matters is that you keep a level head, and absorb as much opportunity as possible.
You aren’t going to be able to find those perfect golden customers if you don’t talk to the annoying customers.
Not only that, those annoying customers give you a fantastic opportunity to practice.
“Eat Out of My Hand”
Those annoying customers can be thought of as a waste of time, or they can be considered as a challenge course for your successful car salesman personality.
Here is where “eat out of my hand” comes in.
It’s the summation of a mindset I use when I work with the most challenging of customers.
When a challenging customer appears, you will know quickly. Challenging customers make their attitudes clear early on, with the way they talk and the things they say. Even their body language can give them away.
When I am faced with one of these customers, I clear my mind and concentrate on the challenge ahead.
In my head, I repeat this:
This customer wants to hate you Andrei.
They want to have a bad day.
Things are not going their way today and they want to put that on you.
Andrei, you are going to face this down as a challenge.
Your mission is to make this asshole love you.
Make this guy love you so much that he would eat out of your hand.
There is a magic to this mindset. I create a game to play, with the end goal of converting the challenging customer into a rabid fan.
When I repeat that mission back to myself, I get excited — what better test of my skills than this challenging customer.
The Return of Humanity
While becoming a successful car salesman it is possible to maintain your humanity.
I am often successful with the most difficult of customers, simply because the challenge makes me invested in the sale.
The best part of this mindset, of challenging yourself to convert the challenging customer, is that you often find that the customer isn’t a bad person.
I’ve found that the most challenging customers are not bad people, but rather, they are scared.
Their fear centers around the fact that they have heard of the evils of trickster salespeople. They fear being taken advantage of.
When you turn their experience around, when you win them over, they lose their fear.
Not only do they lose their fear, they often will grow attached.
I’ve had some of my most demanding customers become “referral machines.”
Referrals are the End Game
Every customer you talk to, buyer or not, is an opportunity to generate referral business.
When you make a great impression, you can create fans.
Fans will believe in the value you bring, and they will spread your name far and wide.
The most successful salespeople work primarily off referral business.
It’s just a better lifestyle.
Referral customers come to you from a place of trust, and they are infinitely more comfortable to work with.
If you want to grow as a successful BDC representative, you need to be asking yourself the right questions. Even the top representatives have room to improve, and this article’s questions should unlock your potential!
If you’ve already read The Automotive BDC Manifesto, you are well on your way to being a top representative at your store. Choosing to follow a path of self-improvement is critical in every career path. Never forget the fundamental tenet of my book: BDC representatives are salespeople, not receptionists!
There is no guarantee that your managers or your coworkers will go out of your way to help you set more appointments. It’s time to take things into your own hands.
Self-questioning is an essential part of improving your performance at work. You need to be able to ask yourself the hard questions, and be honest in your answers!
Successful BDC Representative Question #1: Do I Know My Product?
Salespeople need to be excellent at building relationships, over-delivering on value, and knowing their product. If you are expecting to be a top representative, convincing your clients to come in for appointments, you need to make sure you understand what you are selling.
Every manufacturer provides training for the sales representatives that work with customers on the floor. The manufacturer creates video training and will keep it updated with the new product launches.
Do you follow that training? Do you have a log in so that you can learn the answers to the questions that your customers are going to have?
Think about it this way: you are the front line dealing with the customers. We know that customers actively shop around at multiple dealerships. Do you think that we are putting our best foot forward by not knowing the answers to their questions?
If you don’t want to spend a few minutes a day watching the training videos, consider just walking the showroom with a salesperson, asking for information. Tell the sales representatives on the showroom floor that you will be better at setting appointments for them that sell if you have all the product information!
“I think it’s just little tweaks you need to put into action if you want to be more polished. It will take a decision to start and a dedication to follow through. Polish is not about some grand action; it’s a collection of little steps—little steps that you care about.”
Take the small steps every day to perfect your product knowledge.
Not only will you be more successful with the customers, but you will also be setting creating personal value that will protect during market downturns.
Things you can do to learn about the product every day include:
Asking the managers about new products that have arrived
Sitting in all the showroom cars for a few minutes every week to try out new features
Asking for a demo car for a day (perhaps from loaner fleet?) to drive and get the feel of
These are the little steps that will push you to the next level.
With the knowledge from these small steps, you will be prepared; the customer asks you questions such as:
Does all the Audi Q5’s come with parking sensors?
When does the new Allroad come out?
Is there any difference in the new Audi Q7 compared to last year?
When you can answer these questions with confidence, you prove your dealership’s value to the customer. Every time you say, “Uh… let me check” you are losing rapport.
Successful BDC Representative Question #2: Do I Know My Salespeople?
When working the automotive BDC, you are a piece of a much larger machine. There is a funnel of customers that flows through your desk that ends up sitting with the salespeople. Both your customers and your salespeople have peculiarities.
The oddities of your customers will be made clear quickly as you work in the BDC. Although most of your customers will love getting updated on the status of their incoming cars, some will yell at you merely for calling. Some customers will only text, refusing to ever jump on the phone. There will be customers that never respond to a single follow-up touch, but then come in and buy on a random weekday afternoon with no warning.
Your customers are going to fall on a spectrum, from gentle to mean, from wealthy to not.
Your salespeople do too!
Learning about your Partners
Your salespeople that you assign appointments for when working in the automotive BDC are your partners. Never forget how much you all rely on each other! Think of the problems that arise when communication and relationships are lacking:
Salespeople can forget to log appointments, costing BDC reps money
BDC reps can forget salespeople’s days off, costing salespeople half deals
Salespeople can not update the notes in the CRM, causing more work for the BDC
BDC reps can forget to update salespeople on their customer’s plans, costing the salespeople some of their rapport
It’s a transparent back-and-forth.
So, put some Mariah Carey on and get to learn about each other! This is your responsibility if you want to be a successful BDC representative!
Here are some ways that you can get to know the sales staff better:
Attend the weekly sales meetings
Ask the salespeople what the BDC is doing well and what it could do better
Ask the salespeople if there are any problems that they’ve noticed that they haven’t addressed
Ask the sales manager to host team night for everyone to meet up outside of work
When the BDC and the sales floor work with each other, the result will be more successful appointments, better CRM usage, and more sales.
It’s worth it! Get to know your extended team!
Successful BDC Representative Question #3: What Percentage Do I Close?
Do you know the answer to this question:
What percentage of inbound leads do you set appointments for? What percentage of those appointments sell?
If you don’t know the answer to this question, then how will ever know if your performance improves?
Careful tracking of Key Performance Indicators (KPI) is the only way to track your relative performance at work.
Why do I say that?
Think about it this way. If you set 50 appointments every month for three months, and then you set 30 appointments in the fourth month, were you less effective in the fourth month? The fact is, unless we know the amount of opportunity you had in the fourth month compared to the previous months, we can’t identify your actual performance.
What if in the first three months you had 100 opportunities and in the fourth month you only had 60? In that case, your relative effectiveness went up in the fourth month, from 30% appointment setting to 50%!
Example KPI for Successful BDC Representatives
Here is a list of the fundamental Key Performance Indicators that I recommend you track as a BDC representative:
The ratio of Appointments Set (Appointments Set divided by Number of Leads)
The ratio of Appointments Shown (Appointments Shown Divided by Number of Appointments Set)
The ratio of Appointments Sold (Appointments Sold divided by Number of Appointments)
Sales Person Effectiveness Ratio (Appointments Sold divided by Appointments Shown)
With these four metrics, you can have a gauge of your relative effectiveness. If you wish to improve, track these four ratios!
When you are selling cars on the internet, you need to know your market.
Your market is defined by the group of surrounding dealerships. In a thriving market, there will be plenty of sellers and plenty of buyers. Dealers can differentiate themselves in three arenas: pricing, customer service, and inventory.
Pricing includes the price you sell your cars for and the financing you offer. The pricing you should provide (to be competitive) will be investigated in this chapter.
Customer service is a broader category, including timeliness, transparency, unique perks (such as free servicing or details), pick up/drop off services, and general demeanor when working with the customer.
Inventory, the final differentiator, is about volume. When a customer goes on your website or visits your dealer, they want to have options on colors and features. The more cars you have, the more options they have.
I know a significant number of BDC reps are asking themselves the same question right now:
“Wait… isn’t this the responsibility of my managers?”
If you think that market research “isn’t your job,” you are technically correct. That said, technically, most representatives never move up to manage an entire BDC. Most representatives act like Ziggy instead of Zag.
Your desire to succeed can be held back by your belief in the limitations of your role at the dealership. If you are willing to take on additional challenges, such as market research, you will stand out and make a name for yourself.
Superstar car salespeople and BDC representatives need to master auto sales skills to get ahead. One of the essential auto sales skills is the ability to do trial closes and then ask for the business confidently.
Imagine a world in which you were the only person with a unique superpower: You could read people’s thoughts, just by looking at them.
You would go to work every day and handle every auto sales negotiation correctly, always staying one step ahead of your customers.
When they bluff, you’d know. When they lie about how much discount they need to make a deal, you’d know. When they say they won’t pay a penny over invoice when they really would, you’d know.
What a successful salesperson you would be.
Guess what? You don’t have that superpower.
You are blind to what customers are thinking. You may pick up a subtle physical cue here or there, but overall, the customer’s mind is a black box.
Auto Sales Skills: How to Take Off the Blindfold
During your negotiations, you should be following a relatively simple template. Get the customer on a specific car, figure out how they want to buy the car (cash, lease, or finance), and then offer terms. These are the necessary auto sales skills.
When it comes to reviewing terms, you will often face a dilemma. How should you structure a deal?
How aggressive do you need to be in terms to make a deal?
Do you offer an aggressive number right off the bat? Or do you provide the standard price and see what they say?
You can’t know what is in a customer’s brain.
That is, you can’t know what is in a customer’s brain UNTIL YOU ASK!
How the BDC Can Ask Confidently (and Nicely)
Car sales skills come in all shapes and sizes. The ability to ask for money in a friendly, confident way is one of the vital differentiators between those who make an average income and those who make the top 5% of profits.
This applies to more than just money. In the BDC (Business Development Center), representatives need to ask for an appointment almost every time they are on the phone with a customer.
A top tier BDC representative will ask for the appointment at every opportunity (within reason). Every phone call by a BDC representative is an opportunity to provide a reason to come in. Perhaps the exact car they want is in stock, or there is a special sale running that includes the model they want.
Asking with confidence is vital. You need to believe in what you are offering in exchange. Does your tone of voice convey the reason for your call?
The benefit of the BDC is that your leads have often self-qualified. They will put in a lead describing what they are looking for.
Here is an example of confidently asking for an appointment, using the information provided by the customer:
“Thanks for jumping on the phone with me Tim. Last time we spoke you had mentioned that you were on the hunt for a 2020 Jeep Wrangler in the Steel Gray and Fire Red interior. I’ve just been notified that we recieved a car just like that today. I have some time available at 5:45pm today for you to come by, would that work for you?”
The BDC representative knows what the customer wants, so they can confidently ask for an appointment. There is value being offered by the representative.
The BDC is protected by the telephone. There is always an immediate opt-out available for the customer, as they can hang up. The BDC manager can monitor the word tracks of the representatives to make sure they are setting good appointments.
The salesperson that is face to face with a customer faces a different situation.
The Trial Close
When a salesperson is in front of a customer, they should be utilizing the trial close. Since it is so common to be working with a customer for the first time, you need a way to know if what you are showing the customer resonates with them.
Many salespeople ask for the business too early in the conversation because they forget to use trial closes.
The trial close is when the salesperson asks questions about how the customer feels about the sales process so far without directly asking for the business.
“How do you feel about the lease special we have here on the windshield?”
Asking for the Business:
“If I was able to get you approved for this lease special, would you be ready to move forward today?”
The trial close is less direct than asking for the business. When you do constant trial closes throughout the process of showing a customer the car, you are getting a sense of the customer’s likelihood to buy without being overly pushy. You are “taking their temperature” instead of berating them.
If you have been taught to ask for the business consistently, I recommend you take a step back and think about the position you are putting the customer in. If you were at any store and the sales representatives kept asking if you were ready to buy, you would feel pressured. Don’t make that mistake with your customer.
Salespeople need to overcome the objections of their customers continually. The trial close will give you the information that you need to overcome objections in the first place!
When you do a trial close, the customer has an opportunity to “course correct.” They can tell you if the car you are showing them is outside their budget or in the wrong color, without feeling like they are being trapped into buying.
Auto Sales Skills: Did You Do Everything You Could Have?
So far, in this article, we have stressed the importance of confidently asking for business and consistent trial closes. How do you bring this all together when working with your customers?
In my experience, salespeople are much more likely to be afraid of asking for the business than asking too much. The salespeople that I know that are not performing up to their potential often are fearful of asking for the business because they don’t want to be rude. They know that selling cars is a great business, but they can’t figure out why they aren’t making more money.
To get a feel for where you fit into this, how often do you think:
“I want their phone number but it would be rude to ask for it this early in the process“
“I’d love to sell them a car but I don’t think they are ready. It would be better to avoid talking terms and just give them the best experience. I bet they will come back because of my customer service”
“Customers like me but they don’t buy from me! What’s going on?”
If you have been thinking about these three things, there is a high likelihood that you are:
If you can consistently do trial closes and politely (but confidently) ask for the business, you are doing what is required of a top tier salesperson.
To unlock the confidence to do these two things, you need to use this magical mindset:
If I provide top tier service, consistently take my customers “temperature” with trial closes, and confidently ask for the business, then I have done a good job (regardless of whether they end up buying)
The key is to realize that the outcome (purchasing or not purchasing a car) is not 100% within your control. It is your responsibility to ask from the customer, but not every customer will buy every time.
Auto Sales Skills: Look at Your Ratios
I would guess that most salespeople reading this article don’t know their exact closing percentage. The fact is, most salespeople still do not adequately use their CRM, so they can only guess what percentage of customers they close. What is the point of working on your auto sales skills if you don’t know how you are doing right now?
Here is the fact of the matter: if you don’t know your closing percentage, you don’t know if you are good at your job.
There are excellent 10-car salespeople, and there are terrible 30-car salespeople. The exact volume of cars they sell has nothing to do with it. The thing that proves a good salesperson is their ability to convert the opportunities they have.
If the theoretical 30-car salesperson had 500 customers and only sold 30 cars, they are lackluster. If the 10-car salesperson had 30 customers, they are doing very well.
Review: Auto Sales Skills
We can all work to improve our presence in front of the customer. Always put yourself in their shoes. How would you like to be treated when you are in the market?
This week, practice utilizing trial closes with your customers. Throughout your sales process, ask the customer how they feel about what you are presenting. Are they getting more excited? Are you showing things that resonate with them?
This article “Car Sales Skills” is a timely article. As I am writing this, the fiscal quarter is ending for my dealership, and we are wrapping up the last few deals of the month. After traveling for a few weeks, I ended up back at my desk with a large quota to conquer and a week to do it. Every day I’ve been bringing my best face forward to work with the customers, and I’ve been paying attention to what works best when I’m in the zone.
It’s from these customer experiences that I distilled down these three car sales skills. The three car sales skills that I’ve focused on are patience, determination, and organization. I’ll break down how I think these three car sales skills can help you set yourself up for success when working with customers.
Blogging, as my side business, is slow going. It’s a labor of love, one that takes a long time to scale to reasonable profitability. Anyone that sells you the “overnight success” story is just making shit up- I can tell you that honestly from the trenches. I figured that if you break down my hourly rate on this project, I would be making an average of a dollar an hour.
So why do it? The easy answer is- I’m just not there yet. One day I will make more. Matthew McConaughey, that weird actor dude, once said that “my hero is myself, in ten years.” Although that still sounds a bit odd, I like the sentiment. Right now I make $1/hour doing this blogging business, but six months ago I was losing money doing this. Now I have passed breaking even; I only have one way to go (up, hopefully)!
So patience is key. In blogging, in automotive, and life. It took me a while to figure that out.
This above advice that has only become more relevant to me.
Car Sales Skills: Becoming a Patient Chameleon
You can’t just sell easy car deals. To sell the volume that it takes to set yourself up for financial independence, you need to sell the vast majority of types of people cars. That means you need to sell slow customers, the fast customers, the cheap customers, and the barely-speaking-English customers. To make the outsized incomes that car salespeople routinely make, you need to master the art of the patient chameleon.
The patient chameleon can take 10x the punishment of the average salesperson, changing attitude to facilitate the demanding customers. Why is it important to remind yourself to be patient? The reason is simple; it’s easy to get burned out when working directly with the public. You are liable to have to answer the same questions, day in and day out, to customers that are often thankless. That can grate on anyone, especially when you’ve been working at a store for more than a few years.
When you are a patient chameleon, you know going to work that customers are going to grate on you. You see it coming, and you plan for it. The patient chameleon shifts their attitude to facilitate the customers.
I make a game out of being patient. When confronted with a demanding customer, I mentally go through a few steps:
I remind myself that if I get upset, this will only get more difficult
I think of all of the times that I have dealt with demanding customers successfully in the past
I challenge myself to give this customer a perfect experience, regardless of how difficult they are
Rather than treating the customer as the challenge, I create a game out of being perfect. The more complicated the customer, the more difficult the game, the more accomplished I am if I succeed.
The Patient Chameleon Saves It’s “No’s”
Customers can only be told “No” a certain number of times. The majority of customers can only be told “No” three or four times before turning against you. Once you have exhausted that number, the customer will resent you, deeming you unworthy of their business.
When you consistently oblige a customer wishes for the majority of the sales process, you are saving your “No’s” for later. That way you can say “No” a few times during the negotiation and still maintain the customer satisfaction you need!
Even the Patient Chameleon has Limits
Ok, so that sounds great, but how realistic is it? I’d say harnessing the “patient chameleon” mindset and running with it will work with 80% of the demanding customers. That said, once in a while, you will run into one of those world-ending customers. The customers that don’t trust you fight you every time and refuse to be happy.
These are customers that I politely let go. It’s not worth it for me to try and fix a broken person. Perhaps they are inherently bad or possibly it’s just not their week, but regardless, I don’t need to ruin my week helping them.
When I deal with a customer like this, I will give still give it a good attempt. I will bend over backward, but only to a point. When they begin to become distinctly unpleasant, I find a way to let them go. Until you’ve worked in customer service for a few months, you might not know what I mean, but you will know when you see it.
So how do you get rid of a customer like this? If they are looking at cars, I would test drive and show them the vehicles they are interested in, and then let the conversation reach a natural end. I might mention an upcoming appointment and suggest that we schedule a follow-up. In the worst cases, I have told the customers that I think that “this isn’t working for us,” and I offer to direct them towards some other store that might be able to help them.
Determined Mindset: How Long Can You Last?
I’ve had one big goal since I graduated from university: Financial Independence. The idea of having enough capital investment to buy my freedom from work has been the central tenet of my working career for seven years now. Perhaps it’s my dislike of being managed or my hatred of going to the same building every day. Whatever it is, I’ve wanted to become financially independent since the second week I began working. I’ve worked every day with that goal in mind, determined to make it my reality.
You need to be able to put off what you want now in the short term for your “big goal” in the future.
Your goal may be different. Perhaps you dream of owning a home or putting your kids through the best Universities without debt. Regardless of what your goal is, you need to have a “finisher’s” mindset. That means that you are singularly dedicated to accomplishing the goal that you set for yourself. You have told yourself that you will do what it takes to get to where you want to go.
My goal of Financial Independence requires me to save over a million dollars and have it invested. The magic of compound interest means that the earlier I begin investing, the better I will do.
Car Sales Skills: Dedication to a Big Goal
When working with customers, you need to remember the “big goal” that you align your work life with. When you consider the house that you and your spouse want to put a down payment down on, you get a bird’s eye view of your job. It is a means to an end. As such, there isn’t an option for you to “give up” on a deal. You can’t “half-ass” it. The only option for you, if you hope to accomplish your goals, is to work hard and work efficiently.
This determination to accomplish your goal will give you the ability to accept new challenges at work. You will be willing to take on projects that seem outside of your skill set, with the understanding that you will learn what you need to accomplish the small tasks.
Every customer is both a person who needs care and attention and a brick in the road to your “big goal.” Never forget this balance.
Organized Mindset: Can You Juggle?
If you plan to build a road, brick by brick, to reach your “big goal,” you need to stay in a straight line. Being organized is so often ignored, even though it is a requirement for operating at your highest capacity. You need to be able to juggle your responsibilities at the dealership and never drop the ball.
In the car dealership, having an organized work life means that you have a firm grip on what you are working on every hour of the day. Your desk is clear of clutter, and your email inbox is under control.
Personal organization is the shield that stands between you and potentially letting down customers. How often do you forget about an appointment or an email because you were scatterbrained? Do you ever forget about responding to a text because it sinks into your messy message inbox?
I use a few key strategies to keep myself together.
Car Sales Skills: Organization Tools
My first tool to keep myself organized is my paper hot customer list. I always have a piece of blank printer paper followed to 1/3 size with a list of my hottest customers. I jot down their names and the car they are interested in, plus the date of their next appointment. If they don’t have an appointment, it sits blank, driving me to follow up with them.
I’ve tried using excel, my CRM, outlook, and an array of other tools, but for this, nothing beats paper. That little paper reminder of my highest potential customers keeps my head in the game every day.
My second tool to keep myself organized is my CRM strategy. By focusing on “Update Days” in Dealersocket, I can always make sure that my web leads are followed up with on a regular schedule. The “update days” metric is the linchpin of an effective follow-up strategy. If your customers are being touched every three days, they are unlikely to be forgotten.
The pay plan is the most important guiding document of a sales organization. How you pay your salespeople dictates how they will act. If you focus the pay plan around profit, your salespeople will focus on profit. If you concentrate the pay plan on volume, they will focus on selling as many units as possible.
There is no one “perfect” car salesman pay plan. That said, there are some guiding principles that all car salesman pay plans should adhere to (and some potholes to avoid).
In today’s article, I’ll be reviewing the various facets of the car salesman pay plan, with a focus on best practices. Make sure that you always keep in mind what your salespeople think about their commission.
Crafting the Perfect Car Salesman Pay Plan: Figuring out a Target
Just like any real estate deal or business plan, the perfect car salesman pay plan starts by working the numbers backward. You need to build a car salesman pay plan that enables your top performers to make more money than they could anywhere else, while also allowing your average salespeople to make an area-adjusted average income.
Your car salespeople sacrifice to work their job. Those with the skills you seek are valuable assets to your company that need to be compensated accordingly. Your top performers could sell at any dealership, and often, in other industries as well. Your salespeople are probably working long hours and weekends away from their families, in a position with plenty of stress.
In the San Francisco Bay Area, the competition that you face as an employer is mostly from technology companies. These technology companies often have better working conditions and hours than your dealership. To capture your salespeople, you need to enable them to make more money at your dealership than they could if they switched over to technology sales (at least for the first few years). Making a strong income quickly is one of the biggest draws of the car sales career.
Market Research (Other Business Types)
As a sales manager, the first thing you should do when researching your car salespeople’s new potential pay plan should be to find out the optimal income level that you want the top 20% to be able to achieve.
The optimal income level comes down to what is available in your local market for your employees. To figure this out, I recommend speaking to real people rather than relying on aggregator websites such as Glassdoor.
In my area, new salespeople at the dealership could qualify for entry-level “Sales Development Representative” roles at local technology companies. These roles pay between $55k to $75k after bonus in my area, with full health care benefits and beautiful offices. I can find this out quickly by reaching out to a few of my long term customers and friends that work in those businesses.
Therefore, to attract talent to work at the car dealership, I need to have my top 20% of staff be able to make between $80k and $90k in their first year. This extra money will ensure that the salespeople will have to take a pay cut to change industries. This number ($80k, for example) will be what I use to work backward from to build a pay plan.
Market Research (Other Dealerships)
Many car dealerships in my area are plagued with expensive turn-over rates. Therefore I don’t rely on comparisons to their pay plans since what they are doing isn’t working.
That said, if there is a superstar dealership in your area, I always recommend figuring out what they offer. The experience of your salespeople is more than pay, but it is a critical piece of the puzzle.
Crafting the Perfect Car Salesman Pay Plan: Working Backwards
Now that we have our “goal” income ($80k), we can begin to work backward to design the car salesman pay plan.
Our perfect car salesman pay will be competitive enough to keep our employees happy while aligning their activities with our business goals.
Let’s start with some example business goals:
Max Volume: You want your dealership to sell as many cars as possible. Gross profit is less important. This strategy is generally based around having a profitable service center and an aggressive manufacturer stair-step program.
Max Profit: You want your dealership to make money where it can, and as much as possible. Gross profit per car is incredibly important to your dealer. This strategy is generally based around having less service retention and a smaller volume of vehicles on the lot.
Mixed: You want units, you want gross profit, you want it all. You need to have balance.
Max Volume Dealership Example
Let’s say you work at a dealership that is focused on maximizing the volume of cars sold. You have plenty of inventory in stock, and you need to move it.
When building a car salesman pay plan for a dealership like this, you are going to put the focus on unit bonuses. You don’t want your salespeople to stress on the front end profit of deals. You want your salespeople to bring you every transaction, regardless of the offer.
Let’s work backward. Our top-20% salesperson needs to make $80k/year for our store to be competitive. Therefore, they need to make $6600/m when performing at their level. At the current time, this type of salesperson sells 12 cars per month. In California, I need to pay $1000/m as basic income, so I need to spread $5600 over those 12 cars. A simple way to build this pay plan would be to structure it as such:
If you sell 1-11 vehicles, you make $400/car (plus $1000 base pay) If you sell 12+ vehicles, you earn $475/car (plus $1000 base pay)
Now my salespeople that sell ten cars a month will make $5000 per month and my salespeople that sell 12 vehicles per month (the top-20% salespeople) will earn $6500. This significant jump between 10 and 12 cars should encourage salespeople to push to at least sell 12 cars.
Max Profit Dealership Example
Let’s take the exact opposite strategy, max profit. The logic is simple with this strategy. You need to align your salespeople with making as much profit as possible. The easiest way to do this is to focus their pay plan around a high percentage of profit offered.
After discounts in your market, your average front end profit is $900 per car. Your goal with this strategy will be to beat this number. A reasonable goal might be $1100 profit per car. If your average salesperson sells 12 cars a month here is the math:
$1100 goal profit per car * 12 cars sold on average = $13,200 profit
You will need to give your salespeople a reasonable minimum commission per car to keep morale high, so let’s say you pay a $300 mini per car sold:
$300 minimum commission * 12 cars sold on average: $3,600 income on 12 cars sold minimum
With a $300 minimum commission, your 12 car salesperson is making $3,600. You need to get that number to $6600 per month based around a target profit of $1100 per car. Out of the $13,200 profit, you need to pay $3000.
Done, here is our pay plan. We pay $1000 for showing up and $300 mini per car sold. On top of the mini, we pay the salesperson 22% of the gross front end profit:
$1000 Minimum $300 Mini Per Car * 12 Cars = $3600 Plus 22% of $13,200= ~$3000 Total Income: $6600 per month
The Reality of The Situation
The reality of the situation is this: you already have a car salesman pay plan in place at your dealership that your salespeople are used to. All salespeople fear their pay plan changing, which means that you will likely not be able to institute a completely new pay plan without considerable upset.
The purpose of this article is to give you instead of an idea of how you might go about tweaking your store’s current pay plan to align better with your goals.
It has become clear at car dealerships across the country that the market for new cars has begun to cool. After half a decade of substantial gains, the demand for new vehicles is experiencing a bit of a slow down, which makes now a perfect time to sharpen your skills. In a contracting market, there are still those who make an out-sized income.
When the market slows, those who have surfed by with lackluster skills and work ethic fall by the wayside, while superstars continue to gain market share. If you can survive the dip, you will be one of the few when the good times come back around.
To illustrate this, consider the home builders in the Bay Area, where I live. In 2007 and 2008, the market for new homes cooled off tremendously, leading many home builders to quit and join other industries. The going was tough for a couple of years. The few companies that did stick around, continuing to evolve and find new avenues to make money, ended up with the entire market to themselves when things turned around.
I’ve sold Audi’s to many of these folk, and they all say the same thing: the key is surviving the dip.
Step One of Standing Out in a Cooling Market: Work the Portfolio
The lease penetration rate of dealerships across the country has skyrocketed in the last seven years. As the economy recovered from the “great recession,” many customers came back into the market for a new car in a shifting landscape. Manufacturers such as Audi and Volkswagen had changed their lease offerings to be much more incentivized at the same time as electric cars with substantial federal rebates started to hit the market in volume.
When confronted with this market, many customers decided to lease.
Now, as the market cools, there is a pipeline of guaranteed buyers lined up for the next three years. Even if we see a global recession hit with a 10-20% stock market pullback in the next year (anything could happen), these lease customers will still need to make a decision.
Your goal is to gain control of as much of the lease end portfolio as possible. Learn how every part of the lease end process works and become the expert at your store. Ask your management team for a list of 90-day lease maturities and begin to send them robust email templates.
Here is the basic workflow for working the lease end portfolio:
Get in contact with customers 90-120 days before their lease end. Represent yourself honestly as the lease maturity manager, and offer to do a “pre-inspection” of their car to prepare them for their lease end. By getting in touch early, you minimize the chance of the customer walking into a different dealership first.
When the customer arrives for their appointment, have an exciting product for them to check out while you inspect their car. Using the lease contract guidelines, make a note of the condition of their current vehicle. Have your used car manager estimate their lease end vehicle’s value and compare it to their payoff.
While explaining to the customer the lease end process, offer some key swap deals that you have prepared. You will find that in a cooling market for new cars, the used car market will thrive. This means that valuations will be higher for the lease end cars, with strong potential for an equity situation. If you can, structure a deal with equity for their lease end as a trade in, and offer to swap them into a new model with no money at signing.
If the customer isn’t ready to make the jump, make sure you still leave a good impression. Their lease end date forces their hand- they are going to need to do something in the next 90-120 days. Make sure you are the person they think of first!
Here are some email templates that I have successfully used for my lease end customers:
My name is NAME and I will be your Lease End Manager for your current BRAND.
As you move towards your lease end date I will be able to answer any questions you have.
If you are interested in leasing a new car, buying out your current vehicle (or anything else) I will be your contact here.
You may be eligible to get out of your current BRAND early. Are there any new cars that interest you? Let me know if so- I can get you quotes using our BRAND Loyalty program.
Good Afternoon CUSTOMER!
My name is NAME, I am the lease return specialist here at BRAND. I will be your primary source of contact for your end of lease options. I noticed your lease will be maturing in the near future and I just wanted to see if you had any plans after your lease ends. I will probably be trying to call you in the next few days to get in touch!
1. Do you want to pick out a new car?
2. Do you want to purchase your current vehicle?
3. Other questions?
Please let me know what you decide so I can make it a smooth and easy for you. I would love to chat on the phone about your options- give me a call!
Lease Maturity Date: __________
Just wanted to send you a courtesy email to remind you of your lease maturing soon! Do you have any questions or concerns you would like for me to address about your lease before that day comes? Let me know.
Your Lease End Manager,
Step Two of Standing Out in a Cooling Market: Learn to Sell Used
At many stores all across the country, new car salespeople look down on used car salespeople. Instead of learning how to sell used cars, they ignore the entire side of the business, often scared of the label.
This is madness. Used cars are a huge profit center for your dealership, and you can be earning a cut of that.
After making sure that it’s ok with your management, start offering new and used options to every customer. Just by letting your customers know that you can sell used cars, you increase your lifetime value to the customer. Although they may come in to buy a new car, in the future, they may be back in the market for a used car.
Often I’ve sold new cars to parents, and then used cars to their kids.
Walk your used car inventory every day. Learn the “comparable cars” to your new vehicle offerings. Used cars can provide a great negotiation tool if you know the stock. When a customer offers you ten thousand dollars off on a new vehicle, counter by showing them the one-year-old version of the car they are interested in. The pricing of the used car will justify your new car price.
Here is how that works:
SALES: So, what did you think of the new Q5? The vehicle that you liked is listed for $51500, with all the best features!
CUSTOMER:I love the car, but my budget is more around $42000. What can you do for me?
SALES: I’ve got two great options for you. I can sell you this new car for the KBB price of $48200 or I can show you this one year old loaner car with the same options that is priced at $42500. Which would you prefer?
This inventory knowledge will make you a superstar negotiator. You don’t need tricks to win negotiations; you need information and a clear and concise way of communicating!
Step Two Bonus: Side Hussle Used Cars with Turo
If you take my advice and become a used car superhero, you will soon notice a large number of cars your dealership starts wholesaling after they take cars in on trade.
These cars are taken in on trade and then turned around and sold wholesale to smaller dealers and sent to auctions.
If you can save up a few thousand dollars, I suggest you look into picking up some of these cars cash from your dealer. Then you can start building your own Turo fleet.
Turo is like Airbnb for cars. It was initially meant for people who don’t use their cars every day to rent them out when they weren’t using them. Now, entrepreneurs have begun to build out their fleets.
My advice? Shoot for 8 or 9-year-old Honda Fits and Toyota Prius. These cars depreciate slowly, are cheap to maintain, and are easy to rent.
Step Three of Standing Out in a Cooling Market: Live Within Your Means
Personal finance is hard for everyone, but it can be especially hard for car salespeople. The boom and bust cycle of this business leads droves of salespeople to alternate between living in luxury and poverty.
The problem is that humans are bad at planning. When the going is good, people live large, spending every penny on fancy things and expensive indulgences, rather than focusing on the essentials.
I track my income and expenses with Personal Capital (click for $20 coupon code). Here is what it looks like:
Using the app, I can track every income and expense, making sure that I am always keeping an eye on the big picture: growing my net worth. This is only possible when I carefully track my finances.
When the market cools, incomes tend to dip. If you are living beyond your means, you are in for a rude awakening.
Focus on lowering your fixed costs. Don’t rent the most beautiful house you can afford, or buy the biggest house that you can mortgage. Practice restraint on these enormous fixed costs, and you will be much more flexible in a downturn!
Step Four of Standing Out in a Cooling Market: Double Down on You
Customers can buy a car from anywhere. If you are the salesperson, you need to stand out if you hope to survive the coming cooling market.
Salespeople get contented in their position at a dealership and begin to lag in their self-improvement. This is a trap!
My mentor Frank has a saying written up on the wall in the sales office: “Complacency is the Assassin of Ambition.” Don’t become the lazy salesperson who lets their skills dull in the bull market when the going is easy.
Make sure you are keeping up to date with the newest vehicles and their options/technology
Car sales is a business where in your personality can make or break your business. In this business, you are often going to be selling a product that is not unique to your store. This means that the customer has more options, and therefor you need to stand out more.
Your greatest asset in this business is your personality. Do you project confidence and trustworthiness? How often do you strive to find things in common with your customers? Do you listen attentively?
At the end of the bull market, you will find many salespeople who have grown lazy, content to be the same or worse than the day before. Make sure that you don’t fall into this trap. Make the extra effort to be the most likable salesperson possible.