Better recruitment of new employees can help reduce your turnover rate and save your dealership much grief and even more money

Is employee turnover overturning your store’s profits?

Maybe. According to Ted Kraybill of ESI Trends, employee turnover is a big problem for the auto retail industry. How big? Kraybill estimates turnover costs the average dealership half a million dollars a year. If you extrapolate those numbers across the entire industry, you’re looking at a loss ranked in the billions of dollars. The U.S. Department of Labor agrees about the turnover curse, noting a bad hire can cost an employer the equivalent of 30 percent of the employee’s first-year earnings.

Regardless of whether a new hire is an executive, a middle manager, or working in the front-line trenches, a bad hire has a negative impact on the rest of your team. Of more lasting damage, perhaps, is a bad hire’s impact on your brand and local reputation.

In this article, I compare messaging for two help wanted job ads – one by a fictional composite car dealer, the other by CarMax — for basically the same auto industry job, showing you which ad is more likely to attract a better employee.

Job Description

From the composite dealer ad:

If you are looking to start or advance your career in sales, here’s the opportunity you’ve been looking for. Competitive compensation and commission plans, paired with months of increasing sales volume, have led to huge earning potential. Unknown Dealership is looking for Sales Representatives to join its sales team!

The job description posted by the dealer talks about “competitive compensation” and “huge earning potential.” The reality is more telling, as most new sales hires will make neither competitive nor huge salaries for their first year at a store.  In fact, after 90 days there’s nearly a 50-50 chance your newest hire will be either looking for another job or get fired.  A NADA study from a couple of years ago supported this timeline when it found that 40 percent of sales people are terminated within 90 days of hire.

In contrast, here’s a posting from a CarMax ad for the same role:

If you’ve got a passion for people and the desire to succeed, a position as a CarMax Sales Consultant may be for you! CarMax is a growing company built on the fundamental principles of integrity and treating people with respect.

The job description posted by CarMax takes a very different approach. It’s less about potential earnings and sales and more about the culture of working at CarMax, employing positive references to describe the company’s environment and experience. The ad’s emphasis on “people” is especially noteworthy, and is designed to find applicants who have the right attitude and will be a good fit, reducing the chances of a bad hire.

Job Requirements & Responsibilities

Here are three bullet points from the composite dealer ad:

• Automotive sales experience is a plus but not necessary for this role.
• Complete quotes, return email/voice mail, other administrative functions.
• Sales training and support that will provide you with the skills you need to be a top earner!

The comment about sales experience could be seen as the dealer saying we hope you have already been trained somewhere else. Completing quotes and returning email and voice mail implies the job would be boring rather than engaging. Sales training and support assumes the sales manager can find the time to mentor.

As contrast, here are three bullet points from the CarMax ad:

• Provide exceptional service throughout the customer’s experience.
• Communicate effectively both in-person and over the phone to discover customer’s wants and needs.
• Consulting and guiding your customers to the appropriate next step based on their situation.

CarMax talks about the customer’s experience, wants and needs. Elsewhere in the ad, not shown here for copy space reasons, CarMax describes their commitment to each employee: A Great Place to Work (e.g., Fortune 100 Best Companies to Work For, fosters a work/life balance, 95 percent of customers refer us); Top-Notch Training (ranked as one of the best training companies in America, own personal sales mentor, learn as a team); and Career Growth and Recognition (more than 180 stores nationwide).

Attract the Right Employees with the Right Message

The industry average turnover rate is 67 percent. If you’re a dealer, turnover may be old and painful news, and with turnover not only high but seemingly inevitable, what can you do?

Nip turnover in the bud by utilizing smart hiring practices, starting with your job postings. Outline your New Hire and On-Boarding processes, and don’t forget to include continuous training in your plan.

Marketing efforts to attract new employees should be equal to such efforts spent attracting new customers. Both are worth the investment. And both directly impact your bottom line.

About the Author

Pedram Faed is the Co-Founder and CEO of MBTN (Manage By The Numbers), a market innovator in empowering auto dealerships to become more efficient. With over 13 years of retail automotive experience, he understands the pain points from inside out. Learn more about MBTN’s solutions by visiting www.mbtnsolutions.com