Natural evolution of a dealership
As dealerships get larger each person working there will tend to become more specialized. In the beginning when there are only one to three locations most managers are general managers getting involved in all major decisions. As they grow, usually by adding locations, they will need their top managers to specialize in order to insure all major areas of the dealership receive the proper attention and leadership.
The biggest shift for a small dealer adding their first sales manager...
is to go from reactive leadership (the General Manager saying to their sales person “Call me when you need me”) to the opportunity for proactive leadership (“Get in here and talk with me about the Johnson account”). But without proper setup the sales manager either has no power (reps still controlled by location managers), or is given so much to do (carry territory themselves, assigned used equipment or any other side job given to them) that they have no time to proactively lead their sales team. Too many sales reps reporting to a sales manager will also force the sales manager into a reactive leadership role.
Whenever they specialize by adding a sales manager...
(also called “VP of Sales” or “Director of Sales”), they have the opportunity to make the sales team have a single philosophy, account focus, and set of selling tools. But they need to be assigned the responsibility to grow the team’s skills, customer base, and sales…not just maintain the sales levels when they took over. They also will not know what to do unless they are trained and have an ongoing coach/mentor within the dealership’s most senior management.
When to add a sales manager
One of three things will tend to cause a dealership to want to add a full time sales manager, with all outside sales people in the dealership are directly reporting to them:
- Want more sales growth - They are not happy with the current sales team’s performance and have realized their general sales managers don’t have the time, and many, the skills to change the behaviors and results generated by their sales people.
- Want more selling consistency - A dealership realizes different location managers are managing their sales reps in different ways so there is no consistency in the selling efforts or selling messages being communicated by the sales team.
- Want to grow and/or expand their sales team – Smaller dealers are constrained from growing. They don’t know how to train a new sales person and the location managers have no time to coach and train a new hire…so no sales people get added…and sales opportunities (especially competitive ones) are missed. They will want to add a sales manager when they want stronger market share and want a more proactive sales force calling on new accounts and better covering existing customers.
The best range of people reporting to one sales manager is 5 to 10.
It will be a full time sales management job managing, training and leading a team of 5 rookies. Maximum, even with experienced sales people, is 10 reps. When you get over 10 people reporting to a sales manager that manager just becomes a reactive fire fighter solving problems and doing little proactive coaching and leading. When over 15 reps report to one sales manager than that manager only becomes a “911 dispatch center.” I have met several sales managers at dealer training who have at least 25 reps reporting directly to them.
A good rule of thumb is the dealership needs to add another sales manager to the team whenever the number goes above 10 reps per manager.
If it's only one sales manager – then I suggest looking to add another manager when the first manager has 12 or more reps reporting to them. By the way…when a sales manager is added and stable, I suggest the dealership look at hiring or promoting one or more sales reps into outside sales since they now have a full time coach in place.
The financial justification of the sales manager’s salary and benefits is...
- The increased profits generated by the sales team due to the sales managers' proactive leadership and coaching.
- The saving being generated by the location managers freeing up time to devote to improving other areas.
Why and when to add a used equipment manager
It's much the same “reactive vs. proactive” reasons as when to add a sales manager.
Reasons for a dealership to add a used equipment manager:
- Not making enough money, in their opinion, on their trade-in valuations and sales, or they lost a lot of money on a few pieces of equipment that had been sitting around a long time.
- Dealership as a group is not moving used equipment fast enough so management is taking notice of this growing asset.
- Sales reps or location managers are complaining about how much of their time is taken up with used equipment management. The goal is by creating a proactive used equipment manager position will cause all the others to be more proactive by getting them out of the used equipment hassles.
- They are not taking advantage of selling used equipment on the Internet due to no one available to manage that part of the business.
- There is no consistency in how used equipment is being valued and some of your customers are noticing, and assuming, you are either playing favorites or are at least being unfair to some of your customers.
Enjoy the process!
Jim Pancero