Survey Your Dealership Team Before It’s Too Late
By Dave O’Brien, President and CEO, Quantum5
Retail automotive is a numbers game in love with data: we’re constantly collecting and analyzing data points, we regularly track CSIs and KPIs, we keep a close eye on our internet and foot traffic, and we apply formulas for measuring success, whether it’s debt-to-equity (D/E) ratios, inventory turnover ratios, or return-on-equity (ROE) ratios.
One underappreciated and often overlooked metric, however, is how employees feel about working at a particular dealership. This is known as the employee Net Promoter Score or eNPS, and it is key to improving employee performance and retention.
The Dealership Norm
According to SurveyMonkey’s global benchmark data of more than 150,000 organizations, the average eNPS score is +32. This survey represents the big picture, not just the average for the retail automotive industry.
In a 2021 eNPS survey by Quantum5 of fifty-two of what Automotive News called “The Best Dealerships to Work For,” the average score was +68. The overall norm for non-managers in dealerships was +42. The dealership norm varied significantly by department, with Sales averaging +61, Service +32, Parts +43 and Office at +39.
Survey respondents were categorized, depending on their score, as either Promoters (highest scores), Passives (mid-range scores) or Detractors (lowest scores). Survey results established a strong correlation between a score and employee retention.
Quantum5’s ESi-Q surveyed over 13,000 non-manager employees. The company compared these two questions: How likely are you to recommend this dealership as a great place to work? And are you looking for a better job?
Their answers were unsurprising. Detractors are 14 times more likely to be looking for a better place to work compared to Promoters. Specifically, we found less than 4 percent of Promoters said they were currently looking for a better job, while 48 percent of Detractors were looking to jump ship right away.
Detractors are actively dissatisfied employees and, as a result, represent your highest turnover risk. Passives are neither satisfied nor dissatisfied but are unlikely to recommend your dealership. (Passives can be converted to either Promoters or Detractors depending on how a company responds to their feedback). Promoters, as your most satisfied employees, will say positive things about your store and recommend it as a place to work.
The 3-Year Itch
In most situations, dealership employees on performance-based pay plans – e.g., sales consultants, F&I managers, service advisors, and service technicians – reach peak productivity after three years on the job.
This arc is reflected in wage growth, which increases by double digits in years 2 and 3, but then levels off in the low single digits. Three-year retention rates vary by department: Sales Consultants, 40%; Service Advisors, 45%; and Service Technicians, 56%.
Unfortunately, in an average dealership half of the employees are gone before they reach their third anniversary.
ROI of Employee Retention
Clearly, the retail automotive industry faces a serious employee turnover problem, and the actual cost of turnover can be expensive. That’s why investments made toward employee retention generate a very high ROI.
For example, in 2019 employee productivity in a typical dealership was $8,650 per month per employee. A 10-point decrease in turnover increases monthly the GP /employee ratio by $450 /month or $375,000. A 10-point increase in 3-year retention increases monthly GP /employee by $775 /month or $650,000.
A dealership must absorb all costs associated with the hiring process, onboarding and training, with an expected reduction in productivity during the transition and the potential of lower morale because of losing a co-worker. The best solution, obviously, is to not lose your best employees.
Tricks for Keeping Your Best Employees Engaged
I stand corrected. There are no tricks, just an employee retention strategy based on common sense.
So, what does that strategy look like? At the highest level, there are only two things you must do:
• Hire right. Prior to interviewing job applicants, perform behavior-based testing and competency screening. Select candidates who can fit within your culture. You may want to consider skills testing, as well as cognitive, emotional intelligence and personality tests.
• Treat right. Offer an attractive, competitive, comprehensive benefits package. That said, better benefits and higher pay can make a difference, but not as big a difference as you might think. In a McKinsey research study, the top three factors cited as reasons for quitting were that departing employees didn’t feel valued by their organizations (54%) or their managers (52%) or they didn’t feel a sense of belonging at work (51%). Your strategy should be to listen to your employees, respect their contribution and provide ample opportunities for their growth.
The truth is, companies have always faced employee turnover and always will. The difference is successful companies experience it less often and with a minimum of pain.
About the Author
David O’Brien is the President and CEO at Quantum⁵, which helps sales, service, BDC, and leadership teams everywhere ditch the scripts by combining personal selling skills and technology with an advanced training platform designed to bring heart back into each transaction.