Several Canadian dealerships have separate sales teams for new and used but it’s not the usual approach. Opinion remains divided on the issue and evidently the debate has gone on for years.
Back in 1919, Walter B. Zimmerman, a Hudson-Essex distributor in Columbus, Ohio, was lauded in the company newsletter, The Hudson Triangle: “One Hudson-Essex concern which uses a separate establishment is the Walter B. Zimmerman Co., a firm notably successful in handling used cars. Zimmerman’s used-car men, who are entirely separate and unrelated to the new-car salesmen, have created so large a trade in second-hand automobiles that Zimmerman went on the open market and bought twenty additional used cars.” But the practice was immediately contentious. “That opinions differ on the matter is indicated by the fact that the Hudson Motor Co. of Illinois, among others, has recently closed a separate establishment (for selling used cars) because it considered the one-roof plan far more efficient.”
It’s about scale
For Richard F. Libin, President of Automotive Profit Builders, it’s about scale. If you’re selling more than 40 used cars a month, he says, you should be thinking about a separate sales staff. And where possible, consider a separate building.
APB is a Boston-based management consulting and training firm for automotive dealerships throughout North and South America. According to their website, “The company provides a proven process of training, on-going refresher courses, a teleconsulting support system, and data collection and analysis to provide managers, salespeople, and service managers and advisors with a structured plan for continual improvement.”
Jeff Bennett, Associate Professor in Automotive Marketing and Management at Northwood University agrees that in a big store, he’d go for split sales teams. Says Bennett, “It’s hard to keep track of both new and used inventory in a bigger store.”
Both Adam GM in Wetaskiwin and Wheaton GM in Saskatoon have a stand-alone building for used cars. At Healy Ford in Edmonton, the Hicks family built their used-car building when they bought the dealership 20 years ago. They needed to expand and couldn’t do that in the main building.
Split teams
Having a separate building is an ideal solution, but it’s not always doable. It’s entirely possible, however, to split the sales team within the same building. On the other hand, one of the biggest GM Optimum dealers in the country (Capital GM, Regina) has never split their sales team.
Mississauga Honda has operated this way for at least eight years. Used-car manager Daniel Kozlov tells me the concept is encouraged by Honda Canada. It’s a modified split though, as both groups use a central desk, there’a common dress code and they all work from the same showroom.
When Northwood’s Jeff Bennett ran his own dealership, he devised another solution. He divided sales staff into two teams, and the teams took turns selling new or used. Team A would work the new-car side from 9 until 3, then switch and sell used from 3 until 9. Team B did the opposite. The result, says Bennett, was a more co-operative approach.
Several managers commented that the split sales team means both groups know their inventory better. Daniel Kozlov’s used car staff are more involved with Honda’s certified programs and they’re more accountable for various responsibilities on the lot. “If there’s a downside, it’s that the new-car people don’t know the pre-owned inventory as well as they might.”
Individual skills
For APB’s Richard Libin, it’s not simply product knowledge, it’s also about people’s natural ability to sell new or used. “When you don’t separate the teams, you wind up with some sales people who shouldn’t be selling used vehicles, although they may be very good with new inventory.”
At Adam GM, general manager Curt Compton buys into this approach. He finds that sales people have a preference for selling new or used; they’re more comfortable with one or the other. “When I’m interviewing, I can pretty well tell whether a candidate will do better with new or with used.” Beyond that, new-car sales people have to be on top of their game and these days they probably need to be technologically more savvy. Used-car sales people may not be so technologically talented, but every used vehicle is unique, so their product knowledge needs to be more extensive.
And used-car guys need better people skills, said Richard Libin. “The used-car guy is a problem solver. But with split teams, management still has to work together. Sales meetings should include everyone.”
Having a greeter is key to the success of this concept, says Daniel Kozlov. “We have a greeter at all times. It’s the greeter who ensures the floor stays split.” Kozlov has four or five part-time greeters and pays them somewhat over minimum wage. “We don’t use it as an entry level position for potential sales people; that hasn’t worked for us.”
Wheaton GM can manage without a greeter because from their used-car building they have a birds-eye view of everyone coming on to the lot. Used-car manager Devon Collins has created a ‘first in, first up’ system that works brilliantly. He explains: “The first person who arrives in the morning is first up. There’s no strict rotation; the order changes every day. There are no arguments, there’s no whining.” Over in Wheaton’s new-car department, the approach is for the closest sales person to help each customer who comes in. With separate sales teams, they can do what’s best for their respective departments.
Some dealerships report there’s less pressure in the used-car division when there’s a split sales force. As Healy Ford’s Kurtis Hicks put it, “It’s very relaxed over here. We’re not driven by factory quotas, although the factory does keep an eye on our performance.”
Flexibility important
Daniel Kozlov believes that what scares dealers from splitting the sales teams is having to tell sales staff they can’t sell both. And that was Gord Procyshen’s main objection. Capital GM is fully invested in used cars. Their enormous showroom can accommodate 45 vehicles and it’s half filled with used cars. Yet used-car manager Procyshen doesn’t see how it would work, asking sales people to turn over a customer when it’s a repeat or a referral.
Kozlov lets sales staff sell new or used under certain circumstances – i.e. – when it’s a repeat or referral or a switch. He said Honda research has found that a significant percentage of people who buy a pre-owned Honda will buy a new Honda within two to four years.
Flexibility is the M.O. at Adam GM. The used-car people are free to work with a new-car customer or not, depending on the situation. And that’s the way they do it at Wheaton GM. The departments share a lot, with an imaginary road down the middle. Devon Collins explains: “We take a very open approach. If the customer is shopping pre-owned, the new-car salesman will walk him over to our side, where he may choose to turn that customer over to us. But he doesn’t have to.” This way everyone works to their full potential. There’s a good deal of flexibility, and no tension between the two groups.
But at times there is competition between the departments and that’s not always a good thing. Kurtis Hicks says separate departments tend to be a little more competitive than is good for the customers. “Staff feel obligated to push their own department and sales managers are compensated based on the performance of their departments.” Jeff Bennett adds that with separate teams there can be problems over appraisals. Different teams have different goals when it comes to appraisals.
Devon Collins defuses any conflict by doing the appraisals himself, along with the general sales manager. He limits input from the sales staff and doesn’t pay much attention to the sales person who insists, “I have a customer for that car.”
Team approach
Customer satisfaction is a major driver behind all dealership policy these days, and the decision to split the sales force seems to stem from that agenda. Again, there are varying views.
There’s major change ahead for Healy Ford when they move to a single new building in the Sherwood Park area. Kurtis Hicks says there are no plans yet to blend the sales forces, but after the move, the new and used managers will be on one team. “That’s the way things are going in this business. You need to promote a team approach and that will be possible when we’re all in one building. Once our managers are on the same team, we think the customer will get better service.”
Jeff Bennett remains concerned that it’s hard for the new-car sales force to make good money (if they’re restricted to selling new). “Generally, they’d rather be able to sell both, and you gotta have peace in the valley.”
Yet Curtis Compton maintains the customer has a better experience when the used-car division has its own lot. “It’s all better organized, it’s not crowded, and our customers can tell what’s what.”
While Richard Libin advocates for a split sales staff, where practical, he’s adamant that you “can’t stifle anyone’s ability to sell anything. You have to take care of customers first.”
To split, or not to split? It’s still a valid question.
