JM Lexus drops middleman to speed sales

Jim Dunn, general manager at JM Lexus, believes that if it isn't broken, then break it and make it better.

That philosophy led the Margate, Fla., dealership in March 2012 to replace its traditional salespeople with product specialists who help customers find the vehicles that best fit their needs.

After that, the specialists step aside and leave price negotiations and financing to sales managers.

Eliminating the middleman from negotiating has helped the dealership cut the time a customer spends in the store after deciding to buy a specific vehicle to 2.5 hours from 3.5 hours, including delivery. It also is among the reasons that JM Lexus has kept its title as the world's largest-volume seller of new Lexus vehicles for 22 straight years.

In 2013, the dealership sold 5,976 new Lexus vehicles, up 27 percent from 2012. It also increased its used-vehicle sales 5 percent to 2,400.

"If you'd asked me last year, I would have never said we were going to improve by 27 percent," Dunn says of the store's new-vehicle sales.

He says he doesn't expect such a large increase this year, adding, "But how tall do trees grow? I think we'll see a 10 percent increase for new at our dealership and pre-owned, probably 15 percent."

JM Family Enterprises Inc. owns JM Lexus. JM Family Enterprises also owns Southeast Toyota Distributors, which distributes Toyota and Scion brand vehicles, parts and accessories to 176 Toyota dealerships in Alabama, Florida, Georgia, North Carolina and South Carolina. JM Lexus is not part of the Southeast Toyota region.

JM Lexus product specialists greet customers and hand them a Bill of Rights outlining the dealership's pledge of a smooth, professional and transparent experience, Dunn says. They show and explain vehicle features, answer questions and arrange test drives.

But when the customer is ready to talk price and finance and insurance, the product specialist steps aside and the sales manager steps in.

Craig Martinez, JM Lexus general sales manager, says the dealership piloted the concept with small teams of product specialists and sales managers for about a year before implementing it storewide.

"We wanted to alleviate the sales associate going back and forth with the manager and the customer with the negotiations," Martinez says. "Our philosophy was, if we put our best negotiators in front of the customer in the very beginning, that can cut a half hour and in some cases an hour."

After JM Lexus implemented the new approach, Lexus began requiring its dealers to add delivery specialists.

Martinez says delivery specialists inspect vehicles with the buyers, taking as much time as the buyers want.

Some customers want a demonstration of the vehicle and to be walked through the owner's manual, he says. Others want to know how to operate the radio and windshield wipers and they're gone.

"A delivery can get done in as little as two hours. That's in the hands of the guest," Martinez says.

The dealership has 44 product specialists and 15 sales managers, about one-third fewer than the total when Dunn joined the dealership as its general manager in 2005. The store also has seven delivery specialists.

Product specialists are paid salaries ranging from $22,000 to $25,000 a year. They earn a bonus when they successfully introduce a customer to a sales manager and a second, bigger bonus if the customer buys a vehicle. If needed, they fill in for delivery specialists.

The average novice product specialist earns at least $50,000 to $60,000 a year, which can easily swell to a six-figure income for those with more experience, Dunn says.

The pay structure also helps the dealership attract recent college graduates to its sales team, which it rarely did before its new structure.

"Doing it this way, we're able to attract an associate that looks a little bit different," Dunn says. "We've had good luck getting college graduates out of school. Plus, we're able to develop the next level of talent to move up to sales manager. It'll always be a good career path for our associates."

Though the approach runs smoothly now, the transition was hard for some, Dunn says.

He says most salespeople became product specialists and others were promoted to sales managers. Only two people quit. No one was let go as a result of the change, but as employees left, many were not replaced.

"Some [became product specialists], but they didn't necessarily like it," Dunn adds. "But as time has gone on they see the benefit of it, because they get out of the toughest part of the process. They get to go back up front to either help another customer or set appointments to prepare for the next guest.

"And now there is more volume for individuals. We had over 10 people that sold or got credit for selling over 30 cars" in December, he says.

He says the store has about 400 employees and the total is rising. JM Lexus had about 430 before the recession. Through attrition, the number fell to about 330 during the recession, where it remained until 2013.

But as sales started to rise, the dealership needed more people. Says Dunn: "We provide world-class experience for our guests and it takes people to be able to do that."