After COVID, there's a new benchmark for retail success

Units per salesperson — this is a metric that dealerships have tracked for decades. It is also a metric that hasn't fundamentally changed in more than 35 years. No matter how much we have trained or incentivized employees to move the needle, the average has held steady at 10 units per person per month. It has been so stable that staffing models have been built around it with formulas that spit out the number of salespeople needed to meet a specific sales target.

COVID-19 has changed all of that, which is perhaps one of the few positive things coming out of this pandemic. When stay-at-home mandates went into effect, foot traffic was significantly impacted. For many dealerships, this resulted in temporary staff reductions and a pivot to remote selling tactics that kept customers and employees safe. Stories began to surface about salespeople closing and delivering 30 to 40-plus vehicles in a given month because they could simultaneously work with many customers in a remote capacity. For the first time, we saw the average units per salesperson rise. In May, the average units clocked in at 12-13 units per person according to both NADA member statistics and additional research fielded by Roadster.

Fast-forward to today, with showrooms open and foot traffic returning, this number has not only held but has continued to grow. A second, follow-up research study fielded by Roadster and NADA reveals that the average in August spiked to 16-plus units per salesperson, 60 percent more than the NADA industry average.

What is the cause? When asked what COVID-19 strategies are here to stay, the vast majority of dealers (88 percent) said remote selling is at the top of the list. While it is no surprise for those who had successfully adopted omnichannel retailing before the pandemic, working with customers in a remote capacity allows some, if not most, of the transaction to be completed online and then the rest can be finalized seamlessly in the showroom. Remote selling takes what was once a very linear, face-to-face process and makes it possible to concurrently guide multiple customers through the transaction at the same time.

In the traditional sales model, a customer comes into the dealership and the sales professional stays by their side working through as many steps of the sale as possible. For the customers who buy a car that day, it could easily require 3-plus hours of undivided attention per customer. This linear workstream caps the number of customers any given sales professional can work with on a given shift.

The new model uses omnichannel retailing technology to digitize the sales process. Sales professionals now have the tools to guide customers through various purchase steps, either before or after the showroom visit. By putting the customers to work, we no longer have to spend huge blocks of time working with each customer. We can have multiple workstreams, mostly performed by the customers themselves, going simultaneously.

Dealerships across the country saw this efficiency gain firsthand when showrooms were closed. They found clever ways to build relationships via phone, chat or videoconferencing while guiding customers to do more on their own time. It is no surprise that 70 percent of dealers surveyed say that omnichannel retailing technology made them more efficient, with close to half of them claiming that their salespeople can sell more cars per person because of it.

With this type of technology in our salespeople's hands, customers are encouraged to do more online than ever before. Dealerships who were permitted only to sell online at the beginning of the pandemic saw 80 percent of customers do some of the transaction online, with 30 percent completing it in a fully digital format. Even with showrooms back open, we are still seeing some parts of the transaction happening online 37 percent of the time. This is a significant increase over the 10 percent of customers who did transactional elements online this same time last year, according to Cox's 2019 Car Buying Journey study.

Carvana, Tesla and now CarMax have blazed the path as it relates to online car buying. Now dealerships far and wide are saving customers material amounts of time with those same strategies. So much so that 63 percent of customers who had previous car buying experiences stated that their recent buying experience was faster than their last purchase.

In fact, of the customers surveyed, one-third of them said their transaction happened in less than an hour. This is excellent news related to customer satisfaction since satisfaction and transaction time are so significantly tied together.

Have we always been able to sell more units per salesperson? Perhaps. But the technology that enables remote selling right now has only been available to the masses for the past two to three years. Mass adoption was critical for this to be the impetus for a wholesale move in a metric the industry has been tracking for decades. Only now can we look at the impact on net profitability that this type of technology can truly have. For instance, if the average cost of compensation per vehicle sold was $584.45 with the traditional model that assumed 10 units per person, what can we accomplish in cost savings if they can sell 60 percent more? Playing this out mathematically, we would reduce our labor costs by more than $200 per copy.

What does this mean in the end? Each dealership will have to determine that for itself, as it depends on demand and the total market opportunity at hand. In some cases, this may mean that they had more staff than was necessary all along and can permanently make reductions that drive efficiency. In contrast, for others, this may mean that incremental market share is within their reach without adding head count.

The fear with any new technology is that it will replace human capital. Much like other industries have found, this is nowhere near the case in automotive. What we learned with showrooms closed was just how important people and relationships are in the process. While the technology is there for customers to manage their own deal, there are always questions and a need for guidance along the way.

This leads to the other interesting phenomenon that is happening as we speak. The type of person we are employing at the dealership is changing. Where once the art of sales negotiation was king, we are seeing a new wave of employees with strong customer service backgrounds, technology prowess and process orientation.

This is good news for hiring and training talent, as it allows us to pull from a broader pool of people. More and more, dealerships are looking to recruit the local barista from Starbucks over the seasoned sales professional who may not have these critical characteristics.

Time will tell as it relates to where we go from here. The one thing we can be sure of is that there is more to learn. COVID-19 has fast-forwarded our industry five years into the future. And while the industry still has many hurdles to overcome such as inventory shortages, lack of stimulus, etc., efficiency as a metric is here to stay.