Many dealerships fall short when it comes to attracting millennials to come work for them. While the number of employed millennials at dealerships is rising, the turnover rate is more than three times that of the average turnover rate at most businesses, which is 10 percent. That’s alarming for two reasons. One, the millennial generation is the largest pool of workers right now; the Baby Boomers are beginning to retire and Generation X is largely set in their careers with few looking to transition into auto sales. Two, millennials make great sales people because they’re entrepreneurial, they know how to use technology to boost sales and they retain product knowledge exceptionally well and can recall it in an instant.
Here are five reasons why they don’t want to work at your dealership:
- Commission is a Turn Off
Millennials are turned off by commission-based pay, according to Bloomberg View columnist Megan McArdle. Considering when they grew up, it’s easy to understand why they’re not drawn to a job where all the risk is on them and not on the employer. While it worked for Baby Boomers and Gen Xers, it does not work for today’s 18- to 34-year olds because they came up in a time of heightened anxiety and security – the 2000 Presidential Election, the terror attacks on Sept. 11, 2001, and the recession of 2008, considered by many as the worst economic downturn since the Great Depression.
In most dealerships, there is a direct correlation between performance and pay, with the burden of risk on the employee. If they’re underperforming, they’re not making much – close to minimum wage. In some cases, sales people may owe the dealership money if they draw against their commissions until they can pay them back.
Dealerships should consider developing a base pay option to attract millennials.
- The want more than a job
Fueling their aversion for commission-based jobs is the exceptionally high value millennials place on work-life balance. Working on commission means putting in more time, typically well over the usual 40 hours a week, to earn a decent paycheck. This takes away from time with family, friends and activities important to them.
While at work, millennials want to be fully engaged. According to a Gallup report, millennials don’t just want a paycheck, they want job fulfillment gained by working for an organization that has a mission they can get behind. They want a job that gives them purpose. This sense of purpose leads to happiness, increased productivity and job commitment.
Does your dealership have a mission or purpose beyond selling volume that will engage the millennial worker? Creating a fundraiser of donating a portion of your monthly sales to a local charity is a good start.
- They’re Wary of Sales People
Millennials aren’t beating down the door to consider a career in retail automotive. In fact, research shows that they view car sales people as greedy and clownish, thanks to how they’ve been portrayed in movies and TV. The 1980 comedy Used Cars, starring Kurt Russell, and the 1990 comedy Cadillac Man, starring Robin Williams, are perfect examples. According to a Gallup poll conducted in December 2016, car salespeople rank near the bottom of the list for honesty and ethics, one place above members of Congress.
There’s a lingering stigma about sales jobs, too, according to the Forbes column reference above. In the 1980s, a position in sales was seen as something you did if none of your other career options worked out. Despite high earning potential, this point of view still lingers in certain circles today.
Dealerships will have to squash these stereotypes. First, move away from the silly, gimmicky dealership job ads running in local markets. Those dealerships who do employ millennials need to appoint them as ambassadors who will deliver the message that they are happy and fulfilled with their work. Millennials, who are social media savvy, can generate quite a bit of buzz about the professionalism of car sales.
- Dealerships Are Not Diverse
The face of car dealerships in America is still predominantly white and male and therefore not diverse enough for millennials. Millennials favor diversity – people from different backgrounds, people with different points of view and experiences – as key to strategizing and teamwork.
The National Association of Minority Automobile Dealers (NAMAD) reports that of the 18,000 new automobile dealerships, only 1,127 are owned by ethnic minorities. And, according to the 2016 Dealership Workforce Study by the National Automobile Dealers Association, women make up only 18.6 percent of dealership employees and make up only 20 percent of all new hires (ironic when 51 percent of all licensed drivers in the United States are women). Only 7.8 percent were employed in key positions, while most – 89.3 percent – work in office and administrative support, traditional female roles.
Dealerships have struggled with hiring more female sales staff for years. Part of the reason is the culture at many dealerships is still very much an old boys club. Once that changes, more women will become interested in selling cars for a living. Millennials seeing gender diversity at dealerships will then be more inclined to apply.
- Cars Are Not a Priority
Millennials are not passionate about cars like Baby Boomers and Gen Xers were between the ages of 18 and 34. While owning a car provided a sense of freedom and a sense of self for teens and young adults in prior generations, millennials are finding their identity and sense of freedom in other places, namely technology. The millennial generation, which was brought up on the Internet and social media, have established their identities on Twitter, Instagram and other social media platforms and find their freedom in the newest smartphone and other ways to communicate with friends and the rest of the world.
Millennials are buying cars, but it has taken them longer than previous generations to show up at dealerships. Encumbered with student loan debt and having been underemployed during the recent recession, a new car just wasn’t in the cards for many millennials. Public transportation, car sharing and ride sharing became the primary mode of getting around for millennials – and they’re OK with that.
As every generation gets older, their needs and wants shift. At the older end of the millennial generation, its members are starting to have families and discovering they need a car. Dealerships will just have to wait until the rest of the generation catches up. But by that time millennials will be immersed in other careers and not looking at selling cars.
Generation Gap to Widen
The good news for dealerships, albeit a few years off, is Generation Z, the age group behind millennials, is more interested in cars. However, dealerships must figure out how to attract and retain this current generation before they can fully shift their focus to the younger one. It is important to actively learn how to work with millennials and find a way to make selling cars a meaningful experience that aligns with their preferences. For some dealership owners, this might not be a simple fix. However, this is one approach that can yield higher employee retention in the long haul.