LAST week, GoAutoNews Premium published an article on some breakthrough technology that allows dealers to get an accurate handle on how many actual vehicles a sales candidate is able to sell – whether they have sold cars before or not.

The article stressed that taking on and then trying to manage a so-called B player or C-player is a cost in lost sales, missed sales targets and the unnecessary high cost of management time that is never recorded as a line item in the books yet can cost dealers and dealer groups millions of dollars a year in lost gross.

One company has developed a cloud-based recruitment intelligence system that is all about finding the best possible sales candidates for the showroom while preventing the hire of low performers and avoiding the cost of managing or ultimately removing under-performers.

The company, PerceptionPredict, has developed several algorithms designed to weed out potential poor performers before they get to first base on the showroom floor.

PerceptionPredict has a background of human science in several industries and has more recently been working with car retailers selling BMW, Mercedes-Benz, Toyota and multiple other brands in Australia, New Zealand, Singapore, Malaysia, the United States and Canada.

Company data says that each under-performer in the showroom can cost a dealership between $50,000 and $100,000 a year. The data further shows that in a typical dealership as many as 60 per cent of the sales staff are not meeting targets, leading to an enormous leakage in the return on investment the store is making in its people and in generating customer demand.

Here JOHN MELLOR interviews the CEO of PerceptionPredict, Brett Morris, and Stuart Armstrong, a director of PerceptionPredict Australia & New Zealand, in order to background industry players with more detail about this remarkable technology which the company believes has the potential to restore dealerships to profitability or boost the bottom line to new heights by eliminating the undocumented costs of under-performers and liabilities on the sales floor.

The interview includes the following points:

• How dealership managers hire people just like themselves.
• The true cost of B-players and C-players to the bottom line is more than lost sales.
• How PerceptionPredict’s online system is simplifying the dealer recruitment and selection process.
• Can a groundsman or pastry cook sell cars?
• How some personality traits work better in one brand than another.

John Mellor: How did this get started?
Brett Morris: There are two co-founders, myself and my partner Regina Chou. She is the scientist and I am the commercial guy. We got started over five years ago with an idea of how to fix the pervasive disconnect between hiring and performance.

My background is in enterprise sales and we would keep seeing people get hired – some would make it and some would not – but no-one was picking up data post-hire that gets fed back into the hiring and recruiting process. To be better informed we need to ask: are we using the right selection criteria, are we selecting the right people; because clearly too often we’re not.

If you look closely at what is being done there are a few companies that use data and a few companies that think they use data and then most of the others don’t.

So it was and still is primarily intuition-first hiring which basically comes back to gut feel even in the most sophisticated organisations. It is highly subject to bias and it is highly subject to inconsistency in decision making which means sometimes you get lucky and too often you don’t.

That was the catalyst for us and we thought we could solve the problem by using human science and data science in combination; and connect the hiring and the subsequent performance together.

JM: Is it really possible that you can bring it down to how many cars can they sell based on algorithms?

Stuart Armstrong: What Brett and Regina have done, and I think it is the most amazing thing ever seen in this space, is created an opportunity for dealerships to look at a person and predict their success levels before they hire them in a way that’s never been done before, anywhere.

I have a lot of training to do with the psychometrics of people but we found that one of the critical issues is that people have an inbuilt bias.

For example, in a dealership in which I have worked, 82 per cent of the staff had exactly the same profile as the general manager who did all the recruitment.

In interviews, managers look for people who are like them. If we like people we feel safe with them but that does not mean they have the capacity or skill to do their job.

If I am a dealer manager, and I have someone come through the door, I want to be able to sit down in the first instance and ask: is this person going to produce a return on investment in our business because commercially I need that in the long term.

Most people use what I can best describe as the guess method: They use simple question techniques: ‘Have you sold cars before? Yes, okay, in you come’.

But there are a bunch of other things we need to look into underneath that and this tool gives every business the ability to do such a thing.

JM: How hard is it to take this on? Dealers are going ask: will it disrupt my business?

BM:  The beauty of what we have developed is that it’s such an easy and intuitive system to install with little or no training.

So dealer managers can very quickly and easily get their hands on it and are able to get the intelligence from it to make quick and accurate decisions that are built on real vehicle sales performance data. So in that sense it is not disruptive.

But what is disruptive is that a dealer team can now stop interviewing people three or four times, stop having to go through wasteful steps in an inefficient process that is often avoided by dealer managers anyway because they are so time poor.

So you can strip a lot of activity out of your process that really adds no value.  In fact you can compress that process right down and hire much more quickly. This can be particularly valuable when you have a gap on the showroom floor that is costing sales that never come back again.

So if you can hire more quickly and accurately, quite literally, almost overnight, we think that gives you a really powerful edge.

So does that mean, as a dealer, I am going to have to change certain parts of my process? Yes, and for the better.

They are going to have to break a few habits, that’s true, but we can put in their hands intelligence that allows them to make an informed decision about a candidate’s vehicle sales capability extremely quickly.

JM:   How does it physically work?

BM:  It is all cloud-based in Microsoft’s Azure platform so all data is extremely safe and secure.

Everything is accessed through a web browser so there is no need for any intervention with any existing dealer management system. We don’t touch any of the DMS systems.  Our system runs completely independently and a dealer is able to access it, input data, get intelligence and reporting and predictions through a web browser from virtually any device anywhere.

JM: How do you charge for the service?

BM: Our model is all you can use.  You can put all your employees through the system and you can put every job applicant through the system for one annual subscription amount.  This will give you access to the predictive capabilities and all the analytics capability that comes with it as well as a lot of dealership reporting functions.

When you get to the size of a group of 20 or 50 stores we are then able to provide enterprise level visibility of your entire sales team across every store.

JM: How does your system get set up in dealerships?

BM: We support the dealers with complete implementation. Pretty much all the support materials are built into our system.  We do visit with dealers personally but a lot of the set-up is so intuitive they are able to get started right from the get-go.  Any time they need support they can access it 24/7.

SA:  Part of my responsibility is to support in dealerships with any sort of training and localised conversations.  We have seen this with a couple of dealerships we are working with at the moment where they have decided to put their current team through the system and there are some very specific things that we can do to help those sales individuals become better performers.

So the system is a very strong adjunct to the training and development that the dealership can offer and it ensures that the managers in each department can be quite specific in the training that an individual needs.

JM: Are you able to highlight someone who is selling the wrong brand?   

BM:  Yes. It can be that granular. For example, we work in a lot of high-tech businesses where the sales forces are segmented in many ways.

Within a dealership there is a specific make-up or performance fingerprint that is best suited to volume brands.

Once we have a sufficient sales performance data regarding a particular brand, you can literally built a customised fingerprint around that brand or region.

We have done that with BMW and Mercedes-Benz and we’re working on that with others.

It is quite complex.  For example a narcissist may not be desirable in many showrooms but in some brands we are actually showing a positive correlation between narcissism and sales performance.   

 

The reason he is not being successful is that he has the wrong customer bias; the wrong kind of people associated with the brand.  So you can transfer him out of one brand into another and all of a sudden he finds success.

 

SA: In a larger group you could have a young kid who is struggling in a Jaguar Land Rover dealership, but he might have the perfect psychographic makeup to be selling Volvos.  And the reason he is not being successful is that he has the wrong customer bias; the wrong kind of people associated with the brand. So you can transfer him out of one brand into another and all of a sudden he finds success.

We also see people who cannot cut it in new cars but who can cut it in used cars or someone who does not cut it in service who could be in new cars or vice versa.

So instead of losing a key member of staff because he is disenfranchised with his role you can sit down with them and say: John if I look at your profile you would make a perfect service advisor. How about we give that a whip and see how you go.  

Based on his psychographic information he could quite easily transition into the role and perform very well.

JM: Can it predict a certain career path?

BM: We are already doing this successfully with clients outside of automotive in high-tech. We are measuring promotability so where there is a career track where you might bring someone in at an entry level and after 12 or 18 months of performance you might promote them into the next role.  

We are able to measure that promotability through two or three career steps pre-hire.  So that is an interesting application of the technology also.

JM: Should dealer staff be worried by this?

BM: It is certainly not our intent that this is about getting rid of people.

It is about getting people into the right role in the right place. For example, it’s not only employers who make poor hiring decisions about who they hire for a certain role, candidates also make poor decisions about their careers and the jobs they think they are best suited for. As a matter of fact, at times they are quite delusional.

   

We are preventing people from getting into roles where they are only going to last six months or nine months where they will have a miserable time and are either terminated or they quit.

 

So we know that through this approach we are also preventing people from getting into roles where they are only going to last six months or nine months where they will have a miserable time and are either terminated or they quit when really, from the get-go, we are able to say this is not someone who is well-suited for this role.

It works both ways but the intent is; do we have the right person for the right role? Can we make better, more consistent decisions more often to get those right people into the right role?

Will there be a few managers who might use that to perhaps take a surgical look at the team and decide, based on the results, there are a couple of people who won’t cut it?  I think undoubtedly they will do that.

JM: How big a problem is this? How expensive can it get?

BM:  Every dealership has a bunch of people who are capable of selling more but who management tolerate because they either cannot find enough new people to hire or they are not sure that if they hire someone new that they will not do any better than the seven vehicles a month they are already getting.

So what happens, and this is a reality in many stores, you get 50 or 60 percent who are underperform against quota, but it’s hard to find good people to fill these spots. There’s previously been no surgical tool such as we are now able to provide which enables dealers to more easily find people who can perform to the expected sales quota.

SA: When I moved into the car industry in those early days you would give a new hire four to six weeks to cut the mustard and then they were out the door. Today, because of HR regulations you have guys holding on to people for six to nine months.

They have their first 90-day program and then they put them on to another 90-day probation. So the number of lost sales blows out significantly because now I have this person who is falling short on any number of cars every month.  

So I have made the wrong decision and hired the wrong person and I am not sure how to get out of it. So then you decide to pour extra time and resources into that person.

 

You have a manager who puts significant time into the under-performers when he should be putting time into the guys who are at or near quota because you can move them up quite easily.

 

And you have a manager who puts significant time into the under-performers when he should be putting time into the guys who are at or near quota because you can move them up quite easily. But getting someone up from very low monthly numbers is seriously hard work.

The disruption that most managers experience is that they are surrounded by poor performers.  Why would you want to keep doing that? The cost is enormous.

BM: To nail right in to Stuart’s point, a lot of clients across all industry sectors say this is not just about finding A-players it’s also about how to avoid those liability hires because they really cost me.

When you’ve got a showroom specced for seven, 10 or whatever number of sales people and 50 to 60 per cent are operating below the required sales quota, that’s a huge lost opportunity cost you’re managing that you don’t need to bear. You could be filling those spots with performers using PerceptionPredict.

JM: Have you identified the cost?

BM: The absolute cost per person varies depending on volume or prestige or luxury, and from dealership to dealership PMA, and from country to country, but it’s between $50,000 to $100,000 per liability hire in real lost money!

 

We have yet to see a dealership with a line item in the accounts called: ‘cost of poor hires’.

 

We have yet to see a dealership with a line item in the accounts called: ‘cost of poor hires’. This is a difficult issue for dealer managers because they are very time poor and also tough because they’ve lived with the problem for years and years and therefore they actually don’t see the underlying cost that is hammering their profitability.

The costs are real but they are not recorded anywhere. And no one is singularly responsible for saying: how do we fix this?

JM: These are seriously big numbers. If you are talking $50,000 to $100,000 and you have 10 in a small dealer group or 100 in a larger dealer group then you are talking millions of dollars.

SA: If I am in a big group and potentially 30 per cent of my sales staff are poor hires and I am living with this, the problem is that when I try to replace them I don’t know if I am going to replace them with someone better. I’m just going to get another poor hire and go through the same thing all over again, so I don’t, I learn to live with the pain until it just becomes the way we do business.

 

We want to give sales managers more time to be more profitable as opposed to fixing up the dead wood that they have in their businesses.  We want them to be more productive and effective as opposed to fixing problems. There is a huge conversation to be had there.

 

We want to give sales managers more time to be more profitable as opposed to fixing up the dead wood that they have in their businesses.  We want them to be more productive and effective as opposed to fixing problems. There is a huge conversation to be had there.

JM: Is there a factor of the industry hiring the same people from a relatively small pool. Can you do something about that?

SA: People are always saying they can’t find good people in the market, but they are looking in the wrong place and in the wrong way.

If you look at all the ads for sales consultants they all say you need one, three or even five years of experience and be able to sell say 10 cars a month.

So all we are doing is rolling through a continuum of these B and C-grade players who are frequently just moving from dealership to dealership. And yet we have great kids sitting out in the marketplace today who by their psychographic makeup are perfect candidates and who could be working as a groundsman or a pastry cook who’d love to sell BMWs.  

On the face of it no manager is going to give them a shot. But if they go through our system they may show up as a genuine blip on a dealer’s radar as someone who can sell 125 or 175 cars a year, now that’s a story with potential.

JM:  How does the groundsman get on to the process in the first place?

BM: They can click on a link in a dealer’s site that takes them to a registration page that is customised to whatever the dealer or dealer group wants.

The manager can respond to a direct enquiry by sending the candidate a link into the encrypted platform which is unique to every dealer where candidates complete the process online.

 

The dealership gets an automated notification sent to a defined set of managers telling them how many vehicles the candidate can sell per month.  Management can then respond immediately and get hot candidates straight in for an interview and, if they pass muster, hire them on the spot.

 

The candidate sets up an account and less than 30 minutes later – or longer if they choose to – the dealership gets an automated notification sent to a defined set of managers telling them how many vehicles the candidate can sell per month.

Management can then respond immediately and get hot candidates straight in for an interview, and if they pass muster, hire them on the spot. The system can dramatically reduce the time to hire and more quickly reduce that under-performing gap in the showroom.

JM:  Is it possible for a groundsman to be a good sales person?

BM:  Absolutely.  There is a large pool of untapped talent, absolute gems, who are overlooked because the number one criterion recruiters and dealer manages look at is the resume. What has the candidate done so far? They use that as their primary guide to how the candidate will perform because they’ve previously had little else to guide them.

SA:  One aspect to this is the myth that there are only so many good people to go around and the market for good people is lean. That’s not true but unfortunately that leads to some dealerships offering what you might call drug money to get a competent sales person to go from one dealership to another.

But I can put an ad online for a sales consultant and, within a short time, have 50 apply for it and in 30 minutes I can look at a prediction of how many vehicles they can sell and choose the top five candidates who are going to sell 18 to 20 cars a month for me. I then interview them to decide which one best fits in with the culture, team and process but I know they can sell 18 cars a month.

This means I am not guessing any more.

The whole process has taken me the time to stick an ad online and make sure the link is in place.  The rest is dead easy. All I do is contact the top five people for an interview knowing they have what it takes to sell cars.

BM: Dealerships are very complicated businesses with some seriously sophisticated tools. But people are still the most operationally inefficient variable that a store manager has to deal with and there is a universal lack of tools and intelligence to use to do anything about it.

That is the void we are filling by taking away the guesswork.

People are not perfect.  We know that. But we want to greatly improve the probability of more consistent decisions and that is where we know we will help dealers win.

SA:  Dealers say to me proudly that they have only a 40 per cent sales staff turnover but they don’t realise that that is $2 million going out the door.

 

So in this harsh operating sales climate where dealers are asking where their money is going then that is where it is going in the lost sales opportunities and direct costs of sales staff turnover.

 

So in this harsh operating sales climate where dealers are asking where their money is going then that is where it is going in the lost sales opportunities and direct costs of sales staff turnover.

BM:  The system is not set and forget.  It is constantly evolving as employers update how each of the people assessed have performed. So it is a self learning system where the more people who are in the data base the more accurate the predictions are.