Pros and Cons of an Open Floor Dealership

Pros and Cons of an Open Floor Dealership

Amongst many other questions that management at a car dealership has, a pressing one is whether or not to have an “open floor” dealership. This is the plan that most people imagine when thinking about a car dealership. It involves a group of sales people standing around waiting for customers and then rushing to be the first to greet them, thus potentially making sales and meeting quota. If they make the determination that they think the customers are “serious” and actually wanting to buy a car, they proceed. If they get the feeling the customers aren’t actually going to buy a car, they may hand the customers their business cards and send them on their way before picking up another potential buyer. 

The Cons

A major downside to this, according to Michael Bowen of Dealer Marketing Magazine, is that customers can easily be lost if the incorrect determination is made. Salespeople on an open floor plan solely aim to make sales, so they may be quick to dismiss potential buyers if they don’t get the right “vibe” from them. Bowen reported that recent research indicates open floor plans cost dealerships around 12% of sales volume, which equates to dealerships missing out on thousands of dollars per month.

Cox Automotive’s 2017 Dealership Staffing Study unveiled an alarming statistic and reported that “only 54% of employees hired for customer-facing positions said they received enough training to do their jobs effectively.” The average annual turnover rate among auto salespeople is around 67%, which also creates issues for any dealership since it will have to hire someone new. Without proper training and experience, salespeople in an open floor sales setting may not be able to make the right decisions when determining whether or not a customer is serious about buying a car.

Bowen also reported that only around half of customers’ information is actually entered into a CRM, which may also be detrimental to dealerships. Salespeople on open floor plans may be too quick to dismiss customers and fail to even gather their names and contact information.

The Pros

It’s not all bad, though. Since salespeople are eager to close deals, open sales floors can actually make them work harder. Dedicated and enthusiastic salespeople try extremely hard to connect with customers and make sales. Of course, the more sales made, the better for the dealership and the happier managers and salespeople will be. According to Tyson Madliger of Dealer Authority, “the eager will be rewarded while the wallflowers will be steamrolled.”

In terms of customer feedback, open sales floor plans can go either way. Some customers enjoy having a lot of sales people around so they feel important; however, most people report that having several salespeople “surround” them is uncomfortable. It’s a well-known notion that a lot of people detest car buying and, according to Beepi, Inc.’s 2016 Consumer Automotive Index, “people are fed up with the old-school experience of buying and selling a car at a dealership.” Therefore, it’s a toss-up whether or not open floor plans satisfy customers or not.

Overall, open floor dealerships have both upsides and downsides. Despite many sales being based on a “gut feeling” by the salespeople, proper training and experience can bring in cash that would otherwise be missed out on. It is also important to remember that as dealership technology advances, your sales floor plan may change, too.

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