How Each Employee Can Help Fight Margin Compression

Margin compression is on every car dealer’s mind. And, even though its causes can be difficult to pinpoint, one thing is certain: today’s car-buying customers have changed, and their behavior is directly impacting your profit margins. So, what can be done? How can your dealership adapt to this new type of consumer? One solution might be closer than you think.

The Evolution of the Employee Mindset

Customers have access to more information than ever before, including readily-available information about competitive vehicle pricing, making the car-buying experience almost completely transparent. As a result, today’s consumers are savvy, demanding, well-educated, and much less tolerant to a hard sell. So, if margin compression can be attributed to a change in consumer behavior, it makes perfect sense to combat the problem with your most forward-facing, consumer-centric assets–your employees.

Believe it or not, your employees have a tremendous amount of influence over margins, for better and for worse. That’s why it’s so important for them to understand the bigger profit picture, and the role each individual plays in preserving those precious profits.

To ensure this type of modern mindset, it’s important for management to ask questions about how employees are interacting with customers, and how customers are reacting, in turn. And, that means frequent and more focused employee training. Sitting down with your employees, as often as once a month, is a great way to help identify mistakes and offer solutions that will positively impact profits. One common mistake that often gets identified during these training sessions, for example, is the increased tendency to sell cars below MSRP, as employees cave to sales goals and quotas in the face of demanding, knowledgeable customers.

Catering to the Customer

There’s no doubt that customers have changed. But, have your employees changed with them? When employees fail to cater to customers’ tech-savvy tastes or refuse to adopt a more streamlined, customer-centric car-buying experience, your dealership loses business. On the other hand, if your employees are given license to accommodate the customer on the customer’s terms, preferred settings, and comfort level, more business will come calling.

As an example, many forward-thinking dealerships have implemented live chat features on their websites to interact with customers from the outset of the car purchase experience, creating a natural, comfortable way for consumers to transition from online shopping to in-dealership shopping. This process streamlines the customer experience and can turn potential customers into lifelong loyalists.Again, employee training is key. Armed with the right tools and training, including technology that speaks to the well-informed consumer, your employees can provide a more friendly, relatable, customer-focused car buying experience.

Cultivating an Employee-Centered Culture

Of course, none of this can be done without the employees, themselves. And, when your dealership is a revolving door, inexperience comes in and money spent searching for talent and training new people goes out. In today’s margin compression environment, that’s never a good business model. One way to combat this problem is by investing in technology that attracts both customers and talented employees.

When your employees feel that you are invested in their welfare, they are more likely to return the favor with an increased investment in their work and the success of your business. Investing in technology that makes your employees work lives easier and more interesting improves satisfaction and retention.


Margin Compression isn’t going anywhere anytime soon, but that doesn’t mean your dealership can’t work to improve efficiency in areas that have lagged behind the changing times. With proper employee training focused on preserving profits and catering to customers, along with an increased effort to attract and retain top talent, your dealership can find success and increased confidence in the face of margin compression. To learn more about how dealerships are combating margin compression, checkout our comprehensive guide.

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