Although just about everyone here has posted my reasoning, I’ll reiterate it so you can hear it directly from me.
We are a new Nissan dealership. We’ve only been selling Nissans for four months now, after we transitioned from being Albany Dodge. Our dealership loses money on a lot of vehicles in order to generate business via referrals and repeat business. What we’re doing must be working considering we’ve beat out dealerships that have been around for 20 years last month, and are on pace to do the same this month (based on new car sales). How do I still have a job? I don’t know, maybe because I’m pretty good at what I do considering the amount of time I’ve been doing it, and ALL sales get approval from more than one sales manager who also understand that it takes money to make money.
Our dealership gives a lot of money on trades and takes a lot of money off on vehicles in order to generate sales. Also, what happens when someone buys a car and drives it? They need service. Oil changes, brakes, etc… all cost money and people are much more likely to service their car at the dealership they purchased from if they were happy with the sales process. To bring that even further, people are much more likely to buy a car from the dealership they get their car serviced at. It creates a cycle. A cycle that pays off greatly in the long run.
As I said, I have no problem paying out money for referrals because it generates business for me and the dealership which I’m very loyal to as they’ve given me a great opportunity, trained me, and I enjoy what I do and who I work with. Plus, I’m looking to move up in the company beyond doing sales.