Chapter 33 — Exercises: Sales Management

Work these to move from understanding the desk to thinking like it. Difficulty legend: ⭐ basic · ⭐⭐ applied · ⭐⭐⭐ synthesis/judgment · ⭐⭐⭐⭐ advanced/extension.

Most items need no answer key here (selected answers live in Appendix I). For calculation items, a numeric answer is provided in a <details> block so you can check your math.

Part A — Conceptual Understanding ⭐

  1. Name the four buckets of the sales manager's job. Which one is the only one a salesperson sees clearly from the floor, and why does that distort their picture of the job?

  2. Define each term in one sentence: first pencil, the tower, T.O. (turnover), up, mini, over-allowance.

  3. What is PVR, and what are its three common forms? Which one is the single most important profitability metric on the floor?

  4. In your own words, what does "desk a deal" mean? Name three things the desk is actually doing when a deal comes up to it.

  5. What is CSI, and list three concrete reasons a sales manager treats it as money rather than as a soft metric.

  6. Explain the difference between an honest T.O. and the T.O. gauntlet. Why does the gauntlet damage the store even when it "works" tonight?

  7. What is a retroactive volume bonus (stairstep), and why does it make the last car of the month worth more than its own gross?

  8. List the five traits a sales manager hires for. Which common qualification is deliberately not on the list, and why?

  9. What is the difference between front-end gross and back-end gross? On a typical new car, which one is usually thin (sometimes zero or negative), and which one frequently carries the deal?

  10. In one or two sentences each, explain the difference between keeping a deal alive and holding a customer hostage, and give one concrete example of each.

  11. What does it mean that a volume bonus is retroactive (a "stairstep")? Contrast it with a marginal bonus that pays only on units above the threshold.

  12. Why does the chapter say "management is a fork, not a trophy"? What is the daily reward a salesperson gets that a manager mostly does not — and what does the manager get instead?

Part B — Applied Analysis ⭐⭐

  1. Here is one salesperson's funnel for the month. Find the leak and state the one coaching priority. Appointments shown 30 Demos 12 Write-ups 10 Deliveries 7

    Answer The leak is between shown and demo — only 12 of 30 shows got into a car (40% demo rate, low). Write-up-to-demo (83%) and close (70%) are strong. This salesperson closes well once people drive, but isn't getting enough people into a vehicle. Coaching priority: get more shows onto a test drive (the demo). One lever, not ten.

  2. Now a second salesperson's funnel for the same month. Find this person's leak and contrast the coaching with #13 — same unit count, different problem. Appointments shown 40 Demos 30 Write-ups 22 Deliveries 7

    Answer Here the front of the funnel is excellent (30 demos from 40 shows, 22 write-ups) but only 7 of 22 write-ups close (32% — low). This salesperson gets people into cars and onto worksheets but loses them at the close. Coaching priority: closing skill and finding the unvoiced objection (Ch 13/14), not getting more traffic. Same 7 deliveries as #13, opposite diagnosis — which is exactly why a manager watches the stage ratios, not just the unit count.

  3. A salesperson tells you, "I'm a 40% closer." What single question must you ask before that number means anything? Give two different denominators that would make "40%" mean very different things.

  4. The Okafor SUV: selling price $43,500**, true cost in the car (invoice − holdback) about **$41,800, trade allowance $18,000**, trade ACV **$16,500. Work the true front-end gross step by step and say in one sentence what kind of deal this is on the front.

    Answer Gross on the car = $43,500 − $41,800 = $1,700.** Over-allowance = $18,000 − $16,500 = **$1,500. True front-end gross = $1,700 − $1,500 = **$200** — a **mini** (plus ~$900 holdback underneath). The front barely makes money; this deal has to earn its keep in the back end.

  5. Same deal as #16. The customer now demands $19,500** for the trade. Recompute the front-end gross and state, in dollars, how deep the front goes (count the $900 holdback). Then name the three honest options the desk has.

    Answer New over-allowance = $19,500 − $16,500 = $3,000. Front-end gross = $1,700 − $3,000 = **−$1,300. Even with the $900 holdback, the front is about **−$400 (in the hole). Honest options: (1) hold the allowance and show the customer the trade-and-price-are-the-same-money connection; (2) split the difference and find the rest in a legitimately chosen back-end product / smaller price discount; (3) decide the deal is worth a front-end loss for volume/CSI/an aged unit. Never silently eat the loss, never lie that you "can't."

  6. Same Okafor deal. The desk re-pencils the trade at a right-sized $17,700** allowance (still $700 better than the customer's other quote, still honest because ACV is $16,500). Recompute the true front-end gross, and explain in one sentence why this is right-sizing an over-allowance rather than lowballing a trade.

    Answer Over-allowance = $17,700 − $16,500 = $1,200. Front-end gross = $1,700 − $1,200 = **$500 (up from $200). It's right-sizing, not lowballing, because the allowance is still above the trade's real ACV and still beats the competitor — the desk reduced an unnecessarily generous number to an honest-and-still-great one. Lowballing would be allowing below ACV while claiming it's "top dollar."

  7. Compare Rick and Carmen as a manager would. Rick: 14 units, front PVR $900, back PVR ~$300. Carmen: 25 units, front PVR $450, back PVR ~$1,000. Compute each person's total PVR and total department gross they generate. Who is more valuable to the store, and why is the front-PVR number misleading?

    Answer Rick total PVR ≈ $1,200; dept gross = 14 × $1,200 = $16,800.** Carmen total PVR ≈ $1,450; dept gross = 25 × $1,450 = **$36,250. Carmen generates more than double the gross. Front PVR makes Rick look better (it's double Carmen's), but total PVR, volume, CSI, and referrals all favor Carmen. A manager who chased front PVR alone would misjudge both.

  8. The store is at 308 units with three hours left and needs 312 to trigger a stairstep bonus worth an extra $700/unit on all 312 cars. The desk is debating whether to do a zero-front-gross deal on the 312th car. Is that rational? Show the bonus math.

    Answer The bonus pays on the whole month: 312 × $700 = **$218,400 of bonus that exists only if the store crosses 312. A single zero-front-gross car that gets them from 311 to 312 unlocks the entire bonus, so the marginal car is "worth" up to $218,400 to the store even at zero front. Rational — and it's exactly why the ethical push works: the store can afford to give those last cars away clean and still come out far ahead.

  9. A 95-day aged unit is costing the store roughly $11/day in floor-plan interest. How much has it cost to hold so far, and roughly how much more will it cost if it sits another 30 days? Use this to explain, in one sentence, why the desk may want to discount it at month-end. (Preview of Chapter 34.)

    Answer So far: 95 × $11 ≈ **$1,045. Another 30 days: 30 × $11 ≈ **$330 more (and the unit keeps depreciating on top of that). The desk may happily discount it now because a transparent discount that moves it stops the daily bleed and frees the floor-plan line — often cheaper than holding it. Time on the lot is money out the door, which is why aged units are prime month-end candidates.

  10. The desk forecasts the Okafor deal's total gross. Using the canonical back-end pieces — finance reserve ~$1,000, ESC $2,200 retail / $800 cost, GAP $900 retail / $300 cost — plus the right-sized front of **$500 (from #18) and the $900 holdback, compute (a) the total back-end gross if the customer buys both products, and (b) the total to the store. Then recompute (c) the total to the store if the customer declines GAP.

    Answer Back-end gross pieces: reserve $1,000 + ESC gross ($2,200 − $800 = $1,400) + GAP gross ($900 − $300 = $600). (a) Both products: $1,000 + $1,400 + $600 = $3,000** back-end gross. (b) Total to store = $500 front + $3,000 back + $900 holdback = $4,400.** (c) Declines GAP: back-end gross = $1,000 + $1,400 = $2,400; total = $500 + $2,400 + $900 = **$3,800. Note the deal is healthy either way — and the customer freely choosing is the point.

  11. Closing-ratio denominators. A salesperson sold 8 cars from 20 fresh floor ups, 40 internet leads, and 6 repeat/referral appointments. Compute the closing ratio against each denominator and against all opportunities combined. Which single number would you, as the manager, be most careful about quoting out of context, and why?

    Answer Against floor ups: 8/20 = 40%. Against internet leads: 8/40 = 20%. Against repeat/referral: 8/6 = 133% (more sales than those appointments — because referrals also walk in). Against all 66 opportunities: 8/66 ≈ 12%. Be most careful quoting the referral number or the floor-up number out of context — both look great but the sales came from a mix of sources. Always state the denominator; "40% closer" is meaningless without "over what."

Part C — Skills & Practice ⭐⭐–⭐⭐⭐

  1. Write your T.O. opening. A green pea brings you a deal stalled not on numbers but on the relationship. Write the 3–4 sentences you'd say sitting down with the customer — fresh, low-pressure, positioning the salesperson as the customer's advocate and opening with listening. Then mark which sentence does which job.

  2. Coach, don't close. A salesperson brings you a deal $600 apart and says "they keep coming back to the payment." Write the coaching dialogue (your questions, not your answers) that helps them discover whether it's really a money problem or a confidence problem. Do not solve it for them.

  3. Run a one-on-one. Using the funnel in Part B #13, write the opening 4–6 sentences of a weekly one-on-one with that salesperson. Lead with a genuine strength, name the one number to move, and end with a question that puts the diagnosis on them.

  4. Desk the deal. Take a deal from your store (or build realistic numbers): MSRP, target selling price, true cost (invoice adjusted for holdback/pack), trade allowance/ACV/payoff, and the back-end pieces. Produce the full two-bucket structure (front gross worked step by step; honest back-end gross if products are freely chosen; total deal gross). Write one sentence on where the deal makes its money. (This is your Project Checkpoint — keep it for the portfolio.)

  5. Diagnose the dirty push. A manager hits 312 on the last Saturday by packing payments on two soft deals, slamming an aged unit into F&I to recover a hidden discount, and coaching the survey on three deliveries. List, specifically, what is likely to go wrong over the next 30 days as a result — at least four concrete consequences.

  6. Write the month-end floor talk. It's 5:05 p.m. on the last Saturday; you're four cars out; the bonus pays on the whole month. Write the 4–6 sentences you'd say to your floor to set a clean tone — what to work (the base), what the bonus math means, and the one thing you won't tolerate. Make it sound like a real person, not a poster.

  7. Build the 90-day plan. For a brand-new hire from outside the industry (a Jordan), sketch a one-page 30/60/90-day onboarding plan with a goal for each phase and the two or three concrete activities you'd require in each. Mark which phase you'd resist judging on unit count, and why.

Part D — Synthesis & Critical Thinking ⭐⭐⭐

  1. The chapter claims the ethical month-end push and the profitable one are the same move. Build the argument in your own words, using the stairstep-bonus math. Then steel-man the grinder: under what (narrow) conditions might grinding the last few customers actually maximize this month's cash — and why is it still the wrong call for the business?

  2. "Default to coaching; take the close yourself only when the cost of losing the deal outweighs the value of the lesson." Give one scenario where taking the close is the right call and one where it's the wrong call, and explain the judgment that separates them. What must you do after taking a close, either way?

  3. A top salesperson on your floor (your "Carmen") tells you she has no interest in management — she'd rather stay on the floor and build her referral base. Is keeping her on the floor a failure to develop her? Argue both sides, then state your position. (Tie to theme #6 and to Chapter 40.)

  4. CSI is tied to real bonus money, and the survey can feel arbitrary or unfair. Make the strongest case you can for why "begging for tens" is tempting — then dismantle it. What does coaching the survey cost that's bigger than the bonus it chases?

  5. The desk can structure a $200-front deal because it sees the back end, the holdback, and the volume bonus. A salesperson, paid mostly on the front, sees a near-worthless deal. Whose view is "right"? What does this tell you about why the desk and the floor sometimes disagree — and how a good manager bridges that gap honestly?

  6. A new sales manager finds that the most "fun" part of the week is jumping in to close tough deals himself, and the least fun part is the weekly one-on-ones. Diagnose the risk in that preference. What does it predict about his floor in six months, and what would you advise him to do about it?

Part M — Mixed / Interleaved Practice ⭐⭐–⭐⭐⭐

  1. (Ch 33 + Ch 12) Present the Okafor first pencil as the salesperson (price-first, all four squares, honest), then immediately as the desk explain what structure you built underneath it. Show how the two views describe the same deal from opposite sides of the counter.

  2. (Ch 33 + Ch 5) A salesperson on the Summit plan (25% front + 5% back, $150 mini, retro volume tiers $100/$200/$300/$400 at 10/15/20/25 units, $500 CSI bonus) finishes the month at 24 units. As their manager, explain — in dollars — why helping them deliver one more car tonight is worth far more than the gross on that one car. (Hint: the 25-unit cliff is retroactive.)

    Answer (illustrative) Moving from the 20–24 tier ($300/car) to the 25+ tier ($400/car) is retroactive — it re-rates all their units. At 24 units the volume bonus is 24 × $300 = $7,200. At 25 units it's 25 × $400 = $10,000. That one car adds $2,800 of volume bonus plus the commission on the car itself — far more than the gross on a single deal. For the salesperson, unit 25 is the most valuable car of the month; for the store, it may be the unit that crosses its stairstep. Both cliffs argue for helping that deal close, clean.

  3. (Ch 33 + Ch 16) Your floor's CSI is sliding. Design a non-survey-coaching plan to raise it, drawing on the delivery and the 7-day call from Chapter 16. What three things would you measure and coach, and what would you explicitly forbid?

  4. (Ch 33 + Ch 34 preview + Ch 22) At month-end you need volume and you have a 95-day aged unit costing floor-plan interest daily. Explain how you'd move it clean — the transparent discount, the honest back end (reserve via buy/sell rate, products freely chosen), and the CSI protection — and how this single deal serves both the inventory and the unit count at once.

  5. (Ch 33 + Ch 13 + Ch 31) A customer is trying to leave. Write what an honest T.O. does (find the one unresolved concern — the Henderson dynamic) versus what the gauntlet does. Identify where the gauntlet risks crossing from "bad practice" into a consumer-protection problem.

  6. (Ch 33 + Ch 6 + Ch 39) A new hire is on day 42, has sold two cars, and is talking about quitting. As the manager, connect the dots: how much of this is a resilience problem the new hire must own, and how much is an onboarding problem you own? Write the conversation you'd have and one structural change you'd make to the 90-day plan.

Part E — Research & Extension ⭐⭐⭐⭐

  1. Find your own store's (or a real public source on) manufacturer stairstep / volume objective structures. Are they retroactive ("on all units") or marginal ("on units above the threshold")? How does the answer change month-end strategy? Write a one-page brief for a new manager.

  2. Interview (or research) a sales manager or GM about the promotion from salesperson to manager. What surprised them most? What do they wish they'd known? Map their answers onto the four self-check questions in §33.8 and write up what you learn about whether the desk is the right path for you.

  3. Research how at least two manufacturers structure CSI / sales-satisfaction surveys and the penalties for survey manipulation. Summarize what a manager may and may not do, and draft a one-paragraph floor policy that protects CSI by managing the experience rather than the score.