BDC, Call Center...BS...Call It What It Is!

COMMUNICATION!

I just got through reading “Is the dealership sales call center obsolete?”on autonews.com. I got the article from Andy Warner on twitter. This article highlights dealers that have built, dismantled and maintain BDC’s and discusses the various pro’s and con’s of each but fails to get the real point.

That said I am going to try and land the plane on this topic and let’s discuss where you think I’m missing it or what we can do to make it better. The reality is that we have a real problem here that needs to be addressed for the retail auto industry as a whole.

I have beaten the lead conversion drum for years to the point many think I am obsessed with it.

The fact is that I am but over the last 2 years I have come to realize that… “Lead Conversion isn’t enough”, we are going to have to get beyond lead conversion to the visit to excel and therein lies our problem.

When we get a lead or a call there are a few inherent things we know we have to do.

  1. Answer the question
  2. Give the price
  3. Sell the appointment

But if you’ve answered the prospects questions and you’ve given them the price…why do they need you? When you get a prospect on the phone how do you get their contact information and make sure it is accurate, and then convince them to visit the store? These challenges are not new to the industry; they aren’t even unique to the automotive industry. The fact is all business working to generate leads face these same challenges.

The answer… VALUE!

To get something from someone, a lead, contact information, a visit you have to give them something of value in return.

Value Drivers

  1. Time – this is the number one reason the prospect is on the net to begin with, it would stand to reason if you can save them time in the shopping & buying process you will have an advantage (think Progressive.com). Here I suggest a 90 min test drive and purchase guarantee.
     
  2. Information – the primary reason a prospect contacts the dealership is for information, about the car, about their trade, about financing and of course the price Joe Webb talks about these various types of appointments in a very good blog post “The Four Appointments Car Dealers Should Set” but what is the VALUE the customer gets for setting the appointment? This is where most sales people miss it and is your opportunity to place yourself above the competition with an online brochure about the car they are buying with information on why they should buy from your dealership and a video introduction from you with a walk around of the car. You see the dealership and the YOU are the only things they can’t get somewhere else. This is the reason we developed infoMagnet our online brochure tied to our incentive based behavioral marketing app. When you offer this value 98% of the time you will get good contact information from a phone call to your dealership and over 60% of these customers will show up at your store with a 80% plus closing ratio.
     
  3. Convenience – we all pay more for convenience, we do business everyday based on what is most convenient for us. Make it more convenient for your prospect to buy from you. Deliver the car to their place of business let them drive it while you take their car and get the appraisal. I was doing this back in the 80’s and ironically I would sell at least 2 other cars to people in that office with in as many months after I did this for a prospect. My closing ratio…100%, I never lost a customer I delivered the car to.
     

Whether you are in the BDC or you are a salesperson on the floor you have to be able to communicate the value to the customer for giving their contact information, showing up at the store and buying from you. So you see it doesn’t matter if you have a BDC Department or Your sales staff handles the leads as they come in, they will all have to communicate value to get the customer.

The question is who do you want to train? That’s all.

So tell me, where am I missing this, if at all? What can we improve or add to TIME, INFORMATON & CONVIENENCE?

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Comment by Keith Shetterly on June 1, 2013 at 9:58am

I've got a great friend who owns two dealership in Chicago.  His BDC does all the things that decades have shown that the sales people AND their management are not capable of doing:  Answer leads quickly and the phone well, and move them both ASAP to the showroom visit.  A salesperson who can answer phones, leads, and do follow-up as well as the BDC is rarer than Doug.  Dealerships are habitual organisms, and the bad habits are why the BDCs are effective.  We can try and find more Doug's, and then try and find principals and GMs who will empower them, and then let them train and hire salespeople to do exactly as Doug says.  i'm just saying that, no matter we did that, the pool of salespeople talent is not that large and the management not that dedicated.  Let me share a stat from four years of call center data:  For appt's that show, dealerships LOG between 22% worst and 65% best.  And the low end  of less than 30% contains 80% of dealers in a pool of over a thousand!!  That's a real stat from unsold follow-up calls done by a 3rd party call center.  You don't want to know what the dealerships' follow-up number was.  Anyway, the folks that Larry wants and Doug had are available.  They're just not common. And a BDC can fail for the same reasons, by the way, of unfocused neglect and bad hiring/training.  It's just a "one stop shop", though, and that single point of failure can be repaired a lot easier than 35 salespeople.  My $.02.

Comment by Stan Sher on June 1, 2013 at 4:50am

I would also love to hear what Brian Benstock would say to this discussion as he operates one of the top dealerships in the country.  The BDC is the lifeline for Paragon with probably one of the most impressive setups ever created.

Comment by Stan Sher on June 1, 2013 at 4:48am

I just think back to my old Nissan store that gets around 1400 leads per month with sales call volume as much as 100 incoming sales calls per day sometimes (depending on campaign).  I also know that there at one time were 12 sales people and now as many as 22 because the store is doing around 350 a month now.  You cannot tell me that not having a BDC in that environment will help the store be effective.  22 sales people will not be sitting there all day taking 100 incoming calls and handling 1400 internet leads.  If they did their conversions would be terrible because too many calls would be missed and internet lead response times would be very poor.  No one would be able to follow a process of following up with leads for 90-180 days. The store would lower their budget and sell 100 cars per month.  This is especially because it is in a metro area and most of the traffic gets driven by phone and internet.  We had customers taking public transportation to get to us and limited parking.  The BDC is a very important department depending on the situation of the store.  Let sales people sell cars and let a qualified BDC properly get the customers in the door.

Comment by Larry Bruce on May 31, 2013 at 7:18am

Tom by far... Train your sales staff to communicate VALUE NOT PRICE!

PRICE does not equal COST if it did 70% of your customers WOULD buy the car they looked at online. 

In a rural market your competition is definitely the other dealers in you market. You need 4 things to to do that:

1. A Market Evaluation to understand; Where 80% of your business comes from right now, what the top makes and models you take in on trade, and the top models you are selling. This will give you an idea what models to market to and against and tell you where to do it. 

2. A strong database marketing strategy with your existing & potential customers! 

3. A strong content marketing and social media strategy that will build audience and engage them at YOUR web properties on that level NOT in social media. 

4. A strong process that your sales people use to stay in contact with the increase in leads as they come in. Your sales people must learn to do this through multiple channels, email, SMS and phone call. The problem is we think there is only one channel we can communicate with customers on BUY THEY don't communicate that way and every communication must have value.  

"Average people with extraordinary processes will produce incredible results". 

The problem with too many dealerships is their sales people are sitting around "Wait'n For An Up" I wrote and article on this in 2004 back when AIM was developing 1SourceCRM a system we eventually sold to Reynolds. The bigger problem your website is doing the same thing "Wait'n For An Up" right now. 

Comment by Tom Hawkins on May 31, 2013 at 12:59am

What is the best structure for a small rural dealership (town of 11,000 2 hours from Mpls/St. Paul)?  BDC? Train all? Hybrid?

Comment by Doug Davis on May 30, 2013 at 11:34pm

Keith, I appreciate the complement. You think that I am unique because I work hard. .

I wrote a long article on a couple of sites. I was talking about focusing on the three major variable expenses (interest floor plan, salesman's compensation and advertising) and how they need to re-evaluated in the internet age. Nobody was interested. Nobody commented. It was a cure for insomnia. 

There are few good internet departments.  They make some ASM, the Internet Director, because he is computer savvy and nobody else wants the job.  He watches the CRM, plays solitaire and complains about reporting at the end of the month. 

For the same reasons there are few good internet departments, there are few decent BDCs. Like in my example, they added a layer to the sales department. They are not integrated and they have not evaluated and altered their expense structure. Dealers actually thought this would cut overall expenses?  Nothing will make you look more foolish than poor preparation.

Market leaders exist and they are always in the minority.  What I described is exactly what exists in the majority of dealerships. The math is accurate when it is applied to that model.  

Take some excellent people, throw them in a situation and they will figure our how to make it work. They will continue to improve on it from there.  Group some marginal or lazy people and they make excuses. 

Comment by Keith Shetterly on May 30, 2013 at 10:01pm

What if there is a leading dealership in the USA (one of the top 10) that has had a BDC for seven years?  What if they use it to develop the leads into opportunities better than any salesperson?  What if they adjusted the salesperson's commission because this brought more sell-able opportunities and kept them on the floor?

What if I've been there and studied that operation and its' real?  It is because I've seen it.  Doug, does that change your math?  Or are they deluding themselves?

As always, Doug, you are leading on performance and how to do this.  I just don't think there are many "Doug's" around.

Comment by Larry Bruce on May 30, 2013 at 9:32pm

Doug your math is solid and therein lies the BDC problem. 

Comment by Doug Davis on May 30, 2013 at 10:30am

My partner Marc McGurren has setup a number of successful BDC's which have empowered stores to deliver month after month sales records with Internet  lead conversion hitting 18-22% consistently.

Brian, I am assuming that by "conversion" you mean sold and rolled.  I contend that you have to sell a high percentage of leads to justify it.

One theme that I see in the field at many dealerships is that the BDC is understaffed, underpaid, and has a high turnover rate. The amount of opportunities that are wasted in these cases in criminal.  These horror stories get repeated at 20 Groups and well, BDC concept gets a bad name.   This is an unfortunate reality. 

They may be "under paid" but if you look at the true cost of employing people considering benefits, unemployment, turnover costs, training, workman's compensation and the like, you will be surprised.  You have to look at it this way because you are adding another layer to your sales department.  I suggest that when you add it up, you will be paying over $4000 for each BDC rep.  Now, most of these Business Development Centers don't actually develop business since they are handling leads and phone calls that were developed by the Internet Director, if he is actually doing his job and not a CRM watcher.  If you are going to give the BDC all of the leads (including phone calls), you need to give them all of the internet related expenses.  

Lets give one BDC rep 100 leads from a typical third party lead provider.  Those close around 6% but this is an exceptional BDC rep and she gets 9%.  You paid $1800 for the leads and sold 9 cars.  Take the compensation and the cost of the leads divided by the sales and you get $640 and you haven't paid the salesperson to sell it.

But you use contracted labor and pay them $10 hour with no other costs of employment or $1600 month (fantasy land) but you give them $10 for shown appointments and $25 for the sale.  When you do the math, you are at $413 and you still haven't paid the salesperson to sell the car.  You have decided to give the BDC department your leads and calls because they were not developing business on their own, add in the total internet budget.  

Bottom line, you have to close at a high percentage to justify adding another layer to the sales department plus you have to pay Brian for this new certification program he is selling.  I suggest that dealers are doing the math and that is why there is push back.

Comment by Brian Pasch on May 30, 2013 at 7:37am

Larry, great discussion starter and obviously this is a hot button at many stores.  Bravo!

As others have said, any structure without leadership or accountability will fail.  This is the heart of the matter along with your comments of what are we training our people to do in their communication with customers.

Another aspect of success is whether the store has CRM centric leadership.  Is the CRM fully setup to follow leads through an effective lifecycle?  Is the CRM accountability for BDC team members, or is the whole store trained and held accountable for CRM compliance?  Stores that are CRM centric, where every sales meeting includes a dive into the CRM, changes a store's culture and view of CRM. 

There are many great stories of BDC's working and delivering great results.  My partner Marc McGurren has setup a number of successul BDC's which have empowered stores to deliver month after month sales records with Internet  lead conversion hitting 18-22% consistently. 

On the flip side, there is a growing interest from dealers to setup a certification of skills based on sales opportunities. Certifications for phone ups, Internet leads, lease retention, equity mining, etc. The CRM manager would route Internet leads to staff members that have the certification skills to do a great job with the lead.   Everyone is the store is required to master the CRM workflow and everyone is held accountable. Those that don't want to get certified on lead handling skills, well they have to build their own book of business or leave.

There are many ways to setup the business but it starts and ends with leadership and accountability. 

One theme that I see in the field at many dealerships is that the BDC is understaffed, underpaid, and has a high turnover rate. The amount of opportunities that are wasted in these cases in criminal.  These horror stories get repeated at 20 Groups and well, BDC concept gets a bad name.   This is an unfortunate reality. 

I also wanted to add that online first pencil tools and for advanced online credit applications are creating another set of leads for the BDC/Sales professionals to handle; pre-approved customers.  We are moving into a time where more customers will opt to use Digital Retailing tools to select and pre-approve themselves for a vehicle before ever talking to someone at the store.  

BDC/Internet processes will have to change along with the experience when the pre-approved consumer hits the showroom floor.  

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