Quick Quiz: If you’re part of an automotive dealer group comprised of anywhere between 2 and 290 stores and you do not run a centralized sales BDC, then you’re:
If you answered E, congratulations! You’ve recognized the downside of sending your inbound leads and phones to those black holes of mediocrity known as The Internet Department.
Don’t get me wrong, there are plenty of end-to-end internet departments (those where a salesperson handles the lead, the appointment and the sale) that are showing success today. (I put showing in italics for a reason: There is actual success and then there is showing success with internet teams – we’ll explore the difference below; and start with that reason.)
Here is Every Reason You Should NOT Create a Centralized BDC
Reason #1: Some of our internet teams are showing success and we don’t want to upset that.
As I wrote above, there is actual success and then there is showing success. Most “successful” internet teams I encounter are really just staffed by those best at fudging the numbers and working their pay plans. Moreover, because your general managers have little idea how to actually manage internet sales, digital marketing or the related processes, these number-fudgers not only get away with it, but are often bragged about at your GM meetings.
Recently, I worked with one of the laziest internet managers I’d met in a long time – a person whose team became so good at number-fudging that their GM (and even some on the leadership team at their extremely large dealer group) would hold this internet manager up as an example of internet sales mastery.
On the morning of one of my store visits, a member of the internet team upped and sold a previous customer in service. After the sale, he created a lead in the CRM for this customer, set an appointment, marked the appointment as shown, and then marked the deal sold. (While I applaud his aggressiveness and would likely move his desk into the service waiting area, his fraudulent entries in the CRM allowed him to skate a fellow salesperson while paying him an unearned appointment bonus.)
If the successes they are “showing” with that internet team aren’t reason enough to make you deep dive into what is truly happening with your stores’ internet teams, let me give you one more example that I also discovered recently at another extremely large dealer group.
An internet salesperson legitimately selling 30 units each month is an asset to any store, right? That’s what the sales managers thought of one such salesperson I discovered, who was receiving about 450 inbound leads each month, initiating zero outbound calls (except to return actual calls from a few of these 450), and selling about 30 units each month. How did he do it? Simple, he sent every prospect an email that vomited the absolute lowest price of the vehicle they inquired about and in bold letters told them that they must ask for him to receive this price. After that, it’s just a numbers game. He sat back and waited for the Ups.
So, did he sell 30? Sure. Could he have sold more if he worked these 450 leads a little differently? Perhaps a few, but that would require work, wouldn’t it?
Let’s do the math as if these 450 were handled by a well-run centralized BDC:
Fifty-six on the low end to 108 on the high end is a lot more than 30!
So, if the reason you think that you cannot create a centralized sales BDC is that you will upset successful stores, think again. Chances are they might not be all that successful.
Reason #2: But, we really do have legitimately successful internet teams!
Great, make one of those legitimately successful internet managers your Director of BDC Operations and let him or her create the centralized sales BDC for you.
“But, why would we want to dismantle our successful teams?” you ask. One simple reason; and it’s called math.
Let’s say you have twenty stores in your group and in ten of these you have legitimately well-run internet teams. (Highly unlikely that half of any group’s stores have legitimately well-run internet teams, but I’ll give you the benefit of the doubt here.) This means in the other ten you are losing sales and wasting money. Moreover, in all twenty stores you are starving the sales floor. In fact, in the ten most successful internet stores, you probably enjoy high floor sales turnover. You see, when the internet team is really successful, there is little left for the floor team except for Ups and their database.
Of course, since we all know the average floor team will not work their database, you were forced to bring in a third-party equity mining company and then you hired one or two agents to make the calls for your floor teams – adding costs and wasting even more money.
Finally, assuming your twenty stores are all of average size, you are employing twenty internet managers and roughly 140-150 internet salespeople to manage about 17,500 total opportunities each month. (Using the BDC math above, we know this should equate to 2,188 sales on the low side and up to 4,200 on the high side.) If you ran a centralized sales BDC you would use about half the labor (roughly 75-80 agents) and sixteen fewer managers (three supervisors and one director).
Reason #3: We can’t afford to run a BDC; our compensation will get out of whack.
You are correct. No group can afford to run a BDC that’s considered a cost center for very long. That’s why you must create your centralized BDC from the ground up to be a profit center, not a cost center. This is the only way to ensure your BDC does not become a compensation burden on your group. In other words: someone has to pay for the BDC.
When some of you read that last sentence, you immediately figured you can “pack” all vehicles another $50 and use that to pay for the BDC, right?
Wrong. Packs don’t work in most situations and they especially do not work here; because even though a $50 pack would reduce the commissions paid by $12.50 per vehicle (for the average salesperson), this additional pack would have no impact on mini deals (which describes most new car deals today), and your BDC would still be a cost center – just one that’s allegedly paid for artificially.
Also, if a pack did work in this instance, it would effectively reduce commissions across the board for all sales and you’d be left with a sales team making less money – even on the deals that did not involve the BDC. Eventually, your great salespeople would migrate to a better paying dealership, wouldn’t they?
If you want your BDC to be successful and maintain the integrity of your overall sales comp, then you need to create a sustainable pay plan. Simply put, this is a pay plan that allows you to grow the BDC without blowing up your labor expense. Here are the basics for a sustainable pay plan for a centralized BDC:
The BDC agents are paid on appointments that show; not on sold units and not hourly (though there is generally an hourly component to the base/draw that a BDC agent will make). For most markets, a solid pay plan for an Appointment Coordinator (BDC agent) would look like this:
The way you pay for this plan is you compensate the floor salesperson that closes a valid BDC appointment with a reduced commission. Generally, this is a half commission with a full or half mark toward their volume bonus. (After all, this is the epitome of a split deal: One person set the appointment; another person sold it.)
For managers or salespeople who gripe about this plan by saying something nonsensical like “I did all the work, why do I only get half the deal?” Remind them that if they did their jobs correctly, we wouldn’t need a BDC.
Reason #4: We tried a BDC before and it didn’t work.
There are plenty of reasons why your BDC failed in the past – in fact, most of the early automotive BDCs are long gone. Learning not to repeat the same mistakes these early adopters made is critical to ensuring your new centralized sales BDC is a success. So, if you’ve tried and failed at a centralized BDC in the past, these are the most likely causes:
Reason #5: I know a group that tried this and the store managers convinced the owner to shut it down.
Just because some other dealer group has a weak owner with no vision doesn’t mean you do. General managers and sales managers are by and large Type A personalities who need control – even of the things they have no idea how to control (like the internet sales process). When someone else is in control of anything that relates to their store, they generally don’t like it.
By the way, I actually do know a group that created a successful centralized sales BDC only to see it dismantled because the GMs pressed for it. This goes back to Reason #4A (above): the owner had no real commitment to the BDC. Consequently, he allowed his GMs to unilaterally change the BDC compensation plan as it related to their respective floor sales teams in a way that guaranteed the successful BDC would become a true cost center. Finally, he sat back while the GMs worked hard to sabotage the efforts of the BDC manager; and in the end, he had no choice but to close the BDC at their request.
Reason #6: We struggle to staff our internet teams, how can we ever staff a large BDC?
You struggle to staff internet teams at the dealership level because you have bad leaders, little training, no real process, no real structure and/or a relatively small team. Let’s tackle each of these in order:
Reason #7: More and more of our customers want the Out-The-Door Price before they will even consider coming in; a centralized BDC would never have that information.
You are 100% correct – and it’s great that the BDC can’t provide this information!
Why exactly would you want to vomit your absolute lowest price on someone who’s not even willing to come in? Why would you want to build Out-The-Door numbers for someone 80 miles away on a vehicle they can get in their own market? (It’s important to stress: this is what makes a BDC great – they have almost no information to share beyond your internet price; so they just set appointments!)
Need more evidence? Look at the math in Reason #1: 450 leads, lowest price given, 30 sales. This means 420 of these 450 went somewhere else or did something else after receiving the lowest price. Is this what you want? If so, then don’t create a centralized BDC and don’t hire an end-to-end internet team. Just sign up for one of the many automated email companies who claim to use Artificial Intelligence to vomit the lowest prices on everyone.
When the lead comes in, just fire back your bottom line price automatically with a note saying this is your bottom line price. This way you save money and save the headaches of staffing any internet or BDC team. Of course, this also means you cannot set appointments; and without appointments you cannot provide an in-store VIP treatment, because you have no idea who will arrive or when. (The average store closes internet appointments at a rate 2.5 times better than Ups who arrive without an appointment.)
Your BDC agents should be Appointment Coordinators, not Customer Service Consultants and not salespeople. So, even if you are a one-price group, a centralized BDC staffed with Appointment Coordinators can and will set firm appointments that show with your prospects. You cannot get this with a group that just fires off Out-The-Door numbers at every lead.
Reason #8: Some of our stores are having their best year ever and we don’t want to do anything to slow down their momentum.
Do you seriously think that the current market growth in the US is due primarily to your sales teams? No offence, but almost everyone is having their “best year ever” right now. Some dealers – those with strong, repeatable processes in place – are also growing significant market share right now.
With a centralized BDC in place, your floor teams can focus on creating better in-store processes for Appointments and Ups, while the BDC delivers a steady stream of ready-to-buy customers that arrive on time, just when you want them.
Reason #9: Our General Managers want to control this locally.
Of course they do; who wouldn’t? The problem is they can’t control this. Again, no offense, but most of your general managers can’t control the floor team enough to ensure they make even one real Be-Back call a day, can they? And with this track record of process management, you think they deserve to control the place where 90% of your customers start their search and where more than half eventually finish it?
If you polled your GMs, you’d find that some of them like a certain DMS or CRM better than the one your group has selected. Do you allow these GMs to change their DMS or CRM? Of course not! Despite what they would prefer, you chose to centrally make some decisions because you could negotiate a better deal and because you could streamline and formalize certain decisions and processes that allow your group to benefit financially. You would never allow a GM to go his or her own way on a DMS, so why would you allow one to hurt your group’s ability to significantly grow share by going his own way on an internet sales structure?
Reason #10: Our salespeople should be making the calls we want the BDC to make.
Yes they should. So why aren’t they?
I guarantee that it’s not from a lack of trying on the group’s part or the owner’s part to get the floor teams to make calls. Simply put, they aren’t making these calls for all the reasons detailed throughout this post. Though, more specifically, your managers are more concerned about checking a box that the calls were made than actually managing their teams and generating great calls that follow your scripts.
The great news is that you don’t need floor salespeople to make any calls if you create a solid centralized sales BDC. (And because you use a sustainable pay plan, you’re not adding any costs in the process.) Once your BDC has proven successful with internet sales follow-up calls, you can assign Owner Marketing and Be-Back calls to this group with the same sustainable pay plan stipulations as internet sales appointments.
Okay Steve, I’m All Out of Reasons…
So, are you ready to actually create, run and succeed with a centralized sales BDC for your group? Excellent; though before you overthink this and spend a lot of money moving in the wrong direction; start with the lessons from this post and also read my BDC Best Practices (The Five Absolute “Musts” for a Successful Automotive Sales BDC).
Who knows, if you do this correctly, you might also want to move all of your service activity to this centralized call center within the next six to twelve months. The only reasons you should not do this are all listed above.