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Derrick Woolfson

Derrick Woolfson Business Development

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How to Pay Your BDC Team

Designing a pay plan focused primarily on commission on the dealer level is not uncommon; in fact, the entire premise of the pay plan is “the more appointments you book that show and sell the more you will make,” which can be true depending on the pay plan. However, if the pay plan is just focused on commission, it can quickly become a group of individuals working separately. And because there is not a team effort when it comes to managing customers, there are often gaping holes in your follow-up. Just check one of your BDC Agents work-flows at random, and you will find several uncompleted tasks.

To avoid the risk of losing sales due to a lack of team effort, there are other components to consider when approaching the pay plan:

Hourly Rate vs. Salary?

It is quite common for your BDC Agent to be an hourly employee, which can be quite costly. A prime example of this is overtime. Take a look at their hours; are they clocking out for lunch? If not that can add as much as five hours per week in unintended over-time, which depending on your state is time and a half for their pay. You take one to two BDC Agents doing that, and now you are paying ten hours a week, and forty hours a month! If you salaried your BDC Agent, you would potentially save thousands of dollars in overtime. However, when it comes to determining their salaried rate, it is best to review the going rate in your area. So while it might sound harsh - business is business, and in many cases, the overtime that is worked was highly unproductive.

Only Paid if the Appointment is Sold?

There are two sides to this scenario, and both are worth addressing; one of biggest reasons dealers do not pay based on whether the appointment sold or not is the age-old argument of “they do not have control on whether or not the customer sells,” which is true. The primary purpose of the BDC Agent is to book an appointment getting the customer into the dealership. Now that said, the reason why dealers have moved towards the plan that only pays if the customer sells is due to the issue of “the BDC agents do not bring in quality appointments. They will try and qualify the customer more if they know they only get paid if the appointment sells.”

Two things, if your BDC Agent is bringing in a customer with a recent repossession or if the customer wants a $350 payment on a $45k vehicle with zero money down - then yes, that is not best practice. However, your BDC Agents have far more significant issues if that is what they are doing. The second issue with that pay plan is the fact that if the BDC Agent is being paid only if the unit sells then they might be too involved in the deal. For example, instead of the BDC Agent moving onto the next phone call, email or text they are steadily focused and involved with the desking manager and sales consultant handling the deal. That distraction can cause ill productivity; as much as a half an hour can be lost as their focus has shifted.  This is not to say that your team does not need to have a commission-based plan, but this does offer that there are perhaps better ways to pay your BDC Agents. One of the ways of doing so is by paying if the appointment were to show, and then pay a volume bonus. If they hit “x” amount of shown appointments, they get a tiered bonus.

Bottom Line: your hourly rate could be costing you thousands of dollars in unintended overtime. It is best that you take some time and review the amount of overtime year over the year looking to see if your appointments increased. Chances are it is minimal, and if it is minimal then you know, it has cost your dealer money decreasing an already thinning bottom line. The other thing you ought to consider too is reviewing the cost of the BDC. Wherein, once you look at the payout of their commission, plus the salaried rate (or hourly), less their “sold” units, you can look at their actual cost and what their ROI is for the dealership.

How do you pay your BDC? Do you have an hourly rate or salary? For those with a salaried rate have you noticed any changes in their performance?


 

Sandy  Zannino

This is an interesting article.  I would be remiss if I didn't comment my warning regarding the advice about pay plan structure for BDC and urge any dealer who is looking at this to consult with your HR professional and perhaps labor attorney.  Why?  Seems simple right?  A common misconception that just putting someone on "salary" means that you don't have to pay them overtime.  This simply isn't true.  The overtime exemptions are very specific and BDC does not fall into one of those exemptions.  Therefore BDC reps would be eligible for overtime. With that in mind--the overtime calculation is often misunderstood as well and any commissions, bonus' etc MUST be added into the calculation for "regular hourly rate".  Yes, you read that correctly.  A wage and hour audit by the DOL is no fun and can cause an employer to loss exemptions they ARE qualified for sometimes.  Another alternative is to create a pay plan based on average total income and pay that hourly rate, no bonus/commission--build in increases based on performance.   OR keep the commission and do not allow overtime.  It was actually a wage and hour suit 20 years ago that was the defining moment in my career.  The dealer lost because of lack of knowledge not bad intent.   #protectingprofits 

Derrick Woolfson

@Sandy, you raise a good question/concern. I should have clarified that more in the article. Each state has its own "laws" pertaining to the "salary" amount should the employee be salaried. In that, if the employee is not paid a certain annual amount - to your point - it can land you (the dealer) in hot water. The main premise for this article was to outline the notion of "paying hourly" does not always make sense. If you paid enough salary wise it can be mutually beneficial. Now, where I have a different perspective is "paying" an hourly rate or salary without any sort of commission. Depending on the "commission" plan, someone who is highly motivated is not "capped," and can earn more depending on his/her performance. Where dealers struggle with this pay model, however, is having an overall lack of consistency when it comes to the "processes" behind the plans, and/or "total" opportunities for the BDC agent to earn commission on. Namely, if a dealer - let's say - cuts their ad spend by "X" amount, it can and will have an impact on total "lead volume." And if the BDC Agent has to hit "X" amount of "shown"/"sold" appointments to hit their commission, this could cause for mutual frustration. Especially considering what the average set, show, and sold rates are, no? 

Morgan Hardy

@Derrick- you make a very good point. When the dealer cuts ad spend, I'm sure most do not take into consideration the pay plan of the "front-line" employees. The BDC is still expected to hit the same numbers.

Derrick Woolfson

@Morgan, thanks! Exactly, let's not forget, hitting your "numbers" with "bad-leads" is not going to work either!! And while it is essential to do your follow-up, if the customer has not purchased a vehicle within 30 or so days of inquiring online your chances of selling that customer is not very likely. Another "tactic" often used is calling the OEM Manifest Lists (cringes while typing that!) - they tend to have one of the *LOWEST* closing rates, ever.

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