The circumstances and situations we continue to face have altered our business practices. But has the way we approach pay plan decisions changed? Arguably, no. 

It is no secret that due to unprecedented inventory shortages, both the dealer and the sales consultant have earned more money in the last two years. And although we know this roller coaster ride will come to an end, are we prepared to face the reality of the situation?

The egregious turnover in the automotive industry before COVID-19 is proof of this reality. Turnover has been a source of concern for the dealer's profitability for several years now. So, while dealers are currently more profitable than ever, this is despite our current dealer approach and philosophies towards pay plans and retention.

Pre-covid, we talked a lot about "turnover" and how to keep the new employees. The "millennial" generation made up the majority of that workforce. While Millennials continue to dominate the workforce, another era, "Gen Z," is entering the market. So the question becomes, "Have we spent so much time having the same conversations about Millennials that we are now unprepared for yet another generation of employees?"

If that question doesn't make you pause for a moment, we have not fully grasped the gravity of the problems we dealers face when it comes to reducing turnover and increasing retention.

So, how do we go about fixing it? That is much easier said than done. As an example, we are still dealing with the same problems. Problems that the new COVID-19 world has now masked. And while having these conversations is simple, making changes based on our discussions is an entirely different story.

More importantly, when we do have these conversations, we must approach them from the actual issues we face. Consider how many people left their dealership and the industry in 2019. How many of those employees quit because of their pay structure? Or, more specifically, how many of those employees leave the industry because of a lack of work-life balance? And the demands that the industry places on the individual? 

Let's face it. If Corporate America is now struggling to get their teams to work in the office, how can we expect sales consultants to work roughly double the hours for less pay and benefits? And while we attempt to address the above issues through new training programs, new pay plans, or the creation of clear career paths, has this had any tangible impact? 

One of the most effective pre-covid retention strategies was to offer "flat-rate" pay plans to the millennial workforce. The insinuation that the new sales consultant was a "product specialist." With the hope of it attracting the “Millennial” workforce. Yet even with that pay plan change, we discovered that retention was still low. Where a product specialist had to sell – in most cases – 17-20 plus vehicles to only make roughly 60k. 60k that an individual with a college degree could easily make working in a Corporate America job. 

So the question is and remains, is simply changing the pay plan sufficient? Or for those who did not do the “Product Specialist” pay plan, is a ninety percent plus commission plan going to cut it anymore? Do we have to adapt some of Corporate America's philosophies when developing pay plans? Have we even looked at how Corporate America develops its sales plans?

And look, even if we adopted a few elements of Corporate America, the most significant challenge that we will continue to face is that Corporate America still has an advantage in that they provide their employees with paid vacations, 40-hour workweeks, and holidays off. So, how can we expect a new generation of employees to work twice as many hours for roughly half the pay? Which would you prefer, working 40 hours with substantial benefits or 80 hours for roughly the same pay and nowhere near the benefits? For those who say “yeah, i’d do it. I am doing it” – that is the exception not the norm we face. 

Suppose we continue to believe that "there will always be Sales Consultants willing to work in the automotive industry," which is the exception rather than the rule. Can we effectively change the way we do business so that when "those Sales Consultants who are always willing to work in the industry" no longer work, we are not left floundering trying to keep the dealership running?

The bottom line: changing a pay plan to induce a behavioral change will change their behavior. But make no mistake, it will have an impact on your retention. We have to ask ourselves if this approach and philosophy can tackle the challenges we will continue to face when attracting top talent. The question of "can we continue to demand that the sales consultant works double the hours of Corporate America with fewer benefits?" is not a question we are going to want to ask ourselves when this becomes a reality we face. 

How has your dealership combatted this issue? Have you successfully implemented Corporate America benefits on the dealer level? If so, has it assisted in increasing your retention? 

Looking back to when I first started in the Automotive industry – fresh out of college – I thought I knew it all. Having confidence is one thing, but coming into any job with the attitude of knowing everything is not the best way to start. A little more than two months into the industry, I switched from being a sales consultant to become a BDC Agent. Not because I was knocking it out of the park, either. But rather, it was because I was not afraid to answer leads or answer the incoming calls. Dealers had a need, and I saw an opportunity.  Sure, I was doing okay (after all – BDC's were something new in 2011/2012), but my phone skills were indeed not where they are today. 

I will never forget the first mystery shop I got from Phone Ninjas. Instead of being eager to enhance my phone skills, I was combative. Now mind you, I still was a "green pea," with no industry – let alone any career experience, and yet here I was – nasty and condescending to the Phone Ninjas coach. Fortunately for me, the Phone Ninjas coach saw something in me. And for that, I am grateful. 

When I say I was combative and nasty, I would spend more time writing emails trying to "debunk" their coaching email/training session than simply taking the training. After roughly four or five bad scores, I got a call from a new mentor who painted me a clear picture. Offering that while you have potential and talent does not mean it gives you the right to be obnoxious and combative. Take the darn training.

I had to ask myself if was really going to throw away the chance of building a career,  discrediting myself because I was "too good" to take the training. 

At that moment, I realized (and thank god) that training had merit, and more importantly, it had a purpose. Not long after, I fully embraced the Phone Ninja's technique going from a 1.4 to score near perfect scores (sometimes hitting that perfect 5, yes, that is the competitive nature in me). Using the technique and taking the training seriously – in part – helped build my career. After the dealership saw my results, it allowed me to build a BDC department for the dealership. At which point, we worked hard – with the Phone Ninja Coach – to train our new BD Agents, where the set rate went from the mid to high twenties to the high forties collectively. 

Once I built the BDC Department, I soon expanded my role and delved into marketing and Business Development, becoming their Business Development Manager. Over the years, this lent itself to working with the OEMs directly, digital marketing, CRM Experience, free-lance writing, presenting key-notes conferences, and developing onboarding guides for dealerships. 

Fast forward, some eight years later, and I still use the Phone Ninja's technique in my new career and everyday conversations. So while I could say "if I could go back in time" and change the past – it is the past. However, if there is one thing to take away from this, it is taking the training seriously. Understanding that while you might have talent, you can always improve your approach and refine your skills. 

Besides, who doesn't want to be a Ninja? 

Week after week, dealers tend to have the same meeting. That is the GM sitting down with each department manager to review where they are at, projections, and things that need attention. Anything needing attention is then addressed individually with each department manager, which seems harmless but can cause tension and animosity. More often than not, it just means that the department managers involved need to sit down and work it out. However, that cannot happen in individual meetings. Here are some of the top reasons to avoid the Island approach and how to have a productive, actionable meeting.

What is the Goal of the Meeting? What's Being Discussed? Did You Give Your Managers Enough Time to Prepare? Or is it A Run Through of Daily To-Do's?

The meeting is often seen as a hassle or waste of time. Knowing that for every minute they are trapped in the GM's office the less money they will make at the end of the month. So to avoid the meeting taking up too much time, they quickly go through the same checklist. Once the checklist has cleared, they rush the door and get back into the lane or on the desk – all while the GM thinks all is good. But that is not usually the case. Instead, there are underlying issues that need to be addressed. Ones that are often not discussed with the GM, but are discussed amongst the employees, which can cause frustration and tension between the various departments.

If You Have A Group Meeting Stick to the Agenda. Give Everyone A Chance. Do Not Interrupt.

The purpose of having an agenda is to ensure that all topics are covered and make sure no one goes down an endless rabbit hole that leads to nothing other than forty minutes of wasted time. That having been said if you do have an agenda, make sure everyone turns in ahead of time what they would like to speak about. This gives the GM the time to review the request making sure it is in alignment with the meeting. If the topic is deemed personal and/or a conversation to be held privately, it takes away the chances of the meeting going from good to bad. Another reason to have an agenda - that is planned - is that it gives each manager a chance to voice their concerns, or questions effectively. More often than not, an argument between departments could have been avoided had there been better internal communication. This cannot, however, be accomplished if the manager is not given the time of day. As interrupting or talking over another manager is disrespectful, it can also show that you do not support that manager.

Do Not Use the Meeting to Attack Your Co-Manager. Not All Issues Need to Be Made Public.

It is no secret that there is a lot of competition on the dealer level. It is a dog eat dog world, but there is nothing worse than bringing your co-worker down in front of everyone else. Especially given that while you might not care for them - what they are allegedly doing wrong might not even be wrong. However, as the GM if you allow the employee to bad-mouth their co-workers in front of their peers it can in many ways send a signal that the behavior is not only allowed, but encouraged. All of which can and will create an eggshell environment. So, if you do have issues with your co-worker it is best to speak with them first. If you are unable to handle it with them directly, at that point you need to meet with your GM.

Bottom Line: Take a minute to get with each one of your managers and allow them to contribute to the meeting's agenda. In doing so, each of your managers will feel like they are a part of the team. Having group meetings amongst management will also help ensure that there is no miscommunication amongst the various departments.

How do you handle manager meetings? Do you review the same agenda each time?  

It is easy to choose the ban-aided approach we know so well in our industry, no? If a vendor's solution can somehow "magically" fix the issue, then it must be true, right? This approach leaves us continually going back to square one, or what we call "back to the basics" - "block and tackle approach." But what if we didn't have to continually go back to square one, slapping one band-aid on at a time? And instead, we focused on the real issue - a crack in the foundation - that causes the breakpoints we deal with? 

One of the biggest breakpoints us dealers face today is handling incoming phone calls, which is a multifaceted issue and comprises the following core concerns: 

● Training processes on the dealer level to handle the incoming calls 

● CRM Integration of the incoming calls is it worth the clutter?

● Management of the incoming calls

● Inbound line tracking vendor

● Total marketing spend dictates inbound call volume, but do you NEED to spend more to get more?

More often than not, we tend to look at the above items with a siloed, tunnel vision approach. Make no mistake, all of these concerns are intertwined, and if one of the above is "broken," it negatively affects everything. Instead of slapping another band-aid to the foundation, looking for a "magical" fix using your phone vendor's "magical buckets," let's, look at each one of the core elements—the most critical being training. 

Training Processes On the Dealer Level to Handle Inbound Phone Calls 

Sure, your phone tracking software might offer "tips and training" on handling inbound calls, which sounds great, right? But for those of us who have managed the vendor side of inbound calls, their reporting, tips-tricks, and training often do not mesh well with your current sales processes. Not to mention, merely relying on a report of "call buckets" does not, by any means, paint the real picture. For example, most call vendors cannot associate duplicate calls. And for those in a BDC or BD Manager role, you often wind up spending more time reworking the reports yourself to get accurate numbers. Numbers that tell a completely different story than of what's reported in the CRM. And, well, you know why - the customer completes a test drive request, and then calls into the dealership. You already set the appointment, but you did not get the appointment according to the phone tracking vendor. So that must mean that your appointment set rate is terrible! So now you need to complete their training courses on setting appointments, right?  

Wrong. Well, partially, but the point is that by looking at it from one angle, you are not getting the full picture of where the breakpoints are hiding. And sure, there will be calls that bombed, and you did not get the appointment. But, taking the time to go through every single "missed appointment" call due to the lack of vendor capabilities is not the best way to approach this issue. And driving home "training" from telephone call analytics on a cornucopia of calls that come from hundreds of other stores doesn't really help MY STORE.

Additionally, this generic training offering is merely an attempt to be "everything to everyone," and as we saw in the late 20-teens, that doesn't work. Sure, many "say" they listen to all your calls, but let's really dig deep into that statement and then transition that into HOW that architects their training for YOUR store? The answer is, it doesn't. 

This is a breakpoint on the vendor side that can do more harm than good. Hence, it is essential to curate your own training on the dealer level to handle the calls vs. solely relying on one side of the equation to handle all of your training. Instead of focusing on "magical buckets" from a one-sided perspective, look at the entire story in the CRM. Using a dedicated training vendor that can connect the dots is not only a best practice; it's the only practice if you really want to drive sustainable results and still expect to get your job done. Additionally, I don't know too many "trainers" working at the store in that capacity with the bandwidth, the tools or the support to drive results. Having said that, do some exist, sure they do. But I'm not talking about the exceptions. I'm talking about the rule. Connecting the dots means they have the whole story, a story that gives the dealer the breakpoints that need to be addressed. 

Management of the incoming Calls 

Getting a text alert for a "bad" call sounds fantastic, right? Well, again, if your vendor cannot aggregate duplicate calls, defining customers who already had appointments, etc. then your manager will be wasting time. Time that could be spent using their CRM to manage and monitor for potential breakpoints actively. Not to mention, taking the extra time to have to go back into the vendor's platform to "fix" the call is not just painful, but pointless. If the vendor is integrated into the CRM, then manage it in the CRM. Make no mistake, it is essential to look at how many calls you are getting, but most CRM's offer a "multiple lead source" report, which can define the total leads by source, "individually." By taking this approach, you get the full story, and better yet, you can work with your teams to address the breakpoints by effective training. And what's actually in the CRM anyway? Think about it, without true and proper training, without effective training, all that you see (even with an API) would be worthless audio files matched up to Caller ID's. Having a fully trained staff actually obtaining contact information the right way means far less management intervention is necessary. How many managers look forward to reviewing those buckets? Or reviewing those alerts for matches? I know I don't. 

The other big red flag with solely using a phone vendor's reports is that I cannot tell you how many times I have seen GM's take away the phone calls from the sales consultants or BDC Agents, and (yes) Sales Managers due to the "reports." This made for a lot of arguing, which led to heated debates on the real issue, lack of training and resources on the dealer level. Simply throwing the new rep on the block into the BDC closet to get phone training in five minutes, or watching another "generic video" is not going to work. Not to mention, let's face it, most sales managers cannot handle incoming telephone calls themselves. This is not about putting anyone down, either. Look, my phone skills were *hateful* when I first started. It took a lot of training and time spent with trainers to get where I am today. If your teams are well trained, armed with solid word-tracking, and phone skills, they will sell more vehicles. 

CRM Integration of incoming Calls 

If your CRM can do this, GET IT DONE. It is a lifesaver. Taking time to manage multiple platforms, all while trying to increase your appointments, is not time well spent. If your phone tracking provider lets you track calls in the CRM (effectively), you can easily manage a seamless workflow. But if you have to take the time to listen to each call, then go back into the vendor's platform to "fix" the call – that is brutally painful. I vividly remember having to spend a good 1-2hrs every night re-scoring the calls so that my teams got paid accordingly, to then have to defend why I "fixed" the call. As if I were on a mission to "fudge" reports. Come on, every "change" made is tracked in most CRM's (check out your audit reports). I still have a headache thinking about it. 

Total Marketing Spend to Increase incoming Calls 

The more you spend – depending on the ad campaign – can mean a significant increase in the total volume of incoming calls. Those incoming calls mean there are more opportunities to sell vehicles. But simply getting more calls does not mean that you will sell more vehicles, and certainly not because they were dropped in your vendors "call buckets" either. For example, if your store is setting appointments at an average of 30%, then by default, yes - you will book more appointments. However, if you take the time to "build your foundation" not slapping band-aids on (using your tracking providers "buckets" and "tips"), you could actually increase your set rate from 30% to 60%. Taking the more laborious approach, time, money, and resources to solve the problem will mean better results. Making more out of the total advertising spend. But spending time working out of "buckets" – with a siloed approach – will not solve the problem, and you will just work yourself in circles, all while creating more breakpoints on the dealer level. 

Bottom Line: take the time to invest in your dealer teams by first training them! Work with a training company that can build a solid foundation. Once your foundation is built, use the tools "together" to enhance your team's performance. The stronger your team performs by having the right phone skills, means less time spent managing your phone vendor's buckets. And instead, you can work with your team on objections, all while increasing your set rate, which means your dealership now has more opportunities to close! As for the managers, make sure they participate in the training too! They cannot manage the breakpoints and areas of opportunities if they do not have proper phone skills. 

Do You Manage Your Training from Buckets? For Those Who Have Trained Their Teams First, What Do Your Results Look Like? 

You can easily run through your PPC budget before lunch if it is not optimized. There are also several critical facets of what makes a PPC campaign successful. Everything from the actual geolocation your campaign is targeting, key-words, negative key-words, headlines, and descriptions, to name a few. The other thing to consider about what makes a successful campaign is as time goes on, your dealership's goals change. Continuing to run the same old ads - simply adding spend - is not always going to increase your results. 

For example, if you need to move the "X" model one month, you should create a Google PPC campaign that reflects this goal. Not to mention, if you have a competitor who is outselling you on that model, then you need to spend more in that geolocation. In addition to retargeting those customers with ads. Where a lot of this strategy planning goes south, however, is either the dealer not reaching out to the vendor. Or the vendor not proactively engaging with the dealer to better understand their needs as they evolve. Either way, it takes continued collaboration to get the most out of your ad spend. 

Given the competitive landscape in the digital marketing arena, it makes one wonder: "what if vendors only paid their digital teams based on the success of their campaigns?" 

The idea that simply getting clicks to the site with a miserable bounce rate is not going to cut it - they have to have hit specific metrics, such as time spent on site and conversion goals. That is how many click-to-call, VDP views, or form-fills completed. The more engaged the vendor's teams are on managing the actual quality of the ad campaign can and will have a positive impact on your results. 

This model could also help reshape vendor reporting, too. While the vendor needs to brand their reporting, it is equally important to be transparent about the content of the report. You will find that most vendors only put the "shiny" numbers on their reporting. Such as Impressions, Clicks, and Click-Rate. And if they do show VDP views, they often do not then disclose how long the customer was on the VDP page. And sure, you can go into Google Analytics and view the campaigns yourself, but how many dealers are actively reviewing their Google Analytics accounts? The other thing vendors often forgo adding total time spent on site, bounce rate, or total conversion goal numbers per each segment: click-to-call, VDP views, form fills, etc. The other key element to consider with your bounce rate is your organic bounce rate (which should be in the low thirties) vs. your "Google PPC" bounce rate. Think about it, if your organic bounce rate is where it should be, but your PPC campaign is in the high to low 80's, and they average the number, you are not getting the full picture. If your Google PPC bounce rate hits the low to mid 80's then the campaign is not performing, whether that is the landing page, key-words, or the relevancy of your campaigns titles/headlines. 

This poses the question: What if your vendors' digital teams are paid on the success of the dealerships campaigns? Could this improve the overall quality of the ad? If their teams are paid on the campaign's success, do you think they would spend more time reviewing and optimizing the campaign? The answer is most likely, yes. But make no mistake, the dealer is just as responsible for working with the vendor! The vendor can only do so much research on your geolocation. As the dealer, you have to understand your market and your core areas of opportunity. There are also several reports available - from the OEM - that can help you outline immediate areas of focus on models you are losing market share on, etc. Lastly, as the dealer, you have to outline your expectations. That's not to say that your expectations can be met - whether that's budget issues, or the ability to execute the strategy - but it does open a dialogue that can help achieve better results. 

How often do you discuss your PPC efforts with your vendors? When is the last time you had an internal strategy meeting to discuss which models you need to sell more of? 

There is not a lot of flexibility when it comes to customizing a work-flow in many of today’s CRM’s. Where in many cases the standard work-flow is both a phone call and email, and while both are very important - so is texting. In fact, texting could arguably be more important - in some cases - than the standard dealer email that does not always answer the customer's questions. That said, here are the top things to consider when implementing a work-flow and the shortcomings we face on the dealer level.

If the Customer Does Not Provide a Phone Number the CRM Still Says to Make a Phone Call.

This is one of the most common issues with the CRM’s in today’s market. Wherein, even though the customer does not provide a phone number the work-flow still offers that the BDC Agent or Sales Consultant needs to make a phone call. This also then means that in the CRM’s reporting it will offer that the BDC Agent or Sales Consultant has not completed their workflow tasks. And if your pay plan for the BDC Agent is tied to the completion of their tasks it makes it that much more difficult to manage. As the BDC Manager will have to manually delete the overdue tasks and or change them to another type.

Where is Texting? Many of today's CRM Work-flows do not include texting as a part of the work-flow.

One of the biggest pet peeves with a lot of today’s CRM’s is that they do not include texting as a part of the work-flow. Yet as we know, texting the customer is becoming more and more relevant as it is a very effective means of communicating with our customers. That said it is important for the CRM providers to ensure it becomes apart of the work-flow. Otherwise (as mentioned above) if your BDC Agent’s pay plan is tied to the completion of their tasks their focus will be misplaced. As they are making unnecessary calls and emails.

A Rigid Work-Flow. Two Phone Calls on the First Day. Emails and More!

There is such a thing as over communicating with the customer. This is especially true if you are calling the customer two to three times, emailing and texting them. All without receiving a response, unless that is of course to unsubscribe or they have opted out of texting. And make no mistake, this is not to offer that we should not try to get in touch with the customer a few times on the first day. What it does offer, though is that we need to make sure the content we are offering makes sense. If the customer is not responding to your phone calls and or replying to the emails you sent then it is best to review the content. It could be something as simple as your subject line, or that the email went to their spam folder. Either way, before completing that additional email task is best to look at your overall open and response rate. This will help you get in front of more customers!

Bottom Line: Instead of worrying about the completion of a task for the sake of it make sure the content is relevant. Knowing that not all leads are the same and or require the same level of contact. In fact, in many cases, the customer might add in their initial reply email what times work best for them for you to call. So if you ignore this - to complete a task - then you could potentially run the risk of losing this customer. In doing so, you will see an increase in the overall response rate, which will translate into more sales.

How Do You Handle Your Store’s Work-Flow? Do You Find That it Limits your BDC Agents Productivity? Do You Tie Your BDC Agents Pay Plan to their Work-Flow Task Completion Rate?

It is not uncommon for most dealers to have strict policies against holding a vehicle for a customer. And for good reasons, every day that vehicle sits on the dealer's lot unsold, it takes up floor-plan money costing the dealer money. However, as dealers shift to more digital retailing measures, it poses a good question. Depending on the circumstances, should your dealer offer to hold the vehicle for the customer? In addition to advertising this policy on your dealer's website to provide customers with peace of mind. 

Here are two things to consider with offering a vehicle hold policy. 

Is the customer local? Having the Customer Drive Two Plus Hours to Find Out the Vehicle Has Been Sold is Not A Best Practice. 

Time is money. Not to mention, imagine if you were the customer - driving a long distance - to look at the vehicle they wanted only to find out it has been sold. To make matters worse, the car having been sold is not communicated with your sales team in some cases. So when the customer does come in to work with the sales consultant, they might tell the customer, "oh, this has was sold yesterday." That is not a good look and certainly does not make a good first impression on the customer. 

And sure, they might wind up purchasing another vehicle. Especially if the vehicle is used where the customer might have wanted this vehicle due to their budget. But imagine if your sales consultant or BDC Agent was proactive, and instead of surprising the customer with the car being sold, they were proactive and offered a solution and not a problem. The customer is more likely to purchase the other option and believe that you and your dealership was going the extra mile for them! 3

What Does the Website Branding Look Like? Is this A Good Value Proposition for the Customer? 

Having a clear, defined vehicle hold policy can lend itself to a positive branding opportunity for the dealership. Especially considering that many dealers are trying to offer some sort of digital retailing options for their customers. Think about it, if the customer is searching for a vehicle, but needs/wants to test drive it before purchasing - you are proactively providing the customer a solution. One that could put your dealership ahead of the competition. That and everyone's schedules are different. Maybe Saturday is the only day the customer has to come into the dealership, and they inquired on the vehicle Monday. 

Now, this is not saying "do not sell the vehicle" with the hopes of selling it to the customer on Saturday, either. If the customer wants to hold the vehicle - paying the deposit of $500 (or whatever deposit your dealer chooses - then it should be strongly encouraged that the customer complete an online credit application. This can and will also save the customer a lot of time before visiting the dealership. As for the website's branding, here is a sample ad/banner you can use on your dealership's homepage! 

Bottom Line: Anything your dealership can do to stand out from your competition will only increase the value of your dealership. In this case, you are providing a proactive solution to the customer! It is important to remember that using this process is not intended to "hope" you sell the vehicle. But instead, encouraging the customer to complete a finance application and complete as many of the sales process steps as possible before they come into the dealership. Remembering that if the customer is willing to make a deposit and or complete a credit application before their arrival, they intend to make a purchase. Now it's our job to make that purchase as easy and stress-free as possible! 

Do you offer a vehicle hold policy? If so, has this helped close more deals? For those who offer a hold policy, what are some of the challenges you face, and how have you overcome them? 

Now more than ever, your dealer needs a clear, defined marketing strategy. One that lends itself to maximizing your dealers budget. It is times like this that push us to think and approach ideas differently. Keeping in mind that the very decisions and actions made today can and have a lasting impact. Instead of approaching the situation with band-aids - with the hopes of things picking back-up naturally - you have to get ahead of the situation. There are many ways to approach your marketing strategy, but it starts by reviewing your actual marketing budget. That is removing all of the white-noise out of the budget - i.e., CRM Costs, Website Hosting Costs, and Software/App costs are not marketing expenses! That and stop solely worrying about what the same OEM down the road is doing, and focusing on your dealership and its surrounding area.  

Advertising Budget. Make the Right Moves. 

Advertising budgets tend to be more complicated than they need to be on the dealer level. The idea that the budget, itself, includes far more than actual advertising. By that, I mean, they tend to include everything from CRM costs, dealership expenses, and website & software expenses, to name a few. In most cases, it is best to have a separate line item for 'operational' expenses, which is your software, CRM, and websites (not advertising, but the actual cost to host your website). When you break down the budget and solely look at your real advertising spend, it becomes easier to identify areas you can cut, vendors to remove, and possibly vendors that you will need to add to maximize your dealerships efforts. 

More importantly, one of the go-to band-aids for "spend reductions" in our industry is to simply "pause," or "cut" ad spend. At first, this seems like the logical thing to do. Make no mistake, though; in many cases, this can wind up doing more damage than good! You have to remember that simply "flipping" the switch on/off does not solve any problems other than an "immediate" drop in costs. But keep in mind that an "immediate" drop-in spend could be costing you more in the long-term. We tend to think short-term (like today) versus thinking about future ramifications. Not to mention, what we tend to ignore (and overlook) is that by the time you decide to flip the switch back "on" your ad spend tends not to go as far as it did previously. 

Instead of slapping on a band-aid and saying, "well, we just need to cut expenses. The more money we make, the more I can spend with advertising." Focus on the ads you are currently running! When is the last time you actually read the vendor reports? When is the last time you reviewed the actual campaigns (Google PPC Ads) the vendors were running? Your dealership needs change, and so should your ad campaigns! 

For example, several dealers often neglect marketing for fixed-ops other than the occasional - expensive - OEM mailer. Or the ground-breaking (repeated, expected) organic social media post for a coupon (FYI, collecting likes does not increase your absorption rate) that does not get much traction. 

As for the PPC Campaigns, when is the last time you reviewed your OEM's detractor report (the report that outlines the OEM you are losing the most sales to?) and worked with your vendor to devise and strategize new ad campaigns? Cleaning up and re-working your ads can make your spending go further. And selling an extra two to three vehicles a month can make all the difference. 

One of the other things you need to review is what percentage of your ad spend the vendor is taking from the top! If your vendor is taking 30% of the ad spend for "fees," you need to negotiate a better cost! 30% of your $15k budget is $4,500 in fees! For example, if you have five stores in your group, which is $22,500 a month, you're not spending to run ads. 

Bottom Line: You do not know what you do not take the time to ask and review. And to keep your dealership on the right track - a sustainable track - you have to have a clear picture of your *actual* advertising spend for the dealership! Once you have a clear outline of your total spend, it is best to devise a refined strategy with your vendor making sure you are getting the most out of your ad spend. 

When is the last time you checked your dealer fees on ad spend? Have you found more success after taking the time to restructure ad campaigns? 

Every month we get leads, lots of leads. But as you know, not all leads are of quality. Yet so many dealers waste precious time answering bad leads. For the sake of this article, a bad lead is one that does not have the following: valid contact information (phone/email), a coupon inquiry from a customer that has sold (yes, this happens), or are plain old spam. If your Sales Consultants or BDC Agents are spending time calling, emailing, or texting bad leads for the sake of completing their CRM work-flow, they are wasting a lot of valuable time. Time that could be better utilized calling leads with a higher probability of booking an appointment. And no, this is not about "cherry-picking" or only working with low-hanging fruit, either. 

So what do you do with bad leads? How Do You Manage Bad Leads?  

If there is no means of connecting with the customer, the lead needs to be marked "bad." However, there are multiple ways to go about marking the lead bad. One of the best ways to do this - depending on your CRM's capabilities - is to mark the "status" as "bad-lead." At which point, at the end of the month, you can easily report on how many leads were not able to be contacted. This does a few things for your dealership: 

First: your BDC Agents or Sales Consultants are not wasting their time trying to contact a lead with invalid information. This also helps them stay on task with calling customers that have valid contact information. And while this - itself - seems trivial or not a big deal, it is a big deal. There could easily be 10-20% of bad leads monthly! That truly adds up after a month or so.

Second: The more you start to mark and report bad leads, you can start to look at the vendor who is supplying them. The idea is that while the vendor is saying you are getting a "tremendous" amount of leads, you can report back saying that out of the 125 leads, 35 were not able to be contacted and we only sold three. Those three sold units - after taking the cost of the provider out - did not have a strong ROI. More so, after two to three months of tracking this vendor's lead quality, it might mean that you ought to move those funds to a campaign that is pushing more traffic to your dealer's website with a stronger conversion rate. 

Third: Morale is everything. If your sales managers are not taking out bad leads (again, this has to *CLEARLY* be outlined/defined as to what constitutes a bad lead), then it can - in many cases - become nearly impossible for your BDC Agents or Sales Consultants to hit their core objectives. That is hitting a specific set/show rate when the lead quality is not making that a remote possibility. Again, this is not about marking "leads" bad if the customer simply does not respond. That is a whole other discussion. Instead, this is about removing the "bad" leads that are not possible to communicate with. 

Bottom Line: Marking leads bad - due to invalid contact information - is not about "skewing" the system to show better results. The purpose and point of marking leads bad due to invalid contact information is to help keep your team on task and make sure that you are holding your vendors accountable. And yes, it is no secret - that with any vendor - there will be leads that are bad. However, when the majority of the leads are invalid and or the set/show/sold rates are the lowest out of the mix, then you have the data on hand to make a well-informed business decision. 

How do you handle bad leads? Do you actively manage this in your CRM? 

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?