I’m a bit dumbfounded as to why a modern auto retailer would still use a sales BDC. 

Think about it.  BDCs withhold information to try to secure an appointment. Not because they are nefarious. They just don’t have the answers. 

• “Does my daughter qualify for a first-time buyer’s program?”
• “How long is that incentive on?”
• “What is my trade worth?”

If sales BDCs could answer commonly asked questions, such as these, they would be salespeople, not appointment setters.

A bit of history:  Sales BDCs came about for a good reason. Most dealerships' best salespeople did not have great phone skills. Their primary skill set was “eyeball-to-eyeball”, and they had high energy and great persuasive skills.  However, those skills didn’t transfer well when it came to handling incoming calls. They also, typically, lacked excellent organizational skills, so their follow-up was iffy.

BDCs were created to augment the sales pro’s skill set.

But the market has changed and very few prospects walk into a dealership without contacting them first. It is estimated that 80% of prospects contact your dealership by phone/internet/ text/chat before coming in.  Your best salespeople should be their first point of contact - salespeople who will make the best impression – who are great on the phone and have the full product knowledge to handle those leads.    

Why pay two people to sell one car (especially in an era of margin compression)?

The Rikess Group model has a separate sales department manned by real salespeople who have the right skill sets to handle remote leads.  This group is well trained to have excellent product knowledge and the ability to signal transparency - trading information to get an appointment.

Ideally, over time, the mix of your sales department will be at least two-thirds highly trained to handle remote leads – and making in-person appointments for themselves.

This model is not just more customer-friendly and results in more sales, but is lower cost.

You eliminate the BDC expense (about $100 per car sold) and you need fewer managers.  This is because this is an empowered sales group, typically with a limited negotiations model, who can “desk their own deals.”  Thus, needing less management.   

Our largest client has 25 salespeople in this department and only 1.5 sales managers.  Call it the Amazon model.  To become an online retailer who occasionally sells a car to a “cold walk-in.”

It is important to note that the best way to create a great process is by starting with the customer. The better you can fulfill their needs and desires the more cars you’re going to sell.

Simply put, if you personally called a local retail establishment and asked about product availability and pricing and their answer was, “you need to set an appointment and come down to see us for that information,” would you hop in your car and drive to their location? I doubt it. But, that is what you’re asking your valuable prospects to do.

If you’d like to discuss this article in more detail, or set up a webinar to learn more about The Rikess Group’s lead handling strategy and training, let me know.

Two Problems – One Solution

Of the many challenges facing dealers today, two of the biggest include:

1. Recruiting a younger, gender-balanced sales staff
2. Effectively and cost efficiently handling incoming phone calls and Internet leads 

Fortunately, there is a single way to address these challenges, and that is by creating a separate department to handle incoming phone calls and Internet leads staffed with salespeople who have the right skill sets to handle these leads.

Three Models for Handling Phone and Internet Leads – One Works

There are three basic models for handling phone and Internet leads. They are:

1. Business Development Center (BDC) Appointment Setters – The majority of dealerships use this model. It was developed because the traditional, high energy, highly persuasive salesperson didn’t have the right skill sets handle incoming calls or be effective at following up leads. They loved “eyeball-to-eyeball” sales opportunities as much as they disliked working the phones, so BDCs staffed with appointment-setters were created to fill the gap.
2. Round Robin – Another traditional approach to phone and Internet contacts involves passing them around to sales consultants either equally or to select individuals.  This model is ostensibly less expensive than a BDC but is in reality less effective in setting appointments leading to sales because it relies on the same people—traditional sales consultants—who haven’t developed phone or follow-up skills.
3. Digital Sales Departments (DSDs) – This is the approach that works because it relies on the right people—younger, gender-balanced, tech-savvy salespeople—to handle incoming phone calls and Internet leads, make their own appointments, and then close sales with phone- and Internet-using customers.

Why Digital Sale Departments Work

It’s always good to start from the customer’s point of view. So let’s start with what prospects want to accomplish when contacting your store from outside the dealership. Are they calling to make an appointment with a salesperson? No; they’re calling for information they can’t easily find through Internet research: actual pricing, incentives, vehicle availability, financing options, monthly payments, and other such topics that are difficult to figure out from reading web pages.

When these prospects reach a BDC, they’re pushed hard to make an appointment, rather than given answers to their questions.  Why? Because BDC representatives are compensated for setting appointments, not for providing information. So when a prospect reaches someone at the dealership who insists on making an appointment rather than answering their questions, the prospect more often than not will disengage. The same thing happens in a Round Robin situation when a call or email is forwarded to the typical floor salesperson: “Come on in and we’ll answer all your questions, get you behind the wheel for a test drive, and give you the best deal in town.” The result of both approaches is wasted time, money, and opportunity, because one minute later that customer is contacting a different dealership.

The goals of a Digital Sales Department (DSD), on the other hand, are to connect the customer with someone like him or her—younger, male or female, able to stay in contact via phone, text, email, or social media—a Product Specialist able to both answer questions fully, accurately, and transparently, and then convert those contacts into appointments and sales. The DSD is not a bolt-on department like a BDC, raising expenses to cover a weakness in the floor sales team. It’s a conversion of a portion of the sales team to a younger, more technologically capable group of specialists able to close sales with today’s and tomorrow’s customers. 

Why Digital Sales Departments Make You More Money

It should be apparent that DSDs offer dealerships a lot of value by virtue of the increased appointments and sales they generate. But DSDs are actually reducing cost as the sales increase:

1. No appointment setter expense: You eliminate the cost of a BDC–about $100 per car sold—a critical cost saving in an era of margin compression.
2. Less supervision. You usually have one manager for every four salespeople on the floor, because they’re needed for closing, TOs, desking, and general oversight. Because of the nature of the process required to be effective with the phone/Internet customer, most of the deal is completed before the prospect even gets to the store. In this scenario a single Team Leader is able to monitor and approve pricing and other deal guidelines for as many as 8 Product Specialists.
3. Product Specialist Compensation. The recruits for this department are typically in their mid-20s and can be paid somewhat less per car sold (around $15 – $20) than the showroom floor salesperson. DSD Product Specialists should earn $45,000 to $55,000 annually on 12-14 units sold per month. If I’m 26 years old and making around 50K I’m the “richest kid on my block.”  

Additional Sales and Lower Cost? Any Other DSD Benefits?

Because Millennials understand their peer group—now the largest generational cohort in the U.S.—and are skillful with the technology required to be successful in today’s marketplace, Millennials represents the ideal segment from which to hire dealership employees. Period. And hiring Millennials today means that 10 years down the road you’ll have younger tenured sales consultants with significant books of business and managers adept at both working with the auto buyer of the future as well as managing the sales consultants serving them. So setting up a DSD isn’t just a short-term play, it’s a strategy for long-term success.

Another advantage of the DSD is that it eliminates a lot of wasted time in the sales process. It gets customers through the front end of the sales process—greeting, needs assessment, product selection, price and financing discussion—while they are in the comfort of their homes, offices, the mall, or elsewhere. When the prospect comes to the showroom the sales process goes really fast…mostly a test drive, trade appraisal, and paperwork session with Finance. So one of the biggest customer complaints—a 3-4 hour (or more) sales process—is eliminated. The DSD is equally more efficient for the sales team, which is able to leverage phone, text, email, and social media communication to work with more prospects simultaneously and then schedule dealer visits at times convenient for both the customer and the dealership team. 

How Do I Set Up My Own Digital Sales Department?

The Rikess Group is currently handling a great deal of recruiting for DSDs because it isn’t easy to attract Millennials to auto dealerships. Your typical 25-30 year old doesn’t have the patience to hang around the showroom waiting for the next guest to arrive or to bounce between customer and desk manager in your traditional command and control sales operation. And that’s what they’re expecting when they hear about sales openings at the local dealership. So you have to be effective in communicating the nature of the DSD Product Specialist position.

You also want to set a target of 50% women as Product Specialists. The U.S. population is 51% female, yet only 7% of the auto sales force is comprised of women. The Rikess Group is placing about 50% women in its DSD staffing efforts. Establishing this gender balance leads to increased sales as it accommodates the significant number of customers who prefer working with people they can relate to. Obviously, the same approach should be taken to reflect local community makeup and language preferences.

Finally, the dealership should institute training, compensation, career path, and work hour approaches that will encourage Millennial Product Specialists to do the best jobs they can for the dealership. The Rikess Group has templates available for just this purpose.

It’s About Time

The number one objection I hear when discussing DSDs is, “I’ve put so much effort into building a functional BDC that I’m not going to dismantle it!” Sounds like throwing good money after bad, if you ask me. But if you want to learn more about setting up a Digital Sales Department just email me at mrikess@rikessgroup.com and we’ll set up a webinar.

Points of Friction…OUCH!

We’ve all been to stores where:

…What you saw online—or were promised online—isn’t available on-site ...  You can’t find what you’re looking for, or find someone knowledgeable and friendly to help you …  The website is information-rich and pressure-free, but in-store personnel make up for their lack of knowledge by being smarmy or pushy …   It takes hours to finish the deal – even after you’ve decided on the car and have agreed to the price and trade-in…

Friction in New Car Buying

Consumers hate any form of friction and the number one “pain point” found in most automobile dealerships is the traditional negotiations sales model. Companies today need to remove friction, not add to it, by simplifying customers’ lives.  Let’s dig deep …

In general, salespeople don’t negotiate. They are either a conduit for desk managers’ “pencils” or they tee up their first customer price quote with enough gross to allow a manager room to negotiate a little and try to close a deal. Very few salespeople today, especially new ones, have competent negotiating skills. This reliance on sales management is expensive. Most traditional dealerships have at least one sales manager for every four sales associates!

This lack of sales associate empowerment is a very costly proposition and an unnecessary critical point of friction. Your customers hate the “back and forth” sales people do while hopping between them and the desk and negates the authority of the salesperson because, at this juncture, it’s clear they aren’t dealing with a decision maker.   

There is no other shopping environment where they encounter this type of experience.

Bottom line, this is a very expensive and redundant model.  Well paid managers are really “super sales people” – when their real job should be to hire, manage and train their sales staff to handle the entire transaction.   But why would they do that?   An empowered sales staff needs less managers – so it would be job suicide.

It may be counterintuitive, but grosses are higher when you eliminate negotiations. When you add value to a transaction you can charge more. By providing a fast, fun, and transparent experience through a knowledgeable sales associate you will have the ability to charge a small premium for a great experience. Happy customers equal higher referrals, more positive online reviews and repeat business.   

The Times They Are a’ Changin’

Most of you buy products from Amazon. You take for granted, the hassle-free experience. Amazon works hard to eliminate points of friction, and automobile dealerships must do the same. The average auto buyer spends over ten hours doing research before ever contacting a store.  When they are ready to buy, most know what they want to purchase.  At that point, friction in the form of a lengthy process and multiple back and forth buying steps, creates doubt and/or turns in to frustration/anger that can lead to lost sales.   

(They don’t run into these hassles when buying anything else – why now?) 

I’m sure you’re aware of the growing movement for consumers to buy everything from the comfort of their homes -  including automobiles. It is estimated that 28% of car buyers would buy “remotely” if given a simple, secure, friction-free method. New technology tools like Roadster Express Storefront allows consumers to complete an entire transaction without coming to the dealership. Recent pre-owned entrants like Carvana, Vroom and CarMax have proven they can sell pre-owned vehicles even without a test drive. They are all negotiation free.

Meanwhile, another “A” company, Apple, has disrupted brick and mortar retail operations with their Genius Bars - where consumers are served by salespeople who are friendly, patient and smart – with high levels of technical knowledge. 

Automotive salespeople must also be product geniuses so they can keep up with today’s educated shoppers. Consumers don’t want an aggressive, high-energy closer focused on wheeling and dealing. They want a highly knowledgeable advisor who knows more than they do - focused on product features and value, financing, and what’s best for them. They want to deal with a true professional.

Does your store offer a significantly differentiated shopping experience than that of your same brand competition? In almost every case, the answer is no. So, if the shopping experience is similar from store-to-store, what drives most customer’s final purchase decision? Price! Isn’t it time to create a frictionless experience that allows you to sell more vehicles, for more gross, while getting a greater amount of positive reviews? 

Can You Hear Me Now?

Ask yourself – why do I have a negotiation-based sales model, with all the extra time, expense, complication, and customer and employee dissatisfaction that come with it?    Most likely, it’s simply because it’s what you’ve always done.    It may require a leap of faith, but not a big leap. It’s time to THINK DIFFERENTLY. 

Most Dealers are closer to a One Price Selling sales process than they may realize. If you’re an excellent pre-owned dealer you’re basically not negotiating. You must price your cars to market to get leads. On the new car side, the customer is setting the prices. With new tools that allow prospects to literally buy the car from home, negotiating power is shifting to the consumer.

The number one reason to go to One Price is the vast majority of customers want to conduct business in a transparent manner.  Women register over 50% of vehicles and they dislike negotiations.  Gen Y now makes up almost 30% of the market and they also dislike negotiations.

Add in others who don’t like to negotiate and you have at least 80% of the market who will pay a slight premium for a fast, simple and transparent purchase experience in which they feel they are being treated fairly.  Why employ a sales process that appeals to only 20% of the market?

The second reason to adopt a One Price process is it increases your ability to attract a younger, gender diverse sales force.  How many of you did a great job of attracting salespeople in their early to mid-20s ten years ago? If you did, you’d have the majority of your sales staff in their mid-30s with a ten year book of business and a management team that looks more like your customers.

Look around your showroom floor.   Does the majority of your staff that look like your customer base? The market is rapidly getting younger while most stores sales staff are going in the opposite direction.  You’ll never attract and retain a youthful sales force with the traditional, “desking” sales model that leaves sales people un-empowered and required to haggle over every sale.

The third reason to go to One Price is to eliminate wasted time in the sales process. When a dealership is busy it takes at least three hours to buy a car plus delivery time. About half of that time the prospect is not engaged in the sales process. They are waiting while salespeople line up to talk to a manager - and then comes the T.O. which backs the process up even further.   Negotiating F/I also slows down the process. 

The traditional sales process needs an abundance of managers to handle negotiations.   The average store has one manager (including F/I, BDC and sales) for 2.5 sales people.  If you’ve got twenty salespeople you’ll have at least eight managers.  Bottom line:  In an era of margin compression this is no longer a financially sustainable sales model.

And finally number four:   Shoppers look for a dealer based on social media.   Yes, they go right to Yelp and see which dealers in their area have the highest ratings.  Like it or not, this is true. Inventory, pricing and location won’t help dealers that have less than a 4 star rating.   One Price Dealers get significantly better (and often glowing) 4+ star reviews.

Is transitioning to One Price easy?  No, it’s not.   Is it worth it?  Absolutely. 

To be successful, the store’s leader must have a very strong commitment to changing the culture to one that is centered around transparency - what most customers want.    Change is hard.   This is not for the weak or lazy.

A number of sales managers don’t have the right belief system and skill sets.    We understand.  They’ve been doing things one way for a years.  And again, change is hard.  We get that.  Still, I’m still amazed when a sales manager tells me he believes “customers like to negotiate”!  Because customers are compelled to negotiate due to an archaic sales process doesn’t mean they like it.

Sales managers will need to move from “deal managers” to developing, training and coaching their sales staff so they can be empowered to conduct the transaction without help of sales management on virtually every deal. This empowerment results in less overall managers in the Variable Department.

It’s Inevitable. You can’t defeat the internet.   It’s here to stay.  Today’s highly informed consumer has already done their homework to determine what they should pay for the commodity you sell.

Those dealers that become One Price Stores have a competitive advantage over those who are trying to improve the traditional process for a shrinking owner base. If you’d like me to conduct a short webinar for you just let me know at: markrikess@gmail.com  

According to Call Source, 80% of prospects contact a dealership before coming in—by phone, email, lead form, text or chat. 

Because the close begins during those initial contacts, I contend that a BDC—whose purpose is to withhold information in order to set appointments—is among the most counter-productive strategies a sales department could use. No prospect asks, “May I set an appointment to see a salesperson?” They call for specific information that can only be provided by a salesperson, not a BDC agent. If you won’t give it to them, the next dealership will.

So, a new definition of closing should be: The initial interaction with today’s prospect determines where they will set their appointment, so beginning the close requires providing accurate and complete information in a high-quality manner that will earn the appointment. To fulfil this requirement means relying not on BDC reps but on Apple Store Genius-type salespeople providing the knowledge and transparency earning them the right to request an appointment.   Some Data Points:

• According to J.D. Power, 74% of prospects will drive 20 miles or more to receive what they perceive to be a great experience at a dealership. How do they determine whether they’ll receive a great experience? That first interaction and what customers report on review sites.

• Driving Sales data says that 39% of prospects won’t consider a dealership unless they can easily receive a competitive price in advance of a visit. Dealerships with BDCs and “old school” management unwilling to quote prices risk losing almost 4 in 10 sales opportunities. Why turn away potential customers? To protect grosses?

• According to DrivingSales’ 2015 Customer Experience Study, 80% of vehicle buyers visit only one or two dealerships before buying. This data underscores the need to have a very positive initial interaction with a highly knowledgeable salesperson on the first contact.

• According to Accenture, 75% of consumers said they would “buy a car online” if given the opportunity. If you truly believe in giving customers what they want, you can take a step toward online buying by offering remote delivery. This is clearly a trend from progressive dealers I know. All the new entrants to used-vehicle sales (Carvana, Beepi, Vroom, etc.) basically only offer home delivery, and they are thriving. By aggressively offering “remote delivery” you expand your sales “footprint” and take market share from your competitors.

Another reason for enabling prospects to gather as much accurate information as they wish from your dealership in advance of a store visit is it saves everyone—customers and dealership employees alike—time and aggravation when they’re at the store.  Often, the “elusive” one-hour sales process can actually be achieved and you get more of those 5-star online ratings that will generate leads for your store.

Does your dealership want to close more sales? Seems like a silly question…but, if you’re not handling the initial contact correctly and giving prospects more of what they want, you’re costing yourself appointments, leads, and sales.

If you would like more information about this strategy I’d be pleased to run a webinar for you. Just let me know if you’re interested and we’ll set up a time to visit. You can reach me at:

• markrikess@gmail.com
• C) 916-715-8129