The Rikess Group
I Don’t Understand Sales BDCs
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.
3 Comments
Chris Murray
Independant
If the ONLY function of a BDC was setting appointments your points would be valid however you are only addressing one small part of a Sales BDC. It seems to me you are actually critiquing a call center's functions.
Typical of most in the car business you assume EVERYTHING that is not on the sales floor then it is BDC and that is simply not well thought out.
Derrick Woolfson
Beltway Companies
It sounds like you have dealt with some pretty bad BDC’s! I have seen both sides. And for every side, there is a perspective. A view that in some cases can offer a better model depending on the store. Whether that is little management, no BDC, Internet team, sales teams, and product presenters – you name it – it’s out there.
I will offer, however, that having built a BDC from scratch (starting in sales), we are far more than “appointment setters.” In fact, we have shifted the model to having “product presenters” who close the customers we bring in.
I agree that if you are still trying to manage like it’s 1995 (check out the gentlemen’s class from DSES), you have problems. I also agree that if your BDC is unaware of incentives, products, or basic objection handling techniques than no – it will not work. And you will be wasting hundreds of thousands of dollars on a “fixed cost” that should be yielding a healthy, but stable ROI.
That said, in our BDC we handle all objections, questions, pricing, on the phone. Most of the appointments that show have already agreed on price, vehicle, have their insurance updated, obtained a copy of their 10-day payoff, and have their credit application. In turn, they are ready to roll. As our lead to close is an average of just four days. Where is all the data analysis on this?
The customer is then in and out of the store in less than 2hrs, and their product presenter demo’s the product, reviews the features, and guides the customers to finance, dealer tour, sending them off in their brand new vehicle.
We also set 45%+ of the leads to an appointment (phone, the internet, manifest lists, and showroom follow-ups) with an average of 65%+ show with a 45-51%+ sold. Those that are not closing above the NADA guidelines most likely have a breakdown; whether that is the miscommunication from management to the BDC or lack of control in the BDC.
Regarding the ROI – this should *absolutely* be checked, tracked, and understood. Where you take your ‘fixed’ expense (hourly wages & salary) + commissions (per appointment sold) against the overall ‘gross.’ Once you’ve deducted the expenses and you’re making a healthy profit, it is a win/win situation. But, again, if you cost the dealer money with having business development department then something just isn’t adding up.
Beyond setting appointments, managing chats, inbound calls, texts, and outbound requests – the BDC also manages and assists w/ marketing, social media management, and customer engagement.
All that to say, I appreciate your perspective – and agree that if your department is not profitable, then it isn’t worth it.
But, I do also offer that – if anything – BDC’s are becoming more and more relevant as consumers are continuing to shop and research online - expecting more “customer service” than previously.
Elizabeth Powers
Beingseen360.com
I see what you are saying. I have often felt that dealerships BDCs as we currently know them will not be able to sustain the expense as margins continue to be challenged. Plus on the sales floor there are more people but they are typically not as productive. So you have a department that is very productive but understaffed and a sales floor with a lot of staff not doing much of anything.
I firmly believe that dealerships will have to evolve. Sales people will have to have more of the skill set found in the BDC inorder for a dealership to be successful. This will all start with the manager. Can they train and hold staff accountable? Many times these days, the consumer doesn't want to see you until the deal is done and dealerships will have to find a way to embrace that. By combining the two skill sets dealerships may find more success without more expense. It is a big culture change for many dealerships and like everything else in this business it comes down to the people and the process.