The Five Absolute “Musts” for a Successful Automotive Sales BDC

 

If you’re like most dealers I speak with lately, you’re either looking to add a Business Development Center (aka BDC) or trying to find ways to make your current BDC more successful? If so, then there are just a few simple “must haves” that are truly non-negotiable if you’d like your BDC to succeed today and over the long term.

MUST #1: BDC’s Must be Profit (not Cost) Centers

The primary reason BDCs failed in the past is they simply weren’t very successful at driving what I call “plus business.” I saw it played out again and again: a dealer would return from a 20 Group or an industry conference and announce “It’s time to move our internet sales efforts to a BDC!” So the store would hire a few BDC agents, give them computers, telephones and headsets; and send all the inbound leads and calls their way. BDCs are call centers

The problem was that whatever volume the store was selling before the addition of the BDC, they pretty much were selling the same amount after the BDC was added. The only difference was that the dealership now had additional compensation costs to deal with each month.

These BDCs were cost centers, not profit centers; and they certainly weren’t “developing” any business (as their name implied). Over time, dealers wised up and closed these ineffective departments.

Many of the BDCs I encounter today – generally because of better training, templates, talk tracks and overall direction – are driving plus business for their dealerships… but, they’re still a cost center. In fact, just as in the past, the primary reason I see BDCs shuttered this year is because they are a cost center, and not a profit center.

Despite (or because of) their success, BDCs today often cause a dealership’s overall sales compensation to get out of whack. While this profit hit is often easy to absorb in the short term, over the long term no dealer can live with this. Something has to change, so the BDC is closed and the leads and calls are rerouted back to the floor.

Bad move.

Instead of shuttering a successful BDC, dealers need to work to make their BDCs profit, not cost centers; and there is one easy and instant solution for this. It’s called the Sustainable Pay Plan.




MUST #2: BDCs Must Use Sustainable Pay Plans

If you want your BDC to grow and provide you with incremental sales today and in the future, all while maintaining 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 killing your net profit. Here are the must haves to a sustainable pay plan for a BDC:

  1. Pay the BDC on APPOINTMENTS THAT SHOW; not on sold units and not hourly (though there is generally an hourly component to the BASE that a BDC agent will make). For most markets, a solid pay plan for an Appointment Coordinator (BDC agent) looks like this:
    1. $10-$12 to even $15/hour in base pay that is a DRAW AGAINST COMMISSIONS.
    2. $50 commission for every VALID (discussed later) appointment that shows.
    3. $100 volume bonus for every 10 VALID appointments that show.
  2. Pay the floor salesperson that CLOSES a BDC appointment a REDUCED COMMISSION. (Generally, this is a half commission with a full or half mark toward their volume bonus.)

This second point is hard for most sales managers to swallow. They like to argue something nonsensical like “My salesrep closed the deal; he did ALL THE WORK; so he deserves a full commission!”

No he did not; and no, he does not. He BARELY deserves the half commission you’re awarding him. Appointments today close at an extraordinary high rate (between 50-80%), so the most he can argue for is that he did half the work. Moreover, the minute he’s ready to make the calls and set the appointments for himself then we can talk about giving him the entire deal.

However, let’s look at this another way:

One of your floor salespeople – let’s call him Bob – sets an appointment for a prospect tomorrow at 9:15 AM.

Overnight, Bob becomes ill and decides he should stay home. He calls Joe (a fellow floor salesperson) and asks “Joe, can you take my 9:15 appointment this morning?”

Joe agrees and sells the car.

How much of this deal does Joe think he deserves?

Half; Joe thinks he deserves exactly half; not a penny more and not a penny less.

Joe looks at this as a split deal with Bob. After all, Bob set the appointment, didn’t he?

Why should Joe think he deserves only half when Bob set the appointment, but suddenly he deserves a whole deal when a 22-year-old young woman with a headset set the appointment from the BDC? It doesn’t make sense; pay a split commission on appointments set by the BDC.

MUST #3: BDCs Must be Managed Like Call Centers

Many dealers I know created their BDCs by staffing them with a few of their existing floor salespeople and then paying them like floor salespeople (generally on the sold units). Their argument was simply that they needed knowledgeable people to be able to answer customer questions and that they only felt they should pay when this department sold a car.

Wrong and wrong.

The truth is that your BDC is more like a bank call center than it is a traditional sales team. You don’t need seasoned salespeople to be successful and you should never expect them to sell anything. Their job is to set appointments that show, period. When you compensate a BDC agent on a sold unit you are encouraging them to start “selling” on the phone – something that is not just a bad idea, but also counterproductive. You’ll end up selling fewer units to appointments this way, because your BDC team ends up over-qualifying every prospect.

Moreover, when you employ “car guys” in this role, you often get a group that spends too much time answering questions and almost no time setting appointments that show. Like a bank call center, your BDC should be driven by metrics and talk tracks, not selling and product knowledge. In fact, the less product knowledge a BDC agent has the better – it means they can only stick to the approved talk tracks and will spend all of their time setting appointments that show and buy.




MUST #4: BDCs Must Have Strict Rules for What Counts as a Valid Appointment

You might think you’re being nice or even driving incremental business when you allow your BDC to set soft appointments, but you’re not. In fact, you’re costing them and you money; here’s how:

When you have soft appointment rules – like paying a BDC agent for an appointment that shows a day early (yes, I’ve seen this more often than the alternative) or giving the BDC credit for a sold unit because they had “meaningful contact” with that prospect in the last 72 hours – you’re actually hurting your sales and the paychecks of the BDC agents.

Unless you have strict rules in place for what constitutes a valid appointment – my choice is to only count these if the prospect arrives within 45 minutes of the scheduled appointment time – your BDC will NEVER have the discipline to pin a prospect down on a specific time. Why should they? That takes work, it’s sometimes uncomfortable, and they’re going to get paid either way, right?

Yes it takes work. Yes it’s sometimes uncomfortable. No, they’re not getting paid, because the prospect won’t be showing up.

When your team allows a customer to say something like “I’ll be there before 9” there is almost no chance this “appointment” will show; because it’s not an appointment. A true appointment requires both a specific day and a specific time. Without a specific time, there is no mental commitment by the prospect to show up, so they generally will not.

Once you force your team to start setting stronger appointments (by paying them only for those that arrive within 45 minutes) their show rates will multiply as will your sold units.

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MUST #5: All Sales Managers Must Support and Defend the BDC

Despite the fact that we’ve had this pesky internet around in car dealerships for nearly a generation, I still meet more desk managers who enjoy torturing the Internet BDC than I do those who support their efforts. This boggles my mind, since these same managers are paid based on what the entire store sells, and that the BDC is often instrumental in driving the growth for the stores I visit.

The time for sales managers to not only support, but also to defend their BDCs arrived years ago.

It’s simply bad for business for your desk managers to keep taking the side of your sales floor in disputes with the BDC. After all, if the floor team did their job, you wouldn’t need a BDC. The reason for nearly every Automotive Sales BDC in place today is because the sales managers cannot or will not get their floor teams to make the required calls using the proper talk tracks. It’s simple activity management that fails for almost every dealer on the floor, yet succeeds in a BDC environment.

The reward for having your sales managers begin supporting and defending the efforts of the BDC is you can make the BDC team a true developer of business.

It starts with Internet Leads, and then you add all inbound phone calls. Once you have solid efforts in place for these two, you give the BDC your orphaned owner database. Finally, you allow your floor salespeople to “contract” with the BDC to make their owner marketing and Be-Back calls (since they’re likely not making these today). The cost to the floor team? Just half their commission (a sustainable pay plan).

Then and only then can you look to your BDC as a developer of business that feeds your dealership a steady stream of ready buyers.

Good selling!

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About TheManager:

Steve Stauning, creator of The Appointment Culture and an expert in The Customer Experience. He is also an extremely popular keynote speaker, writer, and industry consultant. Learn more about Steve at SteveStauning.com.

 

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