Beware of BDC Pitfalls
You stop by the dealership on your way home after attending the latest dealer 20-Group meeting, where a fellow dealer touted the great results his store was getting with a business development center. The presentation fired you up, and convinced you putting in such a call center will propel your store to untold riches. You yank your general manager into your office and give him his marching orders.
November 1, 2006
You stop by the dealership on your way home after attending the latest dealer 20-Group meeting, where a fellow dealer touted the great results his store was getting with a business development center.
The presentation fired you up, and convinced you putting in such a call center will propel your store to untold riches. You yank your general manager into your office and give him his marching orders. “Build us a BDC,” you tell him.
Before you start writing the checks, wait!
There are things to know. An e-commerce director for a large national dealer group says the concept sounds great in theory, but pulling it off is tricky.
BDCs are not new to the automotive retail industry. But in recent years, consultants, vendors and auto makers have been pitching the concept.
A BDC simply is a separate telemarketing department in the dealership set up to make outbound phone calls to potential customers, as well as handle inbound calls for sales appointments.
Most dealers agree their showroom sales people's phone skills can be terrifying. They may be great in face-to-face meetings. But it's a different matter when getting them to answer calls correctly as well as making follow-up calls to customers.
The idea behind a BDC is to hire people with phone skills, give them scripts and watch the money roll in.
There are several dealers who are skeptical, even though they think BDCs make sense theoretically. During the late 1980s and early 1990s, many dealers invested hundreds of thousands of dollars in them. Some even constructed separate buildings with the latest technology that now are empty or used for other purposes.
“We built an ‘in-house call center’ in 1995 — it wasn't called a BDC back then,” says Ted Linhart, chairman and CEO of the Dominion Automotive Group in Virginia. “It didn't work. I think it is a great idea, though.”
Allen Levenson, vice president-sales and marketing for the Asbury Automotive Group dealership chain, says the company has two BDCs that have lasted more than two years.
Several years ago, Asbury developed a centralized BDC for its Mississippi dealers. It was running strong for a couple of years until the person managing it left to start a family. The operation soon fell apart.
“They make sense, but are hard to do,” Levenson says of BDCs.
Mike Johnson, owner and president of Antelope Valley Ford and Shuttle Lincoln Mercury in California, likes to tell people he invented the BDC 20 years ago. A young woman from Texas called him trying to sell some pens.
She was so good on the phone he began to think of ways to implement that type of service into his operations.
It almost became an exercise in futility. “I literally put hundreds of thousand of dollars into the black hole of BDCs,” he says. “Only in the last year and a half have we started to see some results.”
Figure out the costs before deciding whether to go forward, says Kathy Kimmel, Cars.com's corporate trainer who has managed a BDC for Mercedes-Benz of Westmont and Naperville, and was an AutoNation trainer.
“You should consider things such as personnel, computers, phone lines — and maybe a new phone system, tracking systems and even facilities,” she says. “A dealer easily could spend a lot of money on it. You have to ask yourself if you sell enough cars to justify it.”
So with all of the horror stories, why start a BDC? There are several reasons.
If done right, a BDC can help a dealership significantly increase appointments, which leads to higher closing ratios. Dealers also report increases in the front and back end grosses after starting a BDC.
“Before we started, our sales people were handling leads from the cradle to the grave,” says Phil Cohen, e-Commerce/BDC director for the Rick Case Auto Group. As a result, many leads weren't being handled.
After establishing a call center in each of the Rick Case dealerships, Cohen says appointments and sales increased.
A BDC also allows the dealer to identify problem areas in the dealership and what type of training to invest in.
Cohen is able to listen to recordings of the phone calls and pinpoint specific areas that need improvement. One area was improving the product knowledge of the BDC reps. To help, Cohen put together a “playbook” in three-ring binders filled with each model's product information.
“We've seen significant improvement in that area,” he says.
Also, if the BDC is centralized and handles calls for multiple brands, a dealership can employ technology that routes the phone calls to the appropriate representative.
A good BDC also should be able to drive CRM (customer-relationship management) efforts, says Jonathan Ord, co-founder of FireSocket, a customer-relationship management vendor.
“Is it necessary for a dealer to have a call center or BDC?” he asks. “It depends on the dealership. Does the store need one to help follow up with the customer? If so, then put one in.”
Ord suggests dealers look at the BDC and CRM tools as revenue generating devices rather than expense items. “Look at the CRM provider the same way you hire a general manager,” he says. “And treat it like the asset it is.”
Savvy dealers mine their customer databases and create call campaigns targeting owners whose vehicles have less than 60,000 miles. Not only do they create sales, they obtain attractive used-vehicle inventory to help generate certified-pre-owned sales.
Another clever trick is to use call-tracking technology such as those provided by CallBright, Who's Calling or Cars.com to call customers who called and then hung up without talking to anyone.
“We've generated more revenue doing that than with anything else,” says one e-Commerce manager. “The technology more than pays for itself.”
AutoBase, a CRM vendor in Indiana, provides a service called “Save-A-Deal,” which targets people who left the store without buying. A manager usually calls and discusses the matter within a few hours of the person leaving. Often the person is convinced to return to the dealership.
Other dealers also use BDCs to drive traffic to their service departments, just by calling customers who purchased vehicles recently.
The trick is for a BDC to possess a laser-like focus on setting appointments, not selling cars or services. The dealership sales staff does that. Get the person into the dealership and the likelihood of closing the deal increases significantly.
There are many ways to slice the customer data to segment it and create attractive reasons to give people for why they should visit a dealership.
Cohen says it is important to focus on immediate goals. His BDCs only handle incoming and follow up calls for sales now. “We'll move into the service area before long,” he says. “I want to perfect what we're doing now before adding more.”
One wrinkle lately is vendors offering outsourced BDC services to dealers. Companies such as Sales Academy, AutoBase and e-Leads will handle both outbound and inbound phone calls for dealers who aren't ready to make a large in-house investment.
One drawback is that call representatives might not be strong in product knowledge.
12 Steps to Success with Business Development Centers
Ward's talked with three experts to find out the dos and don'ts of running a business development center.
The experts are:
Phil Cohen, e-Commerce/BDC director for the Rick Case Auto Group.
Mike Johnson, owner of Antelope Valley Ford and Shuttle Lincoln Mercury in California.
Kathy Kimmel, Cars.com's corporate trainer who has managed a BDC for Mercedes-Benz of Westmont and Naperville, and was an AutoNation trainer.
Here is what they say:
The dealer principal and general manager need to commit financially and philosophically to the initiative.
Establish a clear purpose. Do you want to increase your grosses, increase your service appointments and/or sales appointments? Knowing your objective will help you measure success.
Senior management needs to sell the concept to the sales managers. It is important for the sales managers to buy in because if they're not on the bandwagon, it doesn't work, Kimmel says.
Sell the initiative to your sales associates. It is good to have everyone in the store on board and understanding why.
Establish a time frame in which to determine whether the project is worth continuing. “I think a year is fair amount of time,” Kimmel says.
Include the BDC manager in the weekly manager meetings and require progress reports.
Find technology that lets you measure your staff's performance.
Hire people with good phone skills. “Conduct the first interviews on the phone,” Johnson says. “It lets you hear how they handle themselves on the phone.”
Determining success or failure, “phone skills are the most important,” Cohen says. “The two biggest things are process and training. Listen to the phone calls to learn where you need to train.”
Kimmel suggests going outside the normal pool of applicants to find candidates. Hire from other call centers.
Cohen says placing ads on Craigslist.com has brought in some strong employees. “Generally, people on craigslist tend to be more computer savvy, which is important in our stores.”
How many BDC employees should one hire? “We've found the sweet spot is having our reps handle 200-250 opportunities a month,” Cohen says.
Develop phone scripts and require the staff to follow them. But do not be afraid to experiment. “Asking a question a different way often can dramatically alter the result,” Cohen says.
Kimmel says she has seen dealerships BDC initiatives fail because they neglected to do the necessary work up front in developing the right phone skills.
Create pay plans that motivate. “Working in a call center can be very boring,” Kimmel says. “There should be significant financial reward for those people.”
Cohen pays a flat hourly fee with bonuses for appointments and sales.
Originally, sales bonuses were significantly more than bonuses paid for appointments set. But the Rick Case Auto Group realized the phone reps had no real say in sales so it flipped the bonus structure.
Train, train, train. Listen to recordings of the phone calls and let your staff know you are listening, says Cohen.
He developed a “hall of fame and hall of shame.” Each week, he picks out recordings of great phone calls and bad phone calls and replays them for his staff.
“We use it as a teaching tool,” Cohen says. “Plus, it lets them know we are listening, so they are likely to work at being good.”
Demand the BDC manager develop a succession plan. Too many dealers have stories of successful BDCs that fell apart when a good manager left. Develop strong processes stand on their own, and make sure there is someone groomed to step in to the top spot if necessary.
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