When I was at the pinnacle of my retail career, business development centers, or BDCs as they are colloquially known, were becoming all the rage. As a proud A-Z Internet salesperson, I was completely put off by the BDC concept. I had no clue how things would evolve next. Given the circumstances of a sales environment where having inventory is the only thing that matters, many dealerships are questioning the need for a BDC. I’m about to fly off on a rant about it.
Admittedly, things were much different in the nascent days of Internet sales. Traditional salespeople showed little-to-no interest in handling online customers. Many, including some of the leaders that some look up to today, were among the most vocal about it being a flash in the pan. It was during this time that dedicated Internet salespeople existed who could bridge the gap, handling all of the follow-up AND sales responsibilities, up to and including desking deals, dealer trading, and even ordering vehicles.
These were the ultimate apex predators in the car business. Just like the mightiest of creatures who ruled the earth, they went extinct a long time ago (actually, a good portion were promoted, started other companies, and/or left the business altogether). Just like the dinosaurs, we’re leftover with two extremes. We have songbirds on the far left in the BDC and alligators in the showroom on the far right. One group that’s bountiful, clever, and efficient, another a killing machine with a one-track mind.
I’m certain the statute of limitations has expired on such things, so I’ll admit that I actively tried to sabotage the newly minted BD agent at our dealership. I wanted full control of all of my contact with clients. I didn’t think anyone would do a better job than me. If I could see the future, I would’ve done everything I could to make them that much better.
Let’s start with some asterisks. I am biased towards Internet operations, as I started selling cars just as people in my area were buying their first computers, getting their first taste of broadband, and squarely in the early adopter phase. Having sold cars in both a traditional and digital environment across the country, I know the daily responsibilities are quite different (eg, no one in the call center is responsible for greeting clients when they walk in the door unless it’s a common courtesy). Having said that, it has always been a competition instead of both departments working as a TEAM. This is where the battle should end.
Maximum Productivity for the Dealership BDC
In the last twenty years, traditional salespeople show little to no interest in handling online customers. Yes, they absolutely love it when appointments show up, but they do little in the way of nurturing the opportunity to make it to that point. Surely, there are rare exceptions to this, and if you’re lighting a Molotov cocktail at one of those car dealerships, please share your outbound call, email, and text data to back up the assertion.
Back to the rest, if the average salesperson is at the dealership for a ten-hour day and has a 25% showroom closing ratio on fresh ups, that’s only 2.5 hours of productive time. What happens with the other 7.5 hours is anyone’s guess. Any time I look in the CRM I find mountains of overdue tasks, with little in the way of internal or external logging of manual contact activities performed.
Understanding that I come from a perspective of working with thousands of individuals across hundreds of retail dealerships (from publicly traded to single rooftop), across nearly every state and province in North America, no car dealership employee posted in the front of the building receives more scrutiny than a BDC agent. Nobody. Even with the most basic process, all of their contact activities are logged, sometimes redundantly outside of the CRM, and thoroughly examined by not one or two but three layers of management.
Many are expected to work 20%, sometimes more than 30%, more opportunities than they can effectively handle. Some are forced to work on their off hours with little-to-no extra compensation outside of their commission structure. From what I’ve observed over the last 20 years, in situations with a distinct organizational structure between BDC and the showroom, the BDC utterly mops the floor with the showroom regarding measurable contact activities. If you don’t believe me, have a bake-off at your dealership to see who comes out on top.
Consistent BDC Communications
Because of the over-the-top scrutiny, BD agents offer better responses. Whether they use templates or not, BD agents offer better-written responses when compared side-by-side. Scripted or not, phone conversations are more routine, focusing on creating a showroom interaction. The overwhelming majority of these interactions are recorded in the CRM (complete with call recordings if the service is available), all vigorously scrutinized by direct and indirect management, along with the OEM and/or the OEM’s preferred vendors.
Ooooonnnnn the other hand, the showroom is simply trusted to do its own thing. The vaunted professionals (some of whom just graduated high school) are expected to formulate their own written responses off-hand. Some think spell checking is superfluous, while others write as each word comes from their paycheck.
Some of the emails from our NADA 20 Group mystery shops are legendarily bad, with multiple-colored signatures to prove their origin. With seniority and merit comes permission to perform even worse, with some allowed to choose to reply at their own whim.
Here lays the most glaring difference. While BD agents build engagement, are conversational, and do not over-qualify the customer, sales nearly automatically go into selling mode. A BD agent, almost universally, doesn’t have the authority to engage the sales process, instead moving to facilitate the sale through the dealership (where management can easily get involved).
Salespeople routinely judge an internet lead or phone up’s ability to purchase a vehicle. This negates the management’s ability to get involved, preventing the full extraction of the value of all of the money spent to acquire that opportunity. Think I’m full of shit? Randomly select 10 emails from each person on the showroom floor and the BDC to see how they compare.
How do four people touch 50% of the sales and the other 18 accounts for the other 50%? I’ll wait for a response. It’s not unusual to find that a BDC accounts for 40%, 50%, or even 60% of the vehicles sold in a given month. It could be even more if they had the proper balance of opportunities. On average, each appointment set has twice the chance of closing compared to a showroom opportunity. All of the activities are measured inside of the CRM, thus documenting the entire value chain of activities. All of this comes at a cost that falls somewhere in between a McDonald’s and a Target employee.
In contrast, those on the showroom floor make a fair bit more. Location, seniority, brand, commission structure, and volume all absolutely make a significant difference. That said, depending on the published source, the average car salesperson makes between $80,000 and $90,000 per year.
Everyone who reads this article knows a car salesperson who makes 50%-100% more than that. I know a few people clearing $300k per year 20 years ago selling cars. This is where things get wildly lopsided in terms of inputs and outputs. All of this is done without the microscope of scrutiny, KPIs, or OEM iron-fistedness on standards.
Run the comparison. Total the number of sales your BDC was responsible for, then net them out from the total sales. Divide the cost of your sales team’s payroll by that number. Take the BDC payroll and divide it by the number of sales they are responsible for and see which is more cost-effective.
Do you need help re-training your dealership BDC?
Final Conclusion on BDC Services
You’re considering firing the wrong people. It’s in the *%&#ing title.
As every day, with every talking head on social media reminds us, the car business is changing at a rate that none of us could’ve conceived of three years ago. Instead of taking two years of record profits and plowing it back into the dealership (like every other non-dealership organization making money right now), overly generous commission structures for salespeople distributed 10%-20% of total sales revenue to a group of people for just showing up.
That potential future lifeline for the dealership, when revenue is all but certain to get lean, put a boat in someone’s lake or a watch on someone else’s wrist, someone who could walk away at any time. The other group is virtually a fixed cost. This isn’t anti-salesperson. It’s pro-math.
Check your emotions at the door if you’re concerned with your human resource expenses. Measure what matters most. Nurture those who produce more. Reward those who build the most equity. Multiply those who do the most with the least resources. This is the evolution in a nutshell. If your business is evolving, so should your structure.