Four Reasons Why BDCs Fail and How to Improve Them NOW

Dealerships are always struggling with the decision on whether they need a BDC or not. Some try and succeed, but others try and fail. Why does this happen? How is one dealership’s BDC succeeding when other BDCs are failing and returning to status quo after a significant investment? The following are four reasons BDCs fail and solutions for making your BDC a success.

1. Is your team struggling with accurately entering data into your CRM? Do you always feel like a “Data Entry Cop”?

This is a super common problem when salespeople’s goals aren’t aligning with the those of the dealership. This struggle point isn’t uncommon in the dealership. The dealership wants data in order to track and measure ROI on marketing expenses, and the salespeople just want to just sell cars. This problem can be fixed through a couple of ways. The first way is that dealerships can use a pay-plan driven strategy to get the salespeople to do what the dealership wants by connecting their pay plans to showed appointments. By doing this, you are aligning behavior to money which can be a powerful motivator. Unfortunately, this strategy is just a band aid. Dealerships are treating the symptoms but aren’t addressing the root cause of the illness. Let’s ask a different question. Why aren’t salespeople entering information correctly into CRMs? If you step back and evaluate, the answer is clear. The salespeople don’t see the true benefit. The average salesperson doesn’t look at the people they sell with a personal LTV (Life Time Value). Instead, they are just a short-term sale and immediate income source. This philosophy is at the core of what separates the best salespeople in the nation from the masses. If the average salesperson looked at selling cars like an insurance agent looks at selling insurance, data entry issues would be a thing of the past.    

2. Does your dealership set a lot of appointments but lacks a proportionality high level of showroom visits?

This is an issue that is rooted in a few potential areas. The first could be pay plan structure; the second could be in the quality of the appointment conversation and, finally, the third could be in the lack of management involvement in this part of the shopper’s journey. Any or all of these could be affecting the outcome. Let’s break these down in a little more depth in order to extract some insight and potential action steps. The first is pay plan and how much financial weight is put on the appointment compared to how much the rep receives for the actual sale, if any. Appointment setting really sets the pace for the transaction, so it is critical that dealerships get their pay plan formula in order to drive results. Paying BDC reps to just set appointments uncovers the age old saying: people work their pay plans. Design a pay plan that gives the BDC rep skin in the complete game and holds them accountable for too many missed appointments.

Second is the quality of the appointment-setting conversation. Selling a customer on an appointment is not only selling an opportunity to drive the vehicle but also to learn about all the features in a personalized experience for the shopper. I really like something Mitch Gallant, GM of Capital Ford Lincoln, is doing. His method personalizes the test drive experience for the shopper by enabling them to select their drink of choice for when they arrive for the test drive. This creates commitment between the shopper and the appointment setter for a minimum investment. Mitch is leveraging psychology at its best.

Finally, another opportunity is always the management appointment confirmation call. This allows a couple critical things to take place. First, it establishes a relationship between a manager and the shopper which begins a relationship that will come in handy during negotiations. Second, it provides the manager with the opportunity to ask a few questions in order to really understand the shopper’s needs and make sure that the appointment is aligned correctly for a sale. Managers need to get involved early and stay involved. By doing so, they can remove friction points along the shopper’s experience and be more effective in increasing the chance that the shopper shows up for their appointment.

3. Do you find yourself constantly saying the same things to your team to help keep them on pace each month?

Welcome to management, folks. This is a core fundamental part of management: the constant reinforcement of behavior. At no point in time is your sales team going to wake up and just get it. They will need constant direction and leadership to continue to drive the direction of your BDC. I label this job security. Instead of it being a struggle in your management responsibilities, turn it into the best aspect. Train your staff on one aspect of the department duties. Let’s say it is “Overcoming Objections” during an initial phone call. Lay out a simple 10-minute training plan that outlines the “Top 3” shopper objections that your sales team are hearing from shoppers. Deliver the training then reverse the script on your team. Elect one of the team members to create the same training outline that you just delivered but with three other objections and then have them deliver it to the whole team in a week. Keep doing this until everyone has them down then move on to the next topic. You will find that you get tons of new insights from your team and the conversations become much more open. The team will get to learn from different voices which will be reinforced over time. This is how you make an amazing team that works together and that delivers results.

4. Are you spending hours and hours per month compiling reports trying to make sense of departmental data?

This is what I like to call “TPS Report” HELL! This is the one area that seems to be getting more and more complicated as we consume increasing data points within the dealership. Even though we have the potential to track everything within the dealership, you have to ask yourself what are your true “Vital Signs.” Basically, what are the top five most critical data points you want to measure and analyze in order to run your BDC correctly? I would have this mastered first before ever layering on more complexity. After speaking with so many stores, I find many dealerships living in data hell. Take a deep breath. Step back and truly grasp the most important things for you and your BDC.

By truly evaluating and adopting these four practices, dealerships will be well on their way to seeing a successful BDC that increases revenue rather than one that fails to provide the revenue it was expected to.

Businessman holds the model of business, made from wood blocks. Alternative risk concept, business plan and business strategy. Insurance concept.

Is Your Dealership’s Technology Stack Hurting Your Sales and Destroying Your Profits?

This question was posed by a great dealer friend of mine, Todd Caputo from Sun Chevrolet the other day. Are dealers spending so much money and time on technology, implementation and the management of all these tools that it is distracting them from the fundamentals of the business of selling cars at a profit and managing the customer relationship.

With industry-wide disconnect and fragmented technology providers, dealers are forced to use many systems that all cost money, have over lapping functionality and don’t communicate very effectively. This nightmare scenario wastes countless hours and delivers a poor return on time investment. All while technology vendors create confusing metrics to protect their business at the cost of dealership efficiency.

Let’s focus on one part of this discussion today. The human capital part. This is an often-overlooked part of our business as we are usually just focused on our typical KPIs:

  • Leads converted to appointments.
  • Appointments to showroom visits.
  • Showroom visits to test drives.
  • Test drives to write ups.
  • Write ups to sold units.

Let’s think different and ask some fun questions. How are your people using their time? Maybe you have ten salespeople and two managers… a total of twelve people in your variable sales department. This translates to a 40-hour work week per employee which would give you a total of 480-unit hours of work time for the week. How are these hours allocated? Does each team member have a plan for time utilization?

We can dive into so many areas here:

  • Product education training
  • Sales process training
  • CRM updating and maintenance
  • Lead follow up
  • Vehicle demonstrations and delivery

When we can create activity work buckets, we can see much more clearly how our people are using their time. Don’t be surprised if you find a ton of wasted time. I do this experiment for myself every few months to get a reality check on my time and effort and where it is being directed. I write down everything have done for the week in fifteen-minute block increments like an attorney does for billable time management. It is an eye-opening exercise to see how much time is being wasted doing nonproductive things that aren’t align to with business goals.

What I am getting at here is that your “People Capital” is crucial to your success, but sometimes we are so focused on the technology that we miss the hidden cause of missing our goals, which are lack of effective time management for ourselves and our team.

You may discover that your current technology is a huge time suck because it is creating inefficient processes that are eating up your most valuable currency. You may also discover that it takes five clicks to do a task when it should only take one or two, yet this task needs to be done 100 times per day.

Opportunity is all around in order to figure out how to leverage your technology in a way that maximizes your return-on-time. One this is for certain, all of us only have 24 hours per day and that is the one currency that nobody can get back, slow down or alter.

Here are two different ways you can apply this at your dealership to better understand how time is being utilized (or underutilized) at your dealership.

  • Observation– Observation requires sitting and watching your team at work and really understanding what they are doing at a granular level. This means down to the amount of clicks it takes to accomplish repetitive tasks. An example of this could be observing that your CRM requires three clicks to find a customer profile. After that, the salesperson has to reach over and dial the phone number on the desktop phone then has to click into a notes field to update the customer record followed by clicking two more times to create the next task.
  • Self-Observation– Empower your team to write down and track exactly what they are doing down to the most mundane detail of their processes. This may take a little explanation to sink in to for them and I have found you will need to explain it multiple times to your team until they start giving you the feedback that you need. This can be highly effective and a fast method towards finding some real time sucking activities and inefficiencies in your processes that are costing you money and results. 

This is just the tip of the iceberg of what you can accomplish when you start to understand the precious asset of time and its impact on your dealership’s success. “Return-on-Time” should become a staple of what you are tracking which will maximize your team’s performance on the variable side of your dealership.

The funny thing is that we have been tracking this stuff forever in fixed operations with our understanding of job labor hours, shop-load time etc. Now is a great time to start applying it to the variable side of the business.

I would love your comments and thoughts and thanks for taking the time to read and share this article.