Old Horses for New Horses and Killing the BDC
http://www.dealerrefresh.com/eliminating-car-dealer-bdc-for-good/#m...
Unfortunately, most Dealers don’t have a clear idea on how to find the right sales candidate for today’s marketplace. Compounding the problem is that they employ an old school compensation plan.
The majority of Dealers are still looking for people who are like their “old horses” – high volume sales people who’ve been with the store for a number of years and don’t feel comfortable trying to adjust to a new type of customer.
Yesterday’s skill sets created their outstanding success. They were highly persuasive – bordering on confrontational. Dealers rode these “old horses” to outstanding financial success.
But times have changed. There is more to sales now than the still-valuable skills to confidently approach strangers and make yourself immediately welcomed. Those “hearty handshakes” will always be appreciated, as is the ability to look strangers directly in their eyes. But …
..today, virtually every new customer is an “internet customer.” They spend anywhere from 10-15 hours online. That’s right, they make much of their decisions without ever encountering that friendly handshake and persuasive sales pitch.
That means that the era of your sales staff meeting and greeting a “fresh up” is a rarer occurrence. The vast majority of potential customers visit your website before coming to your store. If it is welcoming and information rich (including posting vehicle prices!) it is likely that they will contact your store via an online form lead, a phone call, OR just SHOW UP.
If you have seen this trend yourself, then you know you need to hire salespeople with skill sets that work in this new environment. You need some “new horses.”
Spoiler Alert: Here’s where I’m going to surprise many of you reading this article.
It’s time to eliminate the BDC Sales department.
BDCs were established for a very good reason. The “old horses” didn’t have the skill sets to handle incoming phone calls – and certainly not internet leads. They were hired to handle “walk-ins”. So it made perfect sense to establish sales BDCs to complement the “old horses” skill sets and become “appointment setters” for them.
But since almost everyone is now an “internet customer”, we need to change our hiring criteria and eliminate the BDC layer of expense. Killing off the BDC or transferring an individual BDC into the new sales arena, is especially important in an era of continuing margin compression where Dealers should be doing everything possible to lower transaction expenses.
The hiring profile for the “new horses” include:
- Likes to make sales
- Excellent phone skills
- Very good grammar/typing skills
- Loves product knowledge
- Outstanding organizational skills
The goal of the incoming lead also has changed. The “old school” BDC-driven goal was to “set an appointment,” pretty much at all costs.
The vast majority of prospects who contact your dealership, are calling for information, not to “set an appointment”. Their goal is to gather somewhat granular information that will aid them in their buying decision.
So the new goal in this Digital Sales strategy is to get the potential prospect to “want to meet me”. This is very different than trying to get an appointment. This is about creating trust and confidence by being transparent and knowing a tremendous amount about the product – which can only happen if the salesperson possesses outstanding product knowledge. The more trust and confidence the Digital Salesperson can establish, the more customers will want to set an appointment.
This is a sales model that allows your sales staff to achieve high levels of empowerment. This may “fly in the face” old-school sales manages but it will attract a better educated more diverse sales team.
In this model it is also very IMPORTANT to note that you are now running two different sales groups: A smaller staff that “meets and greets” showroom floor “walk-ins” and your Digital Sales force that handles in-coming calls and internet leads. So this new group never works the showroom floor hoping to get a customer – but is a dedicated team that works only by appointment.
How do I compensate my new team of Digital Sales agents?
Let’s assume this is a younger staff comprised mostly of Generation Y. Gen Y is not a cohort that is turned on by a “straight commission” job opportunity. For the most part, when you’re looking for younger people to staff your sales force they will want more financial guarantees and a flexible work schedule. If you don’t want to meet those qualifications you’re going to continue to ride your “old horses” until they retire…then what will you be left with?
Your compensation for Gen Y should revolve around these principles:
- A training salary, typically at least $2,500 for three months
- Then a blend of salary and a flat fee per unit sold with volume bonuses
- Some compensation for F/I related sales including securing the financing and a small “spiff” for menu items; we want to incentivize this group to be completely supportive of the F/I department
- A flat fee for 5 star reviews from online sites
Are you prepared to hire Generation Y and eliminate your BDC?
Comment
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Comment by steven chessin on March 17, 2015 at 5:55pm
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Hmmm ... the average salesman's time with a store today is far less than the customers' repeat cycle. So the perspective must me skewed to orphans - and - shortening the cycle for some reason - such as the introduction of a new model that may be of greater interest to that customer.
Yes - it is true that salesmen generally do not have any good reason to contact their customers --- that should be addressed by management and marketing --- as --- that is something they should provide assistance with. Holidays - seasons - events - specials - clearance - or even specific vehicles ideal for certain purposes - such as graduation gift --- a trucks with special uses etc - campers- race - BOAT - whatever. If the info is in the notes properly the salesman will know who they have that is a match.
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Comment by Ryan Mayo on March 17, 2015 at 9:39am
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When it's done properly, the sales is mapped to their own clients so the only folks they call are folks who they've sold a car to and the good sales folks will keep those relationships going. At the very least it gives them something to speak to the client about other than "Happy Birthday, do you want another car?"The real reason customers don't loyalty towards their dealership is because the dealership has done zero to earn that loyalty.
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Pro-active is the keyword you mentioned. Having worked in the high-line world for many years I see customers that are less NEED oriented than WANT.The same "upgrade" phenomenon we see with phones and other electronics. When I watched customers admiring a Tesla kiosk at the mall their attention was on the giant touch-screen operations center. Major considerations were the audio system and the beautiful gauge array. A lot of I-Phone-type admiration where the basic automotive core competencies are taken for granted.
Hi-tech gets old faster than anything else. I can expect - not understand - WiFi cars to be a "reason" to upgrade among those that can be pro-actively approached that an upgrade is available even though they only have their car 18 months.
Yes I have seen your tool work --- but I do not like the way I see dealers using it --- like they do with lease maturity As you mentioned. Near contract end. Isolated to one agent. And far too much time is wasted by a highly trained agent just getting the proper prospect discussing a flip. It is inefficient.
Just like I have seen with BDC providing efficient sales support - the same can be done with your tool. Personally - I favor the sales team doing it because they can build relationships -- along with a preliminary investigative contact that could be out-sourced.
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Comment by Ryan Mayo on March 16, 2015 at 6:33pm
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It's also become apparent to me that we spend entirely too much time going after our clients nearing a contract end. That is way to late! Our data shows the more engagement with your clients the better, by the time a client is nearing the end of their term they have equity and options, which almost always decreases the chances that client will stay at the native dealership.
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Comment by Ryan Mayo on March 16, 2015 at 6:24pm
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Steven,
So much of what you're saying resonates with me, before entering my current sales position I was an account manager with the company, I worked with 120 stores in 5 states with the main objective being to help each dealership sell more cars and make more money using our tool. This was a very educational time for me, I think there are two significant things going on, One; the motivation of the sales staff, floor sales or BDC is not equal to what it once was, say in the 90's. Some blame this on generational differences and lack of ambition of the younger generation. As someone from that generation I can say that though we value life balance more than our parents did, we’re certainly money motivated and I believe decreases in the per copy gross that have been passed by most dealerships directly to the sales staff's compensation plans are the main culprit because talent will always find its way to where the capital is! Secondly, I believe we are still hiring for the 1990's sales world where we rely on an endless up's list of customers and expect that to provide a living for our families. Margin compression due to the internet and overall expansion of information in the industry have changed that dynamic and when I speak to GM's and dealers principals I am constantly encouraging them to hire proactive sales talent qualified to take up's and make calls but the truth is if you have to work 70 hours a week , giving up your weekends most high level sales talent will gravitate elsewhere and I don’t see an easy fix for this problem.
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Be careful what you ask for - you might get it"
Imagine 2 fighters in their locker rooms before a fight. By the Marquess of Queensberry rules both will enter the ring - shake hands - and begin. However, by WWF rules one can sneak into the locker-room of the other and hit their opponent with a trash can to soften-him-up. Such poor sportsmanship ! The customer is WWF ! Negotiating their presence. Lying that this is the car they will buy, (most change the car if they even come-in) They demand price without a credit check or trade appraisal. They might not even want to give their name or number !!
Damn foolish if you accept this locker-room fight. I can train a 19 year old high school drop-out to sell twice as many appointments as salesmen who don't have the sense to pick their fight. Instead of even trying to train stubborn salesmen take it ways from them. Let that 19 year-old do what they can't or won't.
You see Ryan --- the customer knows better than trying to squeeze numbers from her. That is an advantage. Why teach the wrong people ? Salesmen are OVER-QUALIFIED for making just appointments so they "go into their dance". They do what they do --- like the scorpion that stings the frog.
I had a front-desk receptionist who's job it was to transfer "sales calls" to salesmen who were often not even available ---- so she collected customer info to get back to them rather than sending them to voice-mail.
(by the way -- isn't it retarded to take live customers and ever give them to a voice-mail ? )
I told the owner she might-as-well- try to set the appointment and make $ 10. She was so good at it he stopped sending sales call to salesmen. This wasn't called "bdc" but .... "a rose by any other name .... Auto sales culture is that blah blah blah is considered SELLING so my way goes against the natural sales DNA of salesmen to always be selling even before they get into the ring.
Do not allow the customer to hit you with a trash can in the locker-room ! You say the same thing "allowing the dealer to operate from a position of strength". Why bother training the wrong people to do the right job when the "wrong" people do it better ?! Generalized Salesmanship loses to Specialized Appointment-setting-ship.
If the customer insists on answers beyond appointment time and directions - OK --- then T.O. She takes their info (for $5) and give it to the sales manager. Most of the time - appointments can be set with LESS better than with more. So take the better results with less effort and save the sales team's time for more important things Assuming of course - that the more important duties are known. "Working the phones" is a time-honored make-work when the floor isn't properly saturated. So if the floor is not saturated "bang those phones !!" Seriously ? Is that's what they should be doing ? Is that the best management solution ? Hell no. But this is ....
"partnered with a strong equity tool can keep the right clients coming in"
Yes Ryan. This is the new hi-tech way to do proven old-school prospecting. And sales does prospecting better than BDC as most of the customers are orphans. So they need a new personal connection to the store. These appointments have an extremely high conversion-rate. And even if they do not buy now they often know when they will. I think it is a management mistake to mis-direct this important communication --- to bdc -- where the reps have no knowledge - to sales where more knowledge is better. If salesmen are being asked to work-the-phone ANYWAY they should be calling warm-existing-customers for sales not cold-first-time-prospects for appointments.
Ryan -- we are looking at management issues regarding sales - bdc - retention loyalty sales - marketing - where they may have the right teams and players - but not well-tuned into the optimum structure. Starting with basic appointment-setting as a prime example.
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Comment by Ryan Mayo on March 16, 2015 at 12:01pm
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Steven,
What I've found with the dealers I work with is that trying to sell a car over the phone is a losing battle, even when you get a deal the gross leaves much to be desired. I favor BDC departments that are appointment-setters only. That partnered with a strong equity tool can keep the right clients coming in who's gross we haven't given away over the phone, allowing the dealer to operate from a position of strength. I would be curious to hear your thoughts on the matter.
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If you are in L.A. we should talk - I can't believe that internet sales departments even still exist. I come from NJ and have converted dealers to the strict BDC appointment-setter style.
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Comment by Ryan Mayo on March 13, 2015 at 4:09pm
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Steve,
Where I am in California it's "internet sales department", in NY and NJ where most of the dealers I work with reside, they use "BDC sales department" or just "BDC". I think the information is valid no matter how you define it.
I appreciate the feed back.
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Ryan
"It’s time to eliminate the BDC Sales department."
What is a BDC Sales Dept ? Do you mean "internet sales department" ?
Just last night a salesman asked me to help him sell his personal car. He said,"If you find me some customers for it and get them to come see me then I can sell them the car". Just gift-wrap and hand deliver the customers. This is :PROBABILITY OF CONVERSION
The reason salesmen don't do things they could such as using your excellent loyalty-mining software is that they don't like the low odds of success. It takes a day of telemarketing by a trained rep making 100 calls to find a good loyalty customer. ( which is worth a split ) And won't work if the store only gives mini flats because there's no incentive to do skilled sales support work for less than mopping a floor.
But the salesman calculates that he might lose 5 showroom ups. You can't put him into a back-room office to do this because he expects his customers to be gift-wrapped and hand-delivered.- but that is what the BDC you got rid of used to do.
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