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.

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:

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.
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.

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!

(By the way, if you want to share this lesson with your managers and you think they'd prefer to watch it rather than read it, you can send them to my free online video training website.)

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Comment by steven chessin on March 11, 2015 at 1:23am: Brian - I understand Steve on a different level --- because I do what he teaches. Business development as a group director requires sooo many diverse disciplines. It is not making videos - answering leads - mailing relationship letters - and 500 other things - it is all of them combined. We must read Googleopoly by Sean Bradley to know search algorithms - master Photoshop & Final Cut Pro - DSLR photography and broadcast video - website design - compose templates for bots and scripts for reps - and then spend our (under) pay to hot-rod computers to gamer-specs to work faster and watch every damn webinar by every vendor because they all have a valuable piece-of-the-puzzle. The dry technical boring books are the tools of the trade because it is like any other professional discipline that has to be known in depth. You would not want your doctor, lawyer, or plumber to have skimmed the "Cliff's Notes" version. Which is fine if it not your profession with people that depend on you to knowing it inside-out. Zero entertainment fluff needed here. I applaud the booklet version but would prefer the boring in-depth book pro version.

Comment by Brian Bennington on March 10, 2015 at 8:27pm: Mr. Stauning, Consider your apology accepted. I understand completely your post was not up for debate, and the fact that you posted it for others to benefit from your BDC experience is thoughtful and generous, in the truest spirit of what DE is all about. (At least that's what I've been led to believe...?) As to your 300 page BDC book, write it in a story format with, maybe, a beautiful heroine (the new BDC manager), a nasty villain always working against her (let's say her store's GSM) with plenty of sex and violence with the customers, and you just might have a book that's read with enthusiasm. I could even see it becoming a movie. You know, like "The Hunger (in the BDC) Game." By the way, I wouldn't put anything with the quality of your post up on "LaughedIn." (I heard they're having serious security issues. People are regularly having their ideas stolen!)

Mr. Chessin, Don't mistake me for a guy of Steve's character. When someone disagrees with me it really pisses me off! (LLADF–"Laugh like a dumb f...–my version of LOL.) Seriously, your statement in the 2nd line of your post says it all. It "would be boring to all except those those that (who) are responsible for making it work." If that includes the Owner, GM, GSM and assorted SMs, "Houston, we have a problem." Nothing, not even blanking for a day or being caught groping one of the office girls, is as bad as "boring" a manager, and the higher up the "pecking order," the less they like it. And, by the way, nothing endears your co-workers like being called "arrogant" and having an "investigation" that finds them "guilty" of hampering your department's performance. What's with you and your need to feel vindicated for your BDC "sins." You're OK. Don't worry about it. Think more about your life-long love and experience doing videos for dealerships. You know what you're doing in that field, so just do it!

Comment by steven chessin on March 9, 2015 at 11:49am: Brian - I have to disagree with you.There is so much more to what a real BDC is and does - that would be boring to all except those that are responsible for making it work. In 2008 the DP looked at the stats.One one of the stores in the group was performing especially poorly and he asked me to investigate. One of the lead providers - it happened to be Dealix - had provided 40 leads and there had not been any sales. The others would have had 6 @ 15%. Some GMs would have said to drop the lead provider for bad leads and began doubting the BDC itself. Especially then when such departments were not common.

I called the company to discuss the matter. They conducted their own investigation by contacting each of the 40 leads by phone and determined that better than 75% had bought after they either visited or spoke with the sales team by phone. Digging deeper it was determined that 25% bought the same make and model they had contacted us for from another dealer.Another 25% bought a different brand. The others bought used -- half from dealers the others from private parties. Dealix was pleased that their leads were proven valid. My BDC team was pleased that a high percentage had made and kept appointments. --- The only one not happy with the results was the owner who bought 40 leads and paid my team to get them to come-in and he was shut-out. Neither the BDC nor the lead provider had failed - in-fact we did our jobs AND determined the cause of the failure.

Moving forward changes were made - "that could fill a 300 page book". It was an invaluable learning experience for me to conduct a sales failure crime scene investigation - and to vindicate my department as innocent - and to have the evidence to accuse the those who were burning the leads from this provider - other providers - walk-ons - repeats - referrals - etc. They were inept and mis-managed because the manager was beyond egotistical - he was arrogant.

Comment by Steve Stauning on March 9, 2015 at 8:18am: Hi Brian,

My apologies. While I appreciate and often encourage lots of deliberation of my ideas, I posted this as a blog and not a discussion, because I don't have the time to get pulled into a philosophical or theoretical back-and-forth.

BDCs are not new to dealerships - they've been around for more than a decade. Long enough that nearly every dealership has tried and failed to put a BDC in place at least once. For those who've failed, there was a common theme: They were missing one or more of the 5 must haves that I detailed here.

For those who've succeeded, there is a common theme: They have all 5 of my must haves in place.

As to your point that dealers aren't going to read a 300-page book about BDCs, you are correct, that's why I didn't write one. (I'm not sure I would read a 300-page book about BDCs - even if I wrote it.)

Please feel free to disagree with everything and anything I've written here and in the original post, though I apologize in advance that I won't have the time or desire to respond to hypotheticals or to defend each and every word or sentence I used.

I originally posted this on LinkedIn, and was asked to re-post it here for the DealerElite community. I was and am happy to do so.

Good selling,

Steve

Comment by Brian Bennington on March 9, 2015 at 1:44am: Wow Steve, 789 hits! You're definitely saying something people want to check out, but with only Steven and I responding, it's hard to tell what people actually think of this. I'm also having a hard time believing how inflexible you are with your "Must Haves." Then, you state to "lay out a perfectly performing BDC," it would take a 300 page book. Are you kidding? Have you ever met an owner or manager who'd invest the time to read and actually comprehend a 300 page BDC manifesto? Now, if you could edit it down to maybe eight or ten pages, you'd be onto something.

Your point about BDCs needing to be profit centers to be sustainable is 100% correct. Really, every department should be able to carry its own weight and add dollars to the dealership pot. But, like I mentioned before, when you throw in "strict rules" and something like letting the sales people "contract" with BDC to do there own follow-up, you may get "green peas" to play this game, but I don't think a pro would stand for it. I know I wouldn't. Frankly, I'd interpret it as an effront to my rep abilities creating doubt the dealership values my worth to the organization. There are plenty of opportunities for good reps in the business, and I'd move on and do my damnedest to take my customers with me. That's what I did when I was a rep and it worked just fine. I understand the principles and purpose of BDCs, but to artificially elevate their importance and power in a dealership is, at its best foolish, and at its worst, dangerous.

As BDCs are relatively new to car dealerships compared to, say, "straight sell," It's going to take some years before they can take on a life of their own. I know "believers" like Steven and you may balk at this, but even you admit that the number of BDC failures is much higher than what many would accept as a risk they'd want to take. But, hang in there. Everything new needs "pioneer' believers to move it ahead and I offer you (and Steven) my sincerest "Good luck"!

Comment by steven chessin on March 4, 2015 at 3:47pm: Steve

I really like how you frame this. But,please take a step back. What are the "must haves" before your 5 rules ?

Does your approach begin with BDC integrated into to core sales infrastructure or is it like a turbo that begins to 'kick-in' at a certain point ?

Before you answer let me just say my best rep closed sales calls at 90% ! Twice the sales team's number. So for me there was no hesitation to take away all calls and all leads from the sales team. I understand that is a controversial. I have heard the debates from well-respected pros on both sides. So which is really right ?

The answer - for me - depends upon what happens not during the call - but rather - AFTER the call. But I do not want to get into that now since I asked the question of bdc from call / lead # 1 or not ?

Comment by steven chessin on March 3, 2015 at 10:35pm: If anything there should be another 5 commandments:

Rule 1 is as hard a rule as there can be for a dept that claims to development business.- MAKE MONEY

Rule 2 that mandates proper pay for those that make the money .

Rule 3 that relationship building skills are what matter for a people-person rep - hard rule

Rule 4 that the definition of appointment must be clear and specific

Rule 5 - support of the dept from managers - again no question

IF RULE 5 WERE PROPERLY OBEYED THE RESPECT WOULD BE THERE

BDC is a fully independent dept that cannot be subject to whims and opinions about pay or really anything by any other managers.

Comment by Steve Stauning on March 3, 2015 at 9:27pm: While I appreciate the comments and advice here (and even welcome more), this post was not a discussion. These are not "sort of, should, might, want to have" ... no, these are MUST HAVES.

I've seen every kind of BDC, and have deeply analyzed what it takes to really turn these into true developers of a dealer's business. It would take a 300-page book to lay out the entire plan for creating perfectly performing BDCs in America's dealerships, but suffice it to say that these 5 would be principles, not options, in what this book would offer up as a plan.

We can certainly nitpick various ideas presented in these five MUST HAVES, but only if we have infinite time to debate what will ultimately be nonsensical discussion around what has been PROVEN to drive increased sales, revenue and profits for those dealers willing to fully implement these plans.

Good selling!

Steve

Comment by Brian Bennington on March 3, 2015 at 9:16pm: An interesting post, Mr. Stauning, especially when I've casually observed the "rise and fall" of so-called "BDC" departments in dealerships I've worked for as a vendor. To begin with, the department should have a different, more customer-friendly name. If you were a customer, would you rather walk into a dealership and ask for the "Business Development Center" or, say, the "VIP Services Department." (To me, "VIP" is one of the few acronyms in the car business that makes sense.) As to what the department actually does, "A rose by any other name is still a rose," so yes, it's still a BDC.

As for "strict rules," that term is much to adolescent for adults in any profession, unless maybe the Military. (And yes, I know some of my fellow DE members like Dave Anderson would disagree.) As to a general overview of your "musts," the nature of a "BDC" is supporting the sales department, but in the dealership mentality, the people who pack the most punch are those on the board with "marks" next to their name, and the more marks, the more punch they have." Really, unless you're at a dealership with management genuinely "tuned in" to BDC, it's easy to become the store's "Rodney Dangerfield," getting "no respect." And that includes minimal decision-making power, like adjusting pay plans. (Most car managers detest paying anyone anything, unless they "worked the deal.")

Comment by steven chessin on March 3, 2015 at 7:47pm: PS - I agree with the $ 50 per kept appointment.Nothing on the sale. I'd throw-out the draw and the bonus as they are probably a wash. I don't see split-deals happening -- at least not for basic appointment-setting. However, if more effort is needed more pay is appropriate.But it would depend upon how much effort is involved. Re: the 45 minute criteria ? I'm happy if the customer comes-in early or late - especially with LA traffic where a 20 minute drive can be 2 hrs.