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Permalink Reply by Stan Sher on April 8, 2012 at 10:22pm

Why not have assistants for your internet department?  I am talking about having fulltime people that can spend all day making phone calls.  They can do outbound, handle inbound, get involved with calling service customers to remarket your dealership for sales, do unsold follow up traffic, and lease retention? 

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Permalink Reply by Chip King on April 10, 2012 at 10:37am

Chris-- We have seen the Cradle to Grave work in some cases (eLeads)-- Conrad Letson of Greenway CDJ has a huge success in this model. Eleads are cradle to grave, but he has the calls go into a separate Call Center that sets appts for the sales reps---Ricky Lopez runs the eLead team if you want to call him.  In general by our measurement the "Specialist" approach...letting the ISM's and Call Handler's be trained experts in setting appts for the Sales Floor "Experts" brings the highest set/show/buy.

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Permalink Reply by Craig Lockerd on April 10, 2012 at 10:39am

.....Real Long Answer

Law of Diminishing Return

The reasoning behind The Law of Diminishing Returns from a Dealers point-of-view in terms of hiring employees can be simplified into three stages:

• In the first stage, the addition of more salespeople allows for specialization of job responsibilities and increased production efficiency. The result is a larger output return for each additional unit of input.
• The second stage is where inputs equal outputs. Each new salesperson added will continue to increase production, but only at the same rate as the increased input of labor.
• The third stage is when additional salespeople will start to decrease production efficiency because the work environment is fixed in the short-run. This results in returns that are less than the labor input.
• Imagine this situation. You have hired a teenager to tend to your garden. He plants 4 saplings in an area of 10 square feet in 4 hours. The next day, he brings another friend along and you decide to hire him as well. The time and the area don’t increase, but the number of saplings planted increases to 8. Another boy comes along and is hired by you. Again the area and the time limit is the same. But the number of boys is now 3. And the number of total saplings planted is now 9. If you hire another boy and maintain the same condition, you will notice that the number of saplings planted may increase overall, but the number of saplings planted by each boy will reduce, until eventually it will be 0. The above explained situation is a classic law of diminishing returns example. 

My question is, do we have any idea where that third stage is? We are in the car business, our outcome should be to have as many people as possible buy our products and services at the highest possible profit margins we can with 100% customer satisfaction. We can’t do that unless we have pushed the envelope with a quantity of quality, properly recruited, screened, interviewed and trained salespeople.

“I don’t want to flood my floor”

That’s admiral and I applaud your moral judgment in trying to make sure your salespeople all make a good living, but how many times have you invested in having a special sale or event, or your product is super hot and huge new incentives came out or you invested millions in your facility and you look around and several of your salespeople decided to come in late, stay home or move on to the next “Hot Store?”

The law of diminishing return is a bit different in our business. How many hours are your salespeople currently scheduled to be at the dealership? Wouldn’t an additional sift or shifts or teams allow them to work less hours, be more affective and in turn more productive and actually have lives outside of work as well? Couldn’t that also help the talented person at your store that has “Manageritis” and if you don’t move him or her up, make them a team captain, they are going to leave you?

 How much real time do your salespeople have to actually truly prospect, develop their own client base, properly handle all the internet leads, take vehicles to people’s homes or business’s ,be involved in the community to create more business when they are at the dealership bell to bell?

Simple question did you or did you not sell more cars when you had more salespeople? Why are some 

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Permalink Reply by Jamie Stockman on April 10, 2012 at 10:59am

Have you considered a hybrid approach?  Speaking about email based leads, you could have your CRM run a parallel process for phone and email, but have your BDC make the initial appointment setting call and then only trigger an initial email if the appointment is not set.  Emails are then handled by your internet sales reps / floor people you have handling email leads.  If you have a fast BDC (calling immediately when the leads arrive) this can work well.  The load on your sales reps is cut down because the BDC becomes the front line appointment setting machine and the client advisors only step in when an appointment is not set.  This allows them to focus their attention on a high quality initial contact via email if the BDC failed to speak to the client or a follow up email / call from the sales rep if the BDC spoke to the client, but failed to set an appointment.

 

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Permalink Reply by Michael Timmons on April 10, 2012 at 11:03am

Chris, depending on the size of your dealership, number of brands and most importantly volume, consider having a First Response team. The team is responsible for handling all outbound and inbound calls, verifying brand and customer information, entering lead info into your CRM and then transferring to a more experienced ISM. They can be paid an hourly wage with a bonus on contact rate and overall sales to keep them motivated and part of the team. This will free up time for your internet sales staff to handle sales and follow up calls. I believe that 75-80 leads is an effective number in this approach. This team can also be utilized to prospect upcoming lease returns and targeted trade-ins through your service department. 

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Permalink Reply by Don Queen on April 10, 2012 at 12:17pm

We handle leads for our dealerships because of the exact problem you outlined: what if the customer is not ready to buy today? Who does the follow up? When? What happens if the rep leaves your company, then what? On average, it takes 9 attempts per lead to get through 70% of your lead database, so you have to ask yourself, as it seems you've already figured out, do It have the horsepower to handle the consistent follow up to get the job done. IMHO, adding more employees only does one thing - increase your cost per vehicle sold and add more hassles and bottom line cost that's unncessary. I can show you a model that works without the never ending cycle of hiring and training - all the while strengthening your lead to buyer cycle that will drive more people into your showroom for a fraction of the cost of hiring more bodies. Message me if you'd like the details.

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Permalink Reply by Tony Troussov on April 10, 2012 at 11:06pm

Chris sounds like you're moving toward BDC/Hybrid approach!  With a good wordtrack your BDC people will be able to focus on selling the appointment vs. selling the car over the phone.  I ran a large Toyota dealership and we have tried all three ways - BDC, Hybrid and Cradle to grave.  From that experience I found out that Hybrid approach worked best for us.  The cradle to grave simply did not allow enough time for the follow-up and ISMs got bogged down just like your people did.  Having designated people handle the incoming calls works better - you might even find out that someone on your team already does a really good job with phone calls.  We had a good success with creating teams where each team mate had his/her own responsibility and they split deal as well.  Keep tweaking this and you will arrive at the model that works best for you.  There is no cookie-cutter approach to this.  Your team's strength/experience your pricing structure/selling philosophy will determine what is best for your store.  I will email you ideas for BDC payplan.

Tony 

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Permalink Reply by Jason Mickelson on April 11, 2012 at 12:28am

Mr. Irwin,

I love this topic!  I have been on both sides of the fence and there are interesting advantages and disadvantages to both.  The best-run internet department that uses sales people to respond to leads and sell the vehicle will cause long-term problems for that store (many of which will be un-detectable at first.)  However, I do believe that this approach is a pretty good way to launch your new department off the ground. 

Starting the transition from the sales professional approach to the BDC approach will be a challenge as well.  There will be costs involved and without proper training and supervision, this venture fails.  Typically, sales people aren't great at handing over responsibility to other people, especially if those people aren't well-trained.  The turnover cycle must be considered as well.  What will the pay differential be between BDC and sales?  If the difference is substantial, why would a capable BDC representative not make the move over to sales?  When this happens, you are back to square one.   

In your case, let's examine what is going to be best for you.  With a little more information, we will be able to add replies that are beneficial to you as you search for the best option for you.  Based on your current model, let's examine if there is a better approach along with the pros and cons.  What a great topic!

If you don't mind sharing, there are a few questions that I think would help as we brainstorm your questions. 

1.  How is your current situation working for selling cars?  What % are you closing your email leads?  (We should establish enough additional business potential exists to justify the added payroll expense)

2.  What is your current average response time?

3.  How many internet leads do you receive and how many people respond to the leads? 

4.  Are your first responders also handling walk-in opportunities and/or phone ups?

5.  How many cars will your top internet producer sell in a month and likewise, how many are your bottom producers selling in a month?

I agree that customers like dealing with the same person from start to finish.  Assuming they like the person they are dealing with.  In fact, everyone that your customer deals with from the day the lead arrives all the way up until the car is smashing bugs is important and has a long-term effect.  Based on the answers we see, you might be able to entice one or two of your better sales team members to go in on a deal to give them an assistant as Stan mentioned.  The key to this is to work with them to cover some of the cost.  You can bet that someone who is paying for part or all of their assistant will be sure to do everything in their power to respect, train and develop this person.  Whether this is a viable option remains to be seen.  When we have a little more information, your recommendations will be more solid.  Thanks for posting.  Again, great topic!!!

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Permalink Reply by Brittany Walker-Cooper on April 12, 2012 at 11:05am

 

What I've seen done in the past when my dealership had this problem is to add BD agents, just like you’re doing now. You can still have your IS team a part of the process from start to finish. I.e. maybe have them in the same office to answer any questions your agents may have. But your BD agents will improve your response time, and increase your showroom traffic. Because, like you said; “they will be forced to simply focus on selling the apt instead of sometimes trying to sell the car over the phone". LTF and sales prospecting will be an additional "pro" to having a BDC. I would recommend Alan Ram's Proactive Training Solutions for training your sales team on how to handle a BDC department and for word tracks for your agents. I've seen several pay plans for BD agents & all of them worked, you just need to keep in mind that this isn't an "entry level position" in the sense of hiring "some kid" to "answer phones" your dealership spends ALOT of money on advertising to generate the "phone-ups and internet-ups" and you are trusting these agents with all of that money. You don't need an automotive expert, just someone with customer service experience & a strong desire to learn.

Be smart, use callbright (or something similar), daily reports, appointment boards, product knowledge training, and TRUST your agents. :)

Previous Pay Plans I've seen;

example #1- $8.00 an hour/ $25.00 a shown appt/+ $50.00 a sold apt

example #2- $10.00 an hour/$10.00 a shown appt/+ $10.00 a sold apt

example#3- $8.00 an hour/ $8.00 a shown appt/ + $12.00 a sold apt

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Permalink Reply by Tony Troussov on April 12, 2012 at 8:37pm

Chris,  enclosed is the file with a payplan idea.  

Attachments:

• BDC PayPlan.xlsx, 11 KB

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Permalink Reply by Kurtis Smith on April 16, 2012 at 1:52pm

Chris,

It sounds like you have a process problem. Ironically I posted a video recently here in dealer elite that discusses this very issue. The strategies and the processes that you are currently using are not connecting, and it also sounds like their is a need to tweak the marketing sequences in your CRM application as well. The reason that I am stating this is that whenever clients are not in the market right now, the relationship can be managed via pre-built campaigns, triggers and wake up calls for status checks. (I am not referring to form letters)  Take a look at your CRM process and make sure that the different buckets of clients and prospects that you interact with have sequences that can be traced form point of entry all the way back to re entry. Once you have this covered, its time to implement the 'if this then that' approach process with your team. Just these two things will address two of the major challenges you outlined in your post.

I will up load a video on the If this then that for your review, Hope it helps. 

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Permalink Reply by Don Queen on April 16, 2012 at 1:59pm

This is a great apporach. Adding more head count is counter-intuitive to adding growth/profits. The stats (per NADA) tell the tale - 1 in 4 calls are mishandled by dealerships and its takes an avg. of 9 attmepts to get through 70% of your database. It takes volume and skill to convert a majority of leads into traffic. Afterall, what good is a lead if you can't get the in the door!?
 
Tony Troussov said:

Chris sounds like you're moving toward BDC/Hybrid approach!  With a good wordtrack your BDC people will be able to focus on selling the appointment vs. selling the car over the phone.  I ran a large Toyota dealership and we have tried all three ways - BDC, Hybrid and Cradle to grave.  From that experience I found out that Hybrid approach worked best for us.  The cradle to grave simply did not allow enough time for the follow-up and ISMs got bogged down just like your people did.  Having designated people handle the incoming calls works better - you might even find out that someone on your team already does a really good job with phone calls.  We had a good success with creating teams where each team mate had his/her own responsibility and they split deal as well.  Keep tweaking this and you will arrive at the model that works best for you.  There is no cookie-cutter approach to this.  Your team's strength/experience your pricing structure/selling philosophy will determine what is best for your store.  I will email you ideas for BDC payplan.

Tony 

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