Dealer Insights - July-August 2015 - BDCs in the virtual marketplace

Published: Jun 23, 2015
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Dealerships today receive leads from many sources. In addition to the tried-and-true telephone, leads also come in from the Internet, online chats, e-mail and text messages sent by vehicle shoppers.

While getting more leads is obviously a good thing, it does present a challenge: how to manage the leads most effectively. To meet this challenge, many dealerships are creating business development centers (BDCs) responsible for handling the leads before they're given to salespeople.

Renewed interest in BDCs

BDCs aren't new. They've been used for many years as a tool for managing incoming leads. But there's renewed interest in BDCs today as a way to better handle the high volume of leads coming in from sources like the Internet and mobile devices.

The specific role and function of the BDC varies by dealership. In general, though, BDC employees (often referred to as business development representatives or BDRs) are responsible for fielding and following up on all leads that come into the dealership, regardless of their source. BDRs are usually responsible for qualifying the leads, gathering pertinent information from prospects, and setting appointments with salespeople.

The biggest benefit of creating and staffing a BDC is that specially trained employees will handle the all-important first contact with prospects and be responsible for scheduling sales appointments. There is a difference in the skills required to respond to leads effectively and those required to lead customers through the sales process. Having a BDC is meant to ensure that the best-qualified employees perform each of these key functions.

It's important to note that BDRs aren't the same thing as customer service representatives. The latter are generally responsible for handling customer questions and complaints. Conversely, BDRs are specially trained in persuading prospects to make an appointment to visit the dealership and meet with a sales representative.

They do this by conveying a sense of trust, excitement, comfort or urgency with prospects that validates their selection of the dealership. This recognizes and capitalizes on the fact that cars are rarely sold over the phone or the Internet. Instead, the phone or Internet is the instrument used to get a prospect into the dealership, where a trained salesperson can take the reins.

Cost vs. benefit analysis

Of course, there's a cost to building and staffing a BDC — primarily the hiring and training of good BDRs. So dealerships must weigh this cost against the potential benefits they might derive from a BDC. In general, BDCs tend to be more cost-effective for midsize and larger dealerships than they are for smaller dealerships.

One cost-saving alternative is to outsource BDC functions to a service provider that specializes in handling leads and setting appointments for dealerships. This is often a more cost-efficient option for smaller dealerships than creating and running their own in-house BDC.

Another option is to run a "hybrid BDC." With this model, Internet leads are usually segregated from phone and text leads due to the unique nature of online sales. Internet BDRs keep their leads and try to close the sales, while salespeople receive phone and text leads themselves and are responsible for setting their own appointments.

Prompt and proper lead responses

Most dealerships spend a tremendous amount of money on marketing and advertising to generate leads from qualified car buyers. But if no one responds to these leads promptly and properly, the dealership is essentially wasting its marketing and advertising money.

Creating a BDC is one way to help ensure that leads are handled correctly, regardless of how they come in to your dealership. A well-run BDC can help optimize the benefits you realize from your advertising and marketing efforts — and even pay for itself in the long run.

Sidebar: Maximize your BDC results

Using a business development center (or BDC) is one way to manage the leads that come into your dealership from a growing number of sources. Here are four tips for getting the most bang from your BDC bucks:

Define your BDC objectives. Determine specifically what you hope your BDC will accomplish for your dealership, and then frame this in the form of measurable goals. For example, one of your goals might be to bump up the percentage of incoming leads that are converted into sales appointments from 50% to 75%.
Hire the right business development representatives (BDRs). Your BDRs don't necessarily need to have auto dealership experience — you can train them. It's more important that they have strong communication and persuasive skills, both verbal and written.
Properly incentivize your BDRs. Compensation for BDRs can be on a straight-salary basis or salary plus commission. If you only pay a salary, hold contests periodically to give BDRs additional financial incentives to set more appointments.
Ensure open communication between BDRs and salespeople. Sometimes, friction can develop between BDRs and salespeople if one feels the other is encroaching on his or her territory. Carefully define the responsibilities of BDRs and your sales team, and make sure the lines of communication between them remain open.