Every dealer wants the same thing, to move their inventory faster and more efficiently. But with money spread across several different marketing channels, you might struggle to see what’s paying off. Here to tell us how to effectively manage your BDC and properly handle leads as they come in is Marc McGurren, President and Co-founder of McGurren Consulting.
Jim Fitzpatrick: Marc McGurren, president and co-founder of McGurren Consulting, welcome to CBT News.
Marc McGurren: Thanks for having me.
Jim Fitzpatrick: In your opinion, should every dealership have a BDC?
Marc McGurren: That’s a trick question, so there should be a form, long story short, I take a different approach than many. Meaning that I believe that whether you have a BDC in a department of the sorts, it’s all dependent on the culture of the store. People ask me all the time going, “Hey, should I do a BDC? Should I do an internet department?” I’ll put it this way, if your culture can sustain a BDC department, meaning people will buy into the process and all that, I would highly recommend a BDC.
Jim Fitzpatrick: What do you say, Marc, do the dealers that are watching us right now or the GMs that say, “Uh oh, Marc’s driving up our expense line again and now I’m going to have another $10,000, 15, $20,000 a month in a three-man, four-man, five-man BDC?” I should probably say person because it could be obviously a girl or a guy in there but so what do you say to those individuals that say we’re now going to allocate some real estate in the dealership, set up their phone room and the computers, there’s going to be some cost in that, is this really worth it, Marc?
Marc McGurren: Absolutely, and so it really becomes, the question is can I get a return on my investment? Meaning can I, by the time I spend money in there, can I get the return on that plus some, right? Meaning can I actually make more money doing it this way? Dealers look at it that way because they’re not theoretically income-producing employees. They’re not on the front lines selling that car but this is the thing, is you got to look how well you’re doing with your current processes in lead providers, in phone, in service, in equity in mind.
Look at all those, so those are the things that you first had to look at. How well am I doing with my internet leads? How well am I doing with my phone opportunities? What about my service department? Am I just being reactive and only handling those who are coming to the drive or am I being proactive? Lastly, how well is my team following up with initial unsold showroom follow up?
If you’re doing well in those areas, a BDC might not be the best or might not get your ROI, but for folks typically what I find is internet sales people are handling the phones, internet, and that’s really it. They’re not being proactive. Dealers work great at reactive, handling those inbound opportunities but what are we doing to grow that business, and that’s where a BDC can be very successful and that ROI takes place, you’re not just paying for it, but you’re making a lot more money by utilizing that BDC.
Jim Fitzpatrick: Right, so when I turn to my sales department and say, “Hey guys, I got good news for you, we’re going to go to a BDC,” is it usually a welcomed concept to the sales department or is it something they go, “Oh, wait a minute. How’s this going to work? How am I going to get my fair share of phone ups or internet leads? That means it’s all going to go to one room and then they’re going to dish up whatever they want to me and that’s kind of my lifeblood of my business as a salesperson.” Do you get some of that kind of feedback in the real world?
Marc McGurren: Absolutely, so you know the stores that kind of already floundering, meaning it’s not a huge deal. There’s no pain to those salespeople meaning yeah, I’ll lose them and it’s not a big deal but if you are taking away a department, so you’ve got a group of guys and gals handling internet leads, you definitely will get some pushback but what I found is we usually try to incorporate them into that process.
As you build out and you go to that BDC, you can’t just come to the team and say, “This is what we’re doing,” and you tell them what we’re doing. What happens, and I love, I was working on talking with a dealer the other day. We had to get mindshare. I always called it buy-in, we had to get buy-in from them, I don’t know what’s going on, let them have input. Because when I let them have input, the managers, desk managers especially because they’re the one leading the charge on the front lines as well as the sale people, what will happen is they’ll embrace it or the chances that they’re going to embrace it are much higher and you don’t get that fighting that can take place.
Jim Fitzpatrick: Okay, so in the event that you have a staff in the BDC, somebody calls, you go through the deal and obviously with digital retailing, which we’ll talk about in a minute, with digital retailing coming on strong and people want to stay in touch with the person that they started with, do you see it as where when somebody comes into the showroom now to take that car on a demonstration drive, do they meet the person in the BDC they spoke to or are they instructed to ask for somebody from the sales manager and then a salesperson on the showroom floor takes it. How do you see that working?
Marc McGurren: Yeah, so the best possible scenario remember, going back to what I talked about earlier, we’ve got to be as efficient as possible. I still believe people buy cars from people they know and they trust so there will be those customers who go, “I have to meet you,” right? Those are the folks that are super personable, they built that rapport, that’s where I’m okay with going out and saying, man, and typically that person, that customer is going to give that person a hug, right? It’s got that personal relationship that’s built in there but most of the time as you communicate with that customer, you’re going to say, “Well, mister customer, hey when you come in, you’re going to meet with a product specialist.” My worry track is they know a lot more about the fun buttons than I do and they’ll be able to help you with that.
Therefore, as long as we set up the expectations of that with the customer, it typically goes very smooth, where it doesn’t go smooth is when they come and ask for that BDC agent and they meet with another sales person and it just doesn’t start off the process or the customer experience very well.
Jim Fitzpatrick: Are there any numbers out there right now that say how many of the 17,000-plus dealerships out there have a BDC versus no BDC?
Marc McGurren: I don’t think there is because there’s so many births and deaths daily. I know I’d say General Motors, almost all of those haven’t because they’re required. Now beyond that, I would say BDCs are a smaller portion than internet just because it’s more difficult to install them. Here’s your leading mister salesperson, go handle this.
Jim Fitzpatrick: At a high level for the people that are for the dealers and managers and such that are watching, explain to us or kind of lay out what a typical pay plan would be for a BDC person.
Marc McGurren: Absolutely, and this is where we go back to is this a business decision? If these people are handling between 20 and 50% of your business, you want to make sure you don’t get the lowest wage employees. Typically, to coach a dealer through this, they’re going to need an hourly, plus commission on appointments, shows, and sold.
Let me kind of give you an idea on this. Do a quick, A, know what your minimum wage is and don’t pay minimum wage, because that person can go work anywhere to get that job. Number two is do a quick Google search, literally type in “call center or telemarketer”, look what the going rate is. You then go up, what I say, go up a dollar, whatever that case is, than what a normal telemarketer makes.
Again, you’re looking at least above that and then you’re going to be based on appointments, shows, and sold. Typically, all-in, sometimes it’s $5 for an appointment, 10 to 15 for a show, and then 20 to 25 for a sold, and that’s all retroactive, meaning it all goes together.
Jim Fitzpatrick: What can the job end up paying on average in addition to the hourly?
Marc McGurren: I’ve done the math. You can make up to about $25 an hour for a superstar, and with a good process, you could their ROI back within 30 days. With a good proven process, there’s very few times where I could sit there and go, that a dealer did not get the return on their investment. Now are they making money above and beyond? No, but at least they broke even. A lot of times they are but a lot of times, it’s their baseline. They’re getting started, especially if it’s brand new.
Jim Fitzpatrick: A dealership that sells a couple hundred cars a month, you could be sure they’re dropping north of $50,000 a month in advertising and marketing to do that, probably more like $70,000 a month. What I would say to those dealers is if you’re having a problem rationalizing the added expense, take $20,000 right off the top of your marketing and advertising budget for those months and see what happens in the way of closing and bringing in more appointments rather than just continually spending a tremendous amount of money in marketing, whether it be digital or traditional just to keep the phone ringing because you know that your people for the lack of a better term, suck on the phone and they can’t bring the people in, okay?
Now all of a sudden, you have the combination of two. You’ve got an ad budget and you also have somebody that’s going to be bringing those people in over the phone or through the internet in a much more effective consistent way, which is what it’s all about today, right?
Marc McGurren: Correct, and it’s about that consumer experience, right?
Jim Fitzpatrick: It is.
Marc McGurren: If you’re going to drive in and spend that $70,000 only to tick that customer off because we’re not following up an appropriate way, really, is that marketing dollars being spent well?
Jim Fitzpatrick: That’s right. Well Marc, I want to thank you very much for joining us on CBT today. I wish you the best of luck in your new endeavor. I know that you’ve got a phenomenal name in the auto industry. I know that you were with Brian Pasch, you guys knocked the cover off the ball I should say in digital marketing and all things BDC and such so hopefully, we can have you back on CBT and talk more about BDC and how to work the CRM more effectively.
Marc McGurren: Absolutely and appreciate the time. Thank you so much.
Jim Fitzpatrick: Great, thank you.
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