As 2018 quickly comes to a close, dealers’ sights are now set on finishing out the year strong and setting up solid expectations for 2019. If you’re brainstorming new standards for your dealership’s BDC and sales training efforts, then our next guest has some advice you don’t want to miss. On today’s show, Jim speaks with David Kain, president of Kain Automotive and host of Kain & Co. right here on CBT.
Jim Fitzpatrick: David Kain, shot of Kain and Company right here on the CBT Automotive network, thank you so much for taking the time out of your busy schedule, crisscrossing the country. So you just finished the 14th annual Kane auto clients and friends workshop. So talk to us about some of the trends that came out of the workshop. What do you see? What can you share with our viewers that we should be focused on?
David Kain: Well process is still king or queen I suppose and no matter what you do from a marketing standpoint, if you’re not good on telephone, if you don’t communicate well …
If your managers aren’t involved in holding the team accountable, it doesn’t matter whether you generate leads, you’ve got to convert those into buyers.
Jim Fitzpatrick: That’s great.
David Kain: So that was a big thing that really came out. Accountability at a metrics level, so some of the analytics, we had Claire Voy there who you know and they did a great job of presenting what the key metrics were. We had presentations by Dominion where they went through some of the Google studies and some of the changes that are out there. We also looked at a true car study where they talked about the …and this will be a big change. You remember we’ve heard about the 1.3 visits per dealership …
Jim Fitzpatrick: Yes.
David Kain: Or dealerships per customer.
Jim Fitzpatrick: On average.
David Kain: Well their study revealed it’s actually more than that. About 2.4. And 26% of people go to four or more dealerships.
Jim Fitzpatrick: Really? Okay.
David Kain: So yeah.
Jim Fitzpatrick: Still alive and well.
David Kain: Visiting dealerships is alive and well. So we still do have traffic. However, we also learned a lot about digital retailing and lot about geo-fencing and targeting your customers better. So those were some of the big topics that were out there. Plus we’ve even had our first telephone company come in and talked about how they can follow a phone call all the way into the dealership to attribute it to the marketing and to the sell.
Jim Fitzpatrick: Wow people are still using phones, huh?
David Kain: So really cool stuff. Yeah surprisingly.
Jim Fitzpatrick: That’s amazing.
David Kain: Yeah.
Jim Fitzpatrick: Speaking of phones and this question comes up, I know, a lot on CBT. We’ve talked about it over the last six years and that is do salespeople, staff, the BDC, do I get a separate staff for the BDC? Not the salespeople. Who should be in it? When should they be in it? What does the compensation look like? Should they even have one? There’s so many dealers out there that still shriek and say oh I don’t wanna take on the added expense, cause some of them see it as that, and not what it’s going to make them. But more what it’s gonna cost them. Talk to us about that. Should there be a separate staff for the BDC?
David Kain: It depends on the personality of the dealership. So when we talk about the BDC, it’s really the business development culture.
So a lot of people call it the center as though that’s really what you’re trying to do. But the dealerships trying to build a business development culture. So BDCs typically were generated because we’re bad on the phone and we don’t communicate well with email or texting and we don’t do it long term.
So to that end, if you don’t have that culture in your dealership at the sales level, you’ve got to have a BDC because you just can’t walk away from that opportunity. But candidly, it is an added expense. So if you can create an organic culture where the salespeople are held accountable, they’re trained well and then they’re great communicators, you can forgo that initial expense and maybe just have them do long-term follow-ups. So a lot of different ways to shape it but I do believe there is a lot of vitality when we teach our salespeople to fend for themselves.
Jim Fitzpatrick: Right.
David Kain: And be true professionals.
Jim Fitzpatrick: Okay. Is there a volume criteria that some dealers will adhere to, to say well I only sell 125 cars a month, new and used. I don’t know if I can afford a BDC or maybe a dealer that sells 5 or 600 would need a separate staff and a complete department that just focuses on answering internet leads and phone calls and such. Do you find that to be the case? And is it right to think that way?
David Kain: Well we look at it through another lens which is the velocity of the pursuit. So you can’t afford to have one customer not buy from you if they were intended to. So what happens, and one of the reasons is whether it’s a small store or obviously the giants out there, if your teams is not pursuing the customer. So speaking of phone calls, they say that the average lead requires eight phone calls to get engagement. Salespeople won’t make eight phone calls.
Jim Fitzpatrick: No that’s true.
David Kain: So you either have to teach them to be great with voicemails or quicker so they get the customer on the phone. Or you have to have someone else do those phone calls and keep up. So you got to look at it through that velocity of pursuit and make sure that your team doesn’t give away opportunities to engage the customer mid and long term.
Jim Fitzpatrick: Right, and that’s on the sales side too. I mean if you start to talk about the service side, which we see a lot more of dealers going to a BDC to handle all the incoming and outgoing just for the service center. Right?
David Kain: Yeah it’s a much easier case in my opinion [inaudible 00:05:48] for service because you look at the ability to take a phone call, schedule the appointment, move. As opposed to a … Let’s see a service scheduler or someone who is in a position where they’re taking time away from customer engagement at the desk …
To field the phone calls, send emails back and forth. It takes away from productive time where you can have that.
Whereas on the selling side, you have a lot of unproductive time and a lot of sales people standing around. BDC agents really fill that void and we’ve got to create a parallel track for the salespeople.
Jim Fitzpatrick: Yeah. If it were your dealership, would you have a separate BDC staff and train them according and then keep it separate from the showroom sales department.
David Kain: I would not.
Jim Fitzpatrick: You wouldn’t?
David Kain: I would create a hybrid.
And they’ve got to work hand in glove.
So there’s a case to be made for salespeople have the product knowledge, particularly if you’ve got multiple brands. And BDCs are set up to a larger grade to engage in a point.
Jim Fitzpatrick: Right.
David Kain: Whereas if you’ve got a guest and a lot of them have questions. What colors? What does this mean for the transmission? Can I tow a boat? Those kind of questions are very difficult for BDC agents to do.
So they’ve gotta work hand in glove to really be effective. So our best situation, truly Jim, is a hybrid, and the BDC does best for long-term maintenance and engagement. They’re great communicators.
Jim Fitzpatrick: Sure, sure. So as we close out 2018 and we look to 2019, what are you telling your clients and friends, what do they need to focus on to really maximize this last bit of profitability that we can squeeze out of the year? If you had your wishlist what should they be really honing down on in these last 40 days of the year?
David Kain: Yeah, so great question. Improve your communications, reinvent the words that we use. Jim we’ve been using words for 50 and 100 years that should be out of our environment. And customers aren’t looking for us to earn their business or become a member of the family. They just want help buying a car. So let’s have help them buy a car and provide them that level of service. So improve your communication skills at each employee level and out the effort into it. You don’t need to hire companies like ours, you can do it yourself. It’s a daily engagement.
David Kain: Secondly, onboard new employees the right way and grow them, develop a career path if you will and that way we can reduce the turnover. You and I have talked about it. 75% of first-year sales people turning over …
Jim Fitzpatrick: It’s absolutely crazy.
David Kain: It’s just insane.
Jim Fitzpatrick: Great.
David Kain: And it’s expensive for the operations, so grow and develop your employees, grow and develop your business through better communications and 2019 will take care of itself.
Jim Fitzpatrick: Talk to us about pay plans.
David Kain: Yeah.
Jim Fitzpatrick: Should dealers in your opinion go to more of a paying their salespeople and their sales [inaudible 00:08:50] more of a base structure with a small commission as we see groups going to. Or are you in favor of still … you eat what you kill. So get out there and sell something.
David Kain: Yes they should change. Even if it is still commission in some form or fashion. Our recruitment of employee base is demanding it. So I like my friend who runs a dealership in Sunnyvale California and he says, when we’re out in the marketplace we’re competing against Apple and Google and all of the big powerful tech companies. But we’ve got to retain, retrain and bring in new talent and the only way we’re gonna bring in new talent that even find our work environment attractive, is to review our hours, our days of a week that somebody would work and certainly compensation and benefits.
Jim Fitzpatrick: Right. I know you don’t tout yourself enough but you’re one of the world-class leaders in BDC and setting up. When’s the best time to get a dealership for those that are listening right now that are saying hey, 2019, we gotta address a BDC. We gotta install one. When’s the best time to give a David Kain a call to go hey uncle there’s a better way to do and you can help me. Is it before they install one? Is it can you fix mine because we’ve already done it? I know you’ve mentioned a few times, these are some things that they can do themselves. But at the end of the day, I ran a dealership, you ran a dealership, you got so many other things going on.
David Kain: Oh sure.
Jim Fitzpatrick: It’s nice to know you have an expert in this field before you spend $100,000 making a mistake to go look come on in here, you know the best practices of all the guys and girls that are doing it right, so show me the light right.
David Kain: Yeah, I mean …
Jim Fitzpatrick: Is it best to call you when nothing’s been done yet?
David Kain: Absolutely. And because we take our clients through eight areas. The vision and goals, what the customer experience is going to be like, certainly what kind of structure they wanna have. Because a BDC is multiple structures. Then process tactics, technology, marketing and metrics. So those eight areas even if I just gave you the framework and said, here’s the formula. Go bake the cake.
Jim Fitzpatrick: There’s no sense giving them to me.
David Kain: Yeah, you’d probably be struggling with all that.
Jim Fitzpatrick: Oh there’s no question.
David Kain: And by doing that, we’ll have them launching strong and powerful within a few months as opposed to starting out three months, six months into it then backing out and saying oh my god, I went with the CRM, I went with the wrong structure, I have this compensation.
Jim Fitzpatrick: Got the wrong skill set coming in.
David Kain: Yeah I mean this is dramatically improved and our responsibility to help you make the right decisions so our 15 years of experience will certainly afford them that.
Jim Fitzpatrick: No question. And when … If I were a dealer today and I age you a call and said come on, in my dealership. Let’s meet next Monday, for instance, from that meeting to the time that my BDC is actually up and running and taking all of those calls, what kind of a time frame is that typically for dealers?
David Kain: Yeah so normally it would be at least 30 days to assemble any kind of a team.
And if you have an internal team, that would be something you could do in 30 days. But if you’re bringing in and recruiting employees …
Jim Fitzpatrick: Oh yeah, no question.
David Kain: It can be a couple of months to really set it up the right way.
But most dealerships can get going within 30 days if they’ve got skilled employees in-house, and then we just ramp up because even if Jim they handle just calls or leads from nine till noon, those three hours would be better than letting them be …
Jim Fitzpatrick: That’s right.
David Kain: Poorly handled the rest of the day.
So don’t try to eat it all at once. Let’s just kind of grow to it and crawl, walk, run, literally within six months they’re gonna be rocking [crosstalk 00:12:43].
Jim Fitzpatrick: But it’s got to be a total mindset and commitment made by the dealer principle to say, this is what we’re doing and we’re in it for the long haul. It can’t be a flavor of the month and go yeah, call David. Get his people in here and then 60 days later they go didn’t work. Thanks a lot.
David Kain: Yeah.
Jim Fitzpatrick: Hit the brakes, right.
David Kain: Well yeah early in my company I just let the people do it.
Jim Fitzpatrick: Sure.
David Kain: We’ve gotten very smart about that. If we get the wrong sense so we start with the self-evaluation, that our clients fill out or our prospects.
Jim Fitzpatrick: Sure.
David Kain: If the answers are such that they give …
Jim Fitzpatrick: You don’t want to get set up for a …
David Kain: We don’t wanna go there.
Jim Fitzpatrick: Right.
David Kain: So yeah we’ve got to have the right environment.
Jim Fitzpatrick: And it takes the mindset of the whole dealership, not the dealer principle that got back from his dealer 20 meeting and meanwhile the GM and GSM are not on board with this program, right.
David Kain: Yeah it’s all got to work in harmony. It’s got to be a symphony.
Jim Fitzpatrick: Right.
David Kain: Yes.
Jim Fitzpatrick: Well the hardest working man in working retail automotive, Mr. David Kain, thanks so much for joining us on CBT and tune into Kain and Company right here on the CBT Automotive network. We really appreciate all your contribution, the shows are great, always among the top viewed, so we love it. So keep coming back.
David Kain: Thank you very much.
Jim Fitzpatrick: We appreciate it, thank you.
David Kain: I appreciate it too.
Bridget F: It’s Wednesday, so don’t forget to check out this week’s episode of On the Mark with Mark Tewart and Auto Marketing Now with Brian Pasch. And of course don’t forget to follow us on Facebook, Twitter, YouTube, and LinkedIn. Thanks for watching everyone, have a great day and we’ll see you right back here tomorrow.
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