An explanation of the difference between Internet Salespeople and a BDC answering new and used car leads in car dealerships.
There has been a lot of discussion in the auto dealer world for many years about how a dealership should distribute its inbound Internet leads every month - “Cradle to Grave” Internet salespeople or BDC, and which method works best. Below are the 3 most widely accepted methods of responding to Internet leads:
- The first method is when a dealership hires dedicated Internet salespeople, who don’t take “floor ups,” and work with prospects from inquiry to delivery (“Cradle to Grave”). They call and email the prospects, set their own appointments, meet the customers when they arrive, accompany the prospects on the test drives, negotiate the prices and complete the deliveries all by themselves.
- Alternatively, the dealer can split the leads among existing floor salespeople, which works just like number one, but those salespeople are also responsible for working with and fielding “walk-in” traffic, whom did not submit an online request to the dealership for more information, but just walked in on their own.
- Finally, the dealership can set up, support and grow a Business Development Center (BDC) of appointment-setters, whose sole responsibility is to reach the customer, set the appointment with them, greet the shopper when they arrive at the dealership and introduce them to a salesperson or a manager (TO, or turnover). The sale is then completed by the floor sales department.
Which setup is best for your dealership? That depends upon several factors:
- how many cars you sell per month
- how many people you have selling those cars
- how many Internet leads the dealership receives each month, on average
A BDC simply doesn’t make financial sense, or “pencil out,” if a dealership receives fewer than 400 leads per month. The cost-per-sale is prohibitive until the dealership sells 40-50 more cars per month, which requires a minimum of 400-500 leads, assuming an average closing ratio of 8-10% on those leads. In my experience, larger-volume car dealers are better served by investing in a BDC, since most of those stores receive several hundred to as many as 1000+ leads per month. Smaller volume stores can’t (or choose not to) spend the money to take on the extra necessary staff, and it’s harder to justify the expense without a high volume of lead traffic.
Dealerships that want to make sure that every lead is worked as hard as possible should only give 60-75 new inbound leads per month to “cradle-to-grave” dedicated Internet salespeople. When spreading the leads among the floor salespeople, the number of leads that each salesperson can effectively follow-up with drops even lower, to around 40-50 per person. These folks have to spend a significant part of their day doing meet-and-greets, walkarounds, test drives, write-ups, back-and-forth with the desk, delivery prep and more, and there’s only so much time they
can spend on their computer, sending emails and/or recording and sending personalized videos.
Doing the math, a larger volume dealer receiving 800 leads per month would need 10-15 dedicated salespeople (or 16-20 floor salespeople) handling leads to be most successful with this type of department setup. If the dealership gives the dedicated Internet salespeople any more than 60-75 new leads each month (or 40-50 for floor salespeople), the salespeople begin to “cherry-pick,” not working each prospect equally and diligently. They start to make assumptions about the people submitting them (assuming bad credit based on ZIP code, thinking the buyer is not serious, or that the prospect’s time-frame is beyond buying a car today or this month, thinking that car the shopper wants is not available, etc).
When dedicated Internet salespeople receive more than 60-75 leads per month, they also begin to make excuses that they’re too busy to diligently follow-up with each prospect. Unfortunately, laziness is inherent to the car salesperson’s nature and not do the follow-up required. Overwhelming them with more follow-up than they feel they have time for is a recipe for failure.
Another reason to limit the number of leads per salesperson is that when the showroom gets busy, answering Internet leads is the first thing to get pushed to the back-burner. The salespeople would rather work with someone physically in front of them, as opposed to virtually in front of them. Each time that happens, the dealership is potentially missing out on an opportunity to get in touch with the prospect first, increasing the likelihood of making an appointment that could lead to a sale. The sales managers also stress to their staff that working with the prospect in the showroom is a higher priority than a prospect who’s online, even though that may be an incorrect assumption.
Please also keep in mind that not all floor salespeople in the dealership WANT to invest the necessary time to do this properly. Some salespeople (usually the top performers) feel that they have enough repeat and referral traffic and don’t need to take Internet leads. Other salespeople aren’t comfortable using a computer and would prefer to spend the majority of their days doing face-to-face work. Still others are better face-to-face than on the phone, and management wants to use the salespeoples’ talents to everyone’s benefit.
The average BDC rep, since they’re sitting in front of their computer all day and not responsible for doing walkarounds, test drives, write-ups, back-and-forth with the desk, TOs and the like, can handle 100-150 leads per month, depending on how skilled they are. Using the same 800 leads per month example as above, a dealership would need to staff the department with 7-8 BDC reps. When this happens, there’s far less likelihood of the floor salespeople complaining about getting “skated” by the Internet sales department. If a dealer is selling 64-80 vehicles per month (8-10% closing ratio) from appointments set by the BDC, then it is profitable to the dealership to have the BDC in place.
Which type of setup do you have in your dealership?
Which do you feel is best for the average dealer?
Do you agree with my assessment?
Thanks for reading and I welcome your comments below!