August 2009, Auto Dealer Today - WebXclusive
Quite some time ago, when dealerships were still getting the majority of their traffic through traditional means like radio, television and direct mail, Internet sales were considered a niche business within the dealership, accounting for a mere handful of sales in most stores. Dealerships maintained business development centers to manage the leads generated through those traditional means, while Internet leads and sales existed on the fringe, often managed by a single (usually tech-savvy) person. The number of dealers with Web sites and the number of customers shopping for vehicles online were significantly lower than today, so it’s easy to see how many dealerships ended up with both a BDC and an Internet department.
However, Internet sales are no longer exist on the fringe. It’s hard to find dealerships without Web sites nowadays, and consumers have fully embraced the Internet as a trusted resource to research and shop for vehicles. The percentage of dealership sales attributable to the Internet is steadily increasing, making the Internet just as viable as other media like television and radio.
That begs the question: does it still make sense to treat Internet sales as a niche business with a separate department, while funneling all other leads through a dealership’s BDC? Combining the functions of these two departments into a single efficient operation can simplify the lead management process and might even reduce expenses and increase sales volume.
Of course, there is more than one approach to running a single department rather than two distinct ones. In the case of Red McCombs Automotive in San Antonio, Texas, a single department handles a number of BDC functions while still taking a cradle-to-grave approach to its Internet sales.
Tony Rimas, director of operations for the group, said merging their multiple BDCs with the group’s Internet department really streamlined operations and actually led to an increase in sales. About two-and-a-half years ago, Red McCombs Automotive was operating a number of BDCs in support of their nine locations. Several of the larger stores had their own BDCs to take incoming calls, while a standalone BDC supported a few of the smaller stores simultaneously. Internet leads were, for the most part, the province of the Internet department; however, a BDC would address an Internet lead if it remained inactive for 10 days.
“The issue we run into there is, who was responsible for the sale?” said Rimas. “That was so frustrating because you had great people in the BDC and you had, in my opinion, equally great people in the Internet department and you could just never figure out who was really responsible for the sale.”
While credit for a sale and issues with the pay plan were problematic, Rimas cited a bigger concern: “The biggest reason [for integrating the departments] was customer rapport.” A customer submitting an Internet lead could be contacted by an Internet manager, a salesperson and possibly a business development representative (BDR) before ever visiting the dealership. “There may be three or four people that touch that customer before we even actually see them at the door,” he said. “It was just mass confusion. We couldn’t ever all get on the same page.”
Instead of continuing to maintain separate operations for Internet and BDC functions, they cross-trained the Internet staff and BDRs and consolidated them into Internet teams. Each store has its own Internet team and a team leader. The teams’ efforts are overseen from the corporate office by Rimas and the group’s Internet director, Carson Rubey, along with the help of two assistants. The corporate office also handles a few centralized operations like chat, CSI follow-up and advertisement tracking while overseeing each store’s Internet team.
The integrated department works all Internet leads as well as purchased third-party leads, and Internet sales associates now handle everything from setting appointments through to delivery and follow-up. “In my opinion, I think the customer, if they can, should deal with the [same] person from cradle to grave,” Rimas commented. The department does not schedule service appointments, but associates are required to greet previously sold customers who come in for service.
When necessary, some of the Internet leads are allocated to the regular sales floor through the sales manager. However, even after a lead is handed off, the Internet team leader will work closely with the sales manager because the sales associate on the floor may not be aware that a cars.com lead might have to be handled somewhat differently from an AutoUSA lead.
Centralizing operations has helped Rimas have a better view of the big picture in terms of being able to understand “which lead sources and opportunities are converting to sales.” The department holds monthly breakfast meetings at a central location to discuss the previous month’s sales, their goals for the next month and discuss various relevant topics like lead generation or vendors with new products that might be of interest.
He said consolidating their BDC and Internet operation has “really helped us streamline things.” According to Rimas, Red McCombs directs between 70 and 80 percent of its ad budget toward the Internet, so having a streamlined process is essential.
Rimas said there were a few problems early on when cross-training his BDRs and transitioning them from more administrative-type work into what he described as “fulfillment roles” in a sales environment. “In their opinion, their job was done at setting an appointment and making a follow-up contact,” he explained. “The problem with that is, you can set pretty much the poorest appointment in the world and pass it off to a salesperson and point the finger at him for not closing the sale, right?” Rimas said accountability has been one of the biggest benefits of merging the departments.
Another benefit has been an estimated 30 to 40 percent reduction in expenses, part of which Rimas attributed to the resulting change to pay plans. Only one person is paid on a sale, rather than paying a BDR a salary plus a bonus for appointments set, shown and sold, then paying a salesperson commission on the same deal. Overall, the change was a win for everyone.
In the case of Hare Chevrolet in Noblesville, Ind., a combined BDC/Internet department handles third-party leads, leads from the dealership’s own Web site, incoming sales calls, chat, appointment setting and follow-up. It does not, however, handle the actual sale of vehicles. According to Courtney Cole, vice president of Hare Automotive, Hare Chevrolet has been running a combined department for about a year-and-a-half.
Prior to that time, their Buick Pontiac GMC store ran a standalone Internet department, while the Chevy store had a BDC for the sole purpose of working special finance leads. The departments and staff were merged into a single operation running out of the Chevy store. Regarding the staff in the standalone Internet department, Cole said her thinking was, “They do such a good job of answering the leads from the Internet, why don’t they answer the phones?”
Since the standalone Internet department was not handling the entire sales process for Internet leads, only setting appointments and following up, combining the departments did not cause a dramatic shift in Hare’s process for Internet sales. In fact, it was the logical move to make. Cole said tracking advertising is easier now that all leads, Internet or otherwise, are filtering through one department. It also helps maintain consistency and continuity in the follow-up process.
While Cole acknowledged a customer should not be handed off to too many people throughout the sales process, she was not in favor of an Internet department that handles appointment-setting, sales and follow-up. Rather than trying to train salespeople to work the phone and set appointments or train appointment-setters to sell cars, she opted to keep everyone performing the jobs they’re best at. One of the reasons she believes they’ve seen success with their model is it plays to the employees’ strengths. BDC-type people handle Internet chat, appointment scheduling and follow-up while salespeople stick to selling cars.
“I guess my feeling is that a salesperson is excellent with a customer [in person]; one-on-one they’re good. That DNA does not transfer over to good follow-up, nor does it transfer over to always taking a phone call correctly,” she explained. “However, it seems like the BDC personality is great on the phone and great at follow-up. [They’re] just two different animals.”
Salespeople are still expected to make follow-up calls to their customers, of course, but the BDC acts as a safety net for a busy salesperson to ensure no customers fall through the cracks. She pointed out, “Our best guy sells 35 or 40 units. He doesn’t have time [to do much follow-up]. Our BDC can continue to receive calls and make appointments all day long; they don’t get interrupted by taking a customer on a demo ride. Their job is to put as many people in front of the salespeople as possible … and our job is to have the best salespeople so that it just works smoothly.”
Cole said she could not see the reasoning behind having a department strictly for Internet sales in this day and age, although she admitted that at one time dealers looked at the Internet as “plus” business and a separate profit center. “We used to think this thing called the Internet was one department,” she mused, “and now it’s just the process, it is the business … it’s an Internet dealership now.”
Chris Carlson, sales and marketing manager for Scott Robinson Honda in Torrance, Calif., agreed with Cole’s observation. “We just totally embrace [the Internet]. We realize that’s what the business is and where it’s going.” He added, “The way we look at it, we’re just one big Internet department. The segregation part just doesn’t make any sense.”
Scott Robinson Honda, rather than merging two pre-existing departments, started out with a two-man Internet department which eventually evolved into the combined BDC/Internet department as it exists today. Six years ago, Internet leads were handled by Carlson and one other individual, from initial contact to delivery. They would set appointments and, in Carlson’s words, “try to sell the low-hanging fruit.” However, he said, “because we were selling the cars, we didn’t really have time to follow up with older leads,” Carlson explained. “We would just get whatever we could get.”
Eventually, they added a few more individuals to make calls, freeing up Carlson and his associate to sell cars. The biggest issue at that time was having the manpower in the Internet department to handle making all the phone calls and as well as the follow-up process over a period of 30 days. “We need people to make phone calls; we need people to sell the cars,” he said. “One person can’t do both and be effective.”
As sales increased, they added a few more people to the department to make phone calls and tweaked the lead management and sales process. The department now has six business development representatives and a director and handles the dealership’s Web site leads, third-party leads, unsold traffic, lease retention, chat and all incoming sales calls. Sales are no longer handled through the department, however, and are now fielded instead by the sales staff on the dealership floor.
Appointments are set with the sales manager on duty and the customer is instructed to ask for that person when they arrive. Any salesperson on the floor can greet the customer and take them to the manager they ask for. The manager briefly explains the dealership’s process and turns the customer back over to the salesperson who greeted them. According to Carlson, “All our sales reps are Internet reps.” That salesperson is also responsible for follow-up with the customer, although the BDC will follow up with them – sold or unsold – for CSI purposes. BDRs each make roughly 500 calls per week and handle, on average, 100 to 150 leads per month.
According to Carlson, sales have doubled since they started doing things this way. “When you’re selling cars along with trying to make phone calls, you’re missing leads. You’re not contacting people and setting appointments; it’s impossible,” he said. “On average it takes two to three hours to sell a vehicle from beginning to end … so if you’ve had a three- or four-car day, how many phone calls do you think got made that day? Of course, [sales volume] is going to double. There was nothing else it could do.” Salespeople were happy with the change, he added, “because it would net them five or six deals a month each that were basically pretty much done deals when they walked into the dealership.”
About two years ago, Amato Automotive in Milwaukee, Wis., had a two-person Internet department and no BDC, much like Scott Robinson Honda. Internet leads were mostly manufacturer leads, and the Internet department scheduled appointments and handled sales cradle-to-grave. However, according to General Sales Manager Chris Kahrs, they were only selling six or seven cars each per month. “At that time, the Internet was more related to new Hyundais and new Mazdas, but not so much used because we had all the incoming calls going to the sales floor,” he said. The problem was it caused difficulty with tracking and determining which lead sources were effective. This was the primary reason for establishing a BDC at Amato about a year-and-a-half ago.
On the advice of consultant Greg Goebel, Kahrs moved his Internet people into BDC roles and took the sales responsibilities from them. “Believe me, they weren’t disappointed at all with taking that element out of it,” he commented, “because they were fantastic at the follow-up [and] fantastic at getting the customer in, but by their own admission, they weren’t salespeople. They’re very good with the phone and setting appointments, so let’s take their talents and make it work.”
The department has since expanded to four people, soon to be five, and handles Internet leads, third-party leads, incoming sales calls, setting and confirming appointments, follow-up, calling unsold traffic, and scheduling warranty service appointments. Kahrs is working on creating a BDC position for CSI follow-up on service customers. Sales from Internet leads, like all other sales, are now handled by the floor sales staff and appointments are set with the managers. Once a customer arrives at the dealership, the manager will assign that customer to one of the salespeople on the floor.
BDRs are paid an hourly rate plus a bonus for appointments set, appointments that show and appointments that sell. Kahrs did not see a problem with paying both a BDR and a salesperson on the same deal, commenting that he might be paying a little more per sale but earns it back in volume.
Regardless of the approach taken by a dealership, it’s hard to deny that there are advantages to be gained by combining the functions of the BDC and Internet sales department in some fashion. “If you think you have the right people in place, I would recommend it,” said Carlson. “It was trying at times. We hired people and let people go until we found the right people. You find good people by holding them accountable. When you set goals and people aren’t meeting [them], then you find someone who can.”
For dealers considering combining a BDC and an Internet sales department, Rimas recommended first experimenting for a couple of days by having a few BDRs switch places with a few of the Internet salespeople, giving each department a glimpse into what the other does. “Switch them up and try it,” he urged. “Train those people and gauge the result.”
Said Cole, “Everybody has their own unique situation, and there’s no right or wrong answer, however, I wouldn’t do it any other way.
Vol. 6, Issue 6