General Motor’s Standard for Excellence (SFE) program will require GM dealerships that do not have a business development center (BDC) to open one in 2016. GM is requiring this mostly because a BDC makes good sense for any dealership—yours included. The purpose of a BDC is to generate business. The emphasis has always been primarily on sales, but a BDC can be a substantial help in driving business to your service bay as well.
I was recently in a Chrysler Dodge Jeep Ram dealer that had a fully functional BDC with three employees. The BDC manager had two difficult tasks to balance. First, as is true with all Internet managers, was following up quickly after every online inquiry. Second was finding new potential customers to call.
We discussed her compensation, and what methodologies she used to bring in customers. She was so efficient that she was well ahead of her CRM system, and was dialing—and emailing—directly from numbers coming out of her BDC. At some point, she had become so interested in finding more numbers and email lists that she lost track of a valuable resource. Because her equity-mining tool wasn’t a true data-mining tool, she got caught in its inefficiency.
Compare her dealership to a well-managed dealership operating in rural Iowa. It sold fewer than 40 cars per month, new and used combined. The dealership had no BDC, but saw the need for one. Two salespeople were enough to handle all their sales. But their every idle moment was used for placing service calls. Despite selling only 40 cars or fewer a month, the dealership had more than 60 service appointments daily—as many as a much larger dealership.
When I asked what problems the dealership had, the general manager said they had nothing to do with sales or service. He laughed as he told me how he had an epiphany while watching an episode of The Bachelor, where a wealthy farmer found it impossible to find a wife because he wanted the woman to move to rural Iowa. The rural Iowa GM explained that he had the same problem with mechanics. But because he recognized that attracting quality mechanics was a problem not just for him, but for every dealership in rural Iowa, he decided he would own that service market—and had taken steps to do so.
He kept his service people busy by driving customers into his service bays with personalized calls. He had his sales team functioning as a BDC and focused on service, because it had no other viable option. The dealership hit on this formula only recently (after the episode of The Bachelor had aired), but I’ll bet within three years, many of those service customers will become sales customers.
I’m suggesting that GMs in most areas have options. They should refocus their BDC employees on spending half the day driving sales appointments, and the other half driving service appointments. Usually, the BDC team is commissioned for generating sales, but not as often on making service appointments.
A typical BDC sales bonus is $15 for making an appointment that is kept, and $45 if that appointment leads to a new car sale. If you pay $15 for making a service appointment, you’ll go broke when your BDC sells $30 oil changes. So, I suggest you find a different pay schedule. I propose $5 for a service reminder, and budget 3% of the service gross income for your BDC manager to use in paying monthly, quarterly, or annual bonuses when service goals are exceeded.
This allows for some flexibility, but involves the BDC manager in appropriate managerial discussions on the service side of the business. Under this plan, the BDC begins to get a better feel for the value that the service drive creates for the overall dealership enterprise, and empowers creativity in compensating BDC employees.
GMs should take three lessons from this article:
- Treat your service drive as an equal partner to the sales side of your dealership.
- Be actively involved in managing your BDC—don’t expect it to manage itself.
- Provide your BDC with the tools and incentives appropriate to the performance you seek.
Nearly every GM I’ve met has come up through the sales side of the business, leading to a tendency to not properly manage the service side or anything to do with computers. More than 70% of your sales leads, however, are likely coming from the Internet, so you understand its value on the sales side. But the next time a software company calls on your dealership, ask what programs it offers that will drive customers into your service bay. And if you really want to get in front of the curve, call software companies before they call you.
Your service department should be close to a 100% absorption rate. If it isn’t (the average is 68%), then you need tools to drive customers into your service bay. For example, one leading tool of this type provides three service notices: one for customers that declined service previously, a second for customers that haven’t been into your dealership for x number of months, and a third for those that are beyond an extended warranty.
When considering a data mining tool, be sure you consider your service drive. There is a wealth of data within your DMS that can be culled by a good data mining tool. Use it.
David Eyerly is a seasoned automotive consultant operating out of the Dallas area. He appreciates feedback to his articles, and can be of great benefit to new and growing automobile dealers. He is presently seeking clients only in the north central U.S. (Minnesota and Iowa). He’s a phone call away when you just have a quick question, however; reach him at (903) 952-8865, by email at [email protected], or through this magazine.
Latest posts by David Eyerly
- Dealership Inventory Management: Automation vs. Accountability - December 22, 2015
- Drive Customers to the Service Bay With Your Business Development Center - October 23, 2015
- Automating Service Opportunities With Your CRM - August 11, 2015