|Chris Kahrs didn’t have to look far to find someone to run his new business development center (BDC) last year. She was sitting in the office right next door at Milwaukee’s Amato Automotive. She was talking on the phone, to be exact, and unknowingly auditioning, as visiting consultant Greg Goebel listened in.|
“We were discussing the call center when we overheard Wendy Reeves set an appointment and Greg said, ‘There’s your person,’” recalled Kahrs. “We haven’t looked back since.” Reeves now runs a new, six-person BDC, which Kahrs and Owner John Amato attribute for pushing sales growth in 2007 and creating a foundation for even more sales power in 2008.
Both Amato and Kahrs got a close-up look at how a BDC can build sales and help control costs in the second half of ’07. “I think it’s just been a godsend for us,” said Amato. “In the early stages it was an expense and now it’s a necessity.” As the New Year kicked off, Kahrs was clearly enjoying the increased earning potential a BDC can offer.
“It obviously helps us track our advertising sources,” said Kahrs. “We can see what is working and what isn’t working. We can better track appointments and not have to worry about customer information being lost.
“The BDC handles all the ins and outs of leads, working on them and making outgoing calls as well,” said Kahrs, and that’s no easy task. The BDC handles calls for Amato’s Hyundai, Mazda and Cadillac stores along with a recently-added used vehicle center.
The dealership didn’t just ramp up the BDC without a plan; there were specific goals to achieve.
Smarter, Faster, Better
“We’re buying more by the book – based on what banks will buy,” he added. That means targeting late model vehicles with slightly higher mileage, which you can often buy further under book value. So far, that strategy has worked well. “We have definitely had an increase in sales,” said Amato. “We were up about 30 percent last year and we were happy with that. With the increase of sales comes the increase in the budget and the BDC. Now that we have the structure in place, we can market better with the BDC.
“It’s a growth situation,” he added. “What really matters to me is to be able to measure where everything is coming from. That’s especially true for advertising.” Amato spends an average of about $100,000 a month on advertising—direct mail, TV, radio, print and Internet ads.
Until the BDC was up and running, the dealership had operated on a gut feeling about what was working and what wasn’t. Sales people were expected to take incoming calls in a sales floor free-for-all, said Kahrs.
After the dealership added the BDC, Amato pumped up its promotions budget to explore how to do smarter marketing. The marketing blitz drove some 1,000 to 1,200 calls a month to the new BDC.
‘We never really advertised as much,” says Amato. “With the BDC in place, we picked up the pace. We felt we could run a little bit harder. Now we don’t have to train 28 salesmen on how to handle a phone call. We have professionals to handle the calls. What we would like to do this year is lower the advertising amount and market more with the BDC, making the calls to our owners and that kind of thing.”
Adding the BDC also taught Amato and Kahrs that their gut instinct on advertising had often been sending the wrong signals. “We’ve eliminated a few advertising sources that weren’t really doing anything,” said Kahrs. “We dumped a few Internet sites and some magazine stuff. One ad for special finance wasn’t working but another was, so we dumped the one and put more money into radio and an infomercial that was working.” A couple of the dealership’s direct mail campaigns weren’t delivering either. Neither was a company, which had promised to deliver good special finance leads, so out they went.
“The last mail campaign generated a lot of customers, but they were gift seekers,” said the sales manager. “We don’t use that company any more. It’s better to stop doing that and throw the money to things that we do know are working.”
Getting Quality Leads
It’s up to the workers in the BDC to make sure that they’re getting through to the right customers. “We get a lot of leads,” said Kahrs, “and the quality leads are the ones they call, set an appointment and the customer shows up. It’s up to us to work them. Not all of them are going to buy.” A successful BDC will set up appointments that arrive on schedule. From there, Kahrs steers the best leads to the most productive sales people. “You can determine in a short time which sales people to give those leads to,” added Kahrs. “The more you sell, the more leads you get.”
BDC workers also stand to make more based on their performance. “We pay an hourly wage and a spiff for an appointment that shows and delivers,” said Kahrs, “so there is a benefit to setting quality appointments.”
By knowing more about the customer up front, explained Kahrs, the sales people have a better chance of getting them to the right kind of vehicle. That can often mean making sure they get into cars that have higher margins. “From your word track, you get a pretty good idea what their situation is and what they hope to accomplish,” said the sales manager. When the customer arrives, all of that information is already recorded in their computer system.
Of course, the chief beneficiary is the dealership. “We increased our ability to control the customer from their initial call through the sale process,” said Kahrs, “and that gives us more gross.”
The Warm Up
“We have buy here, pay here,” he added. “A lot of these customers have gone to other dealers and been told no. When they talk to someone at a call center, we can tell them that we have financing programs to assist you and our guys are ready to go. It gives that customer a good feeling. The people who are coming in are saying, ‘We’re here and they said bring this stip and this stip and this stip and we’re ready to get into a car.’”
“I think they’re so used to rejection that you have to really warm them up, like we were taught,” said Reeves. “They’re calling to eliminate you from a list of dealers that they may go into. They always think there’s some sort of gimmick. The key thing is explaining that we make our own credit decision. We don’t have to rely on banks.”
There are a number of techniques that have helped, said Reeves. “I think that the confirmation call is really important” They confirm appointments for one another. The customer hears another voice during the reminder call.”
“We also go over word tracks,” added Reeves, “repeating that they have guaranteed financing, reassuring them, overcoming objections. It’s important for customers to know by the end of the call that Amato can help them.”
For Reeves, 2008 started with huge potential. The BDC was established and gaining experience, and there were plans to add new responsibilities.” Now we’re three full-time and three part-time workers, and we are going to do more things,” said Reeves. The BDC will be maintaining the dealerships’ customer satisfaction index and calling all their customers to make sure everything went well during the purchase. “We will be able to set service appointments as well,” she said. “We’re now calling floor traffic that didn’t go through a BDC rep and trying to get them back in the door. We’ll do more special finance stuff and we’re setting up a Web site with a credit application.”
There are all sorts of calling opportunities for a dealership like Amato. Recently, Hyundai had a zero percent financing offer and they went back through March of 2007 and called every customer who was in for a Sonata and did not buy one. It led to a few extra sales.
Now, the BDC is also picking up calls for the service center. “This is only the beginning,” said Kahrs. “We’re working through the kinks, fine tuning it, making it more productive. Soon they will be following all the leads that come in and adding calls to renewals and orphan owners.” A renewal is a customer that bought from the dealership before and is a couple of years into their cash transaction. The normal trade cycle is two years for cash, three years for finance. Then customers want to get out of the car and into something else. An orphan sale is a customer that bought from a particular salesperson that’s no longer with the dealership. The BDC calls to reclaim the customer and let them know the dealership is still here when they need another vehicle.
For Amato, they’re all new leads on the road to increased sales.
Swapalease.com’s latest report show U.S. lease approval rates improved slightly to 70.9% in October following a 3.9% dip in September.