|This month, I’ve decided to look at the fundamental question of whether you should even have a BDC or not. The short answer is “yes.” The long answer is “maybe, kinda.” Confused yet? Good.|
The “yes” comes into play because I firmly believe that a well-developed and well-managed BDC can bring substantial growth to a dealership. In dealerships I’ve worked with, I’ve seen BDCs put into place from the ground up and watched them succeed. The “maybe, kinda” comes from my question about whether you should create your own BDC or hire someone from outside to handle it for you. I’m talking about outsourcing here.
When you read the word “outsourcing,” I’m sure it conjures up all types of ideas into your head, especially considering we are talking about a call center. You worry about jobs leaving the U.S., customers not being happy and difficulty getting through to someone halfway across the world. Let me ease your mind here; I’m not talking about that at all.
Technically, the practice of sending jobs outside the country is called “offshoring” and is a specific type of outsourcing. The outsourcing that I’m talking about is simply hiring someone in the U.S., and often in your town, to handle the work for you. It’s like hiring a company to handle your payroll or paint your building.
This form of outsourcing has become very common in most industries that use call centers, including automotive dealerships. Whether you already have a BDC, are currently developing one or have just heard of it for the first time in this magazine, it would be good to consider the possibility of outsourcing and determine whether it is a good fit for you. There are pros and cons to outsourcing and to having an in-house BDC; we’ll look at a few of each.
On the side of outsourcing, the two major reasons for it are cost savings and time savings. In all likelihood, if you called a company that specializes in BDC outsourcing, they would send a representative out to determine your requirements, and in a couple of weeks you would have your outsourced BDC up and running for very little work on your part and very little up-front cost. This is a very appealing scenario, but it is not without its problems.
The biggest entry in the con column for outsourcing your BDC is the lack of control you have. Even if you developed the requirements for the outsourcer, wrote the script for the BDC reps, and kept as careful an eye on their progress as possible, you ultimately have given control over to the outsourcer. And even with the best outsourcer, you will run into the same problem you find with any kind of contractor: they will do the exact thing you ask for, the bare minimum to keep the customer happy, and will rarely take any initiative to improve.
You also have to be aware that even though there is little up-front cost to the outsourced BDC, you will have many ongoing costs as you continue to pay for the services. The way that outsourcers make it seem affordable is by spreading the costs out over time in monthly, quarterly or yearly payments in your contracts.
To look at the other side of the picture, the in-house BDC flips these exact same pros and cons around. The biggest advantage to an in-house BDC is that you have complete control over it. You decide who is hired or fired, how it is managed, what the requirements will be, and how to improve on it or change it to meet your business needs. The employees will know your business well and can develop relationships with customers.
Of course, as we flip things, we see that the biggest cons hitting the in-house BDC are the time and money involved in their development. It takes time to find employees, hire them, train them and retain them. And it takes a considerable investment to buy phones, computers, software and furniture. It is a large initial investment to get a BDC up and running.
These high initial costs highlight the other major advantage, though. There are not a lot of ongoing costs after you have it set up. Basic maintenance costs, employee salaries and overhead are generally relatively small compared to the revenue the BDC can bring in and are almost always cheaper than outsourcing in the long run.
Now the question comes down to which option is best for you, and unfortunately, like too many things we discuss here, there’s no easy answer. Much of the decision will come down to your dealership’s current financial situation compared to the potential revenue brought in by the BDC. Even though there is no easy answer, I will give you a rule of thumb that I have developed while working with dealerships: An in-house BDC seems best suited to small dealerships and large dealerships and the outsourced BDC seems to be the best option for medium-sized dealerships.
Small dealerships need smaller BDCs, can contain costs because they’ll only need to buy a small amount of new equipment and they can maintain the control in-house. That control will allow them to adapt to changes in the business environment quickly. Large dealerships can typically absorb the large equipment and time investments better and already have the infrastructure in place to deal with a brand-new department.
Medium-sized dealerships typically are in a place where they are focused on other areas of growth and by outsourcing the BDC they can maintain their focus while adding a vital department, without overstretching themselves financially.
Take serious time to evaluate which BDC option is better for you. As I said before, I completely believe that a BDC is beneficial to your dealership, but at the end of the day, make sure the option you choose is the one that fits your needs the best.
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