By
Mark Rikess
President, The Rikess Group
Two Problems – One Solution
Of the many challenges facing dealers today, two of the biggest include:
- Recruiting a younger, gender-balanced sales staff
- Effectively and cost-efficiently handling incoming phone calls and Internet leads
Fortunately, there is a single way to address these challenges, and that is by creating a separate department to handle incoming phone calls and Internet leads staffed with salespeople who have the right skill sets to handle these leads.
Three Models for Handling Phone and Internet Leads – One Works
There are three basic models for handling phone and Internet leads. They are:
- Business Development Center (BDC) Appointment Setters – The majority of dealerships use this model. It was developed because the traditional, high-energy, highly persuasive salesperson didn’t have the right skill sets handle incoming calls or be effective at following up on leads. They loved “eyeball-to-eyeball” sales opportunities as much as they disliked working the phones, so BDCs staffed with appointment-setters were created to fill the gap.
- Round Robin – Another traditional approach to phone and Internet contacts involves passing them around to sales consultants either equally or to select individuals. This model is ostensibly less expensive than a BDC but is in reality less effective in setting appointments leading to sales because it relies on the same people—traditional sales consultants—who haven’t developed phone or follow-up skills
- Digital Sales Departments (DSDs) – This is the approach that works because it relies on the right people—younger, gender-balanced, tech-savvy salespeople—to handle incoming phone calls and Internet leads, make their own appointments, and then close sales with phone- and Internet-using customers.
Why Digital Sale Departments Work
It’s always good to start from the customer’s point of view. So let’s start with what prospects want to accomplish when contacting your store from outside the dealership. Are they calling to make an appointment with a salesperson? No; they’re calling for information they can’t easily find through Internet research: actual pricing, incentives, vehicle availability, financing options, monthly payments, and other such topics that are difficult to figure out from reading web pages.
When these prospects reach a BDC, they’re pushed hard to make an appointment, rather than given answers to their questions. Why? Because BDC representatives are compensated for setting appointments, not for providing information. So when a prospect reaches someone at the dealership who insists on making an appointment rather than answering their questions, the prospect more often than not will disengage. The same thing happens in a Round Robin situation when a call or email is forwarded to the typical floor salesperson: “Come on in and we’ll answer all your questions, get you behind the wheel for a test drive, and give you the best deal in town.” The result of both approaches is wasted time, money, and opportunity, because one minute later that customer is contacting a different dealership.
The goals of a Digital Sales Department (DSD), on the other hand, are to connect the customer with someone like him or her—younger, male or female, able to stay in contact via phone, text, email, or social media—a Product Specialist able to both answer questions fully, accurately, and transparently, and then convert those contacts into appointments and sales. The DSD is not a bolt-on department like a BDC, raising expenses to cover a weakness in the floor sales team. It’s a conversion of a portion of the sales team to a younger, more technologically capable group of specialists able to close sales with today’s and tomorrow’s customers.
Why Digital Sales Departments Make You More Money
It should be apparent that DSDs offer dealerships a lot of value by virtue of the increased appointments and sales they generate. But DSDs are actually reducing cost as the sales increase:
- No appointment setter expense: You eliminate the cost of a BDC–about $100 per car sold—a critical cost saving in an era of margin compression.
- Less supervision. You usually have one manager for every four salespeople on the floor, because they’re needed for closing, TOs, desking, and general oversight. Because of the nature of the process required to be effective with the phone/Internet customer, most of the deal is completed before the prospect even gets to the store. In this scenario a single Team Leader is able to monitor and approve pricing and other deal guidelines for as many as 8 Product Specialists.
- Product Specialist Compensation. The recruits for this department are typically in their mid-20s and can be paid somewhat less per car sold (around $15 – $20) than the showroom floor salesperson. DSD Product Specialists should earn $45,000 to $55,000 annually on 12-14 units sold per month. If I’m 26 years old and making around 50K I’m the “richest kid on my block.”
Additional Sales and Lower Cost? Any Other DSD Benefits?
Because Millennials understand their peer group—now the largest generational cohort in the U.S.—and are skillful with the technology required to be successful in today’s marketplace, Millennials represents the ideal segment from which to hire dealership employees. Period. And hiring Millennials today means that 10 years down the road you’ll have younger tenured sales consultants with significant books of business and managers adept at both working with the auto buyer of the future as well as managing the sales consultants serving them. So setting up a DSD isn’t just a short-term play, it’s a strategy for long-term success.
Another advantage of the DSD is that it eliminates a lot of wasted time in the sales process. It gets customers through the front end of the sales process—greeting, needs assessment, product selection, price and financing discussion—while they are in the comfort of their homes, offices, the mall, or elsewhere. When the prospect comes to the showroom the sales process goes really fast…mostly a test drive, trade appraisal, and paperwork session with Finance. So one of the biggest customer complaints—a 3-4 hour (or more) sales process—is eliminated. The DSD is equally more efficient for the sales team, which is able to leverage phone, text, email, and social media communication to work with more prospects simultaneously and then schedule dealer visits at times convenient for both the customer and the dealership team.
How Do I Set Up My Own Digital Sales Department?
The Rikess Group is currently handling a great deal of recruiting for DSDs because it isn’t easy to attract Millennials to auto dealerships. Your typical 25-30 year old doesn’t have the patience to hang around the showroom waiting for the next guest to arrive or to bounce between customer and desk manager in your traditional command and control sales operation. And that’s what they’re expecting when they hear about sales openings at the local dealership. So you have to be effective in communicating the nature of the DSD Product Specialist position.
You also want to set a target of 50% women as Product Specialists. The U.S. population is 51% female, yet only 7% of the auto sales force is comprised of women. The Rikess Group is placing about 50% women in its DSD staffing efforts. Establishing this gender balance leads to increased sales as it accommodates the significant number of customers who prefer working with people they can relate to. Obviously, the same approach should be taken to reflect local community makeup and language preferences.
Finally, the dealership should institute training, compensation, career path, and work hour approaches that will encourage Millennial Product Specialists to do the best jobs they can for the dealership. The Rikess Group has templates available for just this purpose.
It’s About Time
The number one objection I hear when discussing DSDs is, “I’ve put so much effort into building a functional BDC that I’m not going to dismantle it!” Sounds like throwing good money after bad, if you ask me. But if you want to learn more about setting up a Digital Sales Department just email me at manderson@rikessgroup.com and we’ll set up a webinar.