BDCs Must Be Profit (Not Cost) Centers
Today’s BDC is very different than the BDC of the past. Here’s how to make sure your current BDC turns over more profit, not more employees.
The BDC Of The Past
In the past, the primary reason BDCs failed was due to the fact that they weren’t successful at driving what I call “plus business,” or business that allows a store to sell more cars at higher grosses and with better CSI.
The problem was that after a quick BDC implementation, a dealership continued to sell the same amount after the BDC that it sold before it. The only difference was that now the store had additional compensation costs to deal with each month! Over time, dealers wised up and closed these ineffective “cost centers.”
Today’s BDC Is Not Dead. But Has It Improved?
Many of today’s BDCs are driving more “plus business” to their dealerships, generally due to better training, templates, talk tracks and overall direction. But they’re still a cost center, and they’re still being shuttered in 2014, just as they were in the past.
Implement A Sustainable Pay Plan
If you want your BDC to grow and provide you with incremental sales long-term and still maintain the integrity of your overall sales comp, then you don’t need to close your BDC: you need to create a sustainable pay plan within it.
Simply put, this is a pay plan that allows you to grow the BDC without killing your net profit. Here are the “must-haves” to a sustainable pay plan for a BDC:
- Pay the BDC on appointments that show, not on sold units and not hourly (though there is generally an hourly component to the BASE that a BDC agent will make). For most markets, a solid pay plan for an Appointment Coordinator (BDC agent) looks like this:
- $10-$12/hour in base pay that is a DRAW AGAINST COMMISSIONS.
- $50 commission for every VALID appointment that shows.
- What’s a valid appointment? Read this article: BDCs Must Have Strict Rules For What Counts As A Valid Appointment.
- $100 volume bonus for every 10 VALID appointments that show.
Pay the floor salesperson that CLOSES a BDC appointment a REDUCED COMMISSION. (Generally, this is a half commission with a full or half mark toward their volume bonus.)
A reduced commission for the floor salesperson is hard for most sales managers to swallow. You may want to argue something like, “My sales rep closed the deal; he did ALL THE WORK; so he deserves a full commission!”
No he did not, and no, he does not. He BARELY deserves the half commission you’re awarding him. Appointments today close at an extraordinary high rate (between 50-80%), so the most he can argue for is that he did half the work. If you run into this pushback, let your sales rep know that only once he’s ready to make the calls and set the appointments for himself, the more you’ll talk about giving him the entire deal.
Another Way To Look At It
One of your floor salespeople – let’s call him Bob – sets an appointment for a prospect tomorrow at 9:15 AM. Overnight, Bob becomes ill and asks Joe (a fellow floor salesperson) if he can take the 9:15 appointment. Joe agrees and sells the car. How much of this deal does Joe think he deserves?
Half, right? Joe looks at this as an evenly split deal with Bob. After all, Bob set the appointment, didn’t he? Why should Joe think he deserves only half when Bob set the appointment, but suddenly he deserves more than half when a 22-year-old young woman with a headset from the BDC made the appointment? It doesn’t make sense! Pay a split commission on appointments set by the BDC.
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