Car dealerships: VBDC vs. BDC – Should You Outsource or Not?

When it comes to managing inbound internet leads, we’ve seen everything. From very efficient team to salespeople dumping 1 day old leads in the trash can. This is the main reason why a lot of dealerships have decided to go for a Virtual Business Development Center (VBDC).

But why is it so hard for car dealers today to build a profitable business development center (BDC)?

Whether it’s through the sales team or a dedicated department, it’s a huge can of worms. You must be prepared to open it, and you’ll feel you’ll never see the end of it.

What is a BDC?

Before choosing if a BDC is right for your dealership, let’s explore what exactly IS a business development center. A dealership BDC (business development center) by definition is very large and can mean many things for you. 

Some dealerships use their BDC for sales, for service or both.

Business development centers are also more common inside medium to large size groups because of the overhead cost they come with.

Your BDC is currently managing inbound internet leads and following up with potentials customers for X amount of days. Others will use the BDC to renew existing clients faster, book special events or to enhance the service department activity.

Whatever you might be doing or thinking about doing in your BDC, the goal is the same: Streamline customer nurturing & generate more revenue through qualified traffic in your showroom. 

The Role of a BDC

A BDC can do a lot of things for a dealership or a dealer group. Depending on the size, goals and vision of the management team, this can be a very powerful tool for your business.

It can help generating more new clients working with new & used car leads. It can also make sure the renewals (lease & finance) are handled properly & in a timely manner. Both inbound and outbound roles are very important and can help you increase your sales in a big way.

The BDC is also relieving many aspects of the online retail process that’s not matching most salespeople DNA. The opportunity that’s not live in the showroom can sometimes be intangible for most sales people and this is a challenge for every dealership.

Let’s go over a few key things a BDC can help you manage:

Reduce Response Time

It’s no news that response time is one of the top KPIs when it comes to new leads. It applies for every type too: new car, used car, finance and even service. We as consumers are expecting a prompt response when we submit an information request.

This is why it’s important that your team handle a new opportunity with priority and answer quickly. Plus, pretty much every OEMs are on your back consistently trying to get you to reduce your response time on new leads.

From our experience working with hundreds of dealerships, showroom floor teams composed of salespeople usually struggle to keep a response time under 40 minutes on average.

It consistently breaks when busy times come such as a private sale or event. Leads are put on hold like they don’t exist anymore, sometimes for a few days and become the number 1 reason for hair loss in managers. 😅

BDC agents, vs salespeople in your showroom, are more available to take incoming leads. A bigger BDC with multiple agents ensures that someone is available to grab the lead right away and answer promptly. Many BDC teams are also equipped with high end CRMs pulling templates based on customer intent.

Take Inbound calls

Most managers will agree with the fact that inbound calls are though to handle in a dealership. They’ll come in once in a while, catch one of your product specialist off-guard with a series of well prepared questions.

The result is very disappointing in many cases. Most car salespeople are usually good face to face but getting a prospect to come in is a bit harder. Especially when it comes to new car shoppers.

At least on the used car side you can apply the urgency principle, which is harder to pull off when you have an “unlimited supply” on the lot.

Plus, aside of usually poor performance on the phone, good luck tracking those calls in your expensive CRM because most salespeople won’t bother to log it in if they believe the prospect was just a virtual tire kicker.

This is yet another spot where your customer acquisition cost will get a bump.

This is why more and more BDCs accross the country are now managing inbound sales call. They are ready, sharp and they have inbound calling tracks to make sure they close the appointment at the highest levels.

They are usually better to enter the incoming call in the CRM and follow up for a longer period.

Improve Consistency

Sales floors can be hectic places. Dealers are struggling maintaining a good and consistent response rate but also contact rates and follow ups.

If there’s one thing that’s crystal clear for us, it’s that consistency is very hard to achieve for showroom teams, let alone peak performance.

Stats might be impressive this week, but the next time you have a private sale or your top people are off, you’ll hit a slump.

Plus, not every sales reps will want to answer the phone after certain hours, or at night time. It’s the reality and although it’s understandable, it has a direct impact on your business.

Shoppers are browsing your site at every hour of the day, you must be prepared to answer them. Some say a chat will fix this, but you’ll be up against the same issue to be honest.

A BDC on the other hand can make your inbound lead & phone process smoother and mort consistent. A large BDC with many agents will also ensure availability at all times for incoming requests.

BDCs: Let’s Talk Money

But BDCs are different from sales team in a big way. It is a fixed expense for a car dealership and we can agree most of you are fighting to keep theses costs low, not increase them…

Sure you may have built a pay plan the involves bonuses but for most of us, it’s really hard to tie a fixed expense like a BDC to sales.

Moreover, this expense will fluctuate when some of them leaves your company because they are bored or tired of doing the same thing over and over again.

Holding a profitable BDC is a true challenge for car dealerships today. You are struggling to find A players while paying C grade pay.

I mean I get it, you want to make the numbers work. It’s even harder to find good people, especially in dense urban areas where the cost of living is high.

The thing is, a BDC is on the cost side and not on the revenue generating side of your business. No matter how you structure it.

It’s there, wether you make sales or not.

So let’s see if a BDC could be good for your dealership or if you should take another route.

We met with hundreds of dealers by now, and we thought it would be nice to share the true impact of a BDC on a dealership’s P&L statement.


Car Dealers BDCs: Is it worth it?

Everyone knows a BDC is expensive. When you’re done with the agents, director, onboarding training, CRM tool & office miscellaneous expenses, you’ll be shocked at how much this really costs. Do the math right now, it’s crazy!

Most dealerships are really struggling to make it work financially, especially single dealerships & small groups. As for large groups, we’ve seen some BDC payroll exceeding the million dollar mark many times.

You’ll also need the space to locate a small team of agents where they are happy to call all your prospects and do the best they can to make them come in.

Plus, you’ll need to make sure your BDC team is well trained and performing at their maximum.

We broke down the BDC money question in 4 parts where we’ll dissect where a dealership can bleed or make bank.

A) Payroll

Let’s take a 5 dealership group with 5 BDC agents and 1 BDC director. As you know, pay can vary but we’ll take averages here. In this example, we have a strong BDC handling every aspect of sales with base + performance bonus pay.

1 BDC director = $65,000/year
5 BDC agents = $50,000/year

Total yearly cost of BDC staff = $315,000/year 💵

Total monthly cost of BDC staff = $26,250/month 💵

or a total of $5,250 per dealership if we split everything up evenly (which never makes everyone happy by the way!)

That’s a lot of money to spend every month without any guarantee this will bring more revenue in.

Then you have to insert this cost somewhere when you’re trying to figure out what’s your customer acquisition cost.

For some, it’s straight out more money for the BDC then their monthly advertising budget.

Scary right. 😨

But there’s more!

B) Tools

Dealership BDCs are a costly add-on to any single dealership or group in terms of payroll, but even more when you’re done adding up all tools they’ll need:

These things wear out, break and cost money to replace.

  • Phone system
  • Headsets
  • Computer
  • Furniture
  • Office space
  • Miscellaneous supplies

C) Office Space & Real Estate

The most important part of this list is the office space. You’ll have to make sure your employees are comfortable and working in a nice environment.

After all, you’re expecting the best out of them. Don’t even think about setting a BDC somewhere in the shop, too much noise. 🤔

Don’t send them to the basement either, you’ll need the best out of them at every moment to ensure your operation gets profitable.

This means you’ll need to find your BDC a nice spot in your dealership’s showroom or on the second floor. Either way, please let them see outside!

The issue is, not all of you will have this spare room lying around.

I’ve recently worked with a dealer group going over their OEM’s image program and they ended up ADDING a full level to their dealership because they wanted to make room for the BDC.

There are many ways to do the math here and justify the numbers here but holy 💩, talk about adding some overhead!

D) Training

The last but not the least.

You don’t have to have a BDC to understand what I’m about to say.

A BDC is a real money pit when it comes to training. 💵 🔥 💵 🔥 💵

You’ll want to improve inbound and outbound phone calls, email responses, email marketing, selling over the phone.

At times, your team will do great and all will be smooth sailing. But suddenly, your best asset leaves for a showroom position because they figured out how to bring people in, might as well close the deal themselves and make 3 X on the commission!

🤬

Then 4 weeks later, another one voes on maternity leave. That’s awesome but youre now down to 3 agents instead of 5 and your customer backlog is now crushing your team.

🤬 🤬

You have to cut down on the variety of tasks and consciously leave money on the table. Ouch.

There goes the unsold trafic calls and email marketing!

Next step is to hire 2 people to fill in the spots, as soon as possible.

You might be lucky and find some great people quickly, maybe you had a few resumes on your desk already.

Once they’re in, 3 things will happen :

  • They’ll need coaching on how to embrace your business style and track
  • They’ll need training on the various system you’re using: CRM, inside chat, email…
  • They’ll start handling leads but also fumble most of them. But it’s part of the game so you’ll have to consciously drop appointments and sales as you’re training your team.

Is it worth it?

Now, most of you have a target cost of acquisition, often in the range of $200-$400 depending on what you sell, your location, your brand and your current sitution.

With your $9,600 investment, this means you must acquire 48 clients that went through your BDC’s funnel alone. This would give you a $200 cost per sale.

48 sales, every month.

Ok, it might not be much to some of you but remember we only have 5 agents here. Most of them can’t manage more than 200 new leads per month, including backlog.

The average dealership would require 50 (200 x 25%) appointments per agent monthly. This would give you a chance to close 12 sales.

But wait, don’t you see something is wrong here?

Marketing dollars, we forgot them! Crap, we have to start over…

As you can see, making the numbers work require a nearly perfect operations, on a yearly basis to make it work on the balance sheet.