"Cost" and "BDC" are two words that do not go together

By Ted Ings, Executive Director

… Though they seem to be common within the retail auto industry. 

Where Dealer Principals, GM’s and BDC managers are scratching their heads trying to figure out how a “Business Development Center” could be costing the dealer money, there could be hidden costs that they’re unaware of all of which can decrease the bottom line. 

Here are some of the most common overlooked costs associated with the BDC:

1. No Work-Flow Expectations Equals Lost Sales

In mystery shopping multiple dealerships for pricing it’s always fascinating to see the inconsistency in responses. Everything from not receiving a phone call, no email, to the question not being answered, which can cost the dealership hundreds of thousands of dollars in lost sales.  


The other issue is that - as a BDC Manager - it is hard to manage a team and hold them accountable if there are no clear guidelines and expectations as to how the customer is to be answered. That said, it is best practice to have a policy in place that outlines how the customer's inquiry is to be answered: 

Example of follow-up (first 24 hours):

Day One:     
    2 Phone Calls
    Email Message
        -Include three options
        -Why Buy Here
        -Ask for the Appointment
    Text Message 

Merely following a work-flow can increase not just the response rate, but it will increase sales! Not responding to the lead at all or - worse - days later is costing the dealer not only the deal, but the money spent on acquiring that lead! That does not say, however, that all leads will follow the above workflow. As each customer has their requirements. What it does offer, however, is a consistent approach in answering the leads. 

2. Not All Lead Sources Are Created Equally

Not all leads are created equal. If the BDC is given 600 leads - on the surface that all looks well and good. But the fact of the matter is it all depends on the source. The top priority source for the BDC (that has the best ROI) is arguably dealer website leads. Those customers have most likely chosen your dealership to make their purchase. That said, it is imperative that they are handled immediately. After that, you have your third party sources, whose quality tends to be drastically lower. 

For example, the average set rate for a dealership on Internet leads is just 25% for dealer website with it being lower for third-party leads. If out of the 600 leads 200 are third-party, which have less than a 10% closing rate, then it offers the notion that the ROI might not be there as the leads can cost as much as $50 depending on the third party source. 

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In addition to the fact that (depending on the pay plan) the BDC could make up to $35 | Sales Consultant $150 | & Lead Cost $54, which can wind up costing the dealer more than the average $600 to sell the vehicle! 


This is why it is imperative to have the BDC Managers regularly be reviewing lead cost vs. ROI ensuring that if the ROI is not there to first work with the Vendor, and if performance does not improve it may be best to part ways! Spending a fraction of that money on dealer website leads, which tend to have the strongest ROI. 

3. Non-Utilized Vendor Services

Now that you have a BDC it seems like a great idea to stack on the vendors for chat, texting, video, etc. And while the above vendors can, in fact, generate money for the dealership the groundwork has to be implemented. Otherwise, the dealer is spending thousands of dollars a month for a service that they are not using, which costs the dealership money. 


To ensure that the services are being used the BDC Manager needs to sit down with the GM & Owner and map out what each vendor is contributing to the business development side ensuring that the BDC Agents include it within their daily processes. This way the tool can be taken advantage of! All of which can positively impact the bottom line! 

Bottom Line: 

BDC’s have more costs than what people often realize. Where It is not to say that you do not need a BDC. As the BDC can be very lucrative depending on how it is set up and what their responsibilities are! What this does offer, though is that if you are adding additional services, you need to make sure they are being utilized and that there is an ROI. For those who look on the surface, take a moment and look at the historical performance for a vendor within the CRM. Look to see how many sales were yielded from each source.