The BDC Alchemist Analyzes What You Can Learn from CarVana’s Model in Today’s Dealership

By: Whitney Norrad   |   24 Sep 2020
Kijiji Dealer Talk series

Shawn Armorer, The BDC Alchemist, has perfected a business development process that truly works and has made him well-known within our industry. During today’s event, Shawn, Michael and event guests discussed this new BDC model in our current reality, as well as how we can learn from CarVana as a unique type of BDC.

CarVana’s model “removes the traditional dealership structure and replaces it with technology and exceptional customer service,” according to their website.

Let’s consider this while analyzing how people play an important role in that experience.

 

Carvana as a BDC

CarVana has taken out the middleman, which is fine, says Shawn, because that’s their business model. This doesn’t need to discredit the modern dealership, and it doesn’t mean that having a rooftop is poor form.

CarVana has agents that virtually work with customers to pull them all the way through their deal, similar to, and based on the traditional dealership experience. There truly isn’t a magic coin that grabs you a vehicle.

What this analysis and comparison means is that we need to create amazing experiences within our rooftop-based environment.

 

Defining a Business Development Centre

Shawn defines a BDC as a way to provide a consistent flow of traffic to your sales and service departments. This is something that CarVana presently does, but only as it relates to sales and financing: not service or parts. This is an advantage for our rooftop-based model. Why? Because if we can get customers in the door for service, we have the opportunity to win their future purchases by building a positive relationship.

Shawn brings four points to light that a BDC should aim to achieve:

1. Allow for consistent communication

2. Work towards improving that communication

3. Improve CSI, based on that communication

4. Drive retention through all business channels by virtue of communication

Like FlexDealer, Shawn is a fan of communication.

What should this look like? Optimally, one centralized person or department that takes all incoming communication and threads it into the dealership. All of these touchpoints should be driven by the culture and personality of the dealership.

 

Dealer Community Questions:

Is the middleman the BDC?
No, CarVana acts as a large business development centre that is carried out virtually. It’s different from a dealership because it doesn’t operate in a traditional brick and mortar style of environment, but leverages the couch-to-customer relationship more heavily than most dealerships.

From the outside, it looks as if CarVana removes the salesperson (the traditional “middleman”) to go digital, but in reality they have agents that work with the customers through the process.

Does the quality of the BDC depend on the service of the agents/salespeople, or how the lead process is handled?
A BDC is an additive to a dealership: it’s there to enhance the overall performance of the business. A BDC’s goal should be to bring all of the departments together to succeed, to build a culture and to create a winning environment for customers.

It’s all about culture at the end of the day.

Let’s talk about the issue of bandwidth:

Looking at roles such as that of a marketing director, ownership often doesn’t know how many things they’ve put on the plate of that person. The BDC should help to connect departments and streamline processes, not the other way around. The BDC should be involved in marketing and marketing should speak to, and through the BDC. If we properly manage each of these roles, bandwidth will be distributed appropriately and individuals will be set up for success.

Did CarVana create a new niche, or take advantage of customers that dealerships drove away by not innovating?

Likely, the latter, and it’s an important question that hinges on customer experience.

With the dealership model, we have the opportunity to create an enjoyable environment with real people where those people can grow. We can grow as a business, as customers and employees. How do we do that? Through culture: an environment of trust and safety.

If we create an environment that people want to be a part of, then people will come (or come back).

 

“Managers do things right, leaders do the right things”

Anonymous

 

What can I do today to start establishing a new culture?

Shawn would recommend redefining what they want to achieve, or as Michael would put it: your definition of success.

A simple and realistic place to start is that of having a conversation. If you bring in employees and department heads to create a more linear and less vertical decision making process, this will allow you to create results and make more money.

How? Money is a result, and the people in the most direct control of that result are your front-line, customer-facing staff. This can look like your receptionist, your salesperson, and anyone else in your business.

Can an experienced BDC handle leads from multiple rooftops simultaneously?

Yes: it all comes to economies of scale. If we use the example of an internet lead, people often know a great deal of information about the vehicle already. At that point, we need to know what we’re truly qualifying them for. Questions like “What is the car for?” can enhance the relationship while also helping to ensure the customer is truly qualified. These questions can be asked by the BDC for multiple rooftops, as long as that BDC understands how these rooftops and brands are aligned.

Are dealerships getting fatigued with all of the outbound touchpoints?

We need to know how to contact the customer in the first place; there’s no cold-calling here. We’re answering them via the methods they chose to interact with us. Shawn uses marketing spend to distribute vehicles across multiple channels. It’s part of a BDC’s duty to serve these customers. If they say they’re bought somewhere else, then that’s when it’s the BDC’s duty to listen to this customer’s request.
 

Need help managing your digital touchpoints?

LET’S FIGURE IT OUT TOGETHER

 

What structure works best for BDCs?

If the BDC employees are hourly with a bonus structure as an incentive, that structure allows for accountability and alignment between the two departments, and it allows for a relaxed but committed environment.
 

What are we looking for when building a BDC team?

Staffing a BDC requires the first and primary person to be a manager or director. This person will create the structure of the department and analyze the data: they are putting in the legwork up front. As we bring on new employees, their onboarding plan and career path should roughly look like:

0-3 years: that person should be a BDC agent, keen, motivated, and coachable.

3-5 years: this person should be self-motivated and career-focused, committed to the role and looking to make this a career for the long-term.

5-8 years: this person should be a BDC manager, understanding of the technology that makes a BDC, a deep-rooted understanding of each of the business units and be incredibly data-driven.

Employers need to open a conversation with these people, to determine if they fit into the culture being built - that is what matters more than almost everything else.

If most of your outgoing calls are to existing customers, where do you find new ones?

New customers should come from your existing customers and from working with your other departments. 30 service appointments today might mean 30 sales opportunities for your team. A dealer needs to be creative in synchronizing departments to create new opportunities.
 

Where to Get Started, Today, to Build a BDC

Shawn shares these four simple steps to creating a BDC with a model for growth:

1. The admittance of ignorance: don’t be cynical about it, but simply realize that there is a change in mindset that you can take, and there is a positive reason for change.

2. Take a good look at your culture and organization, and define what you want to achieve with this change.

3. Align departments so that each one understands how, and why, they work together.

4. Get buy-in (check out this episode of The DealerPlaybook podcast for some insights on how to do just that) from your team.

“Seldomly do we get up and say ‘ah, I really want to fail today,’” says Shawn, as he shares that it’s typically not a direct fault of your people, but how the culture is built. If they understand the impact on their own bottom line, their outcomes, and their experience, then they will be more bought-in and committed to succeeding.

 

Are you ready to succeed?

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