April 06, 2001 10:47:12
The BDC, It's Not Just About Relationships --- It's About Survival.
President of Dynamic Marketing Strategies
Perhaps it's time to give another spin to the question "Why do I need a Business Development Center?" Equally important is the question "What are the consequences of not installing a Business Development Center?"
Before we can truly relate to the answers, we must first recognize that a Business Development Center by itself is not the only answer to the challenges a dealer faces regarding the dealership customer relationship. In order to make a Business Development Center truly work for a dealership the dealership must recognize that a cultural change is necessary. A change, that will transform the dealership from being reactive to proactive. By itself this seems simple. However, this is not as easy as it may seem. The opinion of many dealers is that they are proactive now. The reason they feel this way is that they market as heavily as they do. Yes they are spending a lot of money and yes many of them are getting deals. However, they are not necessarily developing long term relationships. Typically the result is that they are forced to continue (in many cases increase) their heavy spending in marketing to attract the very same people they sold, serviced or worked with in the past. Every dealer I have ever spoken with understands the importance of building quality relationships with every opportunity/customer they come in contact with. The common mistake that is made is that this relationship building is left to the sales people and the service writers. Since these positions may well be those with the highest turnover, this is where the problem begins.
Additionally, we see many companies entering the automotive marketplace stating that they have better relationships with the dealer's customers than the dealers do. And in many cases the dealer's excel. Sometimes it's a buying/referral service and in other cases it may even be the manufacturer or their retail network. The latest entries in this arena are using the Internet as their leverage. In my opinion they have no better relationship with the customer that the local dealer. However, they may have deeper pockets, which enables them to market heavier than the local dealer. If allowed to continue this could create a market where only those dealers with extremely high advertising budgets could survive. If this is the case we will most likely continue to fail in developing quality relationships. Potentially, all we will see is an increase in expense to the dealer, with little increase if any in volume. The typical selling feature to the dealer is that they will experience additional volume. Logically speaking, where will this additional volume come from? Sure you may see a short term increase. However, what will you do when another buying/referral service pops up? Many dealers today believe they can get a competitive advantage over another dealer simply by joining one of the many buying/referral services. An interesting question may be "are dealers really getting a competitive advantage, or are they fostering an environment that will turn dealers into buying/referral service junkies".
It is my opinion that dealers are in a significantly better position, and are better equipped and qualified to develop quality relationships with the customer than these outsiders. However, to do so the dealership as a whole, must be committed to getting closer to the customer. Additionally, they must recognize that in doing so, the relationship building that is necessary can not, and should not be left solely to their sales force and service writers. Yes this is a philosophical and cultural change. However, in business, when it come to change you only have two choices: mange it or it will manage you. Lee Iaccoca may have said it best when he said "In the car business you either Lead, Follow or Get Out of The Way". Well it's that time again and I believe the independent dealer can survive and in-fact flourish. However this will not happen by accident. Success will come from proper planning as well as a strategic plan that calls for a concerted effort to get closer to the customer. What is needed is a plan, which will promote and develop the dealership as the ultimate brand. In the past the dealer spent his or her time, effort and economic resources promoting the dealership as well as the vehicles they carry. The manufacturer worried about the franchise and the product. Today I hear more about how the dealers and the factory will work together promoting the franchise and the products. Where does the dealership fit in this equation? I have even heard talk where the manufacturer will dictate how large the dealership name can be, on the dealerships own letterhead. It is beginning to appear that the factory has forgotten that the dealers played a major role in their financial success. It wasn't simply the product. It is my opinion that the manufacturer should be the one promoting the franchise and the products and the dealers should be allowed to promote their dealerships as they see fit. Having said and vented this will not change the fact that the manufacturers hold an extremely large economic stick over the dealers head. Failing to conform to the factory wishes could cost a dealer considerable sums. As a result, dealers will do, as they must to survive. However, it should not be forgotten that the manufacturers are notorious for new programs and changes. It should also be remembered that it will be, as it has in the past, the responsibility of the dealers to pick up the pieces when and if these new factory programs fail. It is with this in mind that a dealer should be working franticly to develop the necessary database to enable them to better communicate with their customers. To do this effectively they must have a true quality relationship. This is why I feel the dealership of the future will have a fully operational Business Development Center.
I can not remember a time in this business where ownership of the customer was more important. Yes it has always been important. However, the battles in the past have typically been with other dealers. Today it's buying/referral services, so-called Internet lead generators and in some markets retail arms of the manufacturer. What was once sacred territory appears to be open ground. The question of "whose customer is it" has never been so unclear. If you believe the people who call your dealership, walk into your showroom and live in your market are your customers, you must be prepared to do what is necessary to gain and keep control of them. Since relationship building is the primary goal and mission of a properly installed Business Development Center it is difficult at best to argue their existence.
In the past there was comfort in knowing that the manufacturer would share any and all information they could with a dealer regarding potential customers of the dealership. Today I do not believe dealers are quite as comfortable. One can only wonder what the manufacturer would, could and will do with a lead they get. Additionally, can a dealer be absolutely certain that their customer list will never get into the hands of the manufacturer's retail network, or a competing retailer that the manufacturer has partnered up with. Can a dealer be certain that a factory person, who has access to their customer list, will never be assigned to a position with a competing retail network? Add in the issues of a dealerships corporate strategy and the concerns become even greater. To complicate matters further consider this hypothetical example. A factory employee is in possession of confidential dealership information i.e.: customer lists, marketing strategies etc. Is it possible for a conflict of interest to exist if they share this information with the manufacturer's retail network? Is it possible for the manufacturer to feel a conflict of interest exists should the factory employee withhold this information from the company who actually signs his or her paycheck? Additionally, add in the fact that your manufacturer may be partnering up with one or more of your nearest competitors and there is significant reason for concern.
"Whose customer is it?" may turn out to be the biggest question of the year. The possibility exists that a quality database may become one of your most important assets. Fear of your database may become one of your greatest assests. Ponder this. If the manufacturer knew you had a massive database, which included detailed information for each customer in it. How quick would they be to invade your market? What fear would they have that you might sell it to one of their competitors? I believe that today's dealers are faced with unique challenges. Is there really any dealer left who is completely convinced that their manufacturer will never be their competitor? Please note that I use the word never. While it may seem that I'm bashing the factory, this is not my intent. I simply feel the manufacturer should stick to building the vehicles and the dealers should remain the retailers. It will be interesting to see the response of the manufacturers when a major retail group partners up with a different manufacturer or becomes a manufacturer themselves. Will they feel as betrayed as I suspect some dealers do today.
When it come to success, how you plan to compete in this environment will definitely become the deciding factor. Getting closer to the customer and embracing change will play a major role. The Business Development Center will simply be your tool. Plan its creation, execute its installation properly, and better and more knowledgeable relationships are sure to follow.
Forrest Scott is president of Dynamic Marketing Strategies, Inc. He is an internationally know speaker and industry expert in all areas of retail automotive sales. If you would like more information on this subject or would like to speak with him personally please feel free to email him at email@example.com or call him at Dynamic Marketing Strategies, Inc. 2012 N. Beech Daly Rd, Dearborn Heights, MI 48127 Toll Free 888-677-6629.