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 (BDC) by itself is not the only answer to the challenges a dealer faces regarding the dealership-customer relationship. In order to make a BDC 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. This is not as simple as it may seem. The opinion of many dealers is that they are proactive because they market heavily. They are spending a lot of money and 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 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 leaving this relationship building to the sales people and the service writers. Since these positions are typically those with the highest turnover, this can be a major roadblock to your dealership's relationship building.
Additionally, we see many companies entering the automotive marketplace stating that they have better relationships with the dealers' customers than the dealers do. 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 than the local dealer. However, they may have deeper pockets, which enables them to market more heavily than the local dealer. If allowed to continue, this could create a market where only those dealers with extremely high advertising budgets can survive. If this is the case, you will most likely continue to fail in developing quality relationships. Potentially, all you 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. To do so, the dealership as a whole must be committed to getting closer to the customer. Additionally, you must recognize that the necessary relationship building cannot, and should not, be left solely to your sales force and service writers. Yes, this is a philosophical and cultural change. In business, however, when it comes to change you only have two choices: manage 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 franchised dealer can survive and flourish. 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 of the manufacturer dictating how large the dealership name can be on the dealership's own letterhead. It is beginning to appear that the factory has forgotten that their 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. This will not change the fact that the manufacturers hold an extremely large economic stick over dealers' heads. 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 these new factory programs fail. It is with this in mind that a dealer should be working frantically to develop the database necessary to better communicate with their customers. To do this effectively you must have a true quality relationship. That is why I feel the dealership of the future will have a fully operational Business Development Center.
I cannot remember a time in this business when ownership of the customer was more important. 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 BDC it is difficult to argue against their value.
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. And 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 the issues of a dealership's 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? 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 assets. 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?
How do you plan to compete in this environment? Getting closer to the customer and embracing change will play a major role. The Business Development Center will be one of your most valuable tools. Plan its creation and execute its installation properly. Better and more knowledgeable relationships with your customers are sure to follow.
Forrest Scott is President of Dynamic Marketing Strategies, Inc. If you have specific questions or require more information about this subject, please check the appropriate box on the reader response form on page 3. fscott@dealeronline.com