The 10 Minute Dealership: Building the Organization

October 2010

The arrival of a lead is the ‘Moment of Truth’. Best practice is to execute a multi-vehicle price quote right away every time, followed by a phone call in 10 minutes. The dealer who consistently delivers his customer a 10 minute call in response to an internet lead is best of breed: the “10 Minute Dealership”.

A dealership can invest in software tools that are readily available to achieve the immediate price quote back to the customer. But what about the 10 minute call? That’s tough to achieve. Leads come in when the internet staff is in a meeting, or reps are with customers, on test drives, off that day, and so forth. In the daily hubbub, it’s just hard to ensure that every lead, every time, gets a high-quality phone call response within 10 minutes.

Today I’d like to focus on organization structure. How can a dealership profitably solve for the 10 minute phone call response? How can you become a ’10 Minute Dealership’? The organizational options vary based on size of dealership.

The dealership with less than 100 leads faces the greatest challenge. Since lead conversion rates are about 12% if you have a strong process, a dealer with 100 leads has about 12 (sold deals per month) X $1800 (gross margin, front and back) = $21,600 a month to work with. Once you’ve paid for the direct costs of your ILM system ($600), your digital response management (DRM) solution ($800), your website ($1000), your leads ($300) and your salesperson ($3500), you have a variable margin of $15,400 left to contribute to everything else in the dealership including profit.

So how do you achieve the 10 minute call every time, given your one salesperson is off a couple days a week, can’t work from dawn to late evening and is often occupied with other responsibilities when leads arrive? The only solution is alternative coverage. Task the dealership receptionist to make ONE phone call attempt, within 10 minutes, on every lead that arrives during her shift. If she can’t reach the customer, she must leave a scripted message on voice mail, and alert the salesperson to follow up. If she reaches the customer, she must follow a defined script of questions leading to request for a test drive. Pay her $25 for every fulfilled appointment, and keep track of her calls to ensure they actually occur within 10 minutes at least 90% of the time during her shift. Of course, she can only work 40+ hours a week, and at times the floor traffic will impede her ability to make the call in 10 minutes. But even if 50% – 60% of leads get called in 10 minutes, that’s far better than the alternative. Do this, and you will have built an organization that can deliver a 12% conversion rate.

For a dealership between 100 – 300 leads, more options become available. At a 12% conversion rate, a dealership with 300 leads now has gross margin per month of about $64,800. Assuming you have invested in a full-featured CRM at $2500 a month, a DRM solution costing $2000 a month, a website that is $2000 a month, a third party leads budget of $2000 and a three-person internet sales team costing $10,500, you now have $45,800 remaining in variable margin. With 10-15 leads coming in every work day, you can afford a dedicated person ($2800 / month) whose job it is to make the first phone call. This person’s job is to be on alert the moment a lead arrives, ensure the DRM solution has sent its quote, then make the call to the customer in 10 minutes, following a phone script. One attempt, then the customer is referred to the internet sales rep for follow-up. Since this is only one person, there will be days when the 10 minute call doesn’t happen, but with 3 sales reps able to provide initial coverage when she’s not available and when they are, the success rate should be approaching 75% of all leads. Because you’ve brought up the percentage of leads receiving a quality first call, your conversion rate should be consistently north of 12%– perhaps 13% to 15%, depending on your third party lead volume.

For a dealership over 300 leads, you have the ability to build a dedicated internet BDC. With multiple people covering the hours from 8 AM – 8 PM 7 days a week, you ensure that 90% or more of your leads receive a first call within 10 minutes. If this team has been well trained to follow a carefully developed script, these calls will deliver the customer a powerful sales process every time. The team can also be employed for follow-up calls after the assigned salesperson has given up. This, combined with a thoughtful follow-up email marketing program, will deliver the optimal follow-up process, end to end, for every lead every time. The dealers that achieve this level of execution excellence are capable not just of driving their conversion rates into the 15%+ range, but also of expanding their lead buying and website / microsite optimization to drive lead count ever higher. The result can actually be a slight reduction in conversion rate, which is more than offset by substantially higher monthly unit sales. This ‘virtuous cycle’ of improved process, higher conversion rate, wider leads net via third party and website activity, lower conversion rate but higher unit sales is a huge profit engine that propels the best dealerships into internet leadership in their regions.

The key is to commit yourself to the immediate price quote and the 10 minute call. Once you are committed, you will build the organization that achieves it.  That’s the path to success.  That’s the 10 Minute Dealership.


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