Pros and Cons of Internal vs. External BDCs

Many people assume that because I work with a company that provides BDC services, that I’m against internal BDCs. That’s actually not true. In some instances, it makes sense for a dealership to have an internal BDC.

Every dealership is different with its own unique processes and needs, so the decision really has to be made on a case by case basis.

Many dealers believe their in-house sales team should be able to handle all inbound and outbound sales calls, but not all salespeople possess the necessary personality traits to be successful on the phone, or they simply don’t have time to execute phone campaigns effectively.

The fact is, it takes an average of four attempts to get hold of a customer, and that’s with dialer software that predicts the best time of day to call. Most salespeople give up after two attempts.

Regardless of the reason, when calls are being mishandled or not getting made, it’s time to consider outsourcing to a BDC. Consider the pros and cons of using internal and external BDCs to decide which is best for you.

Advantages of Internal BDC

Relationship management: With an internal BDC, you’ll have more control over the relationship with the customer.
Dealership culture: Internal BDC agents will be more familiar with your dealership’s story and culture and how you want certain situations handled. This can result in a better customer experience.
Expertise: Internal BDC agents can get to know your product line and develop greater expertise than external BDC agents. This allows them to answer more product-related questions.
Technology: The nice thing about setting up an internal BDC is that the agents will have direct access to your CRM. This makes it easy to track all inbound and outbound calls, and measure metrics such as appointments set and vehicles sold, making ROI easy to determine.

Disadvantages of Internal BDC

Cost: Setting up an internal BDC can be financially prohibitive. Take an average store that sells 100 to 150 cars per month. Your BDC will handle from 400 to 1,000 calls per week, so you’ll need to hire four BDC agents and one manager. When you add in overhead, you’re looking at $10K to $12K per month, assuming your BDC is open seven days a week, 12 hours a day.
Personnel/training: Finding a good BDC manager is important if you want to run a successful BDC operation, but they can be hard to find. Same with your BDC staff; turnover rates can be high so you’re always recruiting, hiring and training.
Technology and operations: Do you have the technology and space to support an internal BDC? An internal BDC requires a significant investment in telephony software, and some dealerships just don’t have the space to set up a BDC.
Lack of flexibility: With an internal BDC your budget is set, so you’re limited to what four or five team members can do in terms of lead volume and inbound and outbound call handling. One BDC agent can typically handle about 150 to 200 leads per month.
Lack of after-hours support: It doesn’t make financial sense to keep an internal BDC open 24 hours a day. Most internal BDCs are open about 12 hours a day, which means you’re still going to miss after-hours calls.
Lead ownership: When you set up an internal BDC, you have to very clear about who owns the lead and the customer. If a BDC agent touches a customer before they enter the dealership, it should be marked in the CRM and the BDC agent should get some of the credit and/or commission. There’s always the risk of ongoing conflict between the BDC and sales teams.

Advantages of Outsourcing to An External BDC

Flexibility: Depending on what’s going on in your dealership, an external BDC has immediate scalability. So, if there’s a change in the market, or you want to run several campaigns at once, an external BDC can scale to your needs accordingly.
Cost: With an external BDC, you’ll spend about 25 to 30% less than you’ll spend on an internal BDC, and that’s for 24/7 coverage compared with 12/7 coverage.
Better data collection: Customers will often share information with a third-party caller that they won’t share with the dealership. The fact is, about 20% of customers leave your dealership because they don’t like the salesperson, or had some other negative experience. They won’t tell that to the salesperson or even another caller from the dealership, but 97% of callers will answer a survey and share that information with a third party.

Disadvantages of Outsourcing to An External BDC

Offshore solutions: Many external BDCs are offshore, which potentially means language barriers and frustrated customers. If you do decide to outsource, look for a BDC based in the U.S.
Process control: External BDCs have their own processes that might not match those of your dealership. This can be overcome with detailed process instructions, but there’s always the risk of occasional misunderstandings and finger-pointing when leads fall through the cracks.
Dealership culture: External BDC agents don’t know your story or culture and might not handle every situation the way you’d like them to.
Technology: Lack of CRM integration makes trackability and reporting difficult. You have to rely on the statistics that the BDC gives you and trust they’re correct. ROI is more difficult to measure.

Some dealerships prefer internal BDCs, and some dealers prefer to outsource. It might take some trial and error to figure out which is the right solution for your dealership. Many dealers determine a hybrid approach works best for their business. Only one thing is certain; inbound phone calls are still the best low-funnel leads, so make sure they’re handled properly.

Bill Wittenmyer