In Part 1 of our exploration of the Business Development Assessment (BDA), we highlighted the key elements necessary for conducting the BDA in preparation for the close. Our goal with the BDA is for conquest - displacing a dealer's existing provider by front loading a comprehensive evaluation of the dealer's business and then presenting the findings in such a way that the client is compelled to make a change.

As can be predicted during the course of an evaluation, numerous deficiencies in the dealer's operation will be exposed. You may even find almost every department in the dealership is chronically underperforming compared to other dealerships, morale is poor, process is nonexistent, paperwork is sloppy, and the employees only familiarity with CSI is a TV show. But somehow vehicles get delivered and repaired.

Or, the place positively hums with contagious excitement and enthusiasm and it makes you wonder why you ever left retail! Such is the disparity we find every day visiting dealerships. The good news is, there is opportunity for the serious development agent in both cases.

The Presentation

For there to be any chance of displacing an existing provider when presenting the BDA's findings, the meeting with the dealer principal must be private. You will be discussing financial statements, pay plans, and personnel. Details of the dealer's enrollment in any sort of participation program (reinsurance) will be discussed. Packs added to F&I products, if any, may be on the agenda. For these reasons and more, it is crucial that the initial presentation be with the decision maker alone, prior to bringing in other key personnel for buy-in.

AE tapped the knowledge and experience of Jeff McHugh, VP Florida Region for The Providence Group, a Richmond, VA based agency that does business in multiple states. Jeff has conducted over fifty BDAs on behalf of OEMs and The Providence Group, and has consistently proven the ability to convert a prospective dealer into a client utilizing the BDA.

"A good place to start," states McHugh, "is to ask the dealer what his expectations were when he agreed to the analysis." What does he thinks are his strong points? Analysis usually shows that what the dealer thinks he is good at does not translate, nor is it backed up by facts.

Simple questions posed to his sales and management staff in surveys like, "Why should I buy a car from your dealership?" often differ greatly from how the dealer would answer that same question. Focus on what the dealer thinks is going on, the answers to survey questions which dispute that belief, and the fact that there exists a disconnect: the dealership is not on the same page. It is not uncommon that internal reporting provided to the dealer from sales and F&I are usually more favorably reported than what his own financial statements would indicate.

This is the moment when tough love comes into play and the agent tells the dealer, "Whether you like it or not, it starts with you." Now that the dealer has had a reality check of the first magnitude, it is time to soften the landing with a clearly defined action plan custom tailored to address a particular dealership's deficiencies.

It begins with the dealer's strong desire for success. "You have to get the dealer's buy-in," firmly states McHugh. The process through which you get that commitment begins with a regimen of training, monitoring, and development.

"Since our development is typically F&I-centric, getting the communication and support from front-end management firing on all cylinders will be a major focus of our efforts. We want to create an environment where F&I can be successful, where sales and F&I are working together instead of at cross currents. This must be articulated to the dealer."

Getting the entire sales staff to adhere to the proper solicitation process is the next area to address. Sales people, service advisors, and F&I managers should all know how to greet customers, the unique value propositions of the dealership, and a defined process to ask a customer to participate in all of the benefits the dealership has to offer.

The dealer must offer his clients an assortment of customer centered benefits. "We do not mention the word 'products' when referring to what is offered in finance," confirms McHugh, "we refer to them as ownership enhancing benefits."

Most dealers know where their weaknesses are regarding personnel. A properly selected and motivated staff is another discussion that must take place with the dealer, but recommending change at this point is counterproductive. McHugh generally offers to work with and attempt to develop an under-performing F&I manager with the dealer's commitment to re-evaluate that personnel choice at a specific point in the future.

The findings, reports, graphs, lost profit analysis, results of surveys, proposal etc... should be organized and bound to present to the dealer with copies for each of the team members that will be involved in the deal. This document will then become a reference and a component for benchmark meetings going forward.

The lost profit analysis is a comparison of the dealer's performance metrics compared to the "average" of the agency's other development stores of similar size, franchise, and demographics. McHugh begins the conversation with, "To get to the average of similar development stores that we are involved with would represent an increase for you in PVR of $200, a service contract penetration increase of 20%, and a product count per delivery approaching two. Based on your average sales volume for the last twelve months, it appears you are leaving [x amount of dollars] on the table every month."

The Close

"We are very careful here," states McHugh, "to be conservative with our projections - we want to under promise and over deliver. We may be certain that we can dramatically affect the dealer's business in a very short time, but with the ups and downs of month-to-month sales, we are trying to deliver positive results on an annual basis."

McHugh goes on to say that during the presentation, the agent is not selling, just talking. More than fifty times he has asked a dealer, "Do you want to continue with the same results, or would you like to see a change?" The dealer, at this point, knows that committing to change will include switching from his current product provider in exchange for the agent's development.

There are, however, deals where an agent charges a fee for development without displacing product, often in conjunction with an OEM service contract provider. This type of deal does not preclude the agent from installing other products that are not offered by the OEM.

How many agents have considered fee based development? It could be a viable option when displacing product is not practical for the dealer due to existing relationships and commitments, but is a very real revenue opportunity for the agent.

Wrapping up the BDA presentation is the accountability element of any serious development plan. These would include quarterly benchmark meetings, comparing actual results with pre-determined projections agreed upon by management. In addition, Instituting a daily save-a-deal meeting and making them a part of the dealership culture, and providing for product contests and rewards programs can assist with this accountability.

Some agencies, depending on dealership volume, include as part of their development package electronic tracking software (like StoneEagle's SEcureMetrics). The ability for dealership personnel to have daily, monthly and annual sales statistics at their fingertips, plus the ability for the agent to access this data remotely, is a key factor in making any development effort more efficient and productive. Inspect what you expect.

When asked what the single most important thing an agent can do for a BDA prospect to succeed is, McHugh responded with a resounding, "The agent must deliver on his promises and commit to them, no matter the size of the deal. It is a process, not an event. Over time, if you are truly committed to the dealer's success, the results are always positive."