My Shift in the Call Centre

A User Story

I enter the PCI compliant cleanroom at eleven o’clock with only a quinoa bowl from Freshie’s, and log in to Salesforce on my locked down computer.  No cell phone, no scratch paper – and there are cameras.  I wave to Peter on Camera #1 and start to dial.  I do not have high hopes of reaching anyone in the middle of the workday.  Amid all the DNRs, I may catch an inbound call off of our direct mail campaign, or someone out on the floor may catch it while I am dialing.

I log in to the dialer and it presents my first call.  To save time, I hit “dial” and the phone rings while I paste the number into Salesforce and search for the Opportunity.  Our Cisco dialer has a predictive mode, but I am not using it.  For low volumes, preview dialing is supposed to be a better experience.  The Ministry of Commerce prefers it, too.  This number is guaranteed to be in Salesforce, with a prospect status, because the dialer file is generated nightly from the Opportunity table in Salesforce. 

Bonjour et félicitations pour votre achat d’un véhicule Nissan

My first call goes to voicemail, which is par for the course.  I recite the voicemail script, which I know by heart, and log the status in Salesforce.  I really wish the dialer could leave that damned message on its own.  I must recite it a hundred times a day.  I will dial this number three times before dropping it from the file, spread over a two-week period, in case my prospect is away on vacation.  Salesforce applies this business logic when it generates the dialer file. 

For the next few hours, I get voicemail, no answer, not interested, and never call me again, which I duly note in Salesforce.  This last category will be added to the phone number filtering logic, along with the Do Not Call list we purchased from the Ministry.  I recognize the next number.  Merde!  It’s Dave Duncan.  I try to cancel the call, but too late.

Dave proceeds to grill me about my affiliation with Nissan.  No, I do not work for your local dealer.  If I did, we would have an “existing business relationship” and we wouldn’t have to honor the DNC list.  No, I do not work for the factory, its captive, nor the captive’s department of protection products – but we are the one and only factory authorized direct marketer of said products.  That’s why it’s their number on your Caller ID. 

By six o’clock, I have a live prospect.  I alt-tab to my SPP system, which allows me to quote rates as well as set up a payment plan.  I also have a custom Product object in Salesforce which connects to the rating API, but I find it easier to work in SPP because most customers will want a payment plan anyway.  SPP calls the same API. 

Things are going well until my prospect insists upon seeing the contract.  I recite the talk track about cancellation and full refund within thirty days, but to no avail.  I can also email a specimen contract and we can review it right now while he’s on the line (better odds of closing).  I end up emailing a custom link, or PURL, from SPP that will open right to the rates and contract we discussed. 

I flag this one for callback in a few days.  It’s possible he will self-close on the SPP site, and then Salesforce will close the Opportunity automatically when it receives the file from SPP.  In any case, I now have an email address we can use for the next digital marketing campaign.  Speaking of digital marketing, whenever a voicemail greeting begins, “the Rogers mobile customer you’ve dialed,” I flag those as numbers to which the digital team can send text. 

My next prospect, I actually close on the call.  I am sitting in this fakakta cleanroom just in case I have to handle credit card information which, at last, I do.  My guy buys a 72-month plan, which I set up for 24 monthly payments on SPP.  Then, I download both contracts – the protection plan and the payment plan – and attach them to the Opportunity. 

Salesforce won’t close the Opportunity, though, for another day until it receives confirmation from SPP that all is well with the credit card.  If not, it will indicate that status, send an email, and I will have to call him back.  Once the Opportunity does close, as a win, Salesforce Connector will pick it up and Marketing Cloud will include both contracts in a direct mail welcome package, ending the Customer Journey. 

So, to summarize my workflow, I am manually pasting phone numbers into Salesforce and VINs into SPP.  Salesforce and SPP are each capable of rating and contracting via API, and the customer can check out with or without my assistance.  These tasks could be improved with some Computer Telephony Integration and an SPP interface.  Instead of sending data directly to SPP, all I really need is the logic to generate that PURL and then Salesforce could either launch it for me or send it to the customer as needed. 

At eight o’clock, the end of my shift, I doff my headset and run the job to generate tomorrow’s dialer file.  This is basically a query against the Opportunity table, applying the “next date to call” rules.  Without CTI, the best time to call is not supported.  Jeanette will have to pick those out of the comments manually.  Tomorrow is my day off. 

The Case for D2C

A while back, I wrote a survey of Direct to Consumer VSC Sales.  This was a “how to,” and today I am writing about the “why.”  The short version is that D2C is a large and unserved market.  Franchised dealers sell service contracts with 47% of new vehicles, which is great, but that leaves the other half unprotected. 

Add 6% to reported F&I gross, plus 4 to 5 times that amount for the backfile

Depending on which “touchpoint” you wish to pursue (see here) this market includes roughly 67 million vehicles.  That’s how many are on the road, less than six years old, with no coverage.  Dealers are the group best positioned to serve this market.  Of course, a dealer can only address his local share of the market, not the whole 67 million.  See Profit Opportunity, below.

To succeed with D2C, you must have an existing relationship with the customer.  That’s because success requires digital marketing, and anti-spam laws limit what you can do without a relationship.  For example, an OEM can email their customer a solicitation for their factory-label protection products, but a TPA cannot.

So, the dealer has the inside track.  He has the relationship, the contact info, and a service department to verify eligibility.  Plus, every additional VSC aids in service retention.  Depending on the dealer group, it may also have the other ingredients.  Here’s the parts list:

Direct to Consumer (D2C) Operation

  • An advanced CRM with the ability to run a scheduled, multichannel contact program.  Salesforce calls this a “customer journey.”
  • A source of premium finance, like SPP, Budco, or PayLink.  Dealers will already have one of these, for their instore F&I operation.
  • A call center, which could be the BDC, to participate in the selling journey and also to deal with issues around premium finance.
  • A branded website capable of presenting and selling the service contract, including Visa checkout and premium finance.
  • A service facility.  If you’re not a dealer (trying to cover all bases here) there are still things you can do with Pep Boys and mobile facilities like Pivet.

Depending on the dealer group.  Obviously, if you’re Lithia, you already have a finance arm which could (with training) handle bounced Visa charges.  They’ll need to comply with the PCI security standards.  Maybe that’s best left to PayLink. 

There is a host of such decisions, for which you will need expert assistance – but let’s get back to the “why.”  We are going to make a gross profit calculation in three steps:

Direct to Consumer (D2C) Profit Opportunity

  1. Compute the potential product gross that didn’t close with the vehicle sale.
  2. Estimate the likely D2C conversion rate.
  3. Add the backfile of customers from prior years.

Let’s look at AutoNation.  Sorry, NADA Average Dealer doesn’t provide enough detail.  Even the AutoNation data doesn’t provide much detail on product sales.  Still, we can draw some inferences using the 2019 annual report, industry norms, and these remarks from then-CEO Cheryl Miller.

AutoNation reported sales of 283,000 (new) and 246,000 (used) with F&I PVR of $1,904.  That’s the headline figure, including finance reserve.  Owing to adjustments, the figure in the annual report is a little higher, and the calculation based on Miller’s summary is a little lower.

The $1,350 (new) and $1,050 (used) are averages across all units.  We can infer that product gross was roughly $2,580 (blended) on 47% of units.  That leaves the other 280,000 vehicles unprotected, with a potential gross of $720 million, equal to 71% of AutoNation’s reported F&I gross.

You can use 75% of F&I gross as a rule of thumb.  In general, product gross is two-thirds of F&I gross, and this is derived from fewer than half of the vehicles sold (omitting ancillaries).  The ratio of D2C opportunity to instore penetration is 53/47 of the two-thirds, which makes 75%.   

This $720 million is the potential gross AutoNation left on the table in 2019.  Okay, that’s not fair.  It’s only on the table assuming every one of the D2C prospects will buy the product, which they won’t.  Most won’t, in fact.  The conversion rate is the product of three factors:

  • The number of contacts per customer, based on your touchpoints and your programmed journey.
  • The take rate, which is the percentage of people who take action by clicking the PURL link, scanning the QR code, or whatever.  The industry norm here is 2-5%
  • The close rate, which is the percentage of takers who are closed by the call center or self-close on the web site.  Expert closers can do 20-30%.  Remember, this is within the self-selected “takers.”

The conversion rate is what counts, but we break out the components for management purposes.  For instance, maybe the take rate is high but your closers are weak.  Success requires a lot of contacts, with compelling CTAs and good closers.

Let’s say we utilize all of our advantages as a dealer – an aggressive journey on all touchpoints – bringing our contacts to 10.  Multiply this by a conservative 20% close rate and 4% take rate.  This gives us a conversion rate of 8%. 

In our AutoNation example, this would mean roughly $58 million of additional gross.  All of this arithmetic generalizes, too.  Simply take reported F&I gross and multiply by 6% (8% of the 75%, above, makes 6%).  So, now I can crack the Lithia annual report with F&I gross of $580 million, and reckon that D2C could mean $35 million to them.

This incremental income recurs annually, since it’s based on one year’s volume – but we start the game with a backfile of unserved customers from prior years.  We might reasonably want to go back five years for new vehicle buyers and three years for used. 

AutoNation is a convenient example because they sell new and used in roughly equal parts, so this works out to (blended) four years’ worth of volume.  If your mix skews more toward new vehicles, then your backfile opportunity will be richer. 

In short, you can use the 6% rule to compute the annual recurring, and then add a one-time opportunity of 4 or 5 times that amount for the backfile.  This more than pays for setting up the operation.  So, is it worth the hassle to earn an extra 6% of F&I gross?  Ponder that next time you see the Car Shield ad on television.

Caution: Learning Curve Ahead

In last week’s episode, I warned that dealer groups proceeding aggressively into Digital Retail may suffer for it.  This has gotten some pushback.  Regular readers know that I have been a staunch proponent of Online F&I for many years.  Indeed, my work at PEN and F&I Express has done much to advance the cause. 

I gave this warning in the spirit of full disclosure, and to manage expectations.  Now I am in the awkward position of having to press my charge against a technology which I actually support.  If that sounds complicated, consider this:

Luddites – Veteran F&I Director Justin Gasman, quoted recently in Wards, says that F&I will never be totally digital.  “People who say that are from tech companies,” he quipped.  I call this the Luddite position but, in fairness, I am one of the tech guys he’s referring to.

Boosters – Cox Automotive regularly produces surveys with findings like: 63% of customers would be “more likely” to buy F&I products if they could learn about them online.  Coming from an opinion poll, this is mere boosterism. 

Realists – My position is somewhere between these extremes, hence the warning.  I was addressing the Big Six dealer groups, who are regularly ranked on F&I performance.  I do not want to be the consultant telling Mike Jackson to go all in, and then have to explain why he has slipped out of first place.

If you go to a dealer and say, “Hey, look, we’ve got this great solution, but the profitability is only half of what you had before,” that’s really going to slow down adoption.

Automotive News interviewed some realists last year, and they all share my cautious optimism.  The quote above is from Safe-Guard’s David Pryor.  The consensus goes something like this:

  1. Present F&I products online, early in the process, and include pricing.
  2. Use an API to select the right coverage, and AI to make recommendations.
  3. Experiment with (A/B test) various digital media.
  4. Integrate DR with your instore process, training, and metrics.

Roadster’s COVID-19 Dealer Impact Study found that dealers who already had Digital Retail saw improved gross, while the COVID adopters did not.  “Not a magic bullet,” it says, instead emphasizing the improved efficiency.  Other realists, as here, had the same experience.

Digital Retail is like any other new process.  There is risk, reward, and a learning curve.  That’s not too complicated.

DR and Public Dealer Groups

In today’s post, subtitled, “the good, the bad, and the ugly,” we look at where the Big Six public dealer groups stand on Digital Retail.  Some of them get it, some of them don’t, and others have missed the point.

“Once they start the process online, customers tend to buy a car at a much higher rate than … walking into our showroom” – Daryl Kenningham, Group 1

It’s not essential to spin up a distinct site, though many have taken this approach.  It’s a clever way to get in the same space as Carvana.  Thus, we have new brands Driveway, Clicklane, and Acceleride.  For example, you can enter Group 1’s DR process from either Acceleride or the Group 1 site. 

  • Penske – Penske started experimenting with DR way back in 2015 and something called Preferred Purchase.  Today, it’s still called Preferred Purchase, but it’s the DDC Accelerate system.
  • Group 1 – GP1 recently (2019) launched a Roadster implementation called Acceleride.  It is now selling more than 1,000 units per month, including new cars.  This is the top initiative in their investor deck, clearly showing management attention.
  • Asbury – Asbury was also an early adopter, starting with Drive (2016) and now their own Clicklane offering.  By my count, this is their third experiment – exactly what you want to see with digital transformation.
  • Lithia – Lithia has a branded DR site called Driveway which, unfortunately, requires users to create an account before entering the process.  As I wrote in Design Concepts for Online Car Buying, you don’t create an account until the customer is ready to save a deal.
  • AutoNation – AutoNation has made strategic investments in DR vendors like Vroom, and launched its own AutoNation Express in 2014.  As with Driveway, step one is a lead form.
  • Sonic – Sonic announced a plan to use Darwin but, alas, there is still no sign of DR on either the Sonic or EchoPark site.  Maybe the new eCommerce team will fix that. 

I can understand why new-car dealers might want to start with a lead form.  New cars are commodities, and vulnerable to price shopping.  This is where used-car dealers CarMax and Carvana have an advantage.  Otherwise, DR requires a strong commitment to price transparency.

Digital Retail is synergistic with modern sales practices, like one-touch and hybrid teams.  Sonic is the leader here, and has the highest used-car ratio, so you would expect them to have an edge.

Finally, it’s hard to sell protection products online.  Groups with growing DR penetration are likely to see reduced PVR.  This has long been a knock against Carvana.  Experts agree that the solution here is an AI-based “recommender.”