Category: DMS

Why Dealers Get Stuck Using Outdated Technology

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The auto retail industry is made up of thousands of forward-thinking business people who have found success by adapting to changing environments. These industry leaders have endured downturns, adapted to imposing regulations, and evolved to become the results of natural selection in the marketplace. But when it comes to technology, even enterprising auto dealers can get stuck in their ways and afraid to change. The fear of change is real–and it seems even more real when your current DMS provider threatens to increase prices if you don’t resign or promises functionality ‘in the future.’

Fear of Change Management

With so many advancements in technology in recent years, many dealerships have become reluctant to switch their dealer management systems (DMS), despite the short-term and long-term benefits of upgrading. After all, technology touches every aspect of a dealer’s operations. And one wrong move could spell trouble for an entire business. In other words, with a decision as monumental as changing technologies, it’s easy to see why so many dealerships are apprehensive to make a move.

Fear of Losing Familiarity

Many dealerships are reluctant to change simply because they fear losing familiarity with their old systems and the effect that new technology might have on company culture. There’s no doubt that switching technologies has a huge impact on employees. Especially when dealerships have operated the same DMS for years, even decades, that technology, however outdated, becomes a part of the identity and culture of the business. And the idea of changing identities in the business world can be a frightening prospect.

Fear of Installation and Data Loss

For all intents and purposes, the DMS is the brains of a dealership’s business. It’s the glue that holds dealerships together. It harbors information so vital to the success and continuation of a business it could be fatal if the information isn’t converted seamlessly to a new system. Even if a different DMS would be better for business growth, many dealers are afraid to make the leap and can’t be bothered with a DMS install.

Getting Past the Fear

In truth, switching to a new DMS isn’t nearly as painful as most people think. In fact, most dealer groups report consistent satisfaction in several dimensions of operational improvement. These include efficiency gains, overhead savings, reporting advantages, improved customization, and faster financial closings.

As dealerships depend on their DMS platforms more than ever to stay profitable, those that find ways to leverage technology and take advantage of upcoming trends will outpace the competition and become the next generation of industry leaders.

If your dealership is interested in learning more about overcoming the fear of change, download our free guide, Overcoming the Fear of Technology Transition: Methods for Managing a Successful DMS Change.

Dealertrack DMS Helps Heritage Ford Navigate Uncertain Waters of Auto Sales

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After 20 years of service in the United States Navy, Bert Hodge, general manager at Heritage Ford in Southern Indiana, understands what it takes to manage complexity and risk. As a staff analyst commanding five different warships, Hodge learned that mission success is all about communication – the ability to share information seamlessly between people, ships, and stations.

Now, with his military experience as a foundation, Hodge has helped implement a similar philosophy at Heritage, where teamwork and a focus on communication has allowed the business to navigate the complex waters of the auto sales industry.

“The sea is an unforgiving environment,” Hodge said. “Whether venturing out alone or coordinating operations between multiple ships, there is a tremendous amount of risk and complexity. There are a number of different functions that have to be performed by different individuals that have to be properly coordinated. Being able to share information seamlessly between stations is critical. Mission success is derived from the fusion of those diverse information sources.”

“I find the same to be true for dealerships,” he continued. “Our mission is to provide value that our customers seek in purchasing, maintaining, and repairing vehicles. In doing so, my staff members perform a number of different functions that require close coordination.”

To help with this mission, Hodge and Heritage Ford needed a technology that could integrate people, processes, and products. And, in researching different DMS options, Hodge found that most products were great in concept, but failed in execution. But, with Dealertrack DMS, Heritage Ford found a provider that was as committed to communication, coordination, and the success of the dealership as its team members. Dealertrack DMS has allowed Heritage to integrate a number of different industry task-related software tools. And, with its simple interface and intuitive design, it keeps employees focused on customers instead of tech problems.

“I have been very careful to choose tools that allow information to flow freely,” Hodge said. “I want my staff to focus on helping our customers, not struggling with using the DMS.”

With a commitment to ongoing communication and support from Dealertrack, Hodge knows that, even in the complex and uncertain market of auto sales, Heritage Ford will continue to gain valuable insights from its information as needs evolve.

“In the past 5 years, there has been a tremendous change in markets,” Hodge said. “Increased competition has resulted in reduced margins. If I have the correct view of the industry, the pace of change will increase. Success will continue to come from insights derived from our data,” he added. “It is vital that (we’re) not hindered by (our) DMS.”

“For me, it’s nice not to have to worry about whether or not our most foundational tool, our DMS, will keep pace … and help us navigate the changes ahead.”

To learn more about Heritage Ford’s story and the value of technology integration within a dealership, read Dealertrack’s full case study.

A Dealership’s Digital Ecosystem: Insight into Technology of the Modern Franchise Dealer

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Did you know that the average car dealer needs 7 different technology solutions to run their dealership? The once simple and straightforward business of selling cars has transformed into a complex ecosystem of interconnected and interdependent parts. And while technology has certainly become indispensable, there’s also room for improvement at many dealerships.

Dealer Dissatisfaction

In a recent survey of more than 200 senior leaders at different franchise dealerships, only 20% of respondents had no complaints about their current technology. That means 8 out of 10 car dealers are at least somewhat unhappy with their technology.

The Value of Technology

Nearly every dealer uses a dealer management system (DMS) or customer relationship management (CRM) software. In fact, almost 99% of dealers use a DMS and nearly 93% use a CRM. And, unsurprisingly, nearly all surveyed respondents said that their DMS and CRM were the most important systems to their businesses. Still, dealers expressed the lowest satisfaction and loyalty rates for these two systems.

Considering an Upgrade

With so many dealers expressing at least some dissatisfaction with their technology, 53% of respondents said they evaluate their systems and consider a technology upgrade on an ongoing basis. About 25% said they consider upgrading with declining value or persistent problems. And 18% said they evaluate when contract expiration is approaching. Only 4% perform such evaluations on an annual basis.

Selecting Software

In selecting new software, dealers tend to look for vendor familiarity first. They also consider contract terms, ease of training/implementation and vendor reputation. Surprisingly, only 1.7 out of 7 dealers said they look for product benefits and features of new technology. When asked how they’d like to see their technology improve, dealers named integration, ease of use, support, reporting, and flexibility as the top five factors.

Time to Consider an Upgrade 

Overall, survey respondents felt that merely improving their current technology wasn’t enough. Rather, they’re looking for the future of technology with more enhancements and mobile capabilities.

If your technology is slowing you down, it’s time to rise to the challenge of integrating new technology. To read more dealer survey insights and learn about the role technology plays in the modern franchise dealer, check out our infographic.

The Consultative Approach to Selling

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by Mo Zahabi

While digital retailing in automotive is on the rise, dealership staff still play an important role in customers’ car-buying experiences. Six in 10 consumers would still want help from dealership staff even if they could purchase online, according to the Cox Automotive Future of Digital Retail Study.

But the roles of the salesperson and F&I manager have changed. In the past, dealership staff were only there to make money off a customer. Oftentimes, the customer knew more the vehicle than the salesperson. Today’s dealership staff, on the other hand, have responded to customer needs and shifted to a much more product-oriented approach. According to the same Digital Retail Study, today’s car buyers prefer staff who are product specialists – people who are highly knowledgeable about features and technology who will also act as consultants and listen to their needs in a low-pressure environment.

This consultative approach is particularly important in F&I, where consumers are critical of the traditional pitch, according to the 2015 Digital F&I Experience study. To connect with your customers – and make the sale – you have to take a more personal, friendly approach to F&I selling.

Empower Independent Learning

In the old approach to selling, there was a one-way flow of product information: the salesperson would tell the customer information as they sat in front of them. It was a belly-to-belly, in-your-face approach. But today’s consumers are hungry for resources that allow them to do their own research. 71% of car shoppers would prefer to do F&I research at home prior to purchase, and 63% say they would be more likely to purchase F&I products if they had the option to learn about them before finalizing their vehicle purchase, according to the Cox Automotive Maintenance & Repair Study.

Consider offering F&I product information on your dealership website, and also give your customers opportunities to do their own research once they are in your store. Mobile menu selling solutions, like Dealertrack’s eMenu for iPad®, enable independent customer learning. These technologies allow you to load a tablet with key F&I product and payment info, giving customers the opportunity to digitally explore your F&I offerings on their own – and better understand the value of F&I products.

Sit Shoulder to Shoulder

Most people use the phrase “shoulder-to-shoulder selling” figuratively, and that imagery is important when thinking about your approach. Customers need to know you’re not selling at them, but consulting with them. But the literal sense of the phrase is important too.

Literally sitting shoulder to shoulder with your customer as you review F&I product information can change the entire mood of the presentation. Without the physical barrier of the desk, the “me vs. you” mentality that can leave customers feeling intimidated in the F&I office is removed. Consider implementing menu selling technology that is specifically developed for tablets like Dealertrack’s eMenu for iPad®, which enables you to sit shoulder-to-shoulder with your customers – figuratively and literally.

Leverage Your Network

Today’s customers know there are many options for everything they can buy, and they want to know that they’re getting the best option available. Make sure you’re familiar with the network of aftermarket providers powering your dealership’s F&I selling solution, and don’t be afraid to explain to your customers where your product offerings are coming from. They’ll appreciate the transparency, and an increased understanding of how the process works certainly won’t hurt your chances of making a sale.

A version of this post originally appeared in Digital Dealer.

Watch this video to learn more about how Dealertrack’s eMenu for iPad can help you implement a more consultative approach to F&I selling.

Mo Zahabi is the Senior Director of Product Consulting at VinSolutions and Dealertrack F&I, where he educates dealers on best practices and ensures their offerings exceed industry expectations. Mo has applied his strong foundation in technology-based applications to the automotive industry for the last 18 years. Prior to joining VinSolutions in 2008, Mo was a respected Internet Director and eCommerce Director for two different automotive groups.

Fight Back Against Margin Compression

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Margin compression is taking a toll on the auto retail industry. Dealerships across the country are reporting slimming margins, with some even experiencing negative overall gross profits. And the problem isn’t going away anytime soon. Yet no matter the cause, dealerships can either choose to ignore margin compression and continue business as usual. Or, they can choose to fight back, finding ways to outsmart and outmaneuver margin compression with a few tricks of their own.

Finding Better Ways to Do Business

The secret to fighting margin compression is to find alternative ways of generating profit. And dealerships must think outside the box of the traditional sell-more-cars-to-make-more-money approach to business to recoup their missing margins. In general, dealerships can focus on seven specific practices to fight margin compression.

  1. Fixed Operations – When other sources of revenue run dry, service lanes offer a steady stream of customers and renewable income. By placing a strong emphasis on customer service and retention, and doing a better job of creating awareness of their offerings, dealerships can win back customers that have left for the convenience of corner quick lube shops.
  2. F&I Sales – A dealership’s F&I office is where retention is built and future relationships with customers secured. Plus, dealerships retain a larger percentage of each dollar generated through the sale of prepaid maintenance plans and other services than through the sale of cars.
  3. Process Improvements – Through cost and expense control and other business improvements, dealers can sell cars more efficiently to recoup profits lost to margin compression.
  4. Holding Cost Expenses – Time is money for dealerships. The longer a car stays on the lot, the more money it costs a dealership. By removing inefficiencies in the vehicle reconditioning costs, dealerships can improve profit margins.
  5. Employee Training – By maintaining close interaction with employees, and conducting better, more thorough training, dealerships can correct costly mistakes caused by human error and sell cars closer to MSRP.
  6. Digital Retailing – In today’s environment, it’s become almost necessary to move at least part of the car-buying experience online. The shift to digital retail allows customers to do a lot of front-end work in the car-buying process, saving dealerships time and money.
  7. New Technology – Implementing a modern dealer management system can reduce dealership waste and increase profit by streamlining operations. And a modern DMS that provides real-time data allows a dealership to scrutinize each deal and track margins over time.

Margin compression isn’t going away. But by focusing on alternative ways to recover missing profits, dealerships can avoid the negative effects of margin compression and continue to grow their businesses. If you’d like to learn more about how dealerships are fighting back against margin compression, download our free guide, 7 Solutions to Margin Compression, Strategies for Preserving Dealership Profit Margin.

Communicating Helps Soften Change

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Successfully integrating new technology at a dealership is a daunting task. It’s more than just adopting new software. It involves operational changes, contemplation of compatibility issues, and buy-in from the entire dealership team. Although changing technologies can be challenging, proper communication can help soften the sting of change.

Communication with Leadership

As with any major decision, it can be difficult to get everyone on the same page with new technology. That’s because even if every member of the leadership team has the same end goal in mind, the steps each department must take to get there sometimes involve competing interests and viewpoints. The key to getting leadership on board is to explain how new technology will benefit each department and employee. And once there’s buy-in from leadership, the process of taking the message and benefits of change to the rest of the organization becomes much easier. Share your vision with leadership and be upfront about the realities and challenges of change. Then, invite managers to help employees understand the vision, again highlighting ways that new tech will make their jobs easier and more efficient.

Communication with Employees

Integrating new technology can be especially jarring for employees, whose lives will change as a result of having to learn new processes and programs to complete their jobs. And that means emotions are involved, creating a natural tendency toward pushback. But with leadership on board, it’s easier to get buy-in from every employee. Remember, these are the people who implement your operational processes and will be most affected on a day-to-day basis by a change in technology. You want to make your employees’ work lives happier and more enjoyable, while at the same time improving efficiency across the board. It’s your job, along with your leadership team, to convince them that a change in technology is for the better. Because when your employees are on board, your dealership is in a position to take full advantage of new technology.

Communication with Vendor

Finding a tech partner that’s willing to facilitate communication among staff members can be invaluable. Before implementation, work with your tech provider to discuss requirements unique to your dealership. Then ask your provider to tailor training and communication with staff accordingly. During implementation, your tech provider should be on-site to provide support and help to ensure that there are no interruptions in operations. And after going live, communication with your tech provider’s performance managers and ongoing support team will ensure that you stay focused on meeting your business milestones.

Implementing new dealership technology is no easy task. But proper communication between leadership, employees, and technology vendor can ensure that all parties move forward together for the betterment of your business. If you’d like to learn more about ways to communicate as a part of change management, download our free guide, Real-World Advice for a (Practically) Painless DMS Transition.

The Future: Open, Integrated Systems

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The Internet of Things is here. Consumers are starting to expect that their refrigerator can talk to the stove and their GPS knows where to take them based on calendar appointments. These innovations require software services and devices to communicate with different systems. With open systems comes efficiencies, convenience, and ultimately a better customer experience for all of us. That same logic applies to the technology stack in a dealership. The modern dealership needs all their software solutions—more than 8 per dealership on average—to communicate with each other without the need for custom code, integration fees, or downtime.

Open Platforms Comes to Automotive Retail

What does that mean for car dealerships and their technology stack? It means that a more effective and expansive way of selling and servicing cars starts with sharing secure data, accessible between key partners—all via an open platform.

Indeed, a perfect example is the experience at Big Two Automotive Group. Fed up with their DMS provider’s lack of service and capabilities, they switched to Dealertrack DMS and soon discovered that the power and immediacy of an open and modular platform was required to keep their operation thriving.

Overall, the Group moved toward an open and accessible platform to run their operation due to several key benefits, including:

  • Quick access to relevant data: The ability to apply data in real time made decisions more fluid and efficient, meeting customer expectations and helping to create a more productive and nimble environment. For example, data such as customer information, vehicles, and VINs, employees, parts inventory and transactions (ROs, deals, parts tickets, etc.) can help to do one very important thing: use data to better meet the needs of customers and create process efficiencies.
  • Common system versions for all employees: Having all employees—from sales to service and accounting—on the same version helps to ensure accuracy, reduce confusion and the cost of miss-timed upgrades.
  • Availability for all important vendors and services: The concept of dealer control and open access to ALL vendors creates efficiencies across the entire group. This is perhaps the most challenging aspect to open and accessible platforms: it must be secure enough to protect the dealership, yet open to all third-party sources of information and service. It’s also an area in which dealers are often taken advantage of, by vendors seeking to charge them for the use of their own data. It’s vital that dealers retain control of their own data!
  • Convenience of integration points that matter: Integrated data across vendors and store systems helps to eliminate manual data entry – such as name and address – as well as provide timely and proactive reminders about service and more. Of course, remember too that the point of integrated systems is to work with humans to provide better-than service through technology. In fact, a recent study by Price Waterhouse Cooper found that the majority of consumer wanted integrated and automated technology to improve the human customer service experience – not replace it.

Big Two Automotive Group discovered that closed systems and restrictive policies were about as effective and convenient as roll-up windows on cars. Indeed, most retail operations are now realizing the same thing: closed systems symbolize the status quo and a static and frozen picture of automotive retail—not the evolving and growing reality of the business.

Learn more about open and integrated DMS systems in this blog post, Demand More from your DMS: Open Integration.

 

Invest in New Technology with a Purpose

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Today’s consumers are always on the lookout for the latest and greatest. When something feels old or outdated, it’s quickly replaced with something else that’s new and exciting. This is especially true with technology. But, as dealerships search to find advantages in a competitive marketplace, it’s important to incorporate new technology with a purpose, and not just for the sake of getting something new.

Keep Strategy in Mind

Too many dealerships make strategic decisions based on the limits of their technology. This is a backward approach to business that allows technology to dictate everything from operations to hiring new employees. Every decision you make, including the decision to implement new technology, should be made with your business’ core strategy in mind. To define your strategy, ask how your dealership is different than your competitors. It might be based on size, amount of inventory, or quality of customer service. Whatever makes your dealership unique, find ways to leverage your advantages and use technology as a tool to accomplish your goals.

Ensure a Smooth Tech Transition

Even when a tech upgrade is obviously needed, dealerships should take steps to ensure a smooth transition. These steps include:

  • Getting leadership on board
  • Researching and choosing the right vendor
  • Building implementation partnerships
  • Managing continuous learning

There are emotions involved in change management. And, getting leadership on board and choosing the right vendor the first time will help you get buy-in from every employee. It’s important to share your vision of how new technology will benefit the business. Then, start researching vendors with your long-term goals in mind. Find a provider that’s willing to help you get the most out of your tech investment. Partnering with a team you can trust—one that’s committed to the ongoing support of its product—will help your dealership reach its goals.

Pull the Plug on Outdated Tech

If new technology will help your dealership get better at what it does best, it’s time to embrace change. Incorporating new technology with a purpose, and not just for the sake of getting something new, can help your dealership find a real, lasting solution that will propel your business forward.

If you’re ready to learn more about ensuring a smooth technology transition at your dealership, check out our guide, Pointers For A (Practically) Painless DMS Transition.

Pointers for a (Practically) Painless DMS Transition

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Successfully integrating a new Dealer Management System (DMS) is more than just adopting new software.

It involves operational changes, contemplation of compatibility issues, and buy-in from the entire dealership team. In our guide, Pointers For A (Practically) Painless DMS Transition, we give specific insights about how to create a smooth tech transition, including:

  • Overcoming common roadblocks
  • Creating a strategy for success
  • Getting leadership on board
  • Researching the right provider
  • Managing continuous learning

Changing technologies can be challenging, but with the right provider and the dealership’s overall business objectives in mind, a DMS transition really isn’t as difficult as most people think.

An easy-to-use DMS can do more for employee retention than a company party

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You know the drill: morale is languishing. It may be because sales are down, or a top producer just left. A change in the dealership’s workflow may have been the culprit, such as a required new compliance or accounting step.

Or perhaps the GM just gave everyone a good old-fashioned lecture over missed numbers and runaway expenses. Point is, lots of things go wrong when it comes to dealership employee retention. It’s a problem that’s not going away; it’s getting worse. According to a recent Cox Automotive Staffing Study, up to 41 percent of the typical dealership’s new sales hires will leave before a year is up. The reasons include poor hiring and recruiting practices, a lack of proper training, and little to no career development.

It also includes bad, slow, and outdated technology.

According to a recent study by Sharp, the typical employee wastes 21 days a year waiting for technology to do its job. That’s enough wasted time to make the most patient person grind their teeth. It’s so bad that 32 percent of employees surveyed have pretended that the technology was broken – just so they didn’t have to use it. What’s more, 41 percent said they prefer to use their personal tech, because it’s better than what their company offers.

The result isn’t pretty: lack of productivity, loss of good employees, and frustration all around. For automotive retail, that’s a prescription for failure: the highest producers in an average store are the ones who need systems to work quickly and reliably. That doesn’t mean they have to be new – or the latest thing on the market. They need to simply get the job done right. That’s an important consideration when the time comes to consider an upgrade to your management system.

Is the system easy to use, and learn? It’s critical that all employees can jump into a system without issue and use it efficiently day after day. The entire point of technology is to create efficiencies of process…so it simply must be easy to use.

Ask your team these three questions to better understand pain points caused by technology – and how to solve them:

  1. Does it come highly rated? Don’t just count on what the salesperson says. Ask peers and colleagues if they’ve used a system being considered and how it went. Ask about the onboarding and launch process – that’s another potential roadblock when it comes to employee retention.
  2. Does the system feel like home? Make sure the interface is a common representation of best-in-class user experience – the kind people are used to interacting with at home, and on their mobile devices. That helps promote a feeling of comfort and confidence among employees.
  3. Will it improve and iterate? Software development never stays still – there’s always a better way to get the job done. Make sure your system includes continuous upgrades that focus on helping you increase productivity.

Ultimately, the system that’s best for your dealership is the one that improves efficiencies in the day-to-day process of doing business. That helps build profit and reduce expenses, an objective that starts with an easy-to-use system that helps employees reach their potential – and not the front door.

To learn more about how other dealerships are creating efficiencies through technology, check out Goode Motor Auto Group’s story.