Category: Trends & Insights

Cloud Optimization, Your DMS, and You

Posted on

As technology evolves, so does its language. And one of the newest tech buzz terms “the cloud” can be a little confusing. What is the cloud? How can it help your business? And what exactly does having your dealership’s data in the cloud really mean?

 

What is the cloud?

Essentially, the cloud refers to software or service that runs on the internet and is accessible through a web browser like Safari, Chrome, or Internet Explorer. Some software and services even use their own dedicated apps or programs. Google Drive, Dropbox, and even Netflix are all examples of cloud services. The advantage of the cloud is that you can access a software or service anywhere there’s an internet connection. In the case of Google Drive, you can make changes to a document on the cloud and your colleague can access the same document from a different location to make edits. Remote data storage and faster upgrade capabilities also improve the appeal of the cloud.

 

What does it mean to have your dealership’s data in the cloud?

Extending the logic of the Google Drive example to your dealership, if your dealership’s data is stored on the cloud, you can access it anytime, anywhere you have an internet connection. This means no more on-site servers that limit your data access to your dealership alone. It also means not having to fuss with ongoing maintenance, updates, and costs that come with a local server. With a cloud-based DMS, you can track cash flow, run reports, and monitor dealership functions from home or on the road in real-time, as long as you have an internet connection. Other benefits of having your data on the cloud include lower costs, increased liability, unlimited capacity, and better security.

 

How can the cloud benefit your dealership?

Cloud-based DMS platforms are the new standard for next-generation dealerships. Technology is no longer a luxury in auto sales. It’s a necessity. And the smartest dealerships are future-proofing their businesses with technology that saves time and increases productivity. A cloud-based DMS can improve customer communication, increase efficiency (and profits), and advance the overall perception of your business. Plus, as your dealership continues to hire younger, more tech-savvy workers, a cloud-based DMS ensures that your newest employees will transition to their new responsibilities faster and more efficiently.

 

Is Your Dealership in the Cloud?

As technology (and its language) continues to evolve, dealerships can either keep up with changing times or stay stuck in the past. The cloud is here to stay. It’s the wave of the future in technology. And it’s the new standard for DMS platforms in the auto sales industry.

See how a cloud-based DMS has helped San Tan Ford run all their stores from one DMS. 

 

 

Solving the Mystery of Margin Compression

Posted on

Margin compression is a known problem in the auto sales industry. It has been for years. And yet, there’s a mystery surrounding the problem that most dealerships can’t crack. Too often the knee-jerk reaction is to work harder and sell more cars. But as sales go up, profits go down. And the mystery deepens. So, what can be done to reverse the trend? Here are 7 solutions to solving the mystery of margin compression.

 

  1. Fixed Ops

If more customers are walking through your dealership’s doors to buy a new or used car, leverage those relationships to provide service lane work for years to come. Parts and services generate an estimated 13.6% of revenue. That’s better than both new and used vehicle sales.

 

  1. F&I

Your dealership isn’t just about selling cars, it’s also about selling maintenance plans and service agreements. If F&I has become an afterthought at your dealership, remember that for every dollar made through F&I, dealerships keep an estimated 70 to 80 cents.

 

  1. Process Improvements

When margins are slim, it makes sense to slim down in other areas as well. By cutting costs and improving efficiency, you can turn the tides of margin compression and make more money per sale.

 

  1. Holding Costs

The longer a car remains on your lot, the bigger the financial drain on your dealership. And if a car sits there long enough, those profits disappear altogether. By improving the reconditioning process and getting cars to the frontline more quickly, you can sell more cars faster and more efficiently, directly benefiting your margins.

 

  1. Employee Training

Employees have a lot of influence over profit, for better and for worse. With more frequent, more focused employee training, you can instruct your employees in ways that improve the sales process and maximize margins.

 

  1. Digital Retailing

Moving toward digital retail, at least in part, has become a necessity for most dealerships. By moving sales and purchasing activities online, you can align your sales processes with the preferences of modern customers, improve efficiency, and increase profits.

 

  1. New Technology

A modern dealer management system (DMS) reduces waste and streamlines operations. If your dealership is still fumbling with old technology, embrace the move to a more up-to-date system. Implemented correctly, technology can improve everything about a dealership, including its bottom line.

 

By working smarter, not harder, you can solve the mystery of margin compression at your own dealership. To learn more about how to combat margin compression, check out our infographic, 7 Solutions to Margin Compression.

 

Five Keys to a Mystery-Free DMS Switch

Posted on

Technology is just as integral to the operations of your dealership as the cars you sell. But for one reason or another, while selling cars comes easy to most dealers, technology (and especially the implementation of new technology) remains somewhat of a mystery. Many dealers either ignore the need for change or try to force their old technology to do new tricks. If your dealership feels stuck in a rut, perhaps a change of technology can spark new success. Here are five keys to a mystery-free DMS switch at your dealership.

Create a Strategy for Success

  1. Create a Strategy for Success

The right technology can help you double down on your strengths (i.e. selling and servicing cars) and take your business to new levels of success. However, switching technologies can also be difficult. That’s why it’s so important to create a strategy for success before, during, and after the change. Before anything else, define your strategy, and clearly outline the ways your dealership is different (in a good way) from its competitors. Then, look for tools and operating systems with that end goal in mind. Remember, technology is supposed to help you improve and excel in the areas you’re already good at. Don’t get distracted in the process.

Get Leadership on Board for your DMS Switch

  1. Get Leadership on Board

In addition to products and technology, your people are an essential aspect of your business. And because emotions tend to get involved with any type of change, it’s important to take your message of change to the people, starting with leadership. Once you have buy-in from leadership, take the message (and benefits) of change to the rest of the group. Share your vision of how you hope this new technology will help the company accomplish bigger and better objectives, as well as make the lives of every employee easier. When people see the short- and long-term benefits of change, implementing a new DMS is much easier.

Choose the Right DMS Vendor

  1. Research the Right Vendor

Of course, there’s no sense in change if your new vendor can’t offer any upgrades over your existing technology. As part of your overall strategy, research vendors you can trust. The right vendor will partner with you to fulfill your long-term vision and offer proactive support along the way with a knowledgeable team of experts. Be wary of long-term contracts and make sure your new vendor can provide all the conveniences of tomorrow’s technology today, such as open integration, real-time data, security, flexibility, and ease of use.

Build DMS Implementation Partnerships

  1. Build Implementation Partnerships

When you feel comfortable that you’ve chosen the right vendor, the next step is to install your new technology. Your vendor should be there to provide support and assistance before installation, while “going live,” and after implementation. Most importantly, your provider should be your partner to help you leverage your technology and ensure that key milestones are met in business growth.

Successfully Transition your DMS

  1. Managing Continuous Learning

Work with your provider to manage continuous learning and create a culture of ongoing improvement. Your provider’s performance managers should help you find opportunities and deficiencies in your business and show you how to use your technology to make improvements. With learning and growth as an everyday part of business, achieving goals becomes a natural part of the process.

Changing technologies might seem like a mystery, but having a strategic plan in place to leverage your dealership’s strengths with the help of new technology and the right provider can make the transition a much smoother experience.

To learn more about taking the mystery out of a tech transition, download Pointers For A (Practically) Painless DMS Transition.

The Importance of Developing a Dealership Staffing Strategy

Posted on

Change is the only constant in auto sales. In the last several years, the industry has experienced dramatic changes due to increased focus on digital retailing, shifting consumer behaviors, and the pinch of margin compression. Yet, with these changes, dealerships assume their employees should remain the same. And, it’s precisely this type of thinking that prevents many dealerships from leveraging the strength of their people to gain competitive advantage.

With these factors in mind, Cox Automotive published the Dealership Staffing Study, with tips on how dealerships can drive productivity, create a better workplace culture, improve retention, and boost their bottom lines. Here are a few highlights of the study.

 

Lost Operational Opportunities

With operational costs increasing and margins declining on the sale of new and used cars, dealerships must invest in their employees to reduce inefficiencies. At first, this concept can seem counterintuitive. After all, more than half of a dealership’s gross profit margin goes to payroll. But with the average cost of a new hire at $10,000 and the sales staff turnover rate at 67%, dealerships are losing money every time one of their employees decides to walk. And that doesn’t even contemplate the cost of lost knowledge and lapsing customer relationships resulting from high turnover. Unfortunately, most dealerships (2 in 3) have no staffing strategy, and continue to endure unnecessary high turnover, high costs, and lost operational opportunities.

 

Solid Staffing Strategy

If high turnover results in lost profits, high-quality, long-term employees are critical to dealer profitability and growth. Having the right people in the right roles can be a key differentiator when stacked against competitors. But how do dealerships go from liability to a strategic strength with its employees? For starters, a solid staffing strategy is a function of:

  • Attracting desired talent to an organization
  • Finding people who match your skills-needs and fit your culture
  • Onboarding employees, faster, to set them up for success and keep them engaged

 

Finding and Keeping Top Talent

Speaking of expecting employees to remain unchanged in a changing industry, many dealerships look to hire the same type of employee, just because he/she fits the outdated model of an industry employee. As a result, Gen X and baby boomers make up 2/3 of the dealership workforce. And, despite millennials making up 60% of new hires, dealerships fail to train and manage this key group of workers, leading to an annual turnover rate of more than 50% among millennials.

To accommodate a changing workforce, dealerships need to change as well. This means:

  • Expanding the pool of potential candidates
  • Changing company cultures to encourage more employee involvement
  • Experimenting with different pay plans and work schedules

By instituting better rewards programs, better technology (78% of millennials are strongly influenced by a company’s perceived innovativeness), and better training practices focused on instilling company pride, dealerships can revolutionize their staffing strategy.

 

Having a Holistic Staffing Strategy

To be part of the next generation of auto sales, dealerships need to adapt along with the industry and its workforce. Having a holistic staffing strategy means recruiting, training, recognizing, and continually communicating with the right people so dealerships can find increased efficiencies and leverage the strength of their people as a basis for competitive advantage.

 

To learn more about creating a staffing strategy at your dealership, download the Cox Automotive Dealership Staffing Study.

Margin Compression Solutions: Process Improvements

Posted on

Overcoming Margin Compression with Digital Sales

The age of margin compression is forcing auto dealers to think creatively about traditional car sales. Making a profit requires cutting costs and emphasizing other areas of your business, like fixed ops and F&I sales. But, it also means rethinking your approach to the very foundation of your business. As dealers know all too well, simply selling an automobile has become too expensive to keep many dealerships afloat. If margin compression has found a way to cut into your bottom line, it may be time to shift focus toward digital retailing.

 

Digital Retail as a Solution to Margin Compression

In the face of shrinking profits, the move to digital sales makes sense. In terms of overhead alone, it eliminates many of the costs of a brick-and-mortar dealership, including expenses associated with inventory, facilities and showroom, employees, and lot property. However, selling cars entirely online is a big leap for many of today’s dealerships even though the industry and its customers are moving in that direction.

It’s no secret that today’s car-buying customers prefer to do research online. Oftentimes they already know exactly what they want to buy (and how much they’re going to pay) before ever setting foot on an actual lot. In that respect, moving sales and purchasing activities to the internet allows dealerships to align with the preferences of modern consumers. But, the move isn’t all about the customer. It can have major benefits for dealerships, too.

By allowing customers to browse inventory, explore features, and even obtain ballpark pricing online, dealerships can cut costs and preserve precious margin. And, when the customer finally arrives on site, top dealerships run a name search to find out how much of the sales process has already been completed, improving efficiency and helping salespeople close deals faster. In fact, many dealerships have already established separate “internet departments” to facilitate this kind of experience.

Conclusion

The irony of margin compression is that the traditional way of selling cars is driving dealerships out of business. It’s time to think outside the box of auto sales and move toward a more online experience. The industry and your customers are demanding it.

 

If you’d like to learn more about generating profit through digital sales, and other ways to combat margin compression, download our free guide, 7 Solutions to Margin Compression: Strategies for Preserving Dealership Profit Margin.

 

May the 4th (and Force) Be With You: Four Ways Auto Retail is Kind of Like Star Wars

Posted on

There may not be light sabers involved (one hopes), but when it comes to Star Wars and the technology that drives auto retail, we can make a few fun comparables.

After all, the last thing any sales manager or dealership controller wants is to get stuck on a virtual outpost, searching for solutions like a desert scavenger. The sunset might be nice, but that outpost is no place to find cutting-edge workflow technology. So in the spirit of the day, and the pursuit of connected retail, here are four ways auto retail technology is (kind of) like Star Wars:

1. Jumping to light speed is like using Accelerated Title.

When it comes to title release, Accelerated Title gets you from start to finish 70 percent faster than the industry standard* — a time that’s sure to be quicker than any old Imperial TIE fighter. It’s technology that streamlines payoff quoting, release, and even tracking and reporting.

2. Using the force is like integrating F&I Compliance into your workflow.

It’s so much a part of process that you barely notice it’s there…until you need it. Then it becomes a powerful way to protect and defend your dealership from ID fraud, potential audits, and more.

3. Droids are a symbol of advanced technology – with a smart human touch.

The concept is like our Menu Selling solution: technology that helps build engagement and improve the aftermarket experience. F&I products like GAP, warranty and maintenance options are presented in a friendly and consultative way — thanks to the use of personal technology.

4. Sometimes, what you need is a simple, fast, and effective Podracer to get the job done.

More than that will slow things down, when the most important thing is a fast and efficient finish. Keep that in mind when it comes to your Reg & Title operation. Simple and powerful functionality such as an accurate calculation of taxes and fees, as well as automated error-checking, help ensure that this final step in the process meets the customer’s expectations.