Tag: DMS

How a Technology Switch Helped Goode Motors Keep Growing

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The moment a dealership realizes that its legacy DMS can’t keep up with business growth, everything changes. Suddenly, there’s a crossroads between hanging on to the familiarity of the past and embracing the promise of the future. But while the prospect of growth can be exciting, the transition to new technology isn’t always easy.

Bridging Past and Future Success

Opening its first store in 1917, Goode Motor Auto Group was the very first Ford dealership in Idaho. Over the years, the dealership witnessed the introduction of dealer management technology in the industry, as well as tremendous business growth. Since that first Ford store, the company has expanded to include four locations and multiple franchises in the Southern Idaho area. But like many dealerships, Goode eventually outgrew its legacy DMS. They started experiencing reporting difficulties, including problems obtaining information about car sales and customer visits. But, problematic DMS transition attempts left Goode Motor reluctant to make another change.

After researching several new providers, Goode Motor finally found what they were looking for in Dealertrack DMS—a seamless switch and the promise that technology would keep up with their ambitious plans for business growth. Before, during, and after the switch, Goode Motor’s employees received on-site training and a single, stable point of contact for all support, training, and system utilization needs with Dealertrack.

Partnering with Dealertrack DMS, Goode Motor found the reporting capabilities, connected integration, and easy-to-use technology they were looking for. And the seamless transition from outdated DMS to cutting-edge technology was delivered as promised. Making the switch to Dealertrack DMS allowed Goode Motor to bridge the divide between their past and future growth, paving the way to success for generations to come.

Overcoming a Reluctance to Change

Like Goode Motor, many dealerships get to the point where they must decide whether to stick with their limited legacy DMS or boldly move forward with future plans. This pivotal point, though scary, is an essential part of business growth. Despite some initial discomfort, finding the right technology and the right partner can bridge the divide between past, present, and future growth opportunities.

To learn more about Goode Motors successful technology transition, click here.

Five Keys to a Mystery-Free DMS Switch

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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.

Streamline Operations and Boost Satisfaction

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Think for a moment about the interactions your dealership has with your customers. How many people really want to spend more time buying or servicing a vehicle? They want to get in, get out, and get on with their lives. But the unfortunate reality is that most customers dread the in-dealership experience. And it has more to do with the day-to-day operations of your business than you might think.

 

The Frustration of Buying a Car

In the minds of consumers, visiting a dealership isn’t far from a trip to the DMV. That’s because in-dealership inefficiencies lead to customer downtime and a prolonged sales and services process. And when customers have to wait, customers get annoyed. In fact, 41% of customers label the amount of time it takes to complete a purchase as the single most frustrating aspect of buying a car. That’s a higher level of frustration than dealing with salespeople, negotiating a deal, getting a good trade-in offer, or applying for financing.

As you might expect, customer satisfaction and the amount of time a customer spends in the dealership are closely correlated. According to an AutoTrader.com study, average customer satisfaction scores are highest when a customer spends less than an hour in the dealership. And those scores begin to fall off dramatically at the 90-minute mark, with scores dipping below the average at the 2.5-hour mark. The study also reported that every dealership analyzed failed to meet this 90-minute customer-cycle objective, regardless of the operational or sales tactics employed.

 

The Divide Between Dealers and Customers

Yes, it takes time to buy a car. But it’s obvious that there’s a real disconnect between dealers and customers about just how much time is considered acceptable. Most customers come to the dealership already having researched everything about their car of choice for weeks, even months. They want to show up long enough to sign a financing agreement, pick up their keys, and drive off the lot. In their minds, there shouldn’t be a difference between buying a car and walking into any other store to purchase a product. If inventory is available, they want to be able to buy the car and be on their way.

Dealers, on the other hand, understand that the process is more complicated. And yet, many of those complications can still be avoided. When dealerships use non-linear sales processes that involve multiple, potentially deal-breaking decision points and multiple technology systems (that don’t always play well together), tasks get duplicated, processing time increases, and customers wait.

 

A Wholesale Shift in Operations

To improve operational efficiency and improve the customer experience, dealerships need to think about people, processes, and technology as one and the same. In other words, every means available to the dealership should be used to bring about the singularly-important goal of providing a better customer experience.

Dealership and customer expectations will more closely unite when dealerships:

  • Hire, train, and retain talent with the customer experience in mind.
  • Review and improve technology and processes with the customer experience in mind.
  • Inform and incentivize customers about new and improved operational capabilities and efficiencies built with the customer experience in mind.

This wholesale shift toward an improved customer experience can begin when the customer first begins researching vehicles. By moving part of the sales process online, including online trade-in tools, F&I education and offerings, and having qualified salespeople available via chat, more decisions can be made when the customer is most interested. This also cuts down on in-dealership wait time and improves transparency.

By streamlining processes, implementing technology that simplifies operations, and emphasizing a customer-centered culture (including fostering transparency and trust), dealerships can get closer to the ideal in-and-out car-shopping experience. And eventually, dealership by dealership, sales will increase and the negative perception of the car-buying process will begin to change in the minds of consumers.

The Importance of Developing a Dealership Staffing Strategy

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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.

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.