Tag: DMS

Master Margin Compression: Seven Solutions

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The lasting impact of global events on the economy is yet to be determined, but dealerships are already feeling the pinch of margin compression. Even as customers continue to buy cars, margin compression and related economic factors create the illusion of success, as dealerships profit less from each new and used car purchase. Unfortunately, you simply can’t solve margin compression by selling more cars and working harder. Smart dealerships are already utilizing their technologies, streamlining processes, and optimizing data to get ahead of growing margin compression woes. Learn how your dealership can leverage these seven solutions to fight margin compression and win back your profits!

 

 

 

 

7 Ways to Fight Back Against Margin Compression

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When the going gets tough, the tough get going! That’s always been the mentality of auto dealers during difficult times. When a new challenge comes along (a pandemic, for instance), tough-minded dealers buckle down, work harder, and fight through the difficulty. It’s an admirable quality and one of the main reasons the auto sales industry is so resilient. But in the last few months, economic and societal factors have combined to throw a curveball at dealers—the resurgence of margin compression—which means working harder to sell more cars doesn’t necessarily mean more profit.

Tough times call for smart measures

The amount of gross profit (the amount of profit over and above the cost a dealer pays for a vehicle), has always been relatively slim for new car dealers. But sudden economic slowdown and the threat of long-term recession have reduced margins even further.

In fact, according to Forbes, economic recession is the main factor that causes margins to shrink—the more severe the slowdown, the slimmer the profits. And while the true impact on the economy as a result of recent global events is yet to be determined, there are ways dealers can combat margin compression right now to stay profitable.

  1. Fixed Operations – By placing a strong emphasis on customer service and retention, and an awareness of your fixed ops offerings, your dealership can create a steady stream of customers when other sources of profits start to slim.
  2. F&I Sales – Even as profits on car sales slim, your dealership retains more profit per dollar generated on the sale of maintenance plans and other services. Plus, a focus on F&I sales promotes retention and ensures future business.
  3. Process Improvements – By focusing on selling cars more efficiently (cost and expense control, more efficient technology, and finding hidden areas of improvement), you can recoup profits lost to margin compression.
  4. Holding Cost Expenses – Speaking of efficiency, reducing the amount of time that a car stays on your lot (by improving the vehicle reconditioning process, for example), reduces waste and improves profit margins.
  5. Employee Training – Employees are key to driving long-term profits. By hiring the right people and implementing the right technologies to manage human resources and emphasize ongoing training, efficiency and profits increase.
  6. Digital Retailing – Now, more than ever before, digital retailing is a must. According to the 2020 Cox Automotive Report, The Rise of the Digital Experience in the COVID-19 Era, consumer interest in finalizing a deal online has risen by more than 73%.
  7. New Technology – Implementing a modern DMS can streamline operations and reduce waste. If your dealership has all its data in a single, interconnected DMS, you have a real advantage in times of economic slowdown and margin compression.

Dealers have always been tough. But tough times like these call for smart, efficient measures to fight back against margin compression. If you’d like to learn more about staying profitable, even in times of margin compression, check out our free guide, 7 Solutions to Margin Compression, Strategies for Preserving Dealership Profit Margin.

Integrated Solutions: A DMS That Does More

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As more and more of the car-buying process moves online, dealerships across the country are demanding more from the technology solutions that drive their business. According to a 2020 Cox Automotive COVID-19 Dealer Impact Study, more than 70% of consumers are completing part of the buying process online. With so much riding on how well your technology runs, one this clear: your DMS has big shoes to fill. So it’s a no brainer that a DMS that integrates solutions and speeds up efficiencies is helping dealers meet that demand.

“We used to have to custom report or hand- create reports. And now we can just click download and five minutes later we’re onto the next task. If I had to guess, we won back three to four labor days in a month.” – Bryan Baer, General Manager Budd Baer Auto Group

When Manual Processes Slow You Down

Every dealership deals with custom—and often complex—reporting. For Budd Baer Auto Group, some reports were taking up so much of his accounting team’s bandwidth that General Manager Bryan Baer would often step in and take on the complicated algorithms himself. But, in early 2020, Dealertrack DMS partnered with Netchex to deliver an advanced Payroll solution that integrated through the DMS software directly, and Budd Baer Auto Group was one of the first franchise groups to test it out. The results were pretty clear. By delivering process improvements across the entire human resources team and advanced, accurate reporting, the dealership was able to win back significant time. “We used to have to custom report or hand- create reports. And now we can just click download and five minutes later we’re onto the next task.” Bryan Baer explains. “If I had to guess, we won back three to four labor days in a month.”

Integrated Solutions Are the Key to Going Digital

Dealers looking to meet the needs of today’s challenging market know that reliance on technology is a given. But, tech-savvy dealers are demanding their vendors do more of the heavy lifting. If your technology doesn’t play well with others, you’re going to have a problem. That’s likely because the average automotive transaction now requires seven different software solutions just to complete a sale. It’s so significant, it’s one of the top reasons dealers are making the move. “What I like best (about Dealertrack DMS) is it integrates with all the other Cox Automotive products that we use.” explains Chad Kirchhoff, Director of Operations at Tom Wood Automotive Group. “We have Dealer.com, we have vin solutions, we have vAuto, and the other products that we have from them, they’ll now integrate seamlessly behind the scenes so we won’t have the ‘back and forth’ between the DMS and a third party system.”

The Stakes Have Never Been Higher

The move to a more digital and streamlined workflow for dealers has been spurred by recent events in 2020. With many dealers working with reduced or remote staff, the demand for technology that improved the sales process and built a better customer experience was paramount. As Mandi Fang, VP of Back Office and Fixed Ops for Dealertrack DMS recently stated, “Time is money and the stakes have never been higher for dealers to optimize their workflows.” By working with technology vendors to provide best-in-class integrated solutions, it appears that our partners in the automotive industry are fighting back against the challenges they are facing. Mandi Fang explains, “The new Dealertrack DMS integrations ensure dealers are getting the support they need to eliminate inefficiencies and navigate the uncertainty of the current environment.”

A DMS that does more—by offering integrated solutions that drive improved processes and efficiencies—is a DMS that delivers. Start demanding more from your technology. Read Budd Baer Auto Group’s full story and learn about Payroll powered by Netchex.

 

Overcoming Objections: Find Consensus for Your New DMS

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The old saying goes, “Change is good.” But, the reality is, “Change can be really uncomfortable.” When organizations switch technologies, make broad structural shifts, or roll out new policies, the decision is never made lightly. Your dealership, like most, relies heavily on technology to run effectively. With two out of three car buyers preferring to complete most of the buying process online¹, the switch to digital sales is fueling the need for faster, more integrated technology within major franchise dealerships. So, the saying really should be, “Change might be scary, but it’s absolutely necessary!” Making the decision to switch your dealership’s Dealer Management System (DMS) is a big decision, and dealers often begin the process of consideration up to two years before their contract expires. So, when you’re ready to move to a new DMS, finding consensus among your team can ensure a successful launch. Overcome objections with the following tips before you make the move to a new DMS.

Prepare for Pushback

The more prepared your dealership team feels about an upcoming DMS switch, the less likely you’ll encounter pushback. “The more you can get people ready for change, and get them to the point where they’re open and ready to move on with life before you make that change, the more effective that’s going to be,” shares Bryan Baer, General Manager of Budd Baer Auto Group. Still, though, it’s best to be prepared to encounter some level of pushback from even your most flexible and agreeable team players. Ensuring your dealership staff is in the right mindset by the time you’re ready to launch your new DMS may require some flexibility on your part as well. Check your own mindset and make sure you’re prepared to hear some rumblings of discomfort.

“The more you can get people ready for change, and get them to the point where they’re open and ready to move on with life before you make that change, the more effective that’s going to be.” – Bryan Baer, General Manager | Budd Baer Auto Group

Reach out to Nay-sayers

Basic Change Management advice will tell you to find your advocates—anyone excited and willing to embrace the new change you’re bringing forth. That’s really good advice because, as Performance Manager Mark Gabriella points out, “If you don’t have a champion that wants to take the reins, you’re gonna be fighting an uphill fight.” But, that doesn’t mean Dealer Principals and Managers should ignore anyone who isn’t 100% on board simply because they have a handful of eager participants backing them up. Often, when management is ready to make a switch to a new DMS, there’s a good reason. Lack of easy integration, high fees, and clumsy user interfaces, and lack of customer support are some of the top reasons dealers have made the switch. “But, also,” Gabriella warns, “look for those who don’t (embrace new technology). It’s easy to find those who do, but it’s sometimes better to look for those who do not and turn them around.” Ignoring the team members who aren’t ready for change, or don’t understand your reasons, can cause long-lasting resentments that fester long after you make the change.

Validate Concerns by Backing Up Your Decision

When making the decision to switch to a new DMS, your dealership will have time between the decision date go-live to prepare the team. During that time, it’s your job as a leader to field concerns from each department and reiterate the business decision for change. Any organization that intends to grow and adapt to the changing market conditions and changes in buyer habits simply cannot abide by the mentality that “what we have now works just fine,” or “that’s the way we’ve always done it.” Listen, validate, but remember to communicate to your employees the core reasons behind your decision.

Call On Your Partners to Step Up

One major objection dealers are likely to encounter from team members is that their staff is simply too busy to take on a DMS switch. Fears of “downtime” and lost productivity due to training are very real concerns. This is a reminder that the vendors you work with do not get a free pass to disperse as the ink is drying on the contract. Call upon your partners to manage the heavy lifting of training, and ensure that process efficiency is understood as the intended outcome from the switch. Your team is already busy. Let your vendors do the work.

Resistance to change is perfectly normal. Leading your dealership through a DMS change, overcoming objections, and building consensus is the sign of good leadership. Your dealership is destined for growth. Take the next step and download the full guide, The Road to Consensus, to get everyone on board before the big day.

Get your copy of the guide, The Road to Consensus, here.

¹Cox Automotive COVID-19 Consumer and Dealer Impact Study

Five Tips Before Rolling Out Payroll Powered by Netchex

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New technology within your dealership has the potential to harness your data and unlock powerful insights that improve your business. And as your dealership grows, you’ll likely experience several key technology transitions that help you achieve these goals. Organizing your data, building insightful reports, managing payroll and time attendance, the essential list of responsibilities that your HR team manages goes on. Dealertrack DMS has partnered with the experts at Hireology to provide an integrated solution that offers a full suite of human resources tools and payroll powered by Netchex. Here are the five things your dealership should know before you transition to this new technology.

1 – Prepare

In 2021, Dealertrack DMS will sunset our legacy Payroll system and help our dealer partners as they transition to new options. One of the key benefits of Dealertrack DMS is our open system which allows dealers to use third party vendors of their choice. As we roll out a new, integrated Payroll powered by the experts at Netchex, dealers will have the option of using an advanced Payroll system that performs through their DMS. In order to prepare, Performance Manager Mark Gabriella recommends that dealership controllers and accounting get their employee payroll master up-to-date.

2 – Set up

Implementing a new technology within the dealership—and one that impacts your human resources, payroll, and accounting—is a big deal. Before, during, and after the transition, Gabriella suggests dealers schedule weekly meetings with your contact at Netchex.

3 – Communicate Internally

In addition to weekly status meetings with your vendor, holding regular internal meetings, sending status updates via messaging boards and weekly emails, and keeping an open-door policy at the office are key. “Making sure you’re in constant communication with your employees is important in any transition,” Gabriella points out.

4 – Set Expectations

On that note, setting expectations for your staff can lift the uneasy feeling that comes with a technology transition. “If you don’t know, then ask. There are no stupid questions,” Gabriella points out. Let your staff ask questions, ask for more training, and set up time for discovery to ensure that everyone has a clear roadmap before them.

5 – Your Performance Managers Are Here For You

Finally, just like a new DMS transition, “there’s always a small valley of despair. As employees become more proficient with the technology, it gets better,” Gabriella states. And, he notes, “the Performance Managers can provide a bridge over that valley.” Dealers have the added benefit of having a Performance Manager in their corner to ensure the transition is a success.

Dealertrack DMS has partnered with the experts at Hireology to provide your dealership with a comprehensive human capital management system, with payroll processing and human resources powered by Netchex. Learn more here.

Best practice tips for transitioning to a digital dealership

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Dealers are currently beating the odds in the face of economic unrest and uncertainty. According to the Cox Automotive COVID-19 Consumer and Dealer Impact Study, dealerships who have implemented digital sales models are exceeding predictions and can expect to see success in the long-term. In fact, 73% of dealers surveyed have a digital retailing solution in place, and just over 70% of those dealers are seeing buyers complete more of the purchase process online. Still, though, 2020 is only halfway over and Dealer Principal Owners (DPOs)and General Managers (GMs) are looking to their partners for advice, insights, and guidance moving forward. According to Performance Manager for Dealertrack DMS, Mark Gabriella, having the right technology in your dealership has never been more important. “The pandemic has been horrible for both individuals and businesses. Right now, dealers are discovering the opportunities within their business to make it through, but also to survive beyond.” Gabriella and his team of Performance Managers are working side-by-side (virtually for now) with their dealers to hold them accountable for the business goals set for the year. Below is his advice for making the transition to a digital dealership.

Solo Decisions Don’t Equal Strategy.

When thinking about digital sales strategy or integrated technology solutions, Gabriella warns DPOs and GMs to be team players. “If you don’t involve your management team, you don’t have a strategy. “You’re probably going to be fighting them down the road,” he explains. “You have to show your team what the advantages of a new software are, what your strategy looks like, how you’re going to implement it. And then you have to be open to meet after the implementation on a weekly and ongoing basis.” The true key to a successful launch of anything new within a dealership, is simple: feedback from the team. Are there tweeks that need to be made? Can the team make adjustments? As Gabriella explains, “It should never be just one person’s idea. Make sure your rollout has a plan.”

Find Your Advocates.

A best-practice solution for implementing change in any organization is to identify key champions within the organization who can help their coworkers with their personal experience and willingness to embrace change. Gabriella has over 20 years of retail automotive experience. He worked as an executive manager over nine stores, and the Chief Financial Officer over 18 stores. Identifying who is—and who isn’t—on board with a technology change now comes second nature. “I always try to identify that one individual that embraces new technology and change,” he explains. “ Then, I use them to get other people involved. If you don’t have a champion that wants to take the reins, you’re gonna be fighting an uphill fight.”

Don’t Discount Your Opposition.

Playing devil’s advocate, Gabriella offers the opposite advice next. “But, also look for those who don’t (embrace new technology)” he shares. “It’s easy to find those who do, but it’s sometimes better to look for those who do not and turn them around.” It feels good to have people in your corner, always agreeing with your decision. However, good leaders spend the time to understand the concerns of their team, to make certain everyone is heard, and not to rush a decision.

As dealers move forward, those willing to embrace digital disruption are primed for the ‘new normal.’ Gabriella offers advice for those making the transition to new DMS integrations to enhance their digital dealership: “there’s always a small valley of despair. As employees become more proficient with the technology, it gets better,” Gabriella states. “The Performance Managers can provide a bridge over that valley.”

Download your copy of our guide, The Road to Consensus, here.

 

The Road to a Successful DMS Technology Switch

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Choosing a new technology for your dealership is a big deal. You’ve likely put in the hours to find the right partner, select a vendor who checks all the right boxes, and get everyone onboard with your decision. Under normal circumstances, finding the right DMS for your dealership likely began up to two years before your contract expired with your previous vendor. And, once you’ve made the decision, you have a lot of work to do in order to prepare your staff. Dealertrack’s team of Performance Managers have seen it all. Below are their tips to help your team prepare for your upcoming technology transition.

Lean on Your Training and Support Partner for Help

Dealertrack DMS Performance Manager Garry Shirley has over 25 years of experience in retail automotive. He’s seen successful—and not so successful—DMS transitions. His advice? Make your new partners and vendors carry the load when it comes to transitioning. After all, when learning a new DMS at your dealership, “you don’t know what you don’t know,” says Shirley. Dealer Principals and General Managers will do their best to prepare their teams for new software. But, you need to lean on training and support as best as you can during pre-install. Let your new DMS provider know which reports you use daily, communicate your needs, and take classes again if you’re unsure that you’ve understood everything there is to know. The more you can immerse yourself in a new system, the better your entire dealership will be for it.

It Starts at the Top

Before he joined Dealertrack as a Performance Manager, Shirley held high-level positions within the dealership himself. He’s seen technology transitions first-hand as both a vendor and a client. In his opinion, “The most successful tech transitions take place when the people at the top take the integration seriously.” If a Dealer Principal Owner is sitting in on all the training sessions it communicates several messages to the team. “First, your dealership staff is going to pay attention if your DPO is there taking notes,” he explains. Beyond that, when leadership shows hands-on commitment to the training, transition, and integration of their investment, “there’s a good chance no details will be missed.”

Create a Strategy to Measure Success

Dealertrack DMS has the unique benefit of partnering with third-party experts in technology to provide best-in-class integrated solutions to our partners. For example, dealers will soon have the option of using an integrated Payroll system provided by Netchex that seamlessly runs through the DMS. Changing your dealership’s Payroll system will impact the way your Human Resources, Payroll, Accounting, and Human Capital Management is run. But, before you roll out such a sweeping change for anything that impacts your business, Shirley suggests establishing some basic measures to monitor its success. In the Payroll by Netchex example, he notes, “Your dealership’s time savings stand to be fairly substantial. Measure how much time your accounting team is actually saving.” If your team normally takes a week to process month-end reporting, or longer, discover whether or not the investment is saving you minutes, hours, or even days. Then, measure the data accuracy. Run a report in your new system against an old one. Are your sales commissions adding up? If you’re saving time, but the data is off, you need to fine-tune the process.

Finding a DMS that meets your needs begins by asking the right questions. Download the DMS Checklist and get started today.

How Other Dealers are Communicating Change

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There’s no right way to announce a DMS transition and the best channels for communication will depend on your dealership’s specific structure and culture.

Many dealerships choose to share their decisions during in-person town hall meetings or through simple videos. See the Fox Motors example video below and download our Dealership Transition Email Template.

Fox Motors

Fox Motors also developed a product awareness series that was an instrumental part of their successful transition to Dealertrack DMS.  Take a look at their employee communication guide they used to help employees get excited about the transition.

Master Your Upcoming DMS Transition

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Learn the 4 Steps Dealers Need to Know Before You Roll Out a New Dealer Management System

 

Your dealership relies on technology to drive innovation and meet changing buyer expectations. Finding a right-sized Dealer Management System (DMS) is a big step. But, the transition to your new DMS is a big step on its own. Now that you’ve made the decision to move to your new DMS, make sure you’re ready to launch and hit the ground running with your brand new technology by following these four steps from our Performance Management team.

There’s More to a DMS Transition than New Technology…

Dealertrack DMS Performance Manager Michael Panozzo began his career in retail automotive twenty years ago. He’s experienced the ups and downs of a DMS transition from various roles in the dealership and tells his dealership partners, “Yes, you’re changing technologies, but it’s about more than that.” There are countless fears that hold business leaders back from adopting a new DMS. Eventually, though, when it’s time to switch to a DMS that fits your goals, your budget, and your dealership’s needs, taking the next step can be done well if you follow a few best-practices.

Step One: Be Prepared for Change

It sounds simple, but according to Panozzo, it’s the little things your team wasn’t expecting that become a big deal later. “Understand how the DMS and other departmental tools are used and integrate together, then develop a plan for adoption,” Panozzo explains. “A DMS change is a change to how people do their everyday tasks. Staying prepared and ahead of this is essential!” Being mentally ready for change can help everyone succeed.

Step Two: Operational Efficiency Starts with People

So, you’ve decided to change your DMS. You’re pretty excited and looking forward to the new functionality of the new system that touches every corner of your dealership. But, keep in mind, “you’re changing your technology, but it’s about a whole lot more than that,” Panozzo states. You can’t roll out a shiny new system and expect everyone to embrace it simply because it works better, or because it’s easier to learn. Your organization runs well because of deep-rooted operational efficiencies that rely on people. Make sure you include them in the transition at every step. And, speaking of including your people…

Step Three: Communicate Again and Again

According to Panozzo, Dealer Principals and Managers cannot over-communicate when it comes to preparing the dealership for a new DMS. If you’ve just signed on for a transition, you likely have time to prepare the team. “Don’t waste it! Communicate often and encourage good performance. Find out what motivates your team and go from there.”

Step Four: Master the Mindset

In his experience, Panozzo knows that to be truly successful with your upcoming DMS implementation, your dealership’s leaders must learn to master a bit of psychology. “Something like seventy-five percent of learning a new DMS is all psychology,” he states. “It’s a total mindset shift.” Helping your team adapt to change begins there, so “begin early and help shift the way your team operates before launch, not after.”

Dealertrack DMS has mastered the art of installing your new technology at the dealership. Our team is with you every step of the way to ensure a successful launch. Prepare your dealership staff for change with steps in our guide, The Road to Consensus.