Tag: Profitability

Dealers purchase technology to increase their profitability. That makes sense. After all, you wouldn’t invest in new digital steps if they cost more money than they were worth. And, if you’re like a lot of dealers in the last year, you’ve added at least one new technology to your business. According to the 2020 Digitization End-to-End Study from Cox Automotive, 69% of franchise dealers did just that. And it seems to be paying off. Overall buyer satisfaction rates hit an all-time high of 72% recently. Yet, dealers tend to overlook the major role their DMS technology plays in driving profit and saving money. The reason? It’s not always obvious…at first.

Profit Driver vs. Utility

According to Randy Wilson, director of Performance Management at Dealertrack, “A DMS is required to function.” Simply put, most dealers tend to view the Dealer Management System as a utility—not a profit driver. “But,” he emphasizes, “it’s critical to the profitability of today’s new digitized landscape. Your DMS holds much of the data required to run payroll, for example.” You may not have considered your DMS as much more than a utility running in the background for the past twelve months. But, while you were working on navigating the changes needed to adapt to a more digitized landscape, your DMS was likely feeding each new system the data needed to fully function. Businesses have been busy scaling up technology like never before in the wake of lockdowns, furloughs, and new social norms. In the same 2020 Cox Automotive Study referenced above, 84% of franchise dealers expected to increase online sales in 2021. With so much rich data being delivered to all the major departments of your business, a DMS that could leverage the right data, at the right time, would set up any dealer for success. (And a failure to do so would lead to the opposite.)

More Than Money

You may have spent the last year increasing your digital reach to find the right customer and match them with the right car. But, having the wrong technology can cost you more than just money. Many departments within your dealership operate almost independently from each other. Escaping the siloed nature of our industry may not be possible, but one thing is certain: everyone is impacted by the DMS. Buyers may have changed the way they interact with your dealership, but speed and efficiency are still king. The ability to deliver a superior experience whether in-person, online, or a hybrid of the two will rely heavily on your team’s operational efficiency. Stubborn and complicated interfaces, workflows that create manual re-entry of data, and systems that don’t communicate across departments can hinder your success. All data begins and ends with your DMS. A failure to optimize can cost you in team performance, turnover, and time.

Sneaky Fees Hurt Where it Counts

Technology can connect your business to more data, more customers, and more profit potential. But at the end of the billing cycle, the growth you had expected may come up short. Was it margin compression or something more sinister? Sneaky fees may be hiding in plain sight—and they’re easy to miss. With the average dealership transaction requiring up to 7 technology systems to complete, integration fees could be driving up the cost of doing business. When your DMS provider treats each third-party vendor you work with like a sales opportunity, they’re able to charge exorbitant fees against you. And it adds up to the tune of about $42,000 every year! That’s according to a Cox Auto Community Poll from 2017, which means, those fees are likely higher now. New restrictions on first-party data are going to up the ante on your DMS provider’s data access fees. This means that the true cost of DMS technology depends on how open and transparent your DMS partner chooses to be.

Ultimately, the technology driving your dealership should deliver better business decisions. It should reduce backlogs of old data, manual re-entry, and clumsy reporting that hinders your operations. And, it shouldn’t charge exorbitant or hidden fees. Finding the right partner is more important than ever. Your profitability depends on it.

Looking for an end-to-end software solution that streamlines operations and drives profitability? Speak with the team at Dealertrack DMS at Dealertrack.com/DMS.

 

A version of this article originally appeared on Wards Auto here.

Does your DMS pass the Profitability Test? It’s time to find out. In a year when people spent less time at your dealership, customer satisfaction also reached an all-time high according to Cox Automotive research. While the reasons for staying home were beyond your control, the ability to deliver top-notch service was in your court. But there’s more to it…

If you have big profit goals for next year, you need to consider the role your DMS partner plays in your success.

It’s time to take stock in your dealership’s biggest, and most critical, digital asset—your DMS. The Dealer Management System is the source of truth for data. All systems pull data from it, and all data points back to the DMS. While many dealers tend to overlook their DMS as merely a utility, it’s actually a critical profit driver. Put your DMS to the test—The Profitability Test—below. If your DMS fails to meet the following six criteria in our list, you should ask yourself, “Why not?”

1. Performance Management

Does your DMS partner show up for you and your team each time you implement new technology? Before your dealership ventures any further into the hybrid online/in-store territory, or adopts any more technology your staff will need to learn, make certain you have a trusted partner who knows a thing or two about working in automotive. If your DMS provider has left your lot before the ink has dried on your contract, you may want to reconsider your relationship. Highly skilled Performance Managers take on change management for your teams. Plus, they help you achieve business objectives and ensure profitability long-term.

 

2. State-of-the-Art Support

Does your DMS partner show up when things go wrong? Implementing new technology can be scary. If something ever goes wrong, how confident are you that your DMS provider is available to help? Questions, concerns, and fixes that can be overcome through a variety of channels—such as online community forums, chat, and transparent service tickets—keep business running. Beyond the generic ‘bump in the road,’ working with peer groups to discover how best to solve key customer issues, work with OEMs, and overcome obstacles that may improve your staff’s workflows allows new and veteran employees to contribute their knowledge to the greater good.

3. Retaining Top Talent

Does your DMS provide better workflows that improve the way your team functions? The war for talent in our industry is ongoing. Make sure your DMS technology isn’t slowing down your team’s ability to fulfill their assigned roles. The ability to access better customer info ultimately results in a better customer experience. And, removing complicated interfaces, multiple logins, and redundant data entry, allows your staff to thrive in an environment where they can provide better service.

4. Optimize Efficiency

Does your DMS make your dealership processes more efficient? Your DMS isn’t just another expense. It should be an invaluable asset, enabling you to sell more cars, drive profits, and facilitate the kind of buying experience your customers expect. With the right DMS technology, your dealership can facilitate an intuitive, customer-focused car selling experience in a new age of online sales. By integrating intuitively with other dealership technologies (with information that’s shared between platforms), your DMS can give customers a more complete shopping experience, while also eliminating the extra time and hassle involved in trying to coordinate disparate, disconnected systems.

 

5. Prioritize Integrations

Does your DMS allow you to work with third-party vendors without overcharging fees? Real time, bidirectional technology integrations enable a seamless online to in-store buying experience and allow you to work with the providers and technologies you want. And with the average dealership using seven different technology systems to complete a transaction, make sure your DMS technology isn’t charging hidden integration fees.

6. Your Right to Access Your Data

Does your DMS provide access to your critical data and insights when and where you need them? Data optimization is a critical component of your business. Without it, your ability to create a streamlined and efficient online (or in-person) experience suffers. Consumer data should always be secure, no matter where it is stored. But, your dealership should have the right to full ownership and access of the data. And costs associated with the data should be 100 transparent.

Ready to dive deeper into the why’s and how’s of DMS profitability? Download your own copy of The Dealer’s Guide for Maximizing Profitability with the Right DMS Partner, today. You’ll uncover insights from critical research conducted that shows how real dealers, like you, are optimizing efficiencies and leveraging their DMS partners to make more money.