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Is 10-15% the "vig" you pay to Shift/CDK/Rey/etc?

Discussion in 'I'm Angry and Need to GRIPE!' started by Alex Snyder, Nov 26, 2018.

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  1. Alex Snyder

    Alex Snyder
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    Just got off the horn with a multipoint dealer group who was wondering about how much they were actually paying to their DMS provider. Although I didn't have exact answers we started doing some rough math on how much of their CRM bill might be going to an integration cost, how much of their website provider might be paying for an OEM-mandated program, and so-on and so-on.

    The rough math looked to be a little over 12% of their monthly technology costs were going to services they viewed as paying for twice. For example, if they paid their DMS provider $6,000 per month per store there was an additional $1,000+ going to that same DMS provider for integrations to the CRM, website inventory, and service scheduler that were not disclosed in anyone's bill. This essentially made their DMS bill actually $7,000 per month. And it didn't stop there…. far from it!

    For this dealer group they are easily paying well into the 6 figure territory, annually, for undisclosed things.

    Outside of the DMS and OEM-mandated programs what other things are taking a fee behind the dealer's back?
     
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  3. mikesayre

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    It's interesting, automotive dealerships have so much redundancy in many areas, which have been going on for awhile.
    Just so I'm clear..

    Example #1:
    Dealer pays DMS company $5,000 month for services, which should cover any dealer costs for integrations..
    DMS company charges vendors an integration fee$ to access the dealers data in the DMS..?

    Any other examples, elaborations of redundant services?
     
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  4. Alex Snyder

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    I guess I didn't do a good job explaining it. For the sake of easy numbers these are all fictitious.

    • Dealer pays DMS company $5,000 per month directly.
    • Dealer pays CRM company $2,000 directly.
    • Dealer pays website company $1,500 directly.
    • Dealer pays an inventory company $1,500 directly.
    • Dealer pays service scheduler company $1,000 directly.

    Total monthly budget of $11,000 going out for these technologies.

    • CRM company pays DMS company $500 per month directly.
    • Website company pays DMS company $50 per month directly.
    • Inventory company pays DMS company $150 per month directly (and charges other companies for inventory access too).
    • Service Scheduler company pays DMS company $300 per month directly.

    Total monthly payout of $1,000 going back to the DMS company for "certified" access to DMS data.

    Assuming all of these companies are pushing the costs back to the dealer then the dealer is actually paying the DMS company $6,000 per month and thinking the bill is only $5,000 per month.

    Does that make more sense?
     
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  5. joe.pistell

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    ex·tor·tion
    noun
    1. the practice of obtaining something, especially money, through force or threats (OR PAYWALLS).
      synonyms: blackmail, shakedown;
      upload_2018-11-27_13-13-46.jpeg
     
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  6. Jerry Thibeau

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    I write checks to DMS companies monthly to access to a dealers data and I have to pass that cost back to the dealer unfortunately. It's a racket for sure! Dealers should be able to pass a feed for free to any vendor they choose. Luckily I haven't done any deals with the Shift's of the world, I hear those fee's are more like 20 to 30% of the monthly bill.
     
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