Speculation on the future – somewhat frightening

[Alex Snyder]

First off, I must admit this article is purely speculation based on rumors – it is about the future, and not set in stone.

Two things have come up this week, which are major concerns for me. One deals with the two big DMS providers: Reynolds & Reynolds and ADP. The second is something I heard about Toyota. We all know privacy laws have become more stringent than ever and continually evolve to encapsulate wider venues almost daily. It was simply a matter of time before the DMS providers had to jump on the privacy band-wagon by creating their own set of requirements.  This should be nothing new for a Reynolds & Reynolds dealer. Mostly this will affect third-party vendors. As an ADP dealer I am beginning to become familiar with their upcoming process. It seems as though they are offering vendors two steps: 1) The vendor has to purchase an API to gain DMS access (about $80,000) and 2) become certified through ADP (about an 18 month process…currently). Fortunately, dealers will be able to send out some information to vendors, but the more DMS information a vendor interacts with the harder it will be for that organization. I foresee the next few years being difficult in working with DMS information and vendors. We will have a short list of approved vendors to choose from.

To further shorten that list is the second part: our manufacturers. This part fully comes from the rumor-mill, but I heard Toyota is considering a new mandate. The mandate will require dealers to only use approved CRM/ILM vendors. This will be more stringent than what Honda currently does. Honda only wants to monitor certain areas of how Internet leads are handled, so they require a dealer to use a pre-approved list of vendors or offer dealers to pull leads through their own Honda Interactive Network. From what I heard about Toyota, they are considering only passing leads to dealers who use one of their pre-approved CRM/ILM vendors, and not offering any other alternatives to access Toyota leads. Speculation on the rumor vine, also states Toyota will take things even further by requiring the whole dealership use one of these vendors. Toyota is interested in not only how Internet leads are handled, but showroom traffic as well. Typically Toyota sets the franchise premises, so it is only a matter of time before other OEM’s move in the same direction.

If speculation becomes fact, this could mean dealers have an extremely short list of vendors to choose from. And dealer groups could be even more limited as one manufacturer requires a particular CRM/ILM that another manufacturer may not.

Can you see what a mess all of this could put all of us in?

P.S. One more time, this is purely speculation from the rumor-mill. I mention it on DealerRefresh to give everyone a heads-up on a potentially difficult future.

 

[Mitch]

Nice post Alex...

Nissan also demands that you work with their approved CRM vendors... but they have approved 23 of them, so does it really matter if Toyota goes this route? I'd say no, if they approve anywhere near that many. Most dealers are bandwagon folk, and the number of dealers who will want to use a custom-built tool or an unapproved tool is small enough that it's worth the mandate.

What concerns me more is that every manufacturer and vendor seems to be getting more active in telling the dealer how to run their business... and as much as I'd love to debate that line of thinking, I really can't. Most dealers are successful by accident when left to their own devices.

 

[Alex Snyder (blog)]

You may be right Mitch. I can see it now....

Welcome to McDonalds Toyota, would you like a Corolla with that?

 

[Jeff Kershner]

Mercedes-Benz has done this as well. It was over 2 years ago that Mercedes stepped in and gave the dealers a choice of CRM vendors to choose from.

ADP web CRM
Autobase
ReyRey Contact Management
Higher Gear
NCompass
ReckonUp
UDC Momentum!
eLead CRM

The big problem here was; the personnel in charge of choosing what CRM vendors qualify as a "approved CRM solutions" had never worked at a dealer nor with a CRM. That's a whole another rant though!

As you mentioned Alex, "Toyota is interested in not only how Internet leads are handled, but showroom traffic as well." Currently Mercedes is only tracking Internet leads and leads from their other virtual marketing efforts, but I would not doubt that with time they would like to track the showroom activity as well.

If I were a manufacturer I would want to see which online marketing avenues are working and producing sales at the dealer level. From what I know, the qualified CRM vendors have to be able to relay information back to Mercedes Corporate regarding the ad source and outcome of the customer leads. Narrowing it down to only a hand full of CRM vendors, I'm sure makes it a lot easier for corporate to manage.

I have do doubt that as the Manufacturers try and get a firmer grip on each dealers process, the whole landscape of this business (at least on the new cars side and possible certified pre-owned) is going to change.

All of this and we have not even taken in to account the restrictions the DMS providers I'm sure are going to set in the future for privacy. There is no doubt this could potentially he a huge mess.

I feel for you Alex, being a multi franchises dealer I can only imagine the mess that could cause.

 

[Jeff Larsen (blog)]

Thanks for the heads up Alex and like yourself...

I have heard similar rumblings in the last few years. The rumors I heard were how the big DMS companies would completely deny access to dealership information from 3rd party vendors.

Why does a dealership need a "DMS"? I don't know this answer and maybe others can shed light for me?

Im just a car guy that has taken the time to learn some of the technology available to the dealership via CRM/DMS integration, but I see this as a strong arm of the DMS's to soley use their product (good or bad) for all functions wanted.

Not being as familiar with what the DMS's provide on the accounting side, but other than that- are there not CRM tools that with a little tweaking would be able to provide all of the services needed to dealerships aside from the accounting and maybe some of the service/parts department functions?

Example: Pulling new car inventory from the manufacturers (manually entering used) and ability it to other 3rd party vendors, enter customer info via dl scanner, not having to "push" a paperless deal into a DMS instead working right out of the CRM tool? Besides, CRM tools are already integrating the service and parts dept information now with internet and showroom.

One place for the manufacturers to observe all the dealerships processes and results from all departments.

Maybe Im just a simpleton?

 

[Joe Pistell]

Mitch writes: "...Most dealers are successful by accident when left to their own devices."

I second that opinion!

 

[Kevin Frye]

Would any of us be truly surprised if the primary DMS providers decided to make it incredibly difficult for 3 party providers to have access to our respective DMS? Have any of us been blind to the pattern of smaller vendors rising up to become formidable competition to Reynolds and ADP, then learn that those smaller vendors have been bought out by Reynolds or ADP? It is the nature of this industry... I am curious as to see the shakedown that will result with Microsoft's entry into this market.

As for being forced to use a specific ILM/CRM, I have seen this with several of my OEM's. However, over time, they have opened up access to use other "certified" ILM/CRM packages. While I don't like being forced to use a certain ILM/CRM (especially when I have a better system), I am patient in allowing some time to pass and having the OEM then allow us to use our own system. Kevin Frye/eCommerce Director/Jeff Wyler Automotive Family

 

[Alex Snyder (blog)]

Kevin,

Thank you for your response. Yes, anyone in the auto business should be aware of how DMS providers operate. However, I don't think the recent push to privatize customer information further to be something shady against 3rd party vendors. If that were the case they would have done it a long time ago. I believe this is fully being done in accordance with privacy laws.

As for the manufacturers pushing CRM/ILM's on dealers, no, it is nothing new on the ILM side. It is very new on the CRM side. Now that technology is available to monitor almost every aspect of a dealership's business from anywhere in the world, manufacturers are wanting to see how "their" customers are being treated.

Aside from creating a major hassle of which providers to choose in the future, there is another side to where all this could lead. Mitch, the first commenter in this thread, caught onto it. If manufacturers dictate which technologies to use, then the next step is to QMSify (Quality Management) our sales process. You put these three things together:

equal technology + equal sales process + one price approach (coming) = every franchised dealer being like a fast food chain on new and certified cars.

 

[Kevin Frye]

Good post Alex. I apologize, my response was definitely more ILM biased, and I see your point. For those of us who are on the leading edge with our sales process, I think your final line brings the most concern! Depending on which OEM I am working with (and I will not name which), some are pushing sound sales processes that I would support, while others have "softer" (is that pc? - lol) sales processes that I am not comfortable in fully working with. Keep up the great insight Alex! Kevin Frye/eCommerce Director/Jeff Wyler Automotive Family

 

[Lao Shi]

I am not sure this new trend is such a bad idea. To have the sales processes become more centralized maybe be a good trend at least one to look at for the near term.

So many dealers are doing so many different processes that are unnoticed because they are low on the radar screen. The big groups dominate the attention and the sales process usually with "Cookie Cutter" approaches that center on big discounts, slash and burn sales, any vehicle $77.00, we will not be under sold. They just want to move lots of metal.

Employing new processes with new technology may bring to the surface new ideas that the "Boutique Dealers" are using and that are working in their locales. If the OEM's see what works and is profitable the smart ones will embrace them.

Maybe Microsoft's new solution will bring tools to the game that will offer alternatives to the "archaic" DMS system ADP offers. We will not know unless we are willing to try.

It certainly cannot hurt to try, as we cannot argue with the success of Toyota and Honda's strategists. We are also witnessing the arrival of the Korean brands and models as well as the Chinese Brands that are on the Horizon. We will be in a much different game in the next few years, as each of these new arrivals will bring new strategies to the game. These are strategies that are unique and will be more aggressive and formidable than the Japanese model.

The OEMs and dealers that are in link and know what the local consumer is looking for will have an edge in this game. As we learned from our tournament with the Japanese challenge they knew and know more about what American consumers want than the American OEMs. How did they learn this?? by research and listening to the consumer. The Korean and Chinese OEM's will do the same

Many of the American businesses will be in denial about this and complain that the competition had unfair advantages??? (Some can rationalize anything). However lets face the facts Toyota and Honda are doing well, making vehicle the consumers like well and they are profitable.

I say lets bring the new DMS solutions to the game after all ADP is a dinosaur and no longer the best solution. Reynolds maybe a slight improvement but we need tools for today not yesterdays with a little "bondo" and "Earl's $29.99" I'll paint any car paint job.

GM is already moving in this direction with "One Source", Ford has been drifting in this direction for a few years whether it is part of a plan or just a trend they are not aware of.

This new system will allow the smart, consumer savvy, OEMs to learn more about what the consumers want and think about their products and streamline the process in sales and delivering the inventory to the customer. They will be able to monitor the consumers leads and comments, what they are looking for and are interested in. The smart OEM's will learn and listen and profit as will the dealers.

So rather then dread the change/evolution let's embrace it.

What do we have to lose?