Too Many Choices

In a recent Automotive News article, Cox Automotive stated that dealerships use, on average, about seven systems to complete a sales transaction and 18 vendors to run the stores.  When I started in this business at fourteen, we had no technology.  I did the tedious work to update the parts inventory on 3×5 cards.  I used to type the GMAC contract for the F&I manager. Later,  I was one of the first F&I managers in the country to get a computer.  I unpacked the box from Wang Industries.  Very exciting.  I can remember seeing the first DMS to have a screen instead of entering data on a printer (yes, a printer was an input device!)

Today, when a dealer asks me about a certain technology and the various vendors, I have to do quite a bit of studying and research.  Instead of having only one company that provides a technology, dealers have dozens of choices.  For example, for GM’s Digital Marketing choices there are 14 vendors and 3 different plans. That means 42 choices.  It can make your head explode!  How can you decide with so many choices?

The first thing I do is look for the ownership of the company.  Naked Lime might sound new and exciting, but it is actually owned by one of the oldest DMS providers, R+R.  That can be good or bad.  The good news is that R+R is an established stable company that is now owned by the former UCS.  The bad news is that you might want to use one of their marketing services that depend on DMS data and you have a competing DMS system.   If you do have a R+R DMS and are using Naked Lime’s XtreamService product and things are going great – you’ll want to keep the whole package. Nobody wants to rock the boat and change vendors when dealership profits are at a record-breaking level.

But what happens if we go into an economic downturn?  Do you hang onto pricey technology in fear of change that could further reduce sales – or do you start trimming expenses?  That is the second thing you should do; while times are good, it is best to evaluate all technology costs and perform an ROI.  That way you won’t panic if things get bad and delete the wrong technology.  What is an ROI?  That is a return on your investment.  Next month, I’ll teach you how to do this calculation using a BDC as an example.  Stay tuned and hopefully these dozens of choices won’t get in the way of making good decisions.

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