Charter Software President Anne Salemo offers industry insights.
In the last several weeks, we’ve heard from companies whose dealership management system (DMS) vendor changed their pricing structure resulting in their monthly fees being doubled (in some cases more). These dealerships said their current system wasn’t “worth” that much. It got me thinking, should it really take a drastic change for companies to evaluate their dealership management system and partner?
The first step in evaluating your current DMS is to create a list of things you like and dislike about your current dealership management system vendor. This list can also be used by dealers evaluating DMS partners.
Below are several items to consider when making your like/dislike list:
- Are you partnered with your vendor or is it a typical customer/ vendor relationship? An ongoing dialog with your DMS vendor is imperative to help them understand your needs and help you use the system to its fullest potential. You should be helping each other flourish.
- Is your dealership management system vendor transparent? Do they communicate with you regularly? Good visibility into your dealership management system’s product roadmap and services is essential for trust. If there is a bug or issue with their product or services, you should be assured they will keep you updated on their action plan. Whether at a high level like where they are going as a company, or at a detailed level like updates on new interfaces or bug fixes, communicating provides a level of comfort in your partnership.
- Do they have good working relationships with the OEMs that you represent? If not, are they willing to work with your suppliers so you can streamline your business through integration? Your DMS vendor should be willing to work with your suppliers to provide integration that eliminates duplication of effort and reduce errors. Manufacturers want to make it easier for you to do business with them, and it is the dealership management system vendor’s job to enable that relationship electronically.
- Are they endorsed or approved by manufacturers and industry associations? If a vendor is approved by a manufacturer or dealer association, it means they works closely with and have credibility with other companies you do business with. Associations and manufacturers seriously vet their approved vendors and don’t take that approval process lightly.
- Do industry consultants and experts respect your dealership management system vendor? Industry consultants help dealerships become more profitable by teaching best practices. Having a DMS vendor involved with the consultants ensures that the dealership management system vendor has the tools in place to adhere to best practices.
- Is the leadership team accessible? In a true partnership, you can to reach out to your dealership management system vendor’s leadership team directly. Having an open dialog is important in creating trust in your long-term relationship.
- How are you treated when you call? Are emails and calls returned in a timely manner? When you need help with your system, you need it immediately. You shouldn’t have to wait hours for a call back or for an email response. Your dealership management system should take ownership of your problem and help you solve it in a friendly and expedient manner.
- Is your pricing predictable? Are upgrades and added functionality to existing manufacturer interfaces included at no additional charge? Every business has nominal annual increases due to increasing costs like rent, labor and utilities. If you cannot rely on your vendor to provide reasonable pricing expectations it’s very difficult to budget or plan your cashflow. You shouldn’t pay more every time there is a change in a manufacturer interface.
- Do they listen to you? Are they problem-solving? As a business owner or manager, you are problem-solving daily (if not hourly or by the minute). You should feel comfortable contacting your vendor if your largest investment in technology could do things better. Having that comfort level is an important component of your partnership with them.
- What is the average customer tenure for your DMS vendor? Customer churn is a measure of satisfaction for a software company. A dealership management system vendor’s customer retention numbers gives you an idea of how well they treat their customers. If your vendor is not willing to share this information, you should be wary.
- Do they use local, permanent, noncontracted employees to develop and maintain their software? Technology is moving at warp speed, making the level of commitment to new features and functionality more important than ever. Having permanent, local employees ensures continuity and consistency in the product as well as an understanding of what problems the product needs to solve. Understanding how your vendor staffs can help you determine whether they are investing wisely in your future.
- Are they unencumbered by debt? Debt is way of life for most dealerships, not only because of the enormous investment in facilities but also because most inventory is floor planned. It is different in the software business, where having debt can mean resources are tied up and not available for development of new functionality and/or products. This is an important thing to consider when analyzing your dealership management system vendor.
- Does your DMS vendor value you no matter your size? Your dealership management system vendor should make you feel important as their customer, no matter what size your dealership is.
- What are their employee turnover rates? When you need help, it can be very frustrating to constantly get a new person. Low turnover is not only a positive reflection of the company’s culture and longevity, it also causes less customer frustration.
- Does your account manager truly care about your success? When you receive regular check-in calls from your dealership management system vendor, they should ask about your concerns and help you solve them, not just try to sell you something.
- Is your dealership management system vendor stable? If they have recently changed hands and/or reorganized their high-level management team, changing priorities and goals could impact the way they do business with you. Your vendor should have the stability and longevity that you’d want from an OEM or any other partner you do business with.
Whether you are already using a DMS or looking at investing in one for the first time, it’s important to have a set of standards to measure to. That’s why we publish two free guides:
- For dealers who are already using a system, our free guide Evaluating the Use of your Business Management System helps them make sure they are getting the most out of their software investment.
- For dealers looking to purchase a DMS, we offer a free list of ten considerations when researching a business management system.
Make sure you to regularly review your dealership management system vendor relationship. If they are not meeting your needs or treating you fairly, you should consider other options. Your dealership management system is an integral part of your business’ success, and it is truly important that it meets your needs.