CDK's purchase of Auto/Mate may create a major disruption in the dealer management system (DMS) industry. Here is our take. DOWNLOAD
I believe that, as an automotive community, we intuitively know that we need to change. The sales to consumer model is outdated – our fault for not demanding of ourselves consistent improvement in the consumer experience arena. Consumers are demanding more and Wall Street has taken notice. Backed by hundreds of millions of dollars, companies are quickly rising that threaten to take market share from us. The longer we allow them to thrive and establish their brand and message, the harder it will be for us to retake the market. These disruptors – the Beepis, Vrooms, Carvanas and others – are a threat to our core business model. Right now, they may seem unthreatening, as we continue to go about business as usual. But that would be very wrong.
Take for instance Vroom’s recent acquisition of Texas Auto Direct, one of the earliest and most successful retailers to embrace online sales (Largest independent dealer in U.S.) and offer this method of buying to consumers. They’ve thrived for years, happily shipping vehicles all across our country. Do you think they could do so if it weren’t extremely profitable? As dealers, we’ve long had the ability to facilitate a quasi-online transaction. It tends to jump back and forth between e-mails, online credit applications, documents sent via Fed-Ex, notarized, and vehicles then shipped. Today, technology exists that allows us to accomplish this with far greater simplicity. It also enables a better customer experience. We as dealers must step out of our (now) profitable comfort zones and stretch our minds. We must adopt, or invent new ways to attract customers. We must think like the customers!
It’s time to step back and learn from these disruptors threatening our livelihoods. They aren’t doing anything hugely different from what you can do in your dealership. We have the infrastructure, the inventories and our manufacturers backing us. No matter what anyone may say, customers still want to touch and feel a “sea” of vehicle choices before signing on the dotted line, especially used vehicles. The simplest way to fight back and watch these companies disappear is to replicate their customer experience online – with the extra value that only a dealership can offer. We need to identify the pain points customers feel exist in the process and take steps to change our processes to eliminate these. By taking a page from these disruptor’s playbooks, we can learn to increase market share, improve customer relations and evolve our teams.
The future of our business rests upon our willingness to meet our customer’s demands without sacrificing margins. We can accomplish this by simplifying our processes – both online and in our showrooms. And, by relieving our customer’s pain points in the vehicle purchasing process through the use of technology. We all know where the jams occur in our processes – customers that aren’t getting prompt service because all available salespeople are sitting with customers. Some of these salespeople are merely babysitting, while their customers await financing. We see a backlog of customers waiting for figures while sales managers try to desk 5 deals at the same time, while appraising 2 trades. Our internet leads go unanswered as the Internet managers are all busy with appointments – and these are ripe for the picking by the competition. This list goes on and on…… Every dealership will have its own pain points and areas that could be improved. You know which exist in your dealership. Yes, it will take a fresh commitment that will take a champion to lead this initiative in your store. It’s hard when we are (currently) profitable. But, remember all those stories – Blockbuster stock was at one time $25 a share and they were smiling and golfing and resting on their current success.
All of these problems can be remedied through the use of technology and a committed culture. And through the creation of a champion in your store who is committed to consistent improvement -- without sacrificing gross profits. Adopting new technology and processes can be quite intimidating. Believe me. I know. I’ve been there. After 35 years in automotive retail and 30 of those years in management / GM, I’ve made those decisions, despite the fears. But, I actually found that there was nothing to fear after all – actually quite the opposite.
Take a step back and look through the eyes of your customer. Envision your dealership and the customer experience you want! Then, make a commitment to adopt technology that offers your customers a better buying experience and name a champion or a team of champions that will lead this new initiative. Let’s disrupt the disruptors. Thoughts?