On March 9, 1979, the men’s NCAA basketball tournament kicked off with a field of 40 teams, led by the top-ranked and undefeated Indiana State Sycamores. At that point, the tournament was a second-rate event that only hardcore sports junkies and fans of competing schools cared much about.

That all changed on March 26, when the Sycamores, led by senior forward Larry Bird, faced the Michigan State Spartans and their star guard, Earvin “Magic” Johnson, in the championship game. That Monday night in Salt Lake City, as anticlimactic as it was, gave birth to a rivalry that transformed college basketball and eventually saved the NBA.

Backwoods folk hero

Prior to the 1979 title game, Larry Bird only played in a few televised games. This was before cable TV and ESPN, where players’ exploits were described in print publications like Sports Illustrated or the wire stories picked up in daily newspapers around the country. For small schools like Indiana State, located in Terre Haute and playing in the Missouri Valley Conference, it was more like the 1950’s.

Despite this, Larry Bird was known to those who followed basketball. After graduating from high school, Bird started his college basketball career at mighty Indiana University, where Bobby Knight was about to win his first national title. 

Bird only lasted a month at IU before packing his bags and heading home. The poor kid from French Lick with a troubled home life, wasn’t ready for a college campus larger than his hometown, not to mention a notoriously difficult head coach.

After a year at home attending community college and working as a garbage man, Bird enrolled at Indiana State and never looked back.

It was because of his transfer that Bird gained national attention a second time. In those days, there were eligibility requirements for the NBA draft, and at the end of Bird’s junior year at Indiana State, he was the topic of much discussion among NBA general mangers.

After making it known that he intended to return for his senior year of college, most teams moved on to other prospects. But Red Auerbach, the legendary czar of the Boston Celtics, drafted Bird anyway, content to wait a year before having him on the team. Auerbach knew Bird was worth the wait.

And so it was that Larry Bird entered his senior season at Indiana State, a seldom seen phenom whose scoring and rebounding were only topped by his deft passes and ability to get his teammates into the game.

Magic

Earvin “Magic” Johnson’s rise to fame was as conspicuous as Bird’s was obscure. Despite his humble beginnings – his mother was a school custodian and his father a GM assembly line worker – Johnson’s doting parents instilled in him a drive that augmented his physical gifts and made him star of his state champion high school team and a McDonald’s All-American in 1977.

Johnson could have gone to any college in the country, but chose to stay close to home and play for Jud Heathcote at Michigan State who promised him he could play point guard.

Johnson’s easygoing charm and grace on the court caught the attention of writers and commentators, and as the 1979 NCAA tournament wound down, he and Bird emerged as inevitable foes that everyone following the game hoped would faceoff. They were different in nearly every way except that they both won.

First blood

After crushing Penn 101-67 in the semi-finals, Michigan State looked like a sure-bet to beat the Sycamores, who barely got by DePaul, 76-74, in their semi-final game. But those who’d seen Larry Bird almost singlehandedly destroy teams knew not to count him out.

After the opening tip, Michigan State controlled the ball and got it to Johnson, who drove the lane before crashing into Bird and being called for traveling. Bird got up first, grabbed Johnson’s arm and pulled him to his feet. It was the only time Bird had the upper hand. Michigan State bottled him up with a zone defense that never let him find his rhythm.

The final score, 75-64, belies the impact the game had on college basketball. Bird and Johnson captured the imagination of casual fans like no two players ever had in the sport. Bird, the dogged hustler who never stopped fighting, and Johnson, the always smiling warrior who made it look easy, forced people to take sides in a debate that went on for the next decade as to who was better.   

Nearly 25% of the TV sets in America were tuned to the ‘79 championship game, making it the highest rated telecast in the history of college basketball, a mark that will likely stand forever, given the endless fragmentation of TV that exists today. Even though both Bird and Johnson went on to the NBA the following season, the excitement that fans felt in 1979 didn’t end with that tournament. Instead, it proved to be the launch of a phenomenon that rivals the Super Bowl as the greatest sporting event in the country.

The emergence of college basketball as a big-time sport can be credited to Magic Johnson, the son of a GM assembly line worker and Larry Bird, a man who, in 1987, opened his own Ford-Lincoln-Mercury dealership in Martinsville, Indiana. Car guys.

Many of you reading this will recognize the grit and determination that made Larry Bird and Magic Johnson champions in their respective pursuits. Why? Because you’ve cultivated those same traits to rise to the top of yours.

Here’s to you and your bracket. I hope you win your pool.

Way too often we see dealerships handing over databases to vendors to facilitate a mass email campaign to an entire unfiltered list of customers. Vendors certainly have a stake in larger email campaigns since the odds that a dealer obtains business from the campaign increases - due to sheer numbers. A smart dealer will analyze their open rates and have tools set up to track the effectiveness of a campaign. Success can be judged by the amount spent on the campaign compared to the amount of business it brought in. The problem is that while this may be a success in terms of instant gratification, chances are the dealers have cost themselves more than the revenue they actually generated.

I came across a fantastic article that contained one of the best pieces of advice I’ve heard:

“We need to start seeing failed communications as negative not neutral events.”
 

There are numerous reasons why a massive email blast can hurt your bottom line.  Has this happened to you? You sign up for a loyalty program at a retail or online store with the promise of coupons and specials, only to then find yourself inundated with continuous emails? By itself, this can be annoying, but then add to the equation the fact that chances are good that many of the emails contain nothing of relevance to you in particular. How long would you put up with this? My guess is not for long. According to the article, this type of email program accomplishes five things:

1. It creates a negative brand perception, which will lead to decreased revenue.
2. It decreases interest by the consumer in future communications.
3. It lowers their expectations that future communications will interest them.
4. It decreases engagement between the consumer and the business.
5. It increases the amount of money a business needs to spend to achieve the same results with each and every e-mail blast.

Nurturing customer loyalty is like dancing. When you and your partner are in step with each other, it can be magical. Start stepping on their feet, moving out of tune or messing up the dance steps and you may find your dance partner suddenly loses interest in dancing (or dancing with you, at least).

Data analytics and behavioral marketing can ensure that you (the business) and your dance partner (the consumer) stay in step with each other. This will increase the odds that they’ll want to continue a partnership with you. While sending tens of thousands of emails to your database may seem like it would be the most successful strategy, in all likelihood all you’re accomplishing is stepping on a lot of feet and losing dance partners. Not every one of your customers is ready to do business with you when you have a service special or big sale. Make sure you have a strategy in place to identify which customers are ready to receive your message and then only contact them. You’ll end up with more consumer response, and you won’t have annoyed the ones who weren’t ready to do business at this time.

As security breaches and data theft become more commonplace, businesses will encounter increasing regulatory and consumer pressure to protect that data. I’ve written numerous articles on the importance of data security in dealerships, especially when dealers share that sensitive customer information with their vendor partners.

According to a recent article in Entrepreneur, however, Forrester Research found that “36 percent of data breaches resulted from employee errors.” Even more disturbing is that, according to the government IT Network, MeriTalk, that number is even larger. MeriTalk found that “49 percent of compromises occur when workers bypass security measures…” With sensitive customer data floating around dealerships in CRMs, DMSs, credit applications in deal jackets and many other places, it’s quite apparent that consumer information is readily available to employees who may wish to do your business harm. Add to that the increased risk when employees share that information with vendors or allow vendors to take the information on their own, and dealerships are presented with a plethora of gaps in their efforts to keep this data secure.

As companies get sued, the FTC gets involved and Congress reviews these data breaches on the heels of yet another huge data breach involving JP Morgan—which could affect 76 million households—this problem isn’t going away anytime soon. On the contrary, it’s only going to increase the need for businesses to take greater actions to secure data. Some of the largest collectors of personal data are already under scrutiny by the government, which is deciding whether or not to allow these companies to continue to sell this information to marketers. As big data is big business and essential for marketers to effectively deliver their client’s message to a highly targeted audience, it seems unlikely that government will completely disallow this practice. What seems more likely, however, is regulations that will restrict who these big data companies will be able to share the information with. More than likely, marketing agencies will be restricted to those that use the highest data security methods available and implement strict control, access and processes to maintain the security of the information.

Dealers need to start reviewing their security processes by taking a long look in the mirror. Security is only as good as the weakest link in the chain. All it takes is a single employee downloading the wrong file via e-mail or visiting the wrong website to open a portal for people who want access to that information. This doesn’t even take into consideration that disgruntled or malicious employee looking to damage your business. By tightening access to only those who need it, requiring scheduled password changes and restricting password sharing, dealers can start taking the necessary steps to better protecting the data of the people their livelihoods depend upon—their customers.

Security doesn’t stop internally, however. Many times, the employees tasked with sharing this information with vendors aren’t effectively trained and don’t know what exactly is being shared. E-mailing or FTP’ing databases of customer information is far too common and many times information is unnecessarily shared simply because nobody took the time to review and edit the information prior to sending it. Or vendors are permitted unrestricted access to data just because it was the solution that required the least amount of effort.

The same MeriTalk report revealed “66 percent of respondents see security as time consuming and restrictive, while 60 percent believe their work takes longer due to additional cyber security tactics. Another 20 percent say they can’t complete their work due to security measures and 31 percent skirt around security measures at least once per week.” If your dealership has 100 employees, that would collectively equate to 100 opportunities per week in which your customers’ data is vulnerable.

Whether hackers are getting bolder or security companies are getting better at identifying breaches remains to be seen. The facts are that this is happening on such a large scale and affecting too many people for lawmakers and regulators to ignore. It may not be too far in the future when dealerships start including assurances of data security in their marketing messages. Consumer concern is increasing and consumers will start becoming less likely to share their personal information with you. When that happens, dealerships will find it more difficult to complete sales immediately and secure financing for consumers, as they start opting to circumvent dealerships in favor of dealing directly with banks.

Start preparing now by implementing in-house security processes and policies of the highest standards and hold employees strictly accountable for their actions. Take the time to train at least one employee on how to securely share data with your vendors and make sure that the vendors you are sharing it with respect and protect the data you share.

Earlier this month, the New York Times reported that a crime ring in Russia has “amassed the largest known collection of Internet credentials, including 1.2 billion user name and password combinations and more than 500 million email addresses.” The newspaper quoted data security expert Alex Holden, founder of Hold Security, as warning that hackers “targeted any website they could get, ranging from Fortune 500 companies to very small websites.”
 

In the last year, we have seen more data stolen from retailers than ever before. It seems as if every week we’re hearing of yet another company that might have compromised our personal data. While the Times reports that this crime ring seems to be using this data to simply hijack email and social media accounts, it does acknowledge that the sale of personal information, including Social Security numbers and other personal information, would be much more lucrative.
 

Dealers may think that car dealers are less likely to be targeted by hackers but I would argue that, in fact, car dealerships would be gold mines for hackers. Not only do dealerships have credit card numbers but they also have every piece of information anyone would need to essentially hijack a person’s life. The fact that there has yet to be a dealership breach reported in the national news might only be because news agencies focus on major breaches, or possibly it’s simply because hackers haven’t figured it out yet.
 

Regardless of whether hackers are targeting dealerships, dealers must consider that consumers do not hold the hackers accountable for data breaches of their private information. When Target was hacked, consumers were outraged that their credit and/or debit card information was compromised. Once Target discovered the culprit was an employee of an HVAC company that Target had hired and announced it to the public, consumers still didn’t care. Target is facing an uphill battle to rebuild trust and reassure its customers, all while being scrutinized by government regulators.
 

Wyndham Hotels experienced a similar breach when its database was compromised. In this case, the FTC intervened and sued the hotel chain, and a federal judge affirmed they have the authority to do so. We all know that the FTC is very involved in automotive sales and related consumer laws. Red flag compliance has steadily become stricter over the past 10 years. Have no doubt that the FTC will intervene in any case in which consumer personal information is stolen from a dealership DMS or CRM.
 

To add to the growing list of data breaches, the news site Mashable reported on August 18 that its system had been breached and hackers made off with 4.5 million patient records that included “patient names, addresses, birthdates, telephone numbers and Social Security numbers… .”
 

Technology has empowered businesses of today to become more efficient than ever. At the same time, it has levied a responsibility on dealerships to safeguard the data that is given to them by consumers. With states enacting data security and privacy laws, government committees arguing for legislation and retailers experiencing the wrath of consumer defection following breaches, dealerships would be wise to ensure that they have effective and compliant data security standards in place – and not only within their own organizations, but also with any vendor with whom they share customer information.
 

The warning signs on the railroad crossing are flashing. The train is coming. Dealers need to either stop or keep going and hope they don’t get hit by the train.

FOR IMMEDIATE RELEASE

Contact: Cathy Dupont
Assistant, National Accounts
cdupont@jandlmarketing.com
(800) 346-9117

J&L Marketing Announces New Company President

Jamil Zabaneh brings to new role years of experience as Vice President of National Accounts

LOUISVILLE, KY (July 30, 2014) – J&L Marketing announced today that owner and former president Scott Joseph will be taking on the role of CEO of the company. Joseph has named Jamil Zabaneh as the new president of J&L Marketing.

Founded in 1991, J&L Marketing has grown under Joseph’s leadership from a 2-person company located in a 250 square foot office to a 98-employee, multi-million dollar organization that includes two Louisville office locations and an in-house printing facility. Over the years, the company has expanded its multi-national market reach and built up its products to include direct marketing campaigns that encompass email, direct mail, video, social and digital advertising. Today, J&L Marketing is the nation’s highest rated automotive owner marketing agency.

Now Joseph has decided to take on the role of the company’s CEO, allowing him to focus on the company’s long-term big picture.

“The company has simply gotten too large for one person to oversee, which is a good thing,” Joseph said. “Naming Jamil Zabaneh as president will allow me to hand over the day-to-day duties of managing J&L Marketing to him. Moving forward my focus will be on the long-term direction and culture of the company, building strategic relationships and innovation.”

Jamil Zabaneh has been with J&L Marketing for five years, and has most recently held the role of Vice President of National Accounts. During his time with J&L, Zabaneh has been pivotal in identifying product improvements and has spearheaded the creation of digital and video marketing components for J&L’s customers. Zabaneh also secured an account with the Chrysler Group, leading to J&L’s role as a preferred vendor with Chrysler. His successes, combined with his complete understanding of the company’s workings, made him the obvious choice for the role of president, according to Joseph.

“Jamil gets it,” said Joseph. “He’s worked hard to create meaningful partnerships throughout the automotive industry, and every project he’s touched has thrived under his management.”

For his part, Zabaneh looks forward to taking J&L Marketing in new directions over the coming years. “I’m deeply honored to have been named president of a company that has seen such amazing growth under Scott’s leadership. The foundation at J&L Marketing is already strong, and I plan to position the company for significant and intense growth over the next three years.”

For more information about the changes in leadership at J&L Marketing, contact Cathy Dupont at cdupont@jandlmarketing.com or (800) 346-9117.

J&L MARKETING

Founded in 1991, J&L Marketing is the nation’s highest rated automotive owner marketing agency. The company is SSAE Certified and recognized throughout the industry for its data security and data analytics. Using data driven strategies powered by its proprietary program, J&L works with clients to design and execute their direct marketing efforts. J&L Marketing’s automotive equity data mining and lead generation, sales events, customer pay service clinics, email, direct mail, microsites, digital direct targeting, retargeting, social media, video and virtual BDC provide a complete range of automotive multi-channel direct marketing solutions for both sales and fixed operations. The company is a preferred vendor with BMW, Chrysler, GM, Mercedes-Benz and MINI. More information is available at www.jandlmarketing.com.

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In the NFL, one of the most valuable commodities a team can have are its fans. Countless times we hear about the effect that home crowds can have on the gameplay of the athletes on both teams. Termed the “12^th man,” this phenomenon is extremely powerful as it can motivate the home team, while at the same time making it more difficult for the opponent. Think of all of the times you’ve watched a football game and seen an opposing quarterback forced to call a time-out because his players can’t hear his play calling. This phenomenon works because it involves belief and support. The players believe it works, and it does. It’s even factored into game predictions by analysts.

Marketing is similar in its effects. Many dealerships look at marketing as an expense needed to drive traffic to their showroom. A well-designed and executed campaign can do that, but marketing is more valuable than you might think. In reality, dealers should look at marketing as their personal 12^th man on their sales floor. It is considered best practice for salespeople to follow up with previous customers, reach out to orphan owners, and even cold-call customers mined from their DMS. I would argue that there is only one difference between these activities and marketing, and that is the fact that your marketing efforts can touch more of your customers than your entire sales staff could accomplish in their lifetime.

Rather than view marketing as an expense, consider looking at those efforts as leveraging the skills of your 12^th man. Marketing serves many of the same purposes as your sales staff, just much more efficiently and at a lower expense.

Let’s look at the similarities between marketing and your sales staff.

1. Acquisition – Dealers have historically focused most of their marketing efforts on customer acquisition. Your salespeople stand on the point waiting for the next customer to drive up. If they’re on their game, they’ll be e-mailing and calling their previous customers and begging the sales managers for lists of prospects. If you consider time valuable, you’ll realize that having salespeople perform these tasks comes at an inherent cost. In addition, most salespeople aren’t trained on how to interact with customers and simply don’t like doing this. Forcing your salespeople to do something that they are not only untrained at but also don’t like is a recipe for failure. In marketing, you control the message to each and every prospect. That message is consistent and delivered strategically. It’s much less expensive and more effective. Your salespeople will be most successful calling their previous customers – not orphan owners or customers that haven’t interacted with your dealership in years.
2. Retention – Once a customer has been acquired, the focus of your marketing efforts should be building relationships. Your salespeople aren’t calling customers encouraging them to service their vehicles because they’re focused on what they get paid for – selling cars. My guess is that your service department isn’t doing this either. Dealerships spend a ton of money on customer acquisition, then forget about these customers. The lifetime value of a single customer can run into hundreds of thousands of dollars if you consider repeat purchases, service and referrals. Ensuring that you are staying top-of-mind to your current customers is essential to maintaining revenue for your dealership. Without a retention strategy, dealers will find themselves in a position of having to replace lost customers with new ones every month. The cost of keeping a current customer is far less than acquiring a new one, yet these are the customers most neglected.
3. Defection – Reaching out to customers that you haven’t seen in awhile – whether service or sales – is not only important in any growth strategy, but also helps you identify why these customers left. In the process of reaching out to these customers, you will gain valuable insight on how you can improve as, invariably, customers will tell you where you lost their confidence. This will also help you identify customers with valid reasons, such as moving away or no longer owning the vehicle they were bringing to you. This allows you to more efficiently target your marketing and saves you money by reducing extraneous marketing to customers who simply won’t be a future revenue source. In a well-run dealership, management will have salespeople calling orphan owners or lists of customers who haven’t purchased in awhile. A large percentage of these customers won’t respond and those that do will not welcome the interaction, save for the few that are coincidentally in market.

Through the use of data analytics, marketing is simply your 12^th man. The 12^th man is there to support your dealership through a more efficient method of reaching customers at the most opportune times and allowing your salespeople to focus on their primary task of selling cars. It will motivate your entire staff by providing more opportunity.

 Don’t be that quarterback forced to take a time-out because your competitor is making more noise than you are. Start looking at your marketing as an important part of your sales team and you will find that it’s much easier to win the game.

Consumers today are increasingly becoming finicky about where and how they want to communicate. While the past may have seen a traditional print ad performing well on its own, that’s increasingly not the case. Data supports the fact that consumers are all over the place and successful marketers know that their message needs to be at every potential touch point possible. The transition from one medium to another is getting increasingly more common as people tweet while watching television and head to websites suggested in print ads. It’s not only important for your business to have a presence in all of these spaces but that it’s also consistent.

It’s very easy for dealers to market as they always have. An ad agency creates their weekly newspaper ad; the dealer reviews it and discusses it with their rep and then – BAM! – it is published. The dealer then discusses their direct mail campaign with their vendor, crafts a compelling message with a call to action, reviews a proof and – BAM! – it is sent. Next comes the SEO and PPC company who suggests some new PPC ad copy in multiple variations, they review, set a budget and – BAM! – they have a new PPC campaign. Now it’s time to conference with the website vendor and discuss content, rolling banner messages and new widgets then –BAM! – you have a better performing website. Now you contact your e-mail marketing or newsletter company to create this month’s newsletter or email campaign. A little reviewing and modifications and – BAM! – you have an e-mail campaign. Last, but not least, you move your physical inventory around in your lot and choose what sits in your showroom.

When was the last time that you had a conference call and coordinated all of these marketing areas with all of the vendors? My guess is that you haven’t. Having a consistent message including the look and feel of your ad is extremely important. Remember when you did radio ads? How many times do you think a customer needs to hear your phone number in order to remember it? The answer is three. Why would you think that would be any different in every form of media? Customers transition from devices and platforms faster than they ever had before. It’s also increasingly more difficult to cut through the noise and get their attention. Because of this, it is even more imperative than ever to ensure that your message is consistent in not only what it’s saying but also in how it looks across every medium.

There must exist a seamless transition for your customer between all mediums. If they’re on your website and wish to go mobile, they must continue to be exposed to the same message. The same goes from the transition between TV and mobile, computer to TV, PPC to website or microsite, direct mail to… well, you get my point. Many dealers we speak to understand the need for consistent branding but don’t truly understand the scope of what multi-channel marketing actually is. In today’s marketing, touch points for customers include your website, mobile presence (ie .do you have a responsive website), email marketing, direct mail, PPC, television, radio and print. All of these must communicate a similar message. If you’ve decided to push a particular model, everywhere the customer goes, they should see messages that look and feel the same, have the same call to action and lead them down a conversion funnel that ends with a visit to your showroom where that exact model should be sitting waiting for them.

Companies that truly use big data in a multi-channel marketing strategy are finding that conversion rates increase dramatically. Consumers are screaming for integrated marketing. Mashable reports that 72% of consumers “want to be engaged with an integrated marketing approach, but only 39% are receiving it [and that] Google found that consumers had 74% brand recall when the advertiser’s integrated strategy carried across mobile, TV and online.”

The use of big data to assist your business in targeted, consistent messages that reach the right consumers at the right time across all mediums is no longer an option if companies want to be noticed in this noisy world. Ensure that your vendors are working together to accomplish this or find one who can do it all. You’ll save yourself time, money and increase conversions.

On March 9, the popular television show “60 Minutes” aired a segment titled “The Data Brokers: Selling Your Personal Information”. In the segment, Steve Kroft interviewed various privacy experts who explained how companies are collecting and selling very personal information in ways that consumers would never expect. While the focus of the segment was firmly on data brokers, the segment did include details of the types of data that is being shared through activities such as web browsing, transactions, mobile phones and Internet activities. There’s nothing new about companies leaving cookie in browsers. What is increasingly coming to the forefront is consumer awareness of what is being collected, how it is then being assembled into individual profiles by combining data from many sources, then sold to companies to better assist them with their marketing.

Auto dealers and vendors certainly contribute to these consumer profiles and with privacy concerns receiving high visibility, the government will inevitably be forced to step in and reassure consumers. At the recent, CeBIT IT fair, Volkswagen chief executive Martin Winterkorn warned the audience that it would be very easy for consumer’s own vehicles to turn into Big Brother. According to a recent article, insurance companies are aggressively trying to get consumers to install systems that would allow them to monitor driving behavior. The European Union is calling for mandatory GPS and 2-way data communications (similar to OnStar) to be installed in all vehicles. This past January, Ford’s Global VP/Marketing told an audience at CES “We know everyone who breaks the law, we know when you’re doing it. We have GPS in your car, so we know what you’re doing.” Obviously this alarmed many attendees and Farley has since retracted his statement.

Consumers are slowly realizing the depth of information being collected on them and then sold. I fully expect this trend to continue. A definite pushback will occur as consumers tighten up on the personal information they share combined with new regulations being enacted to limit or prevent companies from sharing personal data without direct individual consumer permission.

What does that mean for car dealers? It poses all sorts of challenges beginning with things as small as RDR’ing vehicles to the manufacturer to simple targeted marketing by dealers to their consumers. Vendors to auto dealers who rely on big data to provide dealers with improved marketing results may find it more challenging to do so. Imagine having to ask every one of your customers whether you can share their information. On the opposite end of the repercussion scale, dealers will find that they may face liability issues stemming from actions taken by their vendors.

Big data is an essential component of our society. It’s not going away. What businesses will find, however, is that who they are able to share it with and the reasons in which they will be able to will increasingly decrease. Dealers need to ensure that they have vendor partners who place a high priority on data security in action, not just through lip service. Dealers have been dealing with increasingly stricter compliance issues for years now. Consumer privacy concerns will only cause more compliance issues for dealers to monitor. All businesses should take proactive steps with this in mind by reviewing their agreements with any entities that they share information with and taking action now to correct any security deficient agreements they currently have. 

Data security is becoming an increasingly public concern as databases from large retailers continue to be breached and consumer information exposed. Congress is holding hearings this week with top data security professionals to discuss how best to prevent future breaches. The concern is so high that Congress is considering implementing national policy to better safeguard consumers. Data security certainly isn’t a new topic to dealers. In fact, there have been some very high-profile automotive vendors that have felt the backlash of dealers when the dealers felt that their customer data was being used for purposes other than what they thought they should be using it for.

In the automotive space, data is necessary in almost every aspect of operations. You think Target had it rough when it was breached? The thieves in that case managed to compromise 110 million consumers’ credit and debit card information. Dealerships have exponentially greater liabilities when it comes to data security. In addition to processing credit card payments, dealerships collect much more in-depth personal information from consumers perhaps second only to financial institutions. Consumers trust that dealers will protect that data which includes hyper-sensitive information like their addresses, dates of birth, social security numbers, driver’s licenses and more.

Dealers are simply stuck between a rock and a hard place. On one side, the FTC mandates that dealers not share nonpublic personal information with anyone without receiving the customer’s permission. The other side sees the necessity of dealers partnering with vendors to facilitate customer data management, targeted marketing pieces and inactive customer follow up (just to list a few) yet to do so the dealer needs to share nonpublic customer data. According to a recent article in Automotive News, now OEMs are demanding (yes, demanding) data from its dealers even to the point of threatening to withhold quarterly incentive payments if their dealers fail to do so. These financial penalties could amount to literal “fines” from the OEM to the dealer for non-compliance.

Nobody is debating the need for data security or the necessity of dealerships sharing data with vendors in order to help dealers facilitate operational and marketing efforts. Dealers need to know, however, that ultimately the FTC is going to hold them responsible for any data breaches that expose their customer information regardless of whether the breach happened within their systems. Compliance and data security issues will only continue to escalate. As the U.S. Government gets more involved, dealers will have to ensure that they are not only in compliance with their state laws but also with any federal laws… and it seems like that hammer is about to fall… hard.

Dealers need to be aware of who they are sharing their data with, exactly what data is being shared and what is being done with it after the fact. The days of carte blanche DMS access for vendors are gone. “Dealers should never let vendors have full access to a dealership management system or customer-retention data without knowing what data fields are being pulled”, advises Brad Miller, director of legal and regulatory affairs for the National Automobile Dealers Association.

We recognize that sensitive customer information is needed to create and deploy powerful, targeted marketing over many channels. Without access to a dealership’s data, many vendors simply could not remain in business. Our jobs as vendors are to assist the dealer while ensuring that in no way do our services expose them to liability. On the other side of the coin, dealers need vendor technology to increase revenue through customer retention and acquisition marketing in the same way it needs CRM and DMS systems to operate. Dealers need to have confidence in the partners that they choose. Choosing vendor partners based on price could prove to be more expensive in the long run if data security issues arise.

Knowing who you are working with, what data they need, what you are giving them and what they are doing with it is an obligation you assume the minute a customer hands you their credit card or fills out a credit application. You have to understand exactly what data the vendor needs and ensure that you are not providing additional data that isn’t necessary for them to complete the service you’ve hired them for. The public’s hyper-awareness of data security and heightened concern regarding it due to the recent incidents of data breaches make it even more important than ever for dealers to ensure that they are doing their due diligence by partnering with vendors that have appropriate security processes in place to protect consumer data and, by extension, the dealership. Even the vendor with the best intentions can put a dealer at risk without written process documentation and adherence to the strictest data security standards.