Author: Ben Lancaster – DrivingSales Retail Editor
This buyer’s guide provides a dealer perspective on the factors important to selecting a CRM system that will match your needs and can improve your store’s performance. Use this guide, in conjunction with product and user reviews on the Drivingsales.com Vendor Ratings website, to structure a high quality, objective, product evaluation process that cuts through the noise to create a short list of potential partners to engage with in depth.
When beginning the search for a CRM system it is important to understand exactly what the term CRM and the host of available solutions encompass.
CRM Definition: Customer Relationship Management is a term that refers to practices, strategies, and technologies used by companies to manage and analyze customer interactions and data throughout the customer lifecycle. The goal of a successful CRM solution is to improve business relationships with customers, assist in customer retention and drive sales growth.
As the definition above illustrates, a core functionality of CRM in a dealership is to manage and analyze customer interaction. Your future CRM system will play a pivotal role in your ILM (internet lead management) strategy. Choosing a tool that provides lead segmentation by source, conversion statistics, and cost per lead analysis will not only make the CRM a useful tool, but will provide additional business insights when defining internet marketing strategies.
While the definition of CRM may seem complex, in reality it’s quite clear; it’s the “window” to your company’s customer base. A good CRM will not only communicate with current and future customers, it will also highlight opportunities, reduce employee workload and drive adoption and implementation of solid business processes throughout the organization. Overtime a CRM should help increase sales conversion, customer retention and highlight revenue opportunities by analyzing past performance. It should also build advocates for the business through insightful ownership communications, as well as smooth purposeful visits to the dealership.
Retention was mentioned above and is a word thrown around often in the auto industry. Everyone has a statistic for how more cost effective a repeat buyer is to sell than to capture an incremental customer. Whether it is the number of service visits a customer makes or the number of communications received in a month from the dealership, lets simply agree that a repeat buyer usually spends more with the store and has the opportunity to become a dealership advocate going forward.
As we begin to take a deeper look into the CRM category and the products/solutions available, it is important to understand that a CRM system is like a gym membership. Signing a contract is not going to cause you to lose weight or improve your sales performance. CRM technology is a tool to support your investment in an improved consumer experience and more effective sales process. Implementing a system should support this strategy, not be the strategy. Getting value from the investment may ultimately require investments in your people and management processes. The tools available have different philosophies that may, or may not, fit with your customer experience strategy, store culture or management practices.
The following are questions you should ask yourself before starting the process of selecting a CRM:
These three questions will provide helpful guidance when analyzing the myriad of offerings and functionality available in the CRM Category.
Deciding on a CRM solution needs to be an inward/outward process at first. It is easy to get caught up in the technology and all of the possibilities it enables, but the single most import part of selecting a CRM is having a clear understanding of your dealerships goals, processes and expectations around customer handling.
Once you have established a clear inward process, it is important to look outward at the market that your dealership serves. What is the demographic makeup of your customer base and how does the customer prefer to interact with your store? Do you serve a metro market with a high technology acceptance curve or a rural market that prefers a more one-on-one approach? These external factors will not necessarily change your inward process and goals for your new CRM, but they will impact the execution and need for certain functionality offered.
Having a precise road map to guide your decision-making will enable you to choose the correct solution as well as a partner that most closely aligns to your organization.
The following categories outline four typical dealership installation scenarios and suggest CRM functionality/support best suited for each.
Single-point Storefront – Independently Operated (Sales Focus):
Single-point Storefront – Independently Operated (Full Customer Relationship Focus):
Multi-Rooftop/Location Dealership Group:
Large Enterprise Group (Centralized Marketing, BDC, Accounting, etc.):
Note: Functionality listed above is intended to provide guidance based on installation type; every installation is unique and functionality is not restricted to the store types outlined above.
A key component to the selection of a CRM product and the partner provider lies in the ease of integration with the current dealership technology solutions. By understanding what your current providers offer for integration as well as the adaptability of the potential CRM products may guide your initial list of target vendors.
Synergies may include:
Along with product technology synergies, the provider is a critical component to the successful installation of a CRM. The size, location, philosophy and employee support structure of prospective CRM providers are key factors when selecting your new CRM product. Finding a company that matches your values and provides the correct support and feedback channels ensures that the new installation will be more than just about the technology and assures a relationship is built around the success of your dealership.
Regardless of the size and complexity of your operation confirm; that the CRM product selected is built to grow with your organization over time. From ensuring that training is built with a walk-before-you-run philosophy to supporting complex enterprise solution, the product and the providers support structure must be sufficient to support your growing business needs.
Items to consider:
Taking the time to do the inward/outward analysis of your operation and market needs before starting the CRM selection will ensure that you have identified critical processes and required functionality to successfully select the proper system.
The components provided in CRM offerings vary by vendor and each offering tends to have a unique feature or functionality that is designed to differentiate the product in the market. That said, most CRM packages have a core set of functionality that is fairly standard across the industry. When researching a CRM for your dealership it is important to understand the standard components as well as the optional solutions offered. Depending on your goals for the new system and the processes you would like it to support, the delineation between standard and optional features may make all the difference in selecting a partner.
Common standard CRM functionality:
Features that are standard in 50% or greater of the offerings:
Profiled Companies Differentiating Features:
Although not reviewed here, several vendors in the category have made major investments to extend their products beyond the traditional boundaries of CRM. Ensure that any vendor you consider details their long-term vision for the products – they might provide you with a competitive advantage.
When comparing functionality it is important to keep in mind that each provider structures and prices its product differently. Pricing philosophies vary widely in the industry with some providers favoring a small core bundle and wide a la carte options, while others have 1 or 2 packages designed to meet most dealers’ needs. The market, however, is competitive. Therefore, analyze your CRM proposals carefully as pricing will tend to normalize around common functionality.
After taking the time to understand the core functionality differences between CRM systems, it is important to understand the philosophical approach built into the product. All CRM systems offer dashboards with workflow management, permission based user setups, hierarchical views of data and escalation processes; however, the way the system goes about supplying this functionality can be quite different. CRM systems in today’s market tend to fit into one of two categories: Rules Based or a Proactive/Utilization approach.
Two Common System Approaches
Systems that function based on proactive utilization tend to lend themselves to dealerships that provide a bit more autonomy to their employees and have a more experienced staff. These systems still offer accountability and teaching opportunities based on escalation rules. They simply arrive at the end result in a different manner. If you have the quality of staff and training that can deliver a more flexible sales process, research on modern consumer behavior by DrivingSales and others show that one can achieve a materially higher closing rate with a flexible, “responsive” selling process than more rigid, linear processes.
In general, all CRM’s provide for accountability, workflow automation and organized customer handling. The choice between a rules based system and a proactive/utilization-based product in the end should be determined by how the solution best fits the need of the dealership.
In today’s world of consumers’ heavy use of mobile devices as a shopping and information gathering tools, a CRM needs a solid mobile component to ensure the dealership is in a position to meet the demands of the market. In today’s market 87% of Millennials utilize up to three tech devices each day. With this group rapidly becoming larger than the baby boomer generation, communicating in a manner familiar to the Millennial customer will become increasingly expected.
CRM partners all offer some form of mobile component to their product, but how the tool is designed and utilized varies widely in the segment. Mobile functionality can be classified in three major categories: mobile first designs, complimentary mobile products and trailing mobile designs.
Mobile First Designs are products that were designed from the ground up with the expectation that a mobile tablet or smartphone would be the primary interface when using the CRM. These tools allow for 100% of the CRM functionality to be available on the device. This product permits the customer interaction to flow seamlessly from the lot to the showroom, even to a family picnic, as everything required to work a deal is available on the mobile device. These latest generation products tend to be written in HTML5 or similar architectures that will auto-sense the device type and present the user with the appropriate layout.
Complimentary Mobile Products are designed with attention to mimic the functionality of the desktop as closely as possible. These products usually provide upwards of 95% of desktop functionality and in most cases are App based. These designs provide a solid user experience and in general are not readily apparent that they are a different system. Data is tightly integrated between the two applications and although customer information is gathered on the mobile device, data is stored at the system level guaranteeing security.
Trailing Mobile Designs are applications designed to support a legacy system. These applications usually support up to 70% of the CRM systems functionality, but rely on the desktop version of the product for certain functionality.
Social communication channels are becoming evermore prevalent in helping drive consumer education and ultimately purchase decisions. Dealerships have been actively adopting social marketing strategies over the past few years and the CRM you choose should help support those initiatives.
CRM systems have done a great job of integrating to dealership websites (whether as a standard feature or optional component) providing inventory integration, customer search, click reporting and, most importantly, lead integration. Social integration is in its infancy compared to websites and only a few of the CRM providers in the market offer much in the way of social connectivity.
Social integration is utilized extensively in one leading CRM by utilizing the publicly available data provided by the social sites to augment customer record updates when initially loading the record. This system may grab a picture from Facebook for the main customer page, while updating “likes” and interest from Pinterest. In addition to customer record update, it provides connectivity to the customers’ pages (permission based) and allows for dialogue through social channels.
As CRM systems continue to evolve, social integration will continue to be integrated into the product suites. It is important when researching a purchase to find out from the prospective providers what their social strategy is and will be.
CRM systems function as the hubs of dealership customer engagement. In many cases, this engagement across dealership departments (sales and service) provides an extensive database of customer information, which is clearly organized and stored. Taking advantage of this data to create intelligent marketing campaigns is a critical component of staying connected with customers.
At the core, CRM systems are designed to automate workflow, organize interactions and communicate with customers through multiple channels (phone, e-mail and SMS). This basic functionality allows for the dealership to stay in touch with its owner base.
Many of todays CRM tools go far beyond the basics by providing the ability to mine data from the tool and initiate highly targeted communications segmented by factors such as vehicle of interest, service offer, and geographic location of the target customers. These campaigns can be stored for future use along with the templates utilized and corresponding data criteria. Triggered campaigns based on customer interaction can be programed to deliver automatically. Such triggers can include declined service notifications and wish-list vehicles that have been taken into inventory.
Dealerships that have centralized marketing departments can take certain CRM providers’ tools to the next level through the use of segmentation (including control groups and householding), customer lifetime value, enterprise functionality, and reputation management. These valuable tools can be used to develop entire marketing campaigns for the operation and segment delivery by rooftop. Customers can be suppressed based on previous offers and/or time criteria to ensure the proper message is delivered in each instance.
Campaign effectiveness & response ROI can be calculated based on numerous criteria including:
When evaluating your CRM it is important to consider your current marketing initiatives and future goals to help determine the level of functionality needed. In addition, many new vehicle franchise dealers may be running OEM required service and sales marketing platforms. Having a plan going into the selection process will help eliminate marketing overlap between systems.
Reporting is fundamental to a good CRM as the data collected within the tool provides direct insights into the day-to-day customer handling of your current and prospective buyers. The data collected will not only help keep customers informed and engaged, but it helps drive process improvement, grade employee performance, compile valuable historical deal and vehicle information, and manage the results of complex marketing campaigns. The ability to take action based on the wealth of information inside the CRM provides dealerships with the foundation to continually refine their operations.
All CRM’s on the market today offer reporting packages that allow for hierarchical views of the data, the ability to graphically represent information, and manage processes. The providers approach of how information is presented and to what degree of depth that they report differ by CRM.
Two Common Reporting Philosophies
Note: Most CRM’s that offer dashboard-landing pages have certain aspects of the real-time reporting. The real-time reporting concept takes this philosophy and integrates it throughout the platform.
Depending on the provider, two primary approaches have been adopted to report the valuable data that has been collected. Providers either focus specifically on data relevant to the CRM and its core functionality or they deeply integrate into DMS specific information such as RO line item detail and detailed deal structure data. One train of thought focuses on providing the most relevant CRM data and letting the DMS display comprehensive detail, while the other stresses the integration between systems.
Neither philosophy is wrong; the decision comes down to what source are you most likely to use as your primary data point. If you opt for the more CRM-specific reporting option, simply remember that certain customer detail information may need to be pulled separately.
Companies providing CRM solutions in the market today offer a wide variety of additional products and solutions that potentially can play a role in selecting your system. CRM providers in many cases will offer dealer websites, comprehensive analytic tools and, in some cases, full DMS solutions. There can be great synergies when purchasing multiple solutions from one partner including:
Deciding on utilizing more than one solution from a partner largely depends on the dealership’s comfort level of having all of their “eggs in one basket” as well as the current system needs of the dealership. When conducting your initial inward process review make sure to consider your entire technology platform in the decision-making process; additional product synergies may be uncovered that can be addressed in the CRM search.
Data integration is one of the most important aspects of the selection process. The CRM system is responsible for the bulk of the dealership’s customer handling and communication strategies. The data gleaned from these interactions can be some of the most valuable information the store gathers in terms of customer preferences, trend analysis and purchasing habits. Ensuing a tight integration with your existing dealership infrastructure allows CRM data to augment the transactional data in the DMS to provide a comprehensive picture of your owner base.
Eliminate data silos: In many instances where multiple systems are used within an organization, data from each individual system is stored separately from the other system. When this happens customer records become duplicated, profiles become fragmented, and the ability to take solid action based on the data is compromised. When working with your CRM partner, confirm that they have documented processes for sharing data between systems.
Record Cleanse Process: When a new system is entered into an existing technology infrastructure, it is critical that the legacy data loaded into the new platform be cleansed for accuracy. Even some of the best technology solutions data can become outdated or inaccurate over time. Take the opportunity when installing your CRM to perform a comprehensive de-dupe and cleanup of your data. A number of the CRM providers offer detailed NCOA, DNC, and algorithm-based customer record updates that will greatly improve the effectiveness of your new system.
Single sign-on systems (DMS and CRM are provided by the same partner) reduce the risk of duplicate records as the systems usually share a single database. In addition some single sign-on CRM systems require integration to the legacy DMS product to function. Certain standalone CRM providers offer robust de-dupe and cleanse logic when a record is written back to the DMS to ensure accuracy within both systems. It is important to understand the unique aspects of these systems when working with prospective partners.
Data Availability: One of the quickest ways to have your new CRM system run into employee adoption issues is by not having the data needed readily available on a daily basis. Regardless of CRM database structure, the most important element to a successful implementation is the ability for employees to find all the relevant information required to perform their job within the system. If employees begin to leave the CRM and have to go to the DMS or other dealership tools to locate relevant customer data (i.e. vehicle ownership, deal data, etc.), the system will struggle to gain traction.
In addition to the ease of use and employee adoption factors, solid data integration provides the availability of a unified reporting picture allowing for a clear understanding of dealership performance.
Do not assume that if you buy a CRM from the same company as your DMS provider that it will automatically be better integrated than an independent vendor. All independent vendors license data integrations from DMS providers and you should evaluate the actual functionality delivered. The DMS provider may have acquired a company to provide CRM functionality and face the same technical challenges as an independent vendor. It is a reasonable expectation over time that CRM and DMS solutions from the same company will work better together (similar user interfaces, deeper data integration, common user log-ins, etc.) than different companies, just inspect to see what is reality today.
Today’s modern CRM systems live in the cloud and no longer require expensive servers and dealership infrastructure to function. In most cases an Internet connection and possibly the need for a tablet will get your store up and running. While this is great for many reasons such as the speed of the installation and the simplification of in store technology requirements, it exposes your customer data to storage and security risks.
Confirm that your provider outlines their cloud server architecture and that at a minimum data is backed up at two separate facilities. Request historical performance numbers for up-time and recovery time when an outage occurs. Understand their normal update and maintenance cycles. Having a clear understanding of this information will provide greater clarity of the up-time and performance characteristics you should expect from your new CRM.
Cloud-based systems’ unique architectures bring along security concerns as well. Data living in the cloud is subject to compromise from almost anywhere in the world. When discussing data security with your CRM partner make sure to answer these questions:
Taking the time upfront to understand the unique nature of cloud-based systems will give you the understanding required to proactively mitigate any risks associated with your new CRM.
Installation and support play a pivotal role in the success and overall utilization of your new CRM. Having a company that can assist you step by step through the installation process and support you well after the system goes live is a fundamental aspect of the overall product. Historically, a significant percentage of CRM deployments have failed, disrupting operations, for lack of adoption in the dealership. You should inspect a vendor’s installation, training and support services with the same intensity as you do their product functionality. Talk to recent customers about their experience, how fast their dealership become productive on the new system, and the overall commitment the vendor had to their successful adoption after the contract was signed.
The typical installation process that dominates the CRM market today is broken into three functional categories: pre-installation, onsite training and ongoing support. Items to consider in each category are outlined below.
Pre-Installation
Onsite Training:
Ongoing Support:
CRM contracts take on two primary structures including month-to-month and traditional term based formats. Deciding which contract type is correct for your business largely depends on what your organization feels most comfortable entering.
The month-to-month contracts typically require a 30-60 day advance notification before the contract can be terminated. These contracts tend to offer dealers a bit more freedom to frequently change partners, but can lack certain protective language that some dealer groups may require.
The standard contract term for most CRM providers utilizing this format is 12 – 24 months. Discounts may be obtained for signing contracts of longer duration. In most cases, these contracts contain a renewal window that allows for cancellation before the contract renews.
DMS integration costs are increasing for partners that require a certified integration to DMS providers such as CDK Global and Reynolds & Reynolds. The DMS provider charges these costs to the partner on a per rooftop basis for allowing integration into their system. These fees can amount to hundreds of dollars per month and will be bundled into the fee you are quoted by the CRM provider. Integration fees vary widely by DMS vendor making it important to understand these costs when selecting a CRM provider.
Data ownership is another key item to fully understand when purchasing predominately cloud-based systems. Examine what rights does the vendor assert in their agreements to use your data. Use of standardized, aggregated data to provide benchmarking and other services in your reporting can be safe and valuable. However, you should have visibility into other uses and retain control of any distribution of your data. Upon cancellation of your CRM contract, understand who owns the updated customer record stored offsite. Determine the length of time you have to retrieve your customer database and upload the records to a new system.
CRM system costs can vary greatly based on the contract term, size of the dealership user base, and optional components purchased. That being said the typical monthly price range for a standard CRM package tends to be between $799.00 per month and $2,499.00 depending on store size. The average observed monthly price for a typical dealership tends to be around $1,500.00 - $2,000.00 per month.
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