Choosing the right dealer management system (DMS) can keep an owner awake at night. Pick the wrong one, and it will affect employee morale, which could result in high employee turnover, drive productivity to the ground and lead to a negative impact on the bottom line.

Twenty-five years ago, it was common for dealers to keep records of inventory, sales and collections on paper! That owners’ businesses survived was a miracle. Then in the late ‘80s to early ‘90s, there was the PC boom and two companies (Lotus and Microsoft) released the spreadsheet, so instead of writing, dealers entered data into spreadsheets and that became their new, sophisticated filing cabinet.

At the same time, DMS software companies emerged. At the core of every DMS, there must be an easy-to-use and logical interface to enter/search inventory, make selling vehicles easy and track receivables. Outside of this, all the other features and functions of software benefit only those owners who think strategically and long-term and are confident of their own expansion, and they must really believe that a DMS can help make their dealership a center of excellence.

In the new car franchise world, two DMS dominate the market. However, in the BHPH market, there are numerous players battling it out to earn your trust and your business. Over the years, we’ve all seen DMS providers come and go. We’ve seen providers sell non-compliant software, offer poor-to-no support, provide minimal-to-no product advancement, and routinely over-promise and under-deliver on the products they sold. Dealers who purchased these products have unknowingly put their businesses and their livelihoods at great risk. The DMS provider’s pressure to provide all things under the sun at a marginal cost contributed to poor quality and provided unrealistic expectations to dealers. The remaining providers are all working hard vying for market dominance.

As the demand for better software tools increases, so do the capital requirements necessary for new and continued investment into research and development. Ultimately, the leaders will separate themselves by offering features that are truly innovative. These features will make dealers more productive, more efficient and most importantly, more profitable. A DMS provider’s ability to provide continuous innovation and long-term intellectual capital will be two key metrics any dealer should use to determine a DMS provider’s long-term survival.

Now let’s venture into nirvana. In the next generation of DMS, dealers will have a one-stop shop for every facet of their business. More importantly, every facet should be integrated to minimize the number of times users have to enter information. If spreadsheets are a thing of the past, so is double- and even triple-entry. The DMS will have a fully integrated and seamless accounting system, a parts and service system, a collections system that helps reduce delinquencies by an order of magnitude, and key performance indicators (KPIs) that will inform the leadership team and employees if there are any problems anywhere in the business. Imagine a software package that proactively alerts you of any bleeding, so you can act upon it instantly instead of reacting after the fact. This up-to-the-minute user interface should not only provide information to you, but it should also go to work for you. Users should be more productive, effective and satisfied. The next generation of DMS will have all of this.

One of the commonalities, or casualties, of all dealerships is paper! Many of us live in a paperless society in our personal finances. We receive invoice notifications via e-mail and make payments online. We do this as a matter of convenience, to save time and to minimize clutter and paper around the house. So, why not make a business a paperless society? The next generation of DMS will have integration to scanners and document imaging technology that will store images, documents and contracts. These documents will be indexed to enable rapid extraction of critical information. That’s on the front-end.

On the back-end, the next generation of DMS will offer an online and fully-integrated payment system, not paper invoices. Customers should have the ability to make payments from their homes and set up recurring payments online either through ACH or a credit card. Few people have time to go or enjoy going to the dealership to make a payment, but if they do, they will have an electronic kiosk waiting to take their money. Once a payment is made, the accounting system should automatically update the customer’s record in real-time. This gives your customer the peace-of-mind of knowing that their transaction was posted correctly.

Fraudsters are becoming increasingly intelligent. Fraud remains a huge concern to many dealers. In addition to Red Flag and OFAC compliance, dealers are going to rely on technology to help fight fraud. Instant verification of people’s identification is going to become the norm. The next generation of DMS will offer seamless integration to technology that validates one’s identity, ensuring that your risk is minimal. Once the person’s information is entered once, it will automatically appear where you need it, on the F & I screen, accounting, collections, service, document storage, CRM you name it! One entry point, accessible by all, seamlessly. The DMS will be the nexus for all information.

Having a fully-integrated technology solution is not limited to the DMS. Web sites have always been vital tools for creating prospects, but your Web site should not only promote the key qualities of your business, but also be a key mechanism to sell inventory quickly and communicate to customers. Your Web site should provide online credit applications that integrate to your DMS. Prospects can go to your Web site, browse your inventory, complete a credit application and receive an approval.

Dealers can negotiate terms electronically and provide all necessary paperwork to these consumers online. When the applicant arrives, all necessary documents have already been prepared, shortening the time to close. Customers can then sign and set up their account for recurring payments, which reduces delinquency, personnel and collections. You can image closing documents, deliver the car and get the customer on their way. Since your DMS is fully integrated via a single entry point, when the car is sold, the Web site is automatically updated to reflect any new inventory adjustments. Little or no hassle, a fast and convenient transaction, and the whole experience is one of euphoria and efficiency for both parties!

The next generation of DMS will take you to nirvana, as long as new methodologies are embraced from the leadership team all the way down through the organization. Patience is the key. Nirvana does come at a cost, and changing old habits takes time. But without a doubt, the next wave of new technology will dictate, and simplify, the way you operate your dealership. The good news is that many of the features mentioned as “next generation” are already available in a few DMS systems. Nirvana can exist today.

Vol. 7, Issue 7