Data Control and the DMS

Mike Esposito is the president and CEO of Auto/Mate, an Albany, N.Y.-based DMS provider that has earned a string of “Best Place to Work” honors from Albany Business Review and “Top Workplace” awards from the Albany Times-Union. Auto Dealer Today caught up with Esposito to learn more about the philosophy behind Auto/Mate’s customer and employee relations.

ADT: Mike, we missed each other at NADA. How was your experience this year?

Esposito: It was the best show we’ve ever had for Auto/Mate. We are seeing a lot of consolidation, so we had a lot of larger dealer groups showing up, asking about what we’re doing and asking to see the software. Pretty much everybody was talking about data. How do you deal with it? Does the dealer own the data?

ADT: Does the dealer own the data?

Esposito: It’s actually two questions: Who owns the data and who controls the data? All the DMS providers say the dealer owns the data. But the real question is who controls it. If you and I have a buddy who’s a dealer and we start a service follow-up company, we say, “OK, we just need to get integration with the DMS so we can pull the data.” He goes to the DMS provider and says, “I would like for Mike to have access.”

These days, it’s based on the DMS no matter what the dealer says. Some of the other DMS vendors tend to want to make that a profit center for themselves. We have an application program interface, also known as an “API.” That’s what the dealer wants.

ADT: Were you with Auto/Mate when that decision was made?

Esposito: We have always had an open strategy with all our third parties. Twenty years ago, people would literally dial in. The dealer would call us and we’d set up a login to get the data, or we would FTP the data to them. It wasn’t until 2007 or 2008 that we decided we needed to have an API to give them the ability to send data back and forth. Most of our third parties use that. It’s nice to have, because it’s easy to secure, and you don’t have to worry about hacking.

ADT: Will the DMS ever take over all the functions of the CRM?

Esposito: I think one of the things dealers are looking for is a tightly integrated package. A lot of them like the one-throat-to-choke thing, but if you’re a DMS vendor and you have a well-thought-out CRM, it can be totally integrated so everybody has access. But the next generation of CRMs will be tightly coupled to the DMS. It will be another function of the DMS as opposed to a separate module.

ADT: What are you working on right now?

Esposito: We look at things in an evolutionary, rather than revolutionary, fashion. The system is not the same as you’ll have in a year, because we are updating it on a weekly basis — some smaller, some larger — so there’s no big bang coming.

Last year, we rewrote our entire payroll system, and all the dealers who buy payroll from us got that for free. We are working on things such as mobile technology and developing new tools for the accounting office to make things more efficient for them.

ADT: You don’t hear much about accounting solutions.

Esposito: You’re right. You’ve got publications for sales, F&I and fixed ops, but not accounting. You have groups within the manufacturers to support the parts manager, but nothing for the office manager. And when it comes to software, dealers are typically driven by how many more cars or they can sell or how much more gross they can make in F&I if they buy it. You could offer them software that would reduce their accounting headcount from five people to three, and most dealers would say, “OK, whatever. Why can’t I sell more cars?”

ADT: What was your introduction to dealer software?

Esposito: My background is in engineering. I spent 10 years working in different management positions with General Electric and another 10 years with Fairchild Semiconductor. Through sheer happenstance, I wound up running a car dealership. One of my attorney friend’s clients was a car dealer who was looking for a sales manager. He invited me to come on board as a computer consultant, hang around for 60 days, shadow his people, see how the process works. So that was my first foray into the DMS arena.

ADT: Were you impressed?

Esposito: Are you kidding me? It was 10- or 20-year-old technology. Green screens and dot matrix printers? Really? And we were on a five-year contract. When we needed another F&I printer, they wanted to charge us $3,000 for it. This is probably 1996. I went online and found a printer, the same model, for about $350, but they said it wouldn’t work on their system. That was a rude awakening. I came from an industry that was all plug and play. Buy any printer and hook it up to any PC.

ADT: Did you enjoy working in the dealership?

Esposito: Well, the dealership environment was a big shock. I started as general sales manager and then general manager, and we did well. We sold about 300 cars per month. I did that for about six years, 80 hours a week, and I thought, “This is crazy.” I decided to leave.

Around that time, I met Steve Fullum, the founder and then-president and CEO of Auto/Mate. They had about 10 people working for them, and I said, “Hey, I’m looking for a job.” They said they couldn’t afford me, so I said, “Why don’t I just sell for you guys?” So that’s what I did, for about a year, and did it really well. It was the only time anyone ever told me to stop selling. They couldn’t install the systems fast enough.

And then tragedy struck. Steve Fullum had a heart attack and died. I stepped in and became a part owner and ran the marketing and sales departments until 2005. That’s when my partners decided they didn’t like the business and didn’t like dealers. We sold the company to an individual investor in Florida and I became president and CEO. At the time, we had about 200 dealers and 25 or 30 employees. Now we have 1,300 dealers and 190 employees.

ADT: And as a former dealer, you were able to give a coherent sales presentation.

Esposito: I felt their pain. I knew what it was like for the sales guy to come in every month and not solve problems but try to sell me more stuff. At that point, some providers wanted people to believe it was rocket science. Dealers drank the Kool-Aid and paid the price. It definitely helps when I’m talking to a dealer and talking his language.

ADT: I know you also put a premium on employee relations. Is that your management style or is that the culture you stepped into?

Esposito: When I joined the company, our priorities were our customers, then our employees, and then our shareholders. And there is nothing wrong with that. But I really have always believed the employees come first. So when I took over in 2005, we started changing policies to make it more employee-friendly.

Employees have to believe you care about them. If they believe it, they’ll care about you. It may sound touchy-feely, but it’s true. All dealers say they care about their employees. OK, well, you’ve got five or six managers reporting to you. Do you know the names of their spouses, their kids? If you don’t know that, you don’t care about them.

But being named the best place to work seven years in a row and top workplace five years in a row is not a tribute to me. It’s a tribute to our people. They’re doing something they love doing.

ADT: What makes Albany a good place to live and work?

Esposito: I don’t know if you could find more beautiful area. And you can actually buy a house here. For $200,000, you can get a nice house. For $300,000, you can get a really nice house. It’s an incredibly diverse area. We have Rensselaer Polytechnic Institute, which is one of the Top 5 engineering schools, the Colleges of Nanoscale Science and Engineering, Union College and Skidmore College. The No. 1 public school system in the country is right here. We have a lot to offer families. The only problem is January, February and March.