The end of the DMS?
The DMS (Dealer Management System) has been at the crux of the automotive dealership for decades. What began as an accounting program quickly grew into a (mostly integrated) solution for running new and used car sales, CRM, marketing, spare parts, service, logistics and more. Providers range from known industry players ADP, SAP, Reynolds & Reynolds to cross-industry newcomers such as Salesforce & Microsoft Dynamics. Due to clunky technology and broken functionality however, the common competitor among them remains to be Excel.
Over the decades, the DMS has greatly influenced how manufacturers (OEMs) have developed and deployed interfaces; how dealers operate; and most importantly, how consumers purchase vehicles. Today it wields the same influence, however notoriously. Unable to meet the needs of the digital age, data utilization, or rising customer expectations, traditional dealer management systems may have good reason to retire.
Many DMS’s were built upon the green screen, whose technology dates back to the 1980s. While once innovative and cutting-edge, the programs struggle to keep up in the cloud-computing era; lacking basic functionality such as mobility, digital integration, and live data.
Over time, shortcomings have been addressed through ‘bolt-on’ interfaces and UI ‘re-skins’. However, these have led to headaches of their own, namely costly customizations and more siloed operations.
At the core of the DMS remains outdated technology — unable to ‘connect’ to useful software applications (Outlook, iCal, connected car, etc.) or other dealerships in general. In an age of ‘Internet of Things’ (IOT), where consumers can control their home lighting with their smartphone, the excuses of inflexible software fall flat.
Recognizing this gap, cloud-based providers such as Salesforce and Microsoft Dynamics have entered the market to help. However, due to the generic nature of these solutions, they have not been able to meet the unique needs of the auto industry. Large customization, manual tasks, and inadequate integrations have left sales consultants and service staff reverting to Excel.
Historically, the DMS has been implemented by the dealership itself. Meaning, the car manufacturer has never had a holistic solution to manage its retail locations and suppliers. For years, OEMs have relied on the dealer to hand over important information such as consumer behaviour and sales analytics.
Today, manufacturers have much more incentive to know their customers directly. Personalized customer experiences have become the norm, and data has been hailed the new currency. Additionally, the future strategies of many automakers depend on it, i.e. autonomous driving, connected cars & direct sales to name a few.
With hundreds of disparate dealer management systems (and/or versions) within a single manufacturer brand, OEMs lack the standardization and scalability needed to utilize data streams or affect customer experiences holistically. Many data streams are underutilized or inaccessible due to siloed operations. Short of one unified platform across the brand, manufacturers will find it difficult to impose a connected car ecosystem without leaving dealerships & their customers out to dust.
Typically, cars are sold through a top down approach — manufacturers produce the vehicle, manufacturers sell to dealers, dealers sell to consumers — making it difficult for data to make its way back “upstream”.
This has been a challenge in retail performance management for years; where the structure in data varies from one system to the next. Manufacturers receive inconsistent, incomparable, and delayed sales performance from their dealers, leaving them with a fragmented view of business as a whole.
Additionally, with most systems unable to relay sales performance in real-time, OEMs are given what they need a month after the fact. This continues to inhibit many brands from enforcing company-wide standards, setting bench marks, or accurately forecasting sales & customer preferences.
Going forward, the consequences of unstructured data will only multiply. The lack of transferrable data between vehicles and dealerships will prevent the use of truly automated operations, I.e. automated servicing, parts replenishment, predictive modelling etc. In a future of autonomous driving, customer data will remain of little worth so long as it’s not held by the manufacturer itself.
Rising customer expectations
Pre-Internet, customer relationships were maintained through direct mail, phone calls, or even knocks on the door. Fast forward to today, and businesses maintain various social media accounts, real-time chats, and webpage integrations just to stay in touch. From replying to their questions and comments on business Facebook pages, Twitter profiles or Instagram pages, to responding promptly to emails, sending out newsletters and answering the phone — communication has become constant and consistent.
While a few progressive car manufacturers have attempted this level of omni-channel engagement, it’s still a pipe dream for most. For even the most sophisticated auto brands require customers to use various Apps to visit various dealerships, and conversations between the two are lost. Without a centralized system, car manufacturers are unable to holistically anticipate customer preferences, automate business opportunities (servicing, parts replenishment, etc.), or tailor their stock to each customer.
Over the next decades, almost all companies will compete on the basis of customer experience. So long as retail dealers continue to operate on various platforms, brand experience will be redundant, manual and disconnected. And as technology advances, the opportunity cost of not investing in a holistic, customer-centric platform will only become greater.