By Mike Trasatti, CEO, DealerBuilt
The one trait that has helped most in business this past year is the ability to be nimble. As the pandemic played out, with varying and highly localized impacts, and as customer behaviors shifted, each dealer had to quickly adapt.
A dealer’s “tech stack” – all the technologies a dealership uses to support selling and servicing vehicles – had to adapt as well. In fact, according to a recent survey, 56% of car dealers have permanently increased their use of digital tools to combat business challenges brought on by the COVID-19 pandemic. But adapting a tech stack wasn’t a one-size-fits-all exercise for dealers. What was the right tool and the highest priority for one was often different for another, based on local market restrictions and sentiment?
While the dynamic nature of the pandemic event magnified the importance of being nimble when making tech decisions, having flexibility and choice when selecting dealership software has always been a powerful catalyst for business growth, particularly when it comes to a dealer’s ability to differentiate by creating a modern, frictionless experience for customers.
But who’s really driving your technology choices – you or your DMS provider? All too often, dealers find their choices stifled by their DMS when working to assemble the best-in-class tech stack that’s right for their dealership.
In some cases, DMS providers have acquired other software and encourage its use through punitive data access fees and policies that make it costly and cumbersome to integrate with a dealer’s preferred third-party solutions. There’s also the single ecosystem model, where a DMS attempts to build all adjacent solutions a dealer requires, resulting in loss of focus on advancing the core DMS, and mediocre products that reflect being a “jack of all trades, master of none.”
So how, then, can a dealer ensure they remain nimble and have the very best tech, based on their unique definition of “best?”
Finding Choice, Not Constraints
With the typical DMS contract averaging three to five years in length (some providers even use month-to-month models), there’s a good chance you’ll have the opportunity to re-evaluate your DMS relationship in the near future. To assess whether a DMS is designed to empower dealer choice and enable a best-in-class technology approach, consider and ask the following during your evaluation process:
- Open API model: Seek out a DMS partner with an open API model, allowing integration of your DMS with any software you determine to be the best fit for your business. From a technology standpoint, does the DMS provide modern API access that enables secure, bi-directional exchange of data in real-time?
- Partner network and process: Get a comprehensive list of the DMS’s “approved” integration partners and inquire what happens if you prefer a solution not on the list. What is the process to certify a new partner, what fees will your vendor pay and how long will it take to achieve approval and go live? Your goal is to understand the integration options you’d have immediately, as well as identify any hurdles or lag time you could face to add desired software to your tech stack.
- Data access fees: Traditionally, some have charged third-party providers for DMS data access, resulting in significant costs passed on to dealers. More recently, some are pivoting to a new model: transactional fees, where each time a dealer’s data is pulled/pushed through the API, the dealer pays “tolls” that quickly add up. Be sure to take stock of all direct and indirect costs to you that are driven by DMS data access fees.
- Strong tech stack foundation: Your DMS sits at the heart of all dealership systems, so it, too, should be a proven, best-in-class solution. Partnering with a company that is a DMS specialist – not a jack of all trades – can help ensure there is continuous investment in enhancing your core DMS technology and that you have access to expert DMS support when you need it.
Undoubtedly, the events of the past year have prompted dealers to re-evaluate their technology and accelerated their need to seek out new and more modern ways to meet their customers when and where they are most comfortable doing business. As the backbone of your dealership’s operations, a DMS can either constrain these efforts or provide a flexible platform that empowers your choice of technologies and bolsters your ability to successfully adapt and thrive.
About the Author
Mike Trasatti, CEO of DealerBuilt, leads the nation’s premier provider of ceDMS (customer experience DMS) solutions. DealerBuilt provides a highly-flexible, enterprise-class ceDMS platform that empowers forward-looking auto dealers to realize their unique vision for their dealership.