Dealer management system integration at Schlossmann Automotive Group

DMS Systems in the Auto Industry

Dealer Management Systems in the Auto Industry

Company Introduction

Schlossmann Automotive Group is a multi-franchise auto dealer located in the Milwaukee, Wisconsin metro area that has diversified into Dodge, Honda and Subaru brands with specific dealership locations dedicated to each of these brands. Each of the locations is independently managed from a sales strategy standpoint, while accounting and finance are managed centrally from the Honda dealership, which is where the corporate offices of the Schlossmann Automotive Group are located.

Centralized functions of the Schlossmann Automotive Group include Information technologies (IT), Human Resources including recruiting, Finance and Accounting. Sales management is also centralized across all of the dealerships from this location with quotas and selling strategies created, launched and managed from the corporate headquarters. Schlossmann Automotive Group has chosen to centralize these common functions to save on operating costs while enabling a higher level of collaboration in IT, Finance and Accounting, Sales, Service and coordination with Dodge, Honda and Subaru manufacturers and their dealer sales representatives.

Schlossmann Automotive Group has been very successful in attaining a high level of customer loyalty from the middle- and upper-class blue-collar and professional workers who live in the greater Milwaukee, Wisconsin area. Despite the economic downturn the Schlossmann Automotive Group has been very effective in using their Customer Relationship Management (CRM) systems to attain 5,000 current prospects and actively tracking relationships with a customer base of 36,000. Analysis of their customer base shows the median income is $55,000 and the age range of buyers from 18 to 75.

As is the case with many small businesses, Schlossmann Automotive Group relies on a centralized accounting and finance system that includes support for the most critical functions including accounts payable, accounts receivable, payroll, and royalty payments to the auto manufacturers they represent. The company also tracks labor hours and uses accrual-based accounting systems for evaluating labor hour productivity.

The CRM systems are widely different across the Dodge, Honda and Subaru dealerships as each of these manufacturers has a significantly different approach to managing their sales leads or opportunity systems. Each of manufacturers Schlossmann Automotive Group represents also approach co-marketing, dealer sales training, use of dealer selling incentives and sales contest specifics (Pollitt, 2005). In short each of these dealers runs, from a CRM and marketing standpoint, as a completely separate company.

As the CRM and marketing systems are drastically different between each of these dealer locations of the Schlossmann Automotive Group, there are stand-alone customer databases in Microsoft Excel, some in Microsoft Access, and others in Dodge, Honda and Subaru-specific dealer management systems that have since been discounted as the Schlossmann Automotive Group has strived to create a single, unified Dealer Management System (DMS) across its entire organization. This has been very slow to evolve however as the intensive level of system integration for the previous generation Dodge, Honda and Subaru DMS systems have been daunting for the IT staff of the Schlossmann Automotive Group. Studies of DMS effectiveness show that lack of integration to previous generation DMS systems, legacy and home-grown databases and the lack of support for integrating stand-alone databases drastically reduces a dealerships' ability to attain cost reduction goals while increasing customer-driven growth (Bradford, Samuels, Wood, 2008). As a result the CRM, sales lead management and escalation, marketing and dealer funds management systems from each of the manufacturers that the Schlossmann Automotive Group represents don't integrate with each other. This forces each of the three dealers' managers to meet frequently to review the co-op marketing programs, current co-op funds balances, and also determine which specifics sales and marketing strategies will benefit Schlossmann across all dealerships. This is what DMS platforms and the continued integration of finance, accounting, customer service, customer satisfaction and lifetime customer value metrics are meant to achieve (Reed, Story, Saker, 2004). As Schlossmann Automotive Group competes in an inherently multi-channel business as a retailer of three different automotive brands their strategic plan needs to set the goal of creating a single, enterprise-wide DMS to alleviate information and knowledge gaps (Warrington, Gangstad, Feinberg, de Ruyter, 2007). By doing this, the Group will be able to attain what many consider to be one of the most critical competitive advantage of any CRM system, and that is the ability to gain a 360 degree view of their customers complete with analytics measuring their lifetime customer value and potential for repurchase based on analysis of their previous purchasing history (Zinnbauer, Eberl, 2005). Once a DMS has been created that spans across all three dealerships, financial and accounting decisions about pricing, promotion and rebates can be more effectively coordinated to a level of and accuracy not possible today. It is a common weakness in automotive retailers who represent multiple brands to be constrained by the lack of systems integration that limits their ability to create synchronized strategies (Bradford, Samuels, Wood, 2008). By having a customer system of record that spans across all dealerships that also takes into account the many variations and complexities of co-op and promotional programs, dealers are able to more cost-effectively manage selling and service programs (Zinnbauer, Eberl, 2005). Schlossmann Automotive Group needs to concentrate on how to tie together all their diverse DMS systems to create a single system of record that is based on customer activity and lifetime customer value, allowing for flexibility of integration with dealer co-op, marketing funding and sales promotions from the three auto manufacturers they represent in the Milwaukee area.

Competitive Position in the Milwaukee, Wisconsin Auto Market

Schlossmann Automotive Group competes with dealers on all three brands they represent, with Subaru Milwaukee, Sommer's Subaru, and on the Honda brand, Honda Greenfield and Milwaukee Honda Civic being the most competitive on the daily sales made. The Dodge brand is resented by Griffin Dodge, Ross Darrow and at the low end of the market, CarMax. All of these competitors lack a unified DMS as each has grown through acquisition and the Dodge dealer is being forced to manage through manually-based processes as this manufacturer has drastically cut back on investments in IT as a result of their financial condition. The Honda dealers however have been able to create a more competitive platform as this manufacturer has gone to a Software-as-a-Service (SaaS) platform.

Conclusion

As the auto industry has been particularly hard-hit by the recession the value of customer relationships is critical to long-term survivability. For Schlossmann Automotive Group they face a challenge comparable to many others, and that is striving to create a unified DMS that can serve to grow their company going forward. The lack of integration across the DMS systems from the manufacturers they represent today needs to be solve through a strategic effort to create a single, unified system. With this system in place the Schlossmann Automotive Group will be able to get the most out of the dealer incentives and programs each manufacturer offers, while maximizing the profitability of their selling efforts locally.