Dms Systems in the Auto

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.

Software Evaluation and Development

Schlossmann Automotive Group does not complete internal development of systems or applications, yet does rely on IT for qualifying new DMS platforms from the manufacturers they represent, in addition to network and desktop applications including Microsoft Office. The IT department is not staffed for intensive Web application development and the many steps for managing quality assurance and quality control of new applications. The integration of DMS platforms across the legacy and current Dodge, Honda and Subaru systems is beyond the scope of the Schlossmann Automotive Group IT department focus. The original mission of the department is to provide network integration support, support desktop applications and manage the finance and accounting systems. Of these three activities the finance and accounting systems are the most time-consuming and require the greatest depth of expertise.