Choosing the right dealer management system is a pivotal decision that can significantly impact your dealership’s success. A dealer management system streamlines operations, enhances customer relationships, and provides valuable data insights.
However, the selection process is fraught with complexities, from understanding the features you truly need to evaluating the total cost of ownership.
This guide aims to navigate you through these intricacies, showing dealership software consultants expert advice on key considerations such as technical requirements, budget constraints, and red flags to avoid.
Whether you’re a small dealership looking for basic functionalities or a large operation needing a robust, customizable solution, this comprehensive guide is designed to help you make an informed choice that aligns with your business goals.
Evaluating Your DMS Needs
- The size of your dealership can significantly influence which dealer management software you choose. If you operate a small dealership with a limited inventory and a small team, you might not need all the bells and whistles that come with a high-end dealership management system. A basic system with essential features like inventory management and customer relationship management (CRM) may suffice. On the other hand, larger dealerships with multiple locations and a vast inventory will likely require a more robust dealership management system with features like advanced analytics, multi-location support, and comprehensive CRM tools.
- Your budget constraints: Budget is often a significant concern for smaller dealerships. Many small-scale DMS solutions offer budget-friendly pricing models, including modular pricing, where you only pay for the features you need.
Larger dealerships often have more financial flexibility and can afford DMS solutions with advanced features, even if they come at a premium price.
- Future scalability: For smaller dealerships, if you plan to expand your business, consider a dealer management software that can scale with you. Some systems are designed with scalability in mind, allowing you to add features or locations as needed. For already large operations, look for dealer management software that can handle your current scale and any future acquisitions or expansions.
- Data handling and security: Data requirements are generally lower for small dealerships, and a basic dealer management system may offer sufficient data security measures. The sheer volume of data handled by large dealerships requires a DMS with robust data security and backup features.
By carefully considering the size and scale of your dealership, you can better identify which features are most important for your DMS, your budget constraints, and how complex your system needs to be.
1. Research and shortlist: The research and shortlisting phase is a critical step in the selection process for a dealership management system. Here’s how to go about it:
- Identify your needs: List the essential features and functionalities you need in a dealer management system before researching. This could include inventory management, CRM, reporting and analytics, and integration capabilities.
- Industry recommendations: Consult industry experts, peers, and online forums to get recommendations for reliable DMS providers. This can give you a good starting point and may even introduce you to options you hadn’t considered.
- Online research: Use search engines to find DMS providers that cater to your industry. Look for lists, reviews, and articles that compare different systems.
- Vendor websites: Visit the websites of the DMS providers you’re interested in. Pay close attention to the features they offer, their pricing models, and any customer testimonials or case studies they may have.
- Feature comparison: Create a comparison chart or spreadsheet to evaluate how each DMS stacks up against your list of essential features. This will help you quickly identify which systems meet your basic requirements.
- Budget consideration: While comparing features, also take note of the pricing for each dealer management system. Eliminate options that are clearly out of your budget range. Remember to consider the upfront costs and any ongoing maintenance or subscription fees.
- Request for information: For the DMS providers that make it through your initial screening, send out an RFI. This formal document asks vendors to provide details about their products, including features, pricing, and support.
- Consult your team: Involve key stakeholders and team members who will be using the DMS in the decision-making process. Their input can be invaluable in understanding practical needs and potential challenges.
- Shortlist: Based on all the information gathered, narrow down your options to a shortlist of three to five DMS providers. These systems should best match your feature requirements and budget and have good customer reviews.
2. Request for proposal: The RFP is a formal document outlining your dealership’s specific needs, requirements, and criteria for the DMS. The RFP is sent to potential DMS vendors, inviting them to submit detailed proposals on how their system can meet your dealership’s needs, pricing, and other relevant information.
A dealer management system RFP aims for standardization, quality, cost-effectiveness, and risk mitigation.
3. Demos and trials: Demos and trials are crucial steps in the process of selecting the right dealer management system for several reasons. They offer a hands-on experience that can help you make a more informed decision.
A demo allows you to see the DMS in action, often guided by a representative from the vendor. This provides a practical understanding of how the system functions and how it can benefit your dealership.
A trial period allows you to use the DMS in a real-world setting. You can input actual data, perform typical tasks, and assess how well the system integrates with your existing operations.
Not only do demos and trials allow for real-world testing, but they also give you an insider’s look, so you can ultimately make the best decision for your team.
4. Customer reviews and testimonials: Customer reviews and testimonials play a significant role in the decision-making process when choosing a dealer management system. They offer insights often unavailable through vendor descriptions, demos, or even trials. Here’s why they are important:
- Credibility and trust: Customer reviews and testimonials add a layer of credibility to a DMS provider. When real users vouch for a product, it instills a sense of trust that the system is reliable and effective.
- User experience: Reviews often include details about the user experience, such as ease of use, interface design, and navigation. This information can help you gauge how quickly your team might adapt to a new dealer management system.
- Feature validation: While vendors will highlight their system’s features, customer reviews can confirm whether these features are as useful and functional as claimed. Reviews can also point out any features that may be lacking or underdeveloped.
- Performance and reliability: Customers who have used the DMS for an extended period can provide insights into its performance and reliability. They can comment on issues like system downtimes, glitches, or any other operational challenges.
- Customer support: One of the most valuable pieces of information in customer reviews is the quality of customer service and support. Timely and effective support is crucial for any software solution, and reviews often shed light on the responsiveness and expertise of the vendor’s support team.
- Real-world use cases: Testimonials often include specific examples of how the DMS solved a problem or improved operations. These real-world use cases can help you understand how the system might benefit your dealership in practical terms.
- Cost-benefit analysis: Reviews can offer insights into whether the DMS provides good value for the price. Customers may discuss the return on investment (ROI) they’ve experienced, which can be a valuable data point in your decision-making process.
- Community and ecosystem: A large number of positive reviews can indicate a strong user community and ecosystem around a DMS. This resource can be valuable for tips, best practices, and even third-party integrations.
Implementing a new dealership management software is a significant undertaking that requires careful planning and execution. The timeline for implementation can vary depending on the complexity of the system, the size of your dealership, and various other factors. However, a general outline can help guide you through the process.
The preliminary phase lasts one to two weeks and involves finalizing the contract and planning how to implement the new system throughout your dealership.
Discovery and analysis can take anywhere from two to four weeks. This is where you thoroughly review your current system to identify your specific needs and customize necessary features and integrations.
Next, you have configuration and customization, which can last one to two months. During this time, you’ll set up your new system, develop custom features and integrations, and migrate data from your old system to your new one.
The testing phase involves user testing, data verification, and performance testing. It typically lasts two to four weeks.
Staff training and manuals and documentation are next as the training phase, which lasts anywhere from one to three weeks.
Finally, you’ll go live, making last-minute adjustments as you go and receiving feedback from your team. Then, you’ll monitor the dealer management system, support your team as they use it, and keep it updated and maintained.
Red Flags to Avoid
When searching for a new dealer management system, it’s crucial to be aware of potential red flags that could indicate a less-than-ideal fit for your dealership. Two significant red flags to watch out for are hidden costs and poor customer support.
- Hidden costs include licensing fees, module costs, implementation fees, training costs, maintenance and upgrades, and termination fees. You can avoid hidden costs by requesting a detailed breakdown of all costs, including one-time and recurring fees. It’s also important to read the contract carefully to understand all your financial obligations.
- Poor customer support usually looks like slow response times, a lack of 24/7 support, inadequate training resources, unresolved issues, and limited support channels. You can avoid this by testing out the customer support before purchasing the dealer management software, looking at customer reviews, and familiarizing yourself with the types of support offered.
Work With Gillrie Institute for Your New DMS System
Ready to make an informed decision about your next dealer management system? Don’t navigate the complex landscape alone — reach out to Gillrie Institute for expert guidance.
With years of experience in the automotive industry, we specialize in analyzing DMS contracts and negotiating on your behalf to secure the best deal possible. We’ll help you avoid hidden costs, understand the fine print, and ensure you get the features you need.