Dealers need to take more accurate approach to calculating DMS costs, says Pinewood
Dealers are frequently underestimating the true cost of their dealer management system, particularly when trying to compare one provider with another
DMS specialist Pinewood says there are three elements to cost that should be considered:
- Firstly, capital outlay and ongoing maintenance paid to your DMS provider
- Secondly, additional software or services which may be needed because they are not included in your particular DMS
- And thirdly, further manpower and other costs that may result from having to adopt those additional software or services
Managing director Neville Briggs explained that the issue of accurate cost calculation was important because it allowed dealers to calculate whether their existing or potential new DMS was providing a worthwhile return on investment.
He said: “Dealers tend to just look at the invoice cost of their DMS, which in our case is done on a pay-as-you-go basis per user, but that is just a part of the cost of your DMS.
“You also need to look at a wide range of other important factors. There are vast differences between the reach and functionality of the various DMS systems available, so you need to know exactly what you are buying.
“For example, some DMS systems include features such as integrated vehicle health checks, internet lead management, inter-branch connectivity, plain paper printing and document archiving but others do not – and you will probably have to buy additional products and services to meet those needs.”?
Briggs added that dealers were left with a difficult choice if functionality was missing from their DMS system – do they spend more on additional products or forego lost revenue?
He said: “Having to buy additional software or services to meet a shortfall in functionality can prove very expensive. For example, if your DMS lacks a vehicle health check function, then you may have to buy a standalone VHC system.
“If you follow this route, you will soon find that there are additional ‘hidden’ costs to operating multiple systems. A key point is the amount of time needed to run two or more systems, especially if you have to input data twice.
“However, if you decide to forego the missing functionality, you are normally choosing to lose out on revenue. For example, if your DMS has good e-mail and text facilities that allows activity fast, cheap and easy marketing, how much are you losing out if your DMS lacks those tools and you have to rely on more labour intensive post or phone communication?”
Briggs concluded that the tough trading conditions very likely to be seen by dealers in 2012 brought these issues into focus.
He said: “This will be a tough year for everyone and dealers need to look at all costs and revenue opportunities.
“The ability to send prospecting texts and emails cheaply and quickly directly from your DMS to 1,000 customers rather than the time and expense of manually sending a letter or making phone calls might be the difference between profit and loss.”