Pros & Cons of Using a Dealer Management Software (DMS)

We’ve worked with numerous automotive dealerships over the past decade, some operate a single location while other clients have dozens of dealerships across multiple states. One thing that makes each of them successful is using a Dealer Management Software, known as DMS. The major DMS players are CDK (formerly ADP), Reynolds & Reynolds, and Autosoft. We’ve actually designed the implementation of these systems so many times, we’ve built custom tools to speed up deploying Dealer Management Software and make supporting them more efficient.

The pros of using a Dealer Management Software (DMS):

• CRM – Regardless of which software you choose, a DMS is a fantastic CRM (Customer Relationship Management) tool that is specifically built for the auto industry. Because selling cars (and servicing them) is drastically different than other industries, most CRMs do not work well. A DMS can tie your sales and marketing teams together seamlessly to recapture a potential customer that has gone silent by having a universal contact list with specific, relevant details that can be segmented easily for a direct mail or email campaign.
• Financial Reporting – Since we generally work with a dealership’s controller or CFO, we find a DMS’ financial reporting to be the most utilized section and leading factor when choosing a specific DMS. It is hard to find good financial reporting in generic business software because the auto industry is so unique when it comes to its profit centers. Most DMS systems give you an at-a-glance overview and help you to efficiently control your payables.
• Payroll – Many DMS systems also incorporate payroll into their database, saving you time and money by processing your payroll in one integrated solution.
• Vehicle Inventory – One of the biggest headaches for any dealership is knowing what vehicles are in inventory. Tracking your vehicles, especially for larger dealerships with multiple locations, is vital and can be the difference between a sale and a missed opportunity.
• Parts inventory – Much like your vehicle inventory, your parts inventory is a vital management component to save your part department time. Many DMS systems also generate invoices seamlessly.
• Service management – Most DMS systems allow you to create repair orders that add in parts and labor automatically and track your Service team’s productivity. They also schedule appointments, recommend preventive maintenance schedules, and can follow up with customers regarding declined work and service reminders.
• Finance & Insurance – F&I is the linchpin for auto dealerships and a good DMS will improve your productivity by streamlining your processes. Most DMS systems are highly configurable in regards to F&I, so you can adjust them to your needs and not force you into their methods.
• Vehicle Pricing – A DMS gives your sales team the needed access to consistent pricing quickly and in real time to compete with online pricing quote services.
• Inventories from other locations – Some DMS systems give you the ability to access the vehicle and parts inventories at other locations so you can retain the customer.
• Security – A huge benefit of a DMS is not just the accessibility and efficiency, but also its security. Auto dealerships deal with lots of personal data including social security numbers and credit card numbers that hackers love, so strong security is vital.
• Lock out former employees – A large part of security needs to be from within. Protecting your data, including the contacts in your CRM, from former employees is a large part of that protection. DMS systems allow you to easily lock out a sales or service person that is on their way out the door.

Other important aspects of good Dealership Management Software (DMS):

• Cloud-based – Today, most DMS systems run in the cloud so they are easily accessible anywhere and backed up. A few legacy systems still run on your locally hosted servers, however, we are seeing less of that each year due to the cost of maintaining servers.
• Mobile friendly – Since many of these systems are cloud-based, you can access your DMS via your tablet and smartphone to quickly get an overview of your finances, KPI (key performance indicators), and inventory. We’ve seen salespeople use the DMS on the lot to confirm pricing and inventory without having to take the customer back inside the dealership.
• Customer service – Reputable DMS systems have fantastic customer service to ensure you’re always maximizing your systems to its fullest potential.

Cons of using a DMS (Dealership Management Software):

• Nothing. We do not see any real cons with a DMS. Even though a DMS system may look expensive if you’re not using one already, we’ve found that there is an option for every budget and each of them yields such a strong ROI (Return on Investment) that the cost is quickly negated. We see many one-location dealerships select a basic DMS and then upgrade to more robust options as they scale their business and see the return from their initial investment.

DMS systems are consistently evolving, making your dealership more productive and profitable. We never see a reason for not using them. Our role is to have our clients’ infrastructures ready to use a DMS and to assist in implementing the system company-wide during the deployment.