Ron Lamb tracks megatrends

Ron Lamb tracks megatrends.

Reynolds Transforms to Avoid Extinction

The status quo will lead to death, says Ron Lamb, president of Reynolds and Reynolds. “Dinosaurs ruled the world, but there aren’t any of them left.”

Reynolds and Reynolds began in 1866 as a purveyor of printed forms, which remains a big part of its business.

Headquartered near Dayton, OH, the company evolved into an information-technology provider, specifically offering computerized dealership management systems.

The firm has reinvented itself by using the DNA of the DMS to offer an array of enhanced software products dubbed the retail management system. The company says those tools allow dealerships to offer better and faster and customercentric service, department by department.  

In a Q and A with WardsAuto, Reynolds President Ron Lamb and Jon Strawsburg, vice president-product planning, discuss the firm’s transformation and how it came about. 

WardsAuto: So how did you get from there to here?

Lamb: Six or seven years ago, we decided to completely rebuild the DMS system, and build a broader platform. Over the last three years, we’ve been talking about this concept of the retail management system.

The DMS is about counting your money, but consumer-experience tools help you make money. These tools became an integrated part of the platform. All pieces work in harmony. When a customer drives in, RFID (radio-frequency identification) tells the dealership service adviser you are here, pulls up the appointment on his mobile device, provides him with a service history of the car and the customer’s name flashes on a welcome screen. All that is on the same system as everything else. It all happens cohesively to create the “wow” factor.

WardsAuto: Reynolds has made some recent acquisitions. What are some of those?

Lamb: One of them is XtremeService, a data-mining and vehicle-matching tool that (megadealer) Rick Hendrick had his folks develop over the years.

You take your new and pre-owned inventory, and the system prices it out based on current rates, residuals, rebates, incentives, dealer cash – all that stuff.

Then when customers come into the service lane, say someone in a Honda LX, the system knows what that’s going for, how much the customer paid for it, how many payments are left and the likely equity. Now, we can have a conversation about a trade in and a new-car purchase with the same monthly payments as the person is currently paying.

Rick has found a 15% increase on new-vehicle sales based on this program. That’s amazing. And as a dealer you are getting high-quality late models for your used-car inventory.

We also just acquired Add.On.Auto, an accessory-business tool. Accessories are a $32 billion-a-year industry that has eluded a lot of dealers. Less than 10% of dealers are good at selling accessories.

Add.On.Auto has figured it out with an interactive tool at kiosks in the dealership or online. People can see on the screen what their vehicle would look like with them. It’s a configurator, but one that is fun, like a video game.

Selling Accesories a Challenge

WardsAuto: Why do so many dealers have a tough time selling accessories?

Strawsburg: It needs to be correctly fitted into the sales and finance-and-insurance process, and it requires a lot of discipline. Not many people have gone to the effort to make it work.

Lamb: Thousands of vendors sell accessories. They’ll all send dealers books. How do you show the consumer all of those? The dealer reaches a point of saying, “I just don’t want to deal with it anymore.”

A really interesting dealership hires new people from outside the industry, say a young kid from Best Buy or the Verizon store who’s interested in stepping up in auto sales.

This dealer says, “You become the accessory salesman for six months before you get to sell cars.” By sitting down with customers and helping them with accessories, you learn a lot about customers and about the cars you eventually will be selling. But it needed the technology like Add.On.Auto to bring it all together.

WardsAuto: You offer a lot of stuff like that, but how much of a challenge is it for dealership people to actually use those tools?

Lamb: People are seeing the bigger picture. We’ve been releasing products that seem like stand-alones. But it is not a bunch of things. It is one thing doing many things seamlessly.

Reynolds has been around for 140 years. To be fair, if you talked to us five or 10 years ago, we were very proud to be a DMS company. We could count the money faster and better than anybody.

I have been trying to create a mentality internally to change it from counting money to instead helping dealers make more money by creating a Disney-like customer experience by using our retail-management system.

WardsAuto: Some dealers are up to speed with technology, some aren’t and some are in between. Where are we with dealers accepting new and improved technology?

Lamb: Dealers want sophisticated retailing tools. Our job is to get to a solution they can all participate in. One of our principles is that the dealer is not technologically sophisticated. The psychology needed to understand code doesn’t fit well with knowing how to sell cars.

Dealers tell me, ‘I need it stupid simple. I just want the thing to do this or that.”

DMS Remains Foundation

WardsAuto: Does the retail management system replace the DMS?

Lamb: A DMS is great at counting the money, and that’s important. But when you talk about retailing and putting customers in the right car and servicing the cars and bringing in digital marketing, you are fundamentally in a different place.

When I became the company’s president, I said DMS has passed us by. I went around internally and talked about retailing, the impact of megatrends and what the dealership of the future would look like.

A woman who had been with the company 25 years left one of my presentations crying. She had raised her hand in front of 80 people and asked, “Does this mean we have to rebuild everything? What’s wrong with what we got?”

I responded, “The answer to your second question is that what we’ve got is not going to be what’s needed in the future. We’d go out of business. The answer to your first question is, yes, we’ve got to build everything from the ground up for it to all work.”

This was 2009 when everything was going down. We basically bet the farm. DMS became so ingrained in our psyche. But we had to start thinking of ourselves as a retail-management system company.

WardsAuto: Why was she crying?

Strawsburg: She had been around a long time, built a lot and was proud of it.

Lamb: Her career had centered on our accounting platform, and she had done a fantastic job. But to hear we have to rebuild all that drew a “what-the-heck” response.

And it had been a long time since the organization had been challenged. I’m not a subtle guy. The status quo will lead to death. Dinosaurs once ruled the world, but there aren’t any of them left.

By the way, that woman ended up playing a critical role in helping to reshape the new foundations.  

WardsAuto: Is DMS now a forbidden word at Reynolds?

Strawsburg: It’s still a foundation. The DMS is the system that keeps the records.  It contains information such as that a customer two years ago bought a particular pickup truck, with this engine and these options and paid this much for it, and got this much on the trade in. All that is in the DMS.

Now, with, say, our integrated phone system, when that customer calls, that information automatically appears on the computer screen of the dealership person taking the call. Data on service visits also pops up. With information like that readily available, I am prepared to talk to you.

Lamb: We offer DMS, and that’s all some dealers want. But a smaller, emerging trend of dealers really is going after that Disney experience. It gives them a competitive advantage.

WardsAuto: What is the general acceptance level of something like that?

Lamb: Most dealers say it makes a lot of sense. A dozen or so dealers said, “I’m drinking the Kool-Aid, I want it all.”

WardsAuto: What are the demographics of the Kool-Aid drinkers?

Lamb: A 3-, 4- or 5-store person who recognizes that to get to more stores and operate at that Disney “wow” level, you’ve got to make changes.

WardsAuto: Are they doing it as a reflection of their success or are they looking for a life preserver?

Strawsburg: They are dealers with the confidence to implement a process. They have the organizational strength to get their people to use the tools to improve the dealership.

Lamb: Hundreds of years from now, a year that will stick out will be 2007, when smartphones got put in virtually everybody’s hands, and everyone had access to nearly all the world’s information. Between Google and the smartphone, everyone has that access, all the time and everywhere they go.

I looked at megatrends like that and thought, “Being the best DMS company? I don’t know.” You see companies that miss big trends, and what happens to them is not a pretty picture. I kept talking about it, drawing diagrams and writing on napkins until I literally was told: “OK, do it.”

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