LAS VEGAS – Reynolds and Reynolds, a firm offering dealership information technology, reinvented itself about four years ago, says Ron Lamb, the Dayton-OH company’s president.
It did so by developing an end-to-end network called the Retail Management System. It features integrated software touching all dealership departments, from desking deals to selling accessories to engaging in F&I to enhancing back-shop operations.
At the recent National Automobile Dealers Assn. convention here, Lamb talks about the latest products, what dealers are telling him and what it has been like selling an all-in-one system to dealers.
WardsAuto: What’s new?
Lamb: In the last few months, we came up with a concept called e-workflow. It digitizes every aspect of the car buying, shopping financing experience.
It goes after the paper monster and eliminates 45 minutes of hearing that printer at work. An average deal jacket is an inch to inch and a half thick with paper.
In the e-work flow world, the customer has an option: instead of walking away with a bunch of documents, walk away with a thumb drive. Dealers are telling us 90% to 95% of their customers like that.
A dealer said, “In every one of my stores I have people that do nothing other than scan documents. And you wouldn’t believe what I pay for storage.” With this, you wouldn’t print that paper in the first place. It is a bit of a sea change for us.
WardsAuto: What are dealers talking to you about here?
Lamb: Dealer profitability as a percentage has declined. A number of conversations are around that, and what can be done to improve operational efficiencies.
For instance, my team went to a dealer’s store and mapped out what he is doing. They use 11 different systems to sell and finance a car. One is a CRM application, another an Internet lead-management tool, another a menu tool, and so on.
Apparently at every year at NADA they buy a new tool and plug it in. It builds and builds.
That’s one guy. Can you achieve efficiency by having 11 different systems or by having one system do 11 different things?
WardsAuto: Presumably the latter. Do most dealers see it that way?
Lamb: Here’s my problem since we’ve been bringing out the retail-management system.
We’ll have a dealer say, “I like that docuPad thing (software for screen-presenting and selling F&I products), I’ll take one.” And we’re happy to sell that. And someone might say, “I’ll take the Add.On.Auto accessory tool (a configurator that shows and calculates payments on accessory products).” Fine.
But it is that onesy-twosy thing we’ve been battling. Candidly, we are struggling telling the story that it is the complementary nature of how these things work. It was built as one to work as one with one data base.
WardsAuto: Dealers are different. Presumably there’s a segment of them that get the oneness of it all.
Lamb: We now are having retailers take a look at this and saying, “I’ve got to be more efficient.” We are seeing them go with the entire Retail Management System. It’s a case of the whole being greater than the sum of the parts.
WardsAuto: Is it a hard sell?
Lamb: It is if someone is comparing it to a standard DMS (dealership management system) that’s essentially an accounting and billing tool. If they pull the bill for a standard DMS and compare it with the cost of the full Retail Management System, it is a hard sell. If someone looks at it like that, we probably won’t be a good partner.
But the Retail Management System has about 20 functions throughout the entire dealership. You have to look at total cost. You have to look at, say, the cost of paying two people to scan documents fulltime.
WardsAuto: Do you see that piecemeal mentality a lot?
Lamb: The tide is turning in that we are seeing more dealers who get it.
And we’ve changed some things to solve implementation problems. A few years ago we had to reengineer our implementation process. Different installation teams installed it in pieces and parts. A dealer called me and said, “Don’t these people talk to each other?”
It was my fault, because we were thinking about this new concept and then developing it and then selling it, but we weren’t thinking enough about the implementation side. So we fundamentally reengineered that.
We still need different experts and people to come in. But we need to be complementary, not duplicative. We got that figured out.
WardsAuto: Older people can retrofit their thinking and be receptive to new IT products, but one might suppose young people coming into the business – people who grew up in the world of connectivity – would be an easier sell.
Lamb: We see it as easier to that group. I’ve been doing this 25 years. For my first 15 years, we were typically trying to sell to dealers who did not turn on a computer. The guy that writes the check to us often would say, “I don’t use the computer. You sell to my people. They’ll tell you what they want. I just want a good price.”
Now, with mobile phones and tablets and slates, all dealers have experience with computers.
The analogy I use is the Apple phone. I say, “You understand why you want this device to make phone calls, do texting and emails, do your maps and tell you where a good restaurant is. Do you want that or 11 different devices doing those things?”
Today, there is a generation of “Amazon” dealers, people in their 30s. They want to push a button and make it happen. They understand the consumer doesn’t want to spend five hours in their dealership buying a car. For us, it is a relatively easy conversation with those folks who understand what’s going on.
You still have inertia with some other people who don’t quite understand that. It’s a different conversation with them.
No Fan of 1-Hour Deals
WardsAuto: There has been a lot of talk about striving for the 1-hour car deal. What’s the perfect time limit for getting a customer in and out of a dealership?
Lamb: I am a staunch critic of the 1-hour car deal. I think it is false advertising first of all.
The data I’ve seen is four hours and 15 minutes to five hours is the average time it takes from the time someone steps on the lot and takes delivery of a purchased car. But about half of that is wasted, waiting time.
Traditional F&I takes 45 minutes to an hour if you are going to do a good job. With docuPad, we can shave 15 minutes, yet present every product correctly. We can save time and give a better experience.
On a vacation, my wife and I stopped into a dealership because that’s how I am. I heard about this dealer who was doing something with Add.On.Auto, our accessory-configurator product. They have a little room, very comfortable with big comfy couches. It has pictures of the top 10 accessories they sell. They say, “Congratulations on your new car, relax, have a bottle of water, it will take a few minutes to pull the paperwork together, why don’t you hang out here?” Then another guy comes in and says, “Let me show you (on the Add.On.Auto accessory screen) some things and how they work. Then the customer starts using the configurator. They are killing it.
WardsAuto: Where is this?
Lamb: This is one of the Gillman Honda stores in Houston.
WardsAuto: The late Ramsay Gillman’s store (now run by his three children and part of the Gillman Auto Group, No.64 on the 2015 WardsAuto Megadealer 100)?
Lamb: Yes, yes. So you need that time. We are seeing a $250,000 lift in profit on that approach. You don’t want to skip that stuff. That is another 20 minutes.
WardsAuto: So it is quality time vs. just gross time?
Lamb: Some dealers who advertise the 60-minute car deal don’t start the clock until the customer lands on the car, and they don’t include F&I time.
When the industry gets serious about quality time, you will see some OEMs go to 1-price or standard-price selling. That will shave off two hours. The average dealer makes about 2% profit on the sale of a car. That means you are spending a lot of time negotiating something that has a small margin. You can spend it on other things offering a greater return.
Plus, if you standardize prices, you will attract more talented younger people to the business. We’ve seen a lot of positive things with the Apple Genius Bars and the young people who staff them.
Millennials don’t want to negotiate at a dealership, either as a customer or as an employee. They want to educate. It’s: “I’m not selling you, I’m educating you so you can buy.” That makes people more comfortable.
WardsAuto: Does a dealership having an up-to-date IT system help employee retention, especially the retention of younger employees?
Lamb: Yes. Also there is this: Does employee satisfaction impact customer loyalty? Absolutely. Do tools and technology impact employee satisfaction? Certainly. Therefore, tools and technology impact customer loyalty.
With 52% of dealership new hires being Millennials, if they look at a system that requires 15 screens to do a 3-line repair order, they say, “You’ve got to be kidding me.” They want two screens and a pop-up box.
WardsAuto: How much psychology goes into your planning and product development?
Lamb: More than I would care to admit.
WardsAuto: You don’t have a staff psychologist, right?
Lamb: No, but we have done a lot of work concerning the human element. An example is docuPad. In Western culture if (a salesperson) gets closer than two or three feet (to a customer), that person is like “Wow, you are in my space.”
We engineered docuPad so that when the F&I manager and customer are looking at the screen, they are leaning in, but they are within that 3-foot buffer.