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Provider Technology Must Keep Pace With Consumers

Provider Technology Must Keep Pace With Consumers

It is a topic in the industry media, at conferences and in front of many bartenders: The internet is changing the consumer experience. No more debate on that. There remains plenty of great discussion with very few wrong answers … except for one: “Our method of doing business has worked for many years, no reason to change.” Those are usually famous last words.

Providers of all types must adapt to an evolving consumer experience that includes online shopping, ridesharing, F&I product sales outside the F&I “box,” and the need to make the product presentation more personalized.

With all that, you have decided as a company to adapt and introduce new methods, including retail technology, to bring your brand closer to the customer. Where do you start? Whom do you listen to? How do you protect yourself from wasted money and effort? Sticking with the theme that there are no concrete answers, sitting on your hands should not be one of them.

Let’s discuss the three steps you can take to bring your provider software up to speed in time to give your agents and dealers a competitive edge: Gather information, incorporate retail technology into your business strategy, and create a proactive culture for your company.

Step 1: Gather Information.

In the last 10 years, retail technology has placed provider systems (and intelligence) directly into the point of sale. Through electronic rating, your systems are interacting with the consumer in real time. Your systems are ready to contemplate additional exchanges of data to better position your products using consumer demographics, real-time marketing material and, maybe, one day, personalized marketing material — all driven to uniquely represent your brand.

Some services are available today, but other ideas have to be conceived by providers so that software vendors can effectively implement them through standardized methods. Think of it in terms of the three “T”s:

Think! There is knowledge all around us. We are all consumers and we all have our own experiences. Pay closer attention to things seemingly unrelated to your business. Consumers now expect a car-buying experience in which they feel they have more control. This same expectation will apply to the way they buy aftermarket products.
If you have never purchased anything through Alexa, much less the Amazon website, there is a good chance that you cannot relate to the changing market. You have people on your team who can help. Think about where consumers are shopping for cars and looking to maintain them during ownership. Recognize this as an opportunity to provide the experience your consumers expect or to extend your brand.

Talk! We are a customer-driven business. Talk to your dealers and agents. Talk to your consumers. Many providers have limited exposure to the point-of-sale experience. Take a field trip! You will find examples and ideas from the most surprising places. Discuss and interpret dealer, agent and consumer feedback about the purchase experience in a constructive manner.

Translate! Everyone has been burned by investments that don’t work out. Protect your business by making informed decisions. Consider how retail technology fits your internal systems and process. Be empathetic to your dealers and their agents, else you run the risk of trying to force the dealer into a process they do not want. You should consider how your systems interact with the point-of-sale brand experience that your dealers are using. Remember that dealers must make it work in their business. They might sell other products and be under pressure from their OEMs. Most dealers resist mandatory systems and prefer to choose their own software.

Step 2: Incorporate Retail Technology.

When it comes to technology planning, it is surprising how many business plans do not formally include retail technology. You might have a CTO or “a guy” who is good with computers. But the leadership of the company must take responsibility to adapt to the changing market. Include retail technology as a line item in your business plan and staff meetings.

Do you have a five-year plan? A good one will start with a vision and a path to get there. This is not the place for micro decisions, but you should be practical enough to know that the vision is viable. How will your dealers be presenting products? Who is disrupting their business? The current model of selling in dealer F&I when a car is sold is still the most effective and productive, but there should be little debate that the consumer is driving change.

The most important lesson that I embraced on the topic is that most provider technologies are built on the assumption that an educated dealership F&I expert is on the other end of the pipeline. As you evolve your retail-facing technology, this is important to understand. Here are some things to consider:

  • The dealership F&I expert knows how to read your consumers. Presentation software needs to contemplate offering the consumer specific products and coverages best suited for the situation. It is not so automatic if the salesperson is talking to them from the service drive, over the phone, or especially when software is all that stands between you and the consumer in an online experience.
  • Software vendors are making positive steps to facilitate client profiling, and your technology is needed to better make it work for your brand.
  • Particularly with consumer-facing software — even if used in the dealer showroom — the presentation must be rightsized for the consumer. Electronic rating technology needs to consider some additional data about the consumer, and provider technology needs to adapt to the changing product presentation experience to include data beyond the vehicle.

Many software applications incorporate a consumer survey before or during the F&I presentation, but this information is usually retained in the dealership. Provider technology could better serve the sales process if they had a method to collect this information in an efficient manner.

Step 3: Create a Proactive Culture.

The world is not waiting on your strategy, so you must deal with retail technology right now. Until you align the talents and efforts of your team (and brand), you will face a continual barrage of special, urgent and often absurd requests. Your agents may be unprepared to effectively manage a dealer situation. This can often be avoided.

Being proactive is easy to grasp and hard to execute. We all go to conferences and hear consultants and vendors convince the audience that it is time to change. For those who quit smoking, or started an exercise regimen, you know that it helps to make small changes.

Not all ideas have a positive return on effort. But, if you do not properly explore the ideas and translate them to a concept, it is too easy to lay an egg. Or worse, do nothing.

Making changes to a process starts with team alignment. In our business, we focus on three “E”s:

Educate: Create awareness throughout your organization. Help agents understand existing technology and the many ways dealers represent your products.

Engage: Create opportunities to get agent feedback. What systems are your dealers using? What are their gripes? What is new? The important thing here is to figure out how to aggregate this feedback. Do you have a method that makes it easy to submit and report on feedback? Having a method is more effective than listening to the newest (or loudest) agent suggestion.

Empower: Most of your dealers and agents do not want to create fire drills, yet these emergencies are how things get done. Effectively trained and engaged agents can be empowered. When your agents know how to help your dealers without pulling the fire alarm, they will naturally be more confident and more productive.

Great companies do not sit idle until it is time to “react.” You do not have to be at the tip of the spear to keep pace. But you do have to plan if you want to avoid the pitfalls common to playing catchup to the market.

The wheels of evolution keep turning. Providers are getting closer to the consumer. Providers need to utilize agents, dealers and vendors to keep retail technology on track with the market.

Posted in Product & Technology0 Comments

A Question on DMS Integration – Open Dealer Exchange Responds

A Question on DMS Integration – Open Dealer Exchange Responds

We have often been asked by our readers to do an in-depth analysis on Dealer Management System (DMS) integration. We wanted to start out by asking Open Dealer Exchange how they view DMS integration. Below is their response. Next month we’re going to hear from the others in the industry, so stay tuned.

What type of DMS Integration is right for F&I Product Providers?

By: Ron Greer

For most F&I Product Providers and Administrators, the primary sales channel is an automotive dealer, this distributed network often presents unique challenges to conducting efficient business. The F&I process is one of the most sophisticated processes to accurately transmit data between an F&I product provider and the DMS. Federal, state and county regulations, add-on services, sales campaigns, credit processes and approvals all require the integration between the DMS and the provider to be up-to-date and accurate at all times during and after the sales process. For instance, even the most well thought out F&I product and integration strategies can inevitably hamper the dealer’s network, cause system compatibility issues, and potentially place the dealer and consumer at risk if the data is not properly transmitted in a timely manner, calculated properly, validated, secured and monitored.

Those that conduct business through an automotive dealer know there are a variety of software applications used in the dealership sales process. Many applications have a specific purpose such as CRM, Sales Process and Tools, Specialized Deal Desking and more, and when used as part of the entire F&I process, each application is a critical part of a successful sale. But because each of these applications is often from a different supplier, the movement of the data, the transmission frequency and the requirement of accurate data complicates the process and, if not done in cooperation with the DMS, can cause the data flow to become disjointed.

The DMS is the system of record for all transactions stored in the DMS and transmitted to an outside F&I service. The DMS is where the forms are usually printed, where vehicle inventory is converted to customer inventory, and where the deal is sent to the accounting software. The term “DMS Integration” means a variety of things and without a full understanding of it and why it is important to the overall sales process, roadblocks continue affecting the accuracy of the data and the successful transmission for data transactions. By understanding internal needs and available options, F&I Providers and Administrators can find the right solution for their businesses.

Solutions vary based on need and circumstance, and there are three major ways for Product Providers and Administrators to conduct business more efficiently with their dealer partners, which all require some type of data exchange or integration:

  • Data Interface between the DMS and other software or reporting solutions
  • Forms/Contract Printing Management used in the dealership
  • Transaction Integration between the Provider and the dealership

Data Interface

Moving data from the DMS to populate fields in a specialized software application has created buzz in recent years and is a requirement for the DMS to provide. Data Interface from the DMS to other software has been called by many different product names such as a Download, Certified Interface, Third Party Access, and Unsupported or “Hostile” Integration. Most major specialized software applications, such as CRM or Electronic Menus, need to make data flow between the two systems as streamlined as possible for the dealer. These specialized applications rely on accurate data to be passed from and updated to the DMS in a near real-time manner. The data needs to support the business processes defined by the application and supported by the DMS. F&I managers will not tolerate the extra work to re-key customer, vehicle and deal information, inaccurate payment and tax calculations, or bad data being transmitted into their specialized application. DMS software providers—including Automatic Data Processing (ADP), The Reynolds and Reynolds Company and other DMS providers—have developed programs to securely share data between software applications which helps to remove these obstacles.

DMS integration is becoming more and more complex due to the need for timely, reliable access to F&I data. Access to DMS data once a month, once a week or once a day does not meet the need for F&I type services. Real-time secure access is a requirement to ensure success. This type of integration has increased the risk to the dealer as well as the F&I software vendor for receiving accurate, safe and secure access if not directly received from the DMS provider. DMS providers like ADP and Reynolds and Reynolds have implemented comprehensive programs that support this type of access ensuring the dealer’s data is protected, system performance is reliable and the data transmission supports the DMS business rules.

Technical considerations for a smooth process are also significant and can only be provided successfully from the DMS provider. Mapping data to ensure that a field (such as customer name) is properly converted, state and county tax percentages are calculated correctly, rounding and payment calculations match those fields in the DMS as well as field lengths and formats between systems match all help avoid software support issues and awkward moments when data is mixed up in front of a customer during the sales process.

The entire process is complex, however, and extracting data from the DMS is just one aspect. There is also the entirely different and complicated matter of pushing data back to the DMS to complete the sales loop. This has to be done in cooperation with the DMS provider in order to assure the data of record in the DMS is accurate and secure. This data is used throughout the entire dealer’s network and therefore cannot be any risk.

The most reliable, secure and industry-supported method is a certified data interface with the DMS vendor. Programs such as Reynolds and Reynolds Certified Interface or ADP Third Party Access Program are available to certify partners who comply with the business rules and processes inherent within the DMS. These programs meet the business rules in the DMS, assuring the specific needs of the certified vendor.

A DMS approved application can also be used if the software provider has a specific need to receive a nightly “push” of data. The DMS has a “download” application that supports the dealer in moving data from the DMS to a dealer defined destination on their LAN. The data is then managed by the dealer and can be provided to any service or application provider.

In the last several years, non-certified access has been perceived as reliable, secure, low cost or even free. This type of access to the DMS requires due diligence. Because the success of accessing the DMS depends on a reliable stream of accurate data, these “hostile” integrators pose a potential risk. DMS vendors routinely change their applications and methods of access in order to support new automotive business rules and security requirements. Dealers expect these changes to be made. The “hostile” integrators have to react to these changes which may hinder the business by providing “unreliable data” and/or unexpected “breaks” in the data interface. Ask yourself, does the risk outweigh the security of a DMS certified interface?

Tip: If your dealers require a very specific business function that is only satisfied through a specialized software application, then consider leveraging a Certified Data Interface to assure safe, secure and accurate data.

Forms and Contract Printing Management

Forms and Contract Printing Management is a very common solution and a simple choice. Even today, most contracts are printed on forms stock in the dealership using what’s called an impact printer. Within the DMS there is a forms formatting program that places fixed data in defined line and column locations, as well as prompts the user for variable data that does not reside in the system. A Digital Forms Library replaces the old process whereby the Provider or Agent (forms owner) supplied a box of forms to the dealer. The dealer printed a deal, and sent it with five blank copies to their respective DMS Vendor to “program” the forms format. Multiply that process by all of the dealers a Provider does business with and the reliability of all necessary forms being updated diminishes significantly.

The technology advancement in utilizing a Digital Forms Library allows for a smoother transaction and according to Rod Allen, National Enterprise F&I Products Manager for ADP Dealer Services, there are definite benefits.

“Providers who participate in the ADP e-Forms Library indicate that they are proactive in using technology to assist dealers in improving the dealership F&I process,” Allen says.

ADP and Reynolds and Reynolds currently manage their respective libraries of digitized forms to streamline their dealer’s process. The company who owns the copyright and publishes the forms (forms owner) works directly with the DMS vendor to “push” updates to the dealer. In most cases, each dealership still requires customization, but the process is managed much more effectively upstream, reducing implementation time and increasing the chances of an accurate and timely dealer form.

Another feature of this forms library is the availability of advanced digital forms printing solutions. Dealers now have the option to have all of their F&I forms printed on laser printers, which enables a highly customizable consumer and dealer experience. This combination of software and services minimize dealer costs through paper efficiency including control over customizable page printing and printer routing. It also provides benefits such as electronic signature, deal jacket archival and the ability to email a very personalized electronic document folder to the consumer.

Connecting to the DMS Forms Library offers a single point of contact for F&I Administrators. Whether the dealer prints on traditional forms, or uses optional laser printing features, the process of maintaining accurate forms is centrally managed.

Tip: Participation in the DMS Forms Library improves the process and paves the way for future capabilities. This is usually available to Providers at no charge.

Transaction Integration

The industry has conceded that the DMS cannot be everything to everyone. It is a lot of work building and supporting a system to satisfy a diverse population of dealers. Factor in compliance to Regulatory, OEM, Lender and Provider processes and it is clear why a DMS might need to narrow the F&I Aftermarket Screen to a simple “input only” function.

It is in this arena where the game is changing and the market need was apparent. There is a third solution, commonly known as Transaction Integration, which is advancing the industry towards a seamless and secure data flow. The logic behind this integration is that the DMS could hold all functions and processes to fully complete a product sale in the F&I office, from correct ratings to e-Contracting.

Currently, F&I Managers in the dealership need to utilize various systems, portals or software tools to complete a sale. With Transaction Integration, the dealer can support full e-Contracting within the same workflow in the DMS. By using this service, a Provider can virtually eliminate the cost and overhead associated with hosting their own contracting portal.
Not only does the flow stay within one dealership software application, a Provider can also present only eligible products and coverage for a specific vehicle and customer under the conditions of the deal. This allows for an accurate point of sale experience based on specific VIN and driving conditions. A DMS that has enabled Transaction Integration can present accurate and instant product ratings, customized forms printing, electronic signatures, and deal data transfers – all within a single workflow.

In a perfect world, every dealership would use the same software applications in the same way. Today’s reality, however, is that even two F&I Managers that share a printer might utilize different software applications, differently. And as long as they both quote correct rates for eligible products that are printed on the correct contract and automatically register at the time of sale, it should be a non-issue for the Provider regarding what software solution they used. This is where the most significant benefit of Transaction Integration lies. No matter what software the dealer chooses to present F&I Products (e.g. menu, CRM, Desking), Transaction Integration can link to them all in order to complete and print the contract. Providers no longer need to incur large integration or system costs to develop custom integration to all of these systems – they can integrate to one and be done.

Tip: If the Provider is neutral on dealership software preference and only requires real-time integration to the consumer point of sale, then Transaction Integration is the emerging technology to consider.

DMS Integration is an issue that should be carefully considered by F&I Providers and Administrators, and depending on their unique needs, each option or combination of options outlined has its benefits. Regardless of which path is chosen, the end goal is to ensure a successful dealership experience that efficiently maintains the integrity of the data. As the field continues to broaden, Providers and Administrators should carefully evaluate their own needs and feel confident that there are technology tools at their fingertips to help strengthen and grow their business.

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Traditional Paper Contract Processing: It is Time to Re-Evaluate the True Cost

Traditional Paper Contract Processing: It is Time to Re-Evaluate the True Cost

F&I product providers and administrators should consider the tangible and intangible expenses when making the decision to shift from paper to digital contracting.

It is no secret that the automotive landscape has become more competitive and more regulated than ever, and the old adage “only the strong survive” has never rung truer.

We see it daily in every aspect of the sales cycle: cut costs, increase operational efficiencies, make the customer happy. Be profitable. Fortunately, today’s electronic processing, or e-contracting, of automotive F&I product sales is steadily evolving and now offers significantly better integrated options compared to five years ago. There are many solutions that support a full electronic process to rate, prepare and register contracts from within the dealership. Technology, or even change itself, is not the real barrier; it is the acceptance of workable solutions across a diverse supply chain.

All entities, including F&I product providers and administrators, lenders, dealers and ultimately, the customer, stake a claim in a successful transaction. Key to that success, however, is embracing tools and technology that streamline the overall flow.

Recently, there has been a slow but fundamental shift away from the traditional manual contracting process to a digital or electronic approach. Many F&I product providers have developed their own contracting portals, and while some are very well designed, they have only incrementally improved the dealership workflow. However, dealers are less willing to completely adopt e-contracting because they are not convinced the benefits outweigh the impact of a major shift in their process.

But how does a provider or administrator justify the new investment, especially when legacy processes must be maintained through the transition? Many providers have evaluated the cost to implement e-contracting, but few have analyzed the real cost of continuing with their current, manual process. There is no industry formula, but the information is available for those willing to look.

Those who have migrated to and embraced e-contracting, especially F&I administrators, quickly realize that the cost, inefficiency and errors of traditional contracts no longer need to be a “given” part of the process. And through this technology, the relationship with dealers and the consumer is more efficient. Providers can reach more customers and sell more products, and secure, electronic transactions make it easier for all involved.

Every industry recognizes the Internet has enabled a major shift in business processes. Traditional expenses that do not help grow the organization or retain customers should be scrutinized. Ask yourself, “If I was starting fresh today, how would I approach it differently?”

While the shift to e-contracting gains momentum for those who understand its benefits, transitioning typically requires an investment that must make sense financially. How can you measure the true “expense” of traditional contracting, and how can we objectively evaluate the business case?

In understanding manual contracting vs. e-contracting, we first need to define the cost elements associated with traditional, paper-based, manual F&I contracts.

  • First are direct costs. These are measurable expenses associated with a paper-based process, typically tracked on a P&L. Direct costs include the cost to purchase or print paper contracts. This is affected by inventory levels, emergency contract changes or scheduled changes. Direct costs also include shipping paper contracts to agents and dealers, which depending on the number of changes, might include multiple shipments.
  • Next to consider are leveraged costs. These are measurable but are typically leveraged. Administrative work to manage forms such as formatting, storage, and library maintenance are examples, as is the data entry work to record contracts. Leveraged costs also can include filing and storage of paper documents using valuable floor space and cabinets, and the time to manually file and retrieve paper documents if needed. Write offs of dealer rating errors are another leveraged cost to consider.
  • The potentially largest piece of the traditional contracting cost is opportunity cost. These costs are rarely measured and difficult to quantify in many circumstances. Examples include missed sales opportunities because the proper tools are not available or accessible at the point of sale; cost of reporting delays like the registration of the sale and its remittance; the risk associated with a distributed forms process where obsolete, non-compliant forms might still be in use; the CSI cost of claims on unregistered contracts or registered contracts that were voided or canceled; and finally, dealer satisfaction, reflecting how easy and reliable dealers perceive it to do business with their agents and administrators.

When an administrator evaluates an e-contracting strategy, he or she needs to factor all of these costs into the decision. Specifically, administrators need to evaluate what percentage of their administrative labor cost is spent on the entire cycle of a paper forms process, as well as look at their charge-backs and write-offs for each quarter and apply a percentage to those “avoidable” issues. They also should analyze their dealer cancellations to find the root cause, as a certain percentage is likely connected to preventable errors in the process.

A number of companies have been working in this space for years to advance the use of modern tools. Spencer Lyman, Vice President of Systems Development at CNA National Warranty Corporation, a leading national provider of vehicle service contracts and associated products, cites the accuracy and consistency e-contracting provides as a primary motivator in embracing the technology. As a result of ongoing investments in infrastructure to support the technology, CNA National is seeing a positive impact and experiencing additional benefits.

“One of the things we found striking is the effect on early cancellations of service contracts. Dealerships that are able to fully implement e-contracting find the percentage of early cancellations drops to almost zero,” said Lyman. “It makes a significant difference because the business is done correctly the first time rather than needing endorsements down the road.”

As stated earlier, though, the overall auto contracting process is dependent upon a carefully timed series of events and contributors. The successful completion of each step relies on the previous link in the chain. In order to reap the cost and operational benefits, it’s not only administrators who must adopt digital contracting, but dealers, lenders and other F&I sources as well.

Since the advent of e-commerce in the Internet era, many companies have launched technology solutions but few have reported widespread adoption by their dealers. Unfortunately, early attempts at e-contracting did not have the desired acceptance in the dealer and agent community.

With more than 16 years of experience in the industry, Steve Veldkamp, Training Director at Great Lakes Companies, has seen business processes change over time as dealers gradually become more open-minded about implementing e-contracting solutions. However, there is still work to be done. In his experience, the early-attempt push back by dealers in particular stemmed from a lack of understanding about the benefits. In working with dealers, however, Veldkamp touts the benefits of the solutions and encourages adoption because of how it can improve business.

“In my experience, dealers have been slow to adopt because it does require learning a new process and approach to business,” he explained. “There are more facets involved in e-rating, e-submission and e-contracting than in traditional processing and each deal is treated individually. Ultimately, the accuracy, speed and time savings can make the dealer more profitable, but they have to make that initial investment in embracing the technology.”

Veldkamp continued, “The potential for errors is so much greater in the traditional processing world and the time to fix manual errors is significant. Time is valuable and I’d estimate that for my dealers that still use manual processing, I spend hours each month cleaning up bad deals.”

The ultimate cost is the loss of dealer confidence. Lag behind, you could lose business. Adopt the wrong technology, you could lose business. Keep it “easy” and that partnership gets stronger.

For many administrators on the cusp of understanding the complex considerations of traditional versus e-contracting, it can be a seemingly difficult path. However, once the true costs of traditional contracting are understood, e-contracting emerges as a key strategic business direction and can deliver tangible benefits. Lyman said, “It’s very seldom to have anyone go back to paper contracts and rate books once they get a taste of e-rating and e-contracting. Once the understanding is there, the buy-in is very high.”

About Provider Exchange Network
The Provider Exchange Network (PEN), a division of Open Dealer Exchange, is a managed digital pipeline between the provider and the dealership. During the F&I process, PEN allows any dealer system or menu to request rates and forms directly from the provider. This supports a potentially paperless contracting process for the provider including instant and accurate electronic ratings, electronic contract origination, forms preparation, digital signatures, electronic deal jackets, digital remittance and forms archival. This solution allows the provider to stay focused on their core business by increasing dealer exposure, contracting efficiency and reducing administration and risk.

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