Peter Drucker once said, “We’ve spent the last 30 years focusing on the T in IT, and we’ll spend the next 30 years focusing on the I.” Information gives us the power to increase profits. Information tells us the best price to sell our parts, service, and vehicles to customers and when. Information informs us when an employee is non-productive, missed an important deadline, or stole last night’s deposit. During the past few years, dealerships have purchased billions of dollars in technology, but are you getting the information you need? I like to separate information into three main categories; financial, customer and employee. Let’s take a look at each one and find out what information is available.
“During the past few years, dealerships have purchased billions of dollars in technology, but are you getting the information you need?”
Financial information has historically been presented as accounting data. Most managers get too much data. An example of this is the DOC; daily operation control. I’ve seen DOCS that were over twenty pages long and ignored by busy managers. This report has line after line of data; parts sales are $93,432, service sales $147,391, new car gross is $431,900. What does that mean financially? Information is what managers need, not data. This is an example of valuable information; Parts and service gross is projected to be $350,000 and sales gross is tracking at $400,000. Our estimated expenses are $600,000, so our net profit is estimated to end up at $150,000. It is a simple piece of information that I call the Net Profit Wizard. Email me if you’d like this free spreadsheet. Another piece of financial data is our Schedules. These can be thousands of pages long; detail data of every account and who owes who what. Information is a condensed form of this called a Heat Sheet. I’m not sure I like this title, but it is a summary of key balances from specific accounts. Typically it contains contracts in transit, lien payoffs and vehicle receivables but it can also have other accounts. One of my first jobs in the accounting office was to type this report daily and I cheered when it was added as a standard DMS report!
Employee information is another area that often sets DMS systems apart. Most core DMS systems report technician productivity and counterperson sales, but more advanced systems go a step further and report overrides that cost the dealership profits. Your DMS can have reports that tell you when parts are deleted, cost amounts changed, labor removed from a repair order, parts and labor are sold at less than the matrix price, and discounts are given. I’ve seen repair orders where the dealership actually lost money after paying commissions on the gross sales amounts before discounts. Look in your DMS for other reports that tell you when overtime is being paid, credit limits increased, and deal gross profit doesn’t match the accounting gross profit. Deadlines can be monitored by using an office CRM product.
The final area of information is about your customers. Although CRM tools have made amazing strides in providing information about your customers, the data they get often doesn’t have the all the information. For example, repair order and deal data might be flowing into your CRM, but rarely are parts transactions extracted from the DMS and sent to the CRM. More advanced DMS systems have Parts CRM that shows your best parts customers and their gross profit averages. Parts CRM tracks phone calls, emails and other contact with parts customers. This feature displays their AR balance, and stores their purchase history to make it easy for your parts department to give their valuable Parts customers a fantastic experience. Yes, the data is all there in your DMS, but putting it into a Parts CRM tool transforms this data into information. If you want to know if your DMS has any of this “hidden information”, contact the DMS support department. DMS systems are typically only 35% utilized, but since you’re paying 100%, why not discover ways to increase profit by using technology you already own?
Author: Sandi Jerome
Sandi Jerome is the owner of Sandi Jerome Computer Consulting. Sandi founded DealerStar, a web-based DMS. She is a former CFO, System Administrator, Fixed Operations Manager, and Controller with over 30 years experience in the auto industry.