Let's get this straight right out of the gate: I am not advocating customer confidentiality breaches at dealerships across the country.
To share or not to share dealer management system (DMS) data is a hotly contested topic these days. In my opinion, sharing aggregate, anonymous sales information is the biggest trend that dealers need to embrace in order to push auto marketing to the next level. And many dealers are, in fact, embracing it. But more still are not in the sharing mood, and this isolationist perspective hurts the industry as a whole.
First, let me clarify what data I'm talking about. It's aggregated data about consumer activity:
- what vehicles sold in a given day
- which accessories were the vehicles sold with
- at what margin of profit did they sell.
To be clear, I am not advocating the sharing of individual consumer information or anything else that crosses that double yellow line of privacy and confidentiality. Just aggregated, anonymous data.
Why share?
Forget what you learned in kindergarten. This is not about being nice, it's about acting in your own self-interest. You need aggregated, industry-wide, up-to-date information about the cars you're selling and the people to whom you're selling them. And for that to happen, everyone needs to share.
This helps create predictability within the industry, ultimately providing a more accurate picture of what's going on: what consumers are buying, which options they prefer, what they're paying and how certain promotional campaigns are performing, among other things.
That level of detailed analysis is critical as dealers make decisions ranging from how to stock their showrooms to how to most effectively allocate marketing budgets: a task that's gotten ever more tricky as advertising has become increasingly fragmented across multiple delivery channels. Only with solid intel can dealers be strategic and deliberate about management, operations and marketing tactics.
A few industry trends in particular require this kind of transparency within the marketplace: upfront pricing and performance-based marketing.
- Upfront pricing. Consumers are looking for a fair, upfront, no-haggle price that is transparent from the start. To feel confident about providing that, dealers have to be sure they know what the market will bear at any given moment.
- Performance-based marketing. There's a lot of talk within the industry about the value of lead generation and how that differs from sales generation. There's a shift underway to a more action-oriented sales structure, where dealers pay for the sale, rather than for the lead. But from the technical and logistical standpoint, dealers must be willing to share their DMS data in order to take advantage of these fee structures.
Why many dealers still won't share
Two words: security and control.
The security question is a big one. Dealers are rightly concerned with safeguarding their customers' confidential information and protecting their own trade secrets; the intricacies and arguments for both of those subjects could be explored at length on their own.
But the key is for these dealers to align with technology partners they trust to keep all identifying customer information and all sensitive dealership data private while enabling access to select information within the dealer management system. This requires reliable partners at every turn, from the system provider to the technology and service vendors that are granted access.
The control issue goes even deeper. Dealers often are reluctant to share consumer data -- especially with manufacturers -- for fear of being edged out of that customer relationship. The fact that we're talking about anonymous aggregate sales data isn't always a comfort for dealers worried about security breaches. But, again, trusted partners and a secure system are the keys to empowering dealers to be able to confidently share data.
The sharing is happening. The technology is here to make it possible, movements within the industry are demanding it, savvy dealers are embracing the trend and those who resist risk being left behind. Creating an open marketplace benefits dealers and consumers alike by bringing buying trends and pricing out in the open. You see, as people and markets demand full transparency in their purchasing transactions, we simply can't afford to go back to our isolation booths.
Scott Painter is CEO of Zag. Read full bio.
