People + Product + Process + Price = PROFIT; That Equation Applies to Vendors As Well As Dealers

When evaluating vendors to help an auto dealer client sell more vehicles, or to enhance an existing vendor partner's application or especially when considering a next generation solution for future shared opportunities I am often surprised to find obvious problems with universal solutions that are overlooked by even the best operators.  Reducing a challenge to its components provides a road map to success which is easy to follow.

People - Car dealers know how important people skills are when selling or servicing a vehicle and a friendly sales/service person is often the greatest differentiator between dealers.  Vendors understand this old school wisdom when it comes to selling their solutions, however, they are not as likely to prioritize it in other aspects of their business.

People that take pride in their solution/technology beyond earning a paycheck that strive to solve tomorrow's problems before their dealer clients encounter them are the first asset that I look for in a vendor partner.  Shared visions by an involved development and support staff that extend beyond the entrepreneur's initial solution allow vendors to stay ahead of the curve in a changing auto industry which is always looking for the next best thing.

When evaluating a vendor it is important to look beyond the salesperson and interview the product developers, support staff and even the billing department to determine how your relationship will mature - or not - when the challenges of day to day operations are added to the mix.

Product -  Of course the product or service being evaluated should provide a best in class solution when compared to competitors in the same space, however, sometimes it is more important to evaluate the problem(s) they address vs. other issues that may warrant a dealers - or vendor partners - attention.  The best application in the world is only as good as the problems it resolves and the R.O.I. that it provides.

Simply put, when evaluating a potential vendor partner the priority should be to determine how a dealer's - or vendor's - limited resources should be invested in competing areas of their business.   Some problems are more urgent than others and all too often dealers/vendors invest in fancy platforms that either don't fit the personality or process of their business or that address perceived issues which are actually sourced from other less obvious problem areas.

For example; the best CRM tool in the world won't help a dealership that can't develop or manage a sales staff to use it and integrated data for a vendor application that isn't relevant to their solution or the problems it was engaged to resolve is a wasted resource and expense that limits profit and client retention vs. improving them.

Process -  Having a comprehensive process in sales/service is an obvious requirement for dealers and vendors alike, however, the real challenge lies in how the companies interact. Communicating problems and solutions between dealers and vendors is often the most under utilized opportunity for both.  

All too often vendors wait for dealers to complain or provide critical information to improve a process for a vendor.  Similarly, dealers don't know what they don't know and until/unless a vendor considers the way that a dealer client sells/services vehicles or uses their product they won't be able to provide the maximum R.O.I. for their clients.  Unfortunately, eventually a competing vendor solution will surface and solve these issues resulting in lost opportunities for all parties.  Constantly changing sales/service processes and vendor solutions are bad for the dealer and of course vendors invest a lot of money to attract new business which would be better applied to keep their present clients.

Price - It is interesting how un-important price is after considering the people, product and process that it supports.  R.O.I. is a more relevant figure which is unfortunately much less obvious.

When evaluating price I always consider the total budget for the dealer, competing solutions for the limited dollars and resources of the dealer and of course the R.O.I.  Vendors have similar goals, however, they must also consider competing applications that promise comparable products and services even when they actually have an inferior platform.

Price alone is not a consideration.  The real focus should be on the R.O.I., what you get for the money and finally how easy will it be to tell that story to your clients to overcome the competition.

PROFIT -  Profit is an obvious goal for dealers and vendors alike, however even profit has many faces which must be considered.  Short terms profits can often be sacrificed for long term profitability.

Dealers understand the value of a short deal on the front end of a vehicle sale that results in a good back end profit in F&I and future service or additional sales.  Similarly, vendors often use the first few months of an agreement to absorb start up costs with the anticipation of a long term agreement developing the profits that are sure to follow.

Other less obvious "profits" for vendors include gaining market share to support an eventual exit strategy or public offering and future enhancements to their solution with additional revenue generated by partnered vendors.

In summary, evaluating vendors often requires more attention to the fundamentals of their business than simply considering their solution based on product and price.  People and process matter in every aspect of the car business and they must be considered equally. 

Views: 158

Reply to This

© 2020   Created by DealerELITE.   Powered by

Badges  |  Report an Issue  |  Terms of Service