What’s really in a Deal Jacket (and why does it make e-contracting so hard)?

I believe the paperless car deal is the holy grail of automotive retailing. In my last blog, I talked about how e-contracting is the sticking point in reaching this ideal. The reason is two-fold:

 

First, car deals are complex and sometimes messy. There are a lot of vendors, systems, and individual variables involved in every single deal.

 

Second, the paper system isn’t broken. There is nothing fundamentally wrong with using paper - the majority of customers today prefer it! Even during the pandemic, the number of customers willing to complete a deal from start to finish digitally was a fraction of all buyers.

 

However, e-contracting offers a lot of benefits, including faster funding and a speedier process for customers. I think it’s safe to say that as customers progressively get more comfortable with technology and eSign platforms, more will want a paperless process. But not everyone will embrace change.

 

For example, my 95-year-old grandfather thinks it’s ridiculous that Ford created the Lightening. For him, gas is the only way to go. When it’s only digital one day, there will be a buyer that requires you to accommodate for paper. That being said, paperless is gaining a lot of steam with dealers and customers. There are several reasons why; two of the most compelling are cost and security.

 

Consider that a 100 deals a month generates approximately 27 boxes of paperwork. With a cost of storage around $2 per square foot, and each box measuring about 1.5 square feet, dealers storing paper documents spend over $900 a year to store a month’s worth of deals. Over the seven years required to retain deals, that cost balloons to over $6,300. For one month of deals!

 

When it comes to security, deals stuffed in filing cabinets and storage lockers are vulnerable to theft and loss. Deal jackets housed in the cloud by a third-party document management solution are protected by strict access controls, and secure cloud servers with firewalls and cybersecurity tools.

 

I think we all agree that e-contracting is the future of auto retailing and dealers need to position themselves to incorporate these tools. Still, putting an online system into place can be daunting. To sell in a paperless manner, each piece of the deal needs to work digitally. In order to do that, you need to understand what goes IN a deal jacket.

 

Breaking down deal jacket silos.

 

The DMS is going to sell how streamlined their product is and how it will facilitate a consistent process for every deal. That’s rarely true, because the pieces of the deal are siloed between multiple parties. Consider the breakdown of a deal jacket:

 

  • Front-end Sale/CRM documents
  • Credit application forms
  • F&I desking product documents
  • Office and accounting documents, including tax, registration, and incentive forms
  • Government required documents including Title and DMV requirements (some states will not accept an electronic signature)

 

Remember: your customers view your dealership as one company, not a collection of separate companies or organizations. Sure, they may understand their loan, for example, is through a separate financial institution, but they still expect you to be the expert at point of sale. Utilizing numerous products to streamline your operational process has to be perceived by the customer as a single, cohesive process.

 

Breaking down deal jacket silos is extremely difficult if products do not implement with your DMS. In addition, who is going to manage each software platform and make sure each piece of the deal integrates with all the other pieces? Managing digital systems can become very complicated.

 

Tips for preparing for e-contracting.

 

Dealerships across the country have cleared hurdles and put e-contracting in place. A recent article in WardsAuto noted that RouteOne had 20,000 new and used dealers enrolled on its credit-application processing platform last year, including 9,000 participating in its e-contracting service.

 

I believe the key to success is proper planning for how to implement e-contracting because every sales tool, technology solution, and data point, must be integrated. A great place to start is by evaluating these five questions:

 

  1. Can it be digital? – Many dealerships have a digital contracting solution, they just don’t use the eSign feature. A solution that you already use that has digital capabilities will make it faster and easier to get up and running with e-contracting.
  2. Is a digital version allowed by your financial partners and states where you do business? – More states are adopting e-contracting, but there are still hold-outs. The same holds true for lending partners. Do your homework to make sure a digital process is possible before moving forward.
  3. Does your OEM currently work with a specific solution that compliments other solutions already in place? –Many OEMs have a preferred partner so investigate how that vendor will work with current solutions, how documents are exported, and how documents are archived.
  4. Is the cost feasible? Hidden costs are common, especially when it comes to implementation fees. Also factor in the cost of delegating an employee, or hiring someone new, to manage the implementation and ongoing process.
  5. Does your solution integrate on a granular, detailed level? Can you customize pieces of a deal that need to be customized? – Deals get complicated when incentives, special programs, and warranties are added in. The best solutions can handle these types of customizations.

 

The key here is to identify the hurdles BEFORE you make the commitment. If any of the questions above force you to question the answer, you need to do the research to plan a proper strategy.

 

e-contracting is the future of automotive retailing – but the complexity of auto deals means there are still hurdles to overcome. Now is the time to do the behind-the-scenes homework and evaluate solutions, your sales processes, and your current technology, to prepare for the online evolution.

 

 

 

 

 

 

 

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