Car Dealerships Kick CRM's Tires - InformationWeek

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Software // Enterprise Applications

Car Dealerships Kick CRM's Tires

Dealers are starting to improve the technology they use to close deals generated by Internet leads.

New contact-management software gets the credit for a sharp uptick in sales generated from Internet leads at George Matick Chevrolet in Michigan. Until two months ago, when it installed Reynolds & Reynolds' contact-management software, the dealership closed deals on just four to six cars per month out of the 100 or so leads it averages from its own and General Motors' site. Those sales have since doubled. In just the past two weeks, says marketing manager Ryan Esler, "we've sold seven cars and have had more appointments in one week than ever before."

Fewer than 30% of car dealerships use lead-management tools to improve sales, estimates Forrester Research Inc. analyst Mark Bunger. But that's changing. A study of 26,838 new vehicle buyers or leasers released today by J.D. Power and Associates finds that 40% of respondents used the Internet to begin the process of shopping for a new car by visiting a manufacturer's site, up from 36% in 2003, while 58% visited independent sites. The firm predicts that by the end of the decade 70% of all car buyers will use the Internet to initiate the car-shopping process.

"Dealerships are looking for software to manage leads because they can't deny the growth in Internet use by consumers," says Troy McLean, business process and technology consulting leader for Volkswagen of America. About 97% of VW's dealers participate in its lead program, but few of them have the tools in place to really make the most of those leads, McLean says.

Volvo Cars of North America LLC plans to survey its dealers to find out which--if any--CRM platforms they use, and is considering a policy that would let independent dealers pick lead-management software from a list of between seven and 10 tools that meet Vovlo's quality and security standards, says Phil Bienert, manager for CRM and E-business at Volvo.

Increased lead volume also is prompting Naz Sesi, the VP of two dealerships that sell Lincoln, Mercury, Volvo, and Mazda autos in Ypsilanti and Ann Arbor, Mich., to install a CRM platform next year. Between 10% and 15% of the dealers' annual sales come from leads generated by both Ford Motor Co.'s and the dealer's web site. "The challenge is finding a CRM application that will integrate with systems at all four brands," Sesi says.

But the benefits are compelling. At George Matick Chevrolet, processes are much more efficient now that Internet leads no longer are routed to a third-party company that re-keyed the information into a database and routed it to the dealer. The CRM software lets the company schedule appointments for salespeople, E-mailing them the schedule and all the customers' requirements. It's also is integrated with the dealership's Reynolds & Reynolds ERP software, so data can be easily shared with financial, accounting, and service systems.

Investments in lead-management tools is important for most industries with similar distribution channels, says Laura Preslan, research director for customer management at AMR Research. "Last year, manufacturing's highest customer-management priority was improving the quoting process," Preslan says. "This year, the shift from 28% to 38% in a study conducted in July shows the manufacturing sector is turning toward more effective lead management to drive revenue."

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