Feb. 8, 2010: Seeking dealer efficiency

By Neil Pascale


The call for improving productivity is a much easier topic to bring up and actually draw interest to during a time of recession than in a time of growth.

That’s what ADP Lightspeed CEO Laurn Rice has discovered as the leader of the industry’s largest dealer management system (DMS) company. Rice has watched as dealers and companies supporting those stores have increasingly eyed the bottom line rather than just their gross revenue as customer demand and sales fell drastically in 2009.

“When times are leaner people actually have to sit back and say, ‘How can I be more efficient at what I’m doing?’” he said.

Efficiency and productivity are words that Rice touched on consistently during a recent interview with Powersports Business that examined the goals, partnerships and business results of the powersports division of ADP. Rice said ADP Lightspeed remained a growth company in an extremely challenging 2009 as its customers sought more ways to use the tools the company provides as well as the industry data ADP Lightspeed collects.

Rice good-naturedly characterizes the industry as in the “Stone Age” when it comes to data sharing.

“Frankly the idea that shocks me the most is how little data the OEMs have about what’s happening in our industry,” he said.

ADP Lightspeed last fall integrated its data collection program into its DMS, allowing the industry an up-to-date view of what’s happening with dealership sales. The program, called Databack, provides a range of dealer performance information, from new unit margin percentages to the average parts department ticket receipt totals to service department data. Close to 500 dealers are currently involved in the subscription service, which updates data on a nightly basis. “Without data, you can’t make any types of measurements or know what you need to do next,” Rice said. “You can operate by gut feeling when the good times are there, but when they’re not, you really need to know where the holes are at. And the only way to find it is with good, accurate data.”

So why does the industry remain in the data-sharing “Stone Age,” especially in comparison to the auto industry? Rice believes much of that is because of a lack of ongoing data exchange, with OEMs currently only interfacing with dealers when stores order parts, register new units or report warranty work.

“But at that point, they (the OEM) can’t tell how long the unit has been there, what accessories have been sold with it, how often parts are breaking, what the dealer’s current inventory is,” Rice said.

Is the lack of data sharing a reflection of a lack of interest or more of a technology issue?


“I think it’s both,” Rice said. “The motorcycle industry for years was growing at a quick-enough pace, at a double-digit pace. As with any business, when it’s growing that fast you’re more worried about keeping up with the growth than you are about running the day-to-day details of a business.”

That obviously has changed, and Rice and company have seen the results of that. First, dealers are being more proactive in learning how to use more of the DMS tools that are already available. Secondly, industry requests to the type of dealership sales data that ADP Lightspeed collects is increasing exponentially.

“It’s going to happen very rapidly,” Rice said of the industry’s appetite for timely sales data.

Those changes have been reflected in ADP’s business results as well. The company has been challenged by dealer closures in the past year, but also has seen parts of its business expand as the need for a more thorough look at dealership profitability has surfaced.

“We’re not shrinking,” Rice said of ADP Lightspeed. “We’re not growing as fast as we used to, but we’re keeping steady (in revenue).”

The changing business landscape also has resulted in ADP Lightspeed adjusting its dealership training. In the past, the company focused more on new dealership training. Today, the company is much more focused on its current accounts.

“We found that not only are they not utilizing all the software, but the dealers that are not well trained are typically the dealerships that aren’t making as much money as they could be,” Rice said. “We would of course rather have a healthy dealer body so we’re making it a very big issue.”

Part of the change is reflected in where the training happens. No longer is ADP Lightspeed conducting as much on-site training at its Salt Lake City headquarters. Instead, the company is doing Webinars and providing online articles on how to improve store profitability. The change in training sites not only reflects a tighter expense control by dealers, but also ADP Lightspeed’s desire to train a higher number of people at the dealership. So rather than provide training for one person at Salt Lake City, ADP has offered online courses that could be used by different members of the dealership.

ADP’s business also continues to evolve in terms of its partnerships. Two years ago, the company partnered with V-SEPT to provide a CRM tool to its dealers. More recently, ADP partnered with Web site and e-commerce provider 50 Below. Rice foresees more such partnerships coming in the near future as the company continues to seek efficiency measures for its dealers.

“We are not trying to create a tool and hope the dealerships want it,” Rice said of the company’s approach to partnerships. “We’re trying to find out what are the dealerships doing already, let’s go in and automate it for them and make them efficient and raise their productivity level.

“Lightspeed’s focus is how do we make the dealership itself run more efficient? How do we raise their productivity level? If that happens, typically the end consumer’s experience is better. Plus if the dealership itself is more financially sound because they have been able to raise their productivity levels and do more with less, it’s just better for everybody.”

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