Members of KainAutomotive on Vendor Best Practices

In March, Outsell Marketing Associate, Amanda Meuwissen, began a discussion on KainAutomotive about “Vendor Saturation”. The responses were opinionated and sometimes heated, bringing up some important points in looking at what dealers really want from their vendors.

The original prompt for the discussion was as follows:

The automotive industry is not short on vendors for dealership needs, everything from website creation and support to mobile marketing campaigns are readily offered. Most vendors focus on one area, maybe a couple, and offer those services only, meaning a dealership has to go to several different places to get everything they want.

Would you prefer a single vendor for your dealership that offers everything (chat, email marketing, video, website, mobile, great reporting and analytics, etc.) or do you prefer utilizing multiple vendors to get the best out of each individual service?

If you are using multiple vendors, even if one company might offer, for example, website building and online chat, but you only use them for the website and have a different company run your chat program, what is it about a particular service that makes it better than another and worth paying an additional vender for even if the first vendor offers multiple products?

At first the responses that came in seemed fairly clean-cut. Jason Manning, Desk Manager for O’Donnell Chevrolet Buick, pointed out that more vendors mean more competition, which leads to better pricing and better products. His opinion was that companies with specializations in a single product would normally do a better job because they could focus all of their attention and innovation on that single product.

Steve Stauning, Founder of pladoogle, LLC, added to the point, “The do-it-all companies I’ve seen in automotive are a lot like the first Fax-Printer-Scanner-Copiers that came out on the market ten years ago: They could not do any of these things well!”

Those first responders to the discussion seemed to agree that larger companies trying to do it all had trouble offering any one good thing, and should focus on improving the products they already offer rather than adding anything new.

Later additions to the discussion disagreed.

“Success breeds competition and in order for a business to be ‘successful’ they must be profitable and that usually requires some growth,” said Shawn Morse, Western Region Sales Director for VinSolutions. He pointed out that for companies to be able to offer competitive products they need to show constant revenue, something often achieved by development of new products and technologies, which doesn’t have to be a bad thing.

Morse went on to say, “A big topic at the last Digital Dealer and at NADA 2011 was consolidation and efficiency. How can that be bad for competition? How can that be bad for the dealer? Wouldn’t you much prefer to work with a company that was pushing the envelope and trying to develop new solutions than one that was stagnant? I say that development breeds competition.”

Of course that also forces us to look at what types of vendors we are talking about. A vendor offering multiple products that are very much separate is not the same as one that offers integrated products that cohesively work together.

Morse came back with the example of Apple as a large but still innovative and customer-focused company that can be a worthwhile model to follow.

Manning disagreed that Apple is a prime example of big business done right, but rather, “Apple is another example of large corporations locking you into their path and limiting your capabilities.” He pointed out where Apple leaves itself open for competition by not providing their customers the options and quality that is expected.

Thomas A. Kelly, Special Events Coordinator for Hank Graff Chevrolet Davison, sought some middle ground. “I would prefer to work with a company that offers it all and does it all exceedingly well.” But, “Consolidation and efficiency in and of itself does not necessarily equate to quality. I will not stop looking for a better solution just because I am already paying for A solution. Conversely, just because a vendor is focused on one product, it does not necessarily equate to higher quality.”

Ed Brooks, Sales Director at vAuto, summed up some of the other points by saying that if a vendor adds a feature to be more competitive then it needs to be something dynamic and worthwhile not simply tacked-on. Likewise, the kind of world-class support for dealers that is expected of innovative and customer-focused companies needs to be maintained.

A similar discussion occurred a few years ago on the Automotive Digital Marketing forums, “One Vendor for Everything or the Best Vendor for Each Service?”

Support for a one-stop vendor for all dealer needs was greater in that discussion, maybe because it was expected that in the years to follow vendors who offer ‘everything’ would do so more and more effectively. One vendor means that everything integrates with everything else, reporting can be comprehensive, and questions and concerns can be addressed to one location. But even in that discussion the most importance was stressed on ROI rather than convenience or seemingly immediate cost-effectiveness.

While some of the responders to the “Vendor Saturation” discussion were no closer to seeing each other’s points of view by the end, the conversation did lead to a few over-arching truths that vendors can take away as what dealers and others in the industry expect from them.

A vendor should continuously do one thing well and innovate to improve that one thing, and when they are ready to expand and develop additional products they need to do so with the same level of innovation and great customer service they had in the beginning. Dealers want consolidation and efficiency but not at the cost of quality. Regardless of size or the amount of products offered, a good vendor needs to be both customer-focused and constantly improving as they grow.

Thank you to all who participated in the discussion at KainAutomotive and for allowing your comments to be quoted here.