The Auto Industry Is Broken: Too Many Vendors

We’re starting a new series on our blog focused on some of the major lessons we’ve learned over the last 16+ years helping auto dealers to be successful in an ever-changing and competitive landscape. To kick things off, we wanted to start by addressing an all-too-common issue in the automotive space (and really, it’s a problem most businesses face): working with too many vendors, and the issues that setup can cause.

When you think about it, it only makes sense – having too many cooks in a kitchen can cause confusion, and having too many vendors providing your services causes significant problems for your dealership. Specifically, that means a lack of accountability, which can cause cascading failures when something goes wrong and an inability to know who or what might have started the avalanche. There’s also a significant cost savings that can be missed when services aren’t consolidated, among other things. We’re going to break all this down a bit and provide some recommendations on how you can prevent these pitfalls.

Auto dealerships face a number of problems when they work with multiple vendors to cover their needs, especially when it comes to marketing and advertising what you do best in a competitive marketplace. One of the biggest issues that come up all the time is a lack of accountability among those vendors. With so many different companies supplying services, it becomes difficult to track who is responsible for failures or missed deadlines. This can lead to frustration on the part of the dealerships, as well as a lack of trust in the vendors themselves.

Here’s another way to think of it – if you hire one agency to run your paid search advertising, one to manage your social media, and another to manage your website’s SEO, which one would be responsible for a drop in sales or leads for a month, or even a quarter? Each would be likely to point the finger at the other, and you’d be hard-pressed to even know for sure yourself.

On the other side of that coin, having one agency that manages all three of those things under one roof allows both you and their team to clearly know where the ball was dropped, and begin working quickly to solve the problem and get things back where you need them to be. It’s really no different when you have one vendor handling your inventory management, another handling photography, etc. In the end, having a clear path to ownership tends to result in better performance long-term.

Another issue dealerships face is inconsistency among services provided. When you have a number of vendors handling each stage or piece of your marketing efforts, each operates independently – which means there is no guarantee that all will deliver the same level of quality or service. This can lead to frustration on the part of customers and a negative reputation for the dealership as a whole.

This is especially important for dealers as the marketplace starts to become increasingly competitive. As inventory supplies start to replenish and customers have more options to consider, being consistent with how your inventory is presented online and how it reflects their experience when they arrive at the dealership is critical.

If your photos are inconsistent or slow to hit your website and third-party sites, for example, customers may end up having a bad impression of your vehicles – or worse yet, not even being able to see them at all. If the first impression a customer has of your dealership and inventory is a bad one, someone out there doing it better can swoop in and take your revenue. As mentioned above, the marketplace is only going to become more competitive as inventory supplies come back to normal levels, meaning that first impression is more important than ever, and that’s where consistency matters most.

One other important thing to keep in mind is that when it comes to marketing your dealership and driving more customers to your lot, one failure often leads to another. If a vendor fails to deliver in a timely or quality manner, what they’re providing could end up causing other disastrous problems.

For example, let’s say your photography vendor doesn’t upload photos correctly for a new car on your lot. They don’t manage your software platforms, so they’re sending them and moving on to the next job. That can lead your inventory management platform to tie those photos to the wrong VIN (because it’s not their job to check). When the customer submits a lead through your site and arrives at the lot, your sales team might be expecting to show them an entirely different vehicle than the one they saw online, so your team has to scramble to find the right one and pull keys. The customer spends more time waiting than they want, and they might just go across the street.

The point here is that if one vendor is responsible for all of these steps, there are generally quality controls in place to make sure errors don’t happen – and if they do, you know exactly who to go to, usually with one main point of contact, to get the problem fixed. That’s a pretty big benefit and one not everyone thinks of when they’re putting together a list of their partners.

One other important thing to keep in mind is economy of scale, and the cost savings you could be missing out on when you have a large stable of vendors working for you. Marketing service providers, from lot service/photography vendors to software partners and everything in-between, build their own fees into your service costs. Those fees add up because each one of them is going to charge you more individually than one consolidated partner typically will.

When you’re working with one partner who provides all or most of these services, their fees will be structured around the full suite of things they do, and in most cases, this means you’ll end up paying less in overall fees than you would otherwise. There might not always be that one perfect partner out there who can handle everything under the sun, but reducing the number of vendors you work with at a time can definitely save you money.