A DSP's Real Customers
If your business is developing and selling systems to dealers, having a better mousetrap is rarely enough to close the deal. It may sound like a difficult pill to swallow, but there is plenty of truth to it. Dealer System Providers or DSPs as we’ve always called them, face numerous hurdles in bringing their product to market. One big challenge is that unless you are well established in the market, you must sell your DMS to 2 distinct customer, the dealer and the OEM. The first one is obvious, but what about the second? Let’s break it down.
Why Dealers Can Be A Hard Sell
There is a very old saying that if you build a better mousetrap, people will beat a path to your door. If that’s true, then are dealers lining up at your door, credit card in hand, demanding your latest software offering? If the answer is yes, congratulations and move on, the rest of this post doesn’t pertain to you. If, however, you find yourself prospecting, calling on dealers and hearing various reasons why they are not interested, then keep reading.
The “better mousetrap” is the business equivalent of an urban myth. Here’s a quick read that explains some of the pitfalls of believing in this myth. Resistance to new ideas is certainly a factor in getting your software into dealerships, but it’s not the only one. Sometimes the opposite is true; your idea is just not new enough. Minor improvements in functionality and look and feel when compared to your competitor’s offerings may not convey enough value to a prospective customer. Hitting that sweet spot between an idea that is “too way out there” (even if it is transformative) and playing it safe with another “me too” look alike is not easy. But let’s assume for a moment that you have done just that, as many DSPs have. Why is the phone still not ringing off the hook?
Don't Forget Your Other Customer
The answer is you are only halfway there in the sales process. For your system to be successful you must also satisfy the OEM. The first step would be to get them to entertain the idea of letting you into their system. If you have enough dealers behind you, then maybe you stand a good chance of clearing that first hurdle. But it can also seem like the chicken or the egg paradox. How do you get enough dealers behind you when you don’t have an OEM connection? Certainly not an easy task. This problem is a direct consequence of the next point, which is integration costs.
Integration from the OEM’s perspective is an expensive, time consuming, and potentially disruptive endeavor and they need to cover their expenses. Hence the resistance to allow open integration. If they do decide to allow you to integrate with their system, there may be a cost for doing so. Additionally, you will have your own IT expenses to pay for. Combined, the cost of entry may be prohibitive.
The problem is clear, integration as it is currently being done is expensive and time consuming. The sheer complexity of business and technical requirements, the diversity of dealer systems, and the difficulties working with outdated legacy technology can overwhelm even the most tech savvy DSPs. Everyday that the integration process drags on is another day that you are not receiving revenue from your subscribers.
If integration were faster and more cost effective you would:
- Have easier access to OEMs
- Spend less on integration
- Experience less dealer sales resistance
- Get your software rolled out faster
Now Some Good News
Fortunately all is not lost, and there is some very good news. Consumers are demanding a much better buying experience and OEMs are listening. This means implementing consumer friendly software and ultimately upgrading their older systems. The very real threat from Silicon Valley is also pushing OEMs to re-evaluate their digital strategies, so the tide could be turning. And, the problems of integration are being solved by new solutions that provide faster, more cost effective and flexible ways of tackling this thorny problem.
Curious to know what a better integration process looks like? Here's a quick video.