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DAYTON, Ohio — Early in Ron Lamb’s tenure as president of dealership software giant Reynolds and Reynolds, he addressed a programming department in Houston on the company’s future direction.
At one point, an employee who had been working on Reynolds’ accounting applications for 20 years asked him: “Does this mean we have to rebuild everything?”
Lamb said yes; the woman began crying and left the room.
Lamb’s vision for Reynolds — predicated on his vision for the dealership of the future — implies wrenching change at the company and, in ways, at its dealership clients.
He has pushed through the internal change. Now he has to get dealers, many of whom are wary of Reynolds because of years of actions that antagonized them, to look afresh at the company and what it is offering.
Dealer management systems such as Reynolds’ are the key software used to run a variety of tasks for dealerships, including payroll, accounting, parts, inventory and service. They’re also expensive, with some costing up to $6,000 a month. But Lamb’s vision of a cohesive retail management system encompasses much more.
His insistence on the need for that change, even when Reynolds appeared to be cruising along, earned him the nickname Chicken Little for a time. At one point, during a performance review with CEO Bob Brockman in 2010, Lamb thought he was going to be fired as head of sales. Instead, Brockman promoted Lamb to president in October 2010 and gave him a mandate to reinvent Reynolds.
Now, the company’s software has been rebuilt and the sales staff armed with new products to offer dealerships.
Next up: Lamb is taking his story on the road, extolling his vision to dealers in hopes they will buy into major changes in how they do business and in Reynolds’ role at their stores. For years, Lamb says, Reynolds excelled at helping dealerships count their money. Now, he wants the company to help dealers make money.
Lamb — a former Princeton hockey player who has been with Reynolds since 1991 — believes Reynolds has spotted opportunities where dealerships can use technology to add transparency to consumer interactions in finance and insurance offices, to personalize service shop visits and to capitalize on largely untapped profit streams from vehicle accessories. In the process, Reynolds could become the sole information technology provider for a store.
It’s all part of a vision of the perfect dealership group that Lamb and his team crafted. If such a dealership group existed, what could Reynolds do to help it achieve its objectives?
Changing the formula
At the turn of the decade, uncertainty clouded the auto industry as Reynolds prepped a new Windows-based DMS platform.
On the surface, it appeared nothing was particularly wrong with Reynolds’ traditional strategy. After all, helping dealerships count their money more quickly was a Reynolds calling card for decades. The company enjoyed tremendous success.
But Lamb, then a senior vice president of sales, saw it as a “going out of business strategy.” He wanted the company to look further than that.
Lamb’s model for excellence, however, had roots outside the automotive realm. He wanted Reynolds to enable dealers to provide premier customer experiences like those of Disney theme parks.
He believed Reynolds could have the same “intuitiveness of how the world needed to change” as Disney.
“When a Disney executive goes and buys a car or services a car, we want them to go back to Disney and say, “Holy crap! You won’t believe how I was treated,'” Lamb, 49, told Automotive News during an August presentation at Reynolds’ headquarters in Dayton, Ohio.
Reynolds, which began serving dealers in 1927 after getting its start as a printing company in 1866, had built itself into a powerhouse on the strength of its dealership management systems. In the minds of some, there was no need to rock the boat.
But during Lamb’s first meeting as president with Reynolds vice presidents, he had a progressive theme: How would a dealership group run if it were owned and operated by Walt Disney?
Reynolds’ 700,000-square-foot headquarters includes a training building.
The Disney Chart
In Lamb’s opinion, one of Disney’s strengths is its ability to make the theme park experience magical. Disney made consumers love what could be a grimy experience with greasy food and crowds by putting in the background work to make its parks memorable.
Lamb pointed to Disney’s $1 billion investment in its MagicBands as an example of the company’s superiority when it comes to serving customers.
The wristbands, powered by radio frequency identification technology, contain credit card details and identification information that allow Disney World visitors to use them as hotel room keys and charge food and merchandise purchases to their rooms.
The bands also enable guests to be greeted by name in some places and can even help parents find lost kids.
So, using Disney as an inspiration, Lamb and his team began to formulate a vision of the perfect dealership group. The team, Lamb says, mapped out a gap analysis looking at the tools Reynolds offered that would help the ideal dealership group operate.
This sobering exercise, as Lamb called it, helped Reynolds brass understand what was missing from their portfolio.
The company has been working to fill out the “Disney Chart” ever since.
“The thesis is: If we bring that mentality to an automotive dealership, what’s possible?” Lamb said.
Disney’s foray into radio frequency technology rubbed off on Rey-nolds. The company released its RFID for Service system in 2014 to bring personalization to service shops.
When a consumer with a vehicle equipped with an RFID tag pulls into the service lane, their name appears on a screen that welcomes them to the shop. The system also notifies service staffers when customers arrive so they can be greeted right away.
While sitting in the service waiting area, customers see a screen that lists the status of the vehicles being worked on along with the names of the clients.
Lamb says this personalized approach can make the service experience special for consumers. If Disney was willing to drop $1 billion on RFID, Lamb said, it was worth looking into.
In Lamb’s first year as president, he says, he met with employees across North America to explain why Reynolds needed to adjust.
“As we’ve ended up where we are now and where we’re going, we’re doing a bunch of stuff that I would’ve never even guessed. It’s amazing when you open up that Pandora’s box of creativity. People start bringing these wild ideas,” Lamb said. “Some of them turn out to be pretty cool stuff.”
Reynolds’ AddOnAuto platform lets car buyers configure a vehicle with accessories to help dealerships capture that business.
No more tears
The Reynolds staffer who cried at the thought of rebuilding its systems later was reassigned to work on the docuPAD, an important piece of the company’s lineup.
A docuPAD, which costs a reported $10,000, is an attempt to bring transparency to the buying process by allowing car shoppers to see every phase of a transaction on a large touch screen, where they can go over pricing, financing options and other details with the F&I manager.
The docuPAD also aids stores in cutting down on paper — a major hurdle Reynolds wants to help dealers clear. Lamb says the car business is drowning in paper, with the average deal producing 39 feet of documents when spread out.
The docuPAD system generates a digital deal jacket, allowing dealerships at the end of a sale to give customers all documentation on a thumb drive, rather than an inch-thick stack of paper. That also lessens a store’s paper storage load and makes it easier to retrieve documents.
In some instances, Lamb says, stores will have off-site facilities to house old transaction documents that they’re legally required to keep for years after a deal is done.
Yet the top reason stores turn to the docuPAD, Lamb says, is compliance. DocuPAD requires a step-by-step menu sales approach, so it won’t let dealership staffers skip a step and put themselves at risk of violating regulations.
One provider?
Dealerships today have a labyrinth of tasks that must be completed on a daily basis.
In the F&I office, specialized systems are needed to close deals. Then there are vendors that handle website operations, while others are responsible for executing digital marketing campaigns across the Web.
Because of the patchwork of tasks, Lamb says, the average dealership uses 18 software systems — all from different companies — to run the business.
Reynolds wants stores to cut through the clutter and invest in a retail management system that offers a suite of options to keep dealerships humming.
Bryan Honda in Fayetteville, N.C., has bought into that mindset. Over the last seven months, the store has been installing everything Reynolds has to offer.
The store is equipped with Reynolds’ phone and credit systems along with docuPAD, the ERA-Ignite DMS, RFID for Service and AddOnAuto, a platform that allows consumers to configure a vehicle with accessories on a big screen during the purchase process. Reynolds’ marketing arm, Naked Lime, has built the dealership a new website.
Timothy Roussell, the store’s general manager, who has been in the auto business for 35 years, said working with multiple vendors leads to integration issues.
He said the idea of a “one-stop shop” approach in which a store depends entirely on one provider appealed to him, but it would have been difficult to accomplish at his much larger previous employers, such as Penske Automotive and Southeast Toyota Distributors. Roussell said big companies sometimes have long-term relationships with certain vendors.
“You can get rid of this and you can’t get rid of that,” Roussell said. “It’s a difficult thing as a dealer and general manager to try to have a balancing act between the dealer and the vendors.”
Third-generation store owner Eason Bryan and Roussell flew to Dayton to meet with Lamb in early 2015. They were impressed with how Reynolds was always striving to improve.
“Reynolds is at a stage that is like version 3.0,” Bryan told Automotive News. “They start out in forms, then they got into main frames and computers, now they have all of these new solutions that are speaking with one another, which is sort of the third version.”
While Reynolds would like dealers to rely on its products alone, the company has certified around 120 vendors that can retrieve data from Reynolds’ DMS to run their respective services. The certified vendors have to pay a fee, but Reynolds declined to say how much.
Reynolds has been very particular about which vendors can have access — which has irked some vendors. In August 2011, Reynolds announced that it was cutting access by noncertified vendors to its DMS in an effort to beef up security.
In the past, a dealer would provide a user name and password to a vendor so it could get into the DMS and pull whatever data it needed. But Reynolds’ move to limit access to certified vendors threw a wrench into the day-to-day operations of some stores, vendors and stores said.
One vendor said Reynolds’ decision interrupted data flow and caused turmoil for some. Incentive payments, for instance, couldn’t be made to impacted dealers in some cases. The vendor has not been able to gain certification from Reynolds.
“We had about 4,800 Reynolds dealers on our system. In three months, we had over 30,000 usernames and passwords disabled. … All done in the name of security,” the vendor told Automotive News.
MacDonald: Tough for stores to switch
Competitive landscape
Reynolds is one of the two giants of the DMS market. The other is CDK Global. The two have a combined DMS market share of 70 percent.
This year, it looked as though CDK had won over Reynolds client Hendrick Automotive. Hendrick — the largest privately held dealership group — had a transition schedule in place, but it later decided not to go forward with the installation at its 102 stores.
During a November earnings call, CDK Global CEO Brian MacDonald said there are no easy wins.
He said “switching DMS providers can be very difficult. It will be quite a process change and takes time, which is part of the reason that many dealers are hesitant to switch.” CDK declined to discuss its competition with Reynolds.
Reynolds using Reynolds
Reynolds doesn’t just sell its products; it uses them.
Lamb says the company relies on its own systems for chores such as accounting, payroll, inventory management and phone calls, to name some.
“When you think about what’s the optimal way to do it, instead of having 18 companies trying to get a job done, maybe there’s a better approach of having one get 18 things done,” Lamb said of dealerships moving to one integrated system. “When you begin building it as one to work as one, what we have found is that is when the magic happens.”
Big campus
The sprawling Reynolds and Reynolds headquarters in Dayton, Ohio, is slightly more than 700,000 square feet. The company recruits heavily from nearby Wright State University and the University of Dayton. Reynolds created a computer sciences department scholarship program at Wright State.
• Reynolds’ Dayton campus has two main buildings for offices and corporate functions: the Technical Assistance Center
for customer support and the Innovation Center for customers. Reynolds University is in the third building — where all the training and continuing education for staffers occur,
a spokesman said. The 16,000-square-foot Reynolds Data Center is the site’s fourth building.
• The Reynolds Data Center was built in 2008 for $15 million. The company says the center is staffed 24 hours a day, every day.
• Reynolds employees: 1,300 in Dayton; 4,300 worldwide
Source: Reynolds and Reynolds
Reynolds sells a revolution
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