Stop Strip Mining of Dealer Data

If you know anything about Jim Ziegler, you know I always stand by the dealers. I’ll take on anyone or anything that threatens the auto-retail industry.

Chances are your customer information is being taken from you en mass. While you are trying to win market share, pirates are rummaging around your dealership-management system, extracting customer information, aggregating it, using it and selling it, sometimes to other dealers.

The most ironic twist: The culprits are vendors that dealers pay to do business with.

Almost every dealership has dozens, that’s right dozens, of vendors accessing customer information, what we call transaction data. That includes how much you sold a car for, how much profit you made, how much was paid for the trade-in and how much was made by the finance and insurance office.

Last year, when I was battling the abuses I perceived TrueCar.com was inflicting on dealers, I realized our data was being used against us, and we were paying for it.

Why must a dealer allow vendors to access data just to do business with them when it has no bearing on the information taken?

I spoke to a dealer who discovered 79 vendors were taking data from his computer system. Even direct-mail companies he had not done business with in years were still accessing his DMS.

J.D. Power and Associates, Edmunds.com, CarFax, Auto Trader, TrueCar, your manufacturer and the event-sale company you did one sale with two years ago have access to your data.

Okay, let’s be fair. Some of these companies need access to your data to perform the services they sold you.

That is necessary and not something I would dispute. But I do have a problem with rooting through transaction data and using it for purposes far beyond a business association with a dealership.

Dealers are the ones who customers trust with their data. They didn’t give you permission to sell it or unwittingly give it to anybody who would sell it on the open market. A civil-case jury could potentially see it as you violating privacy laws, not the vendor.

The first wave of Internet technology consisted of lead providers who found prospects and sold the leads to the dealers. That was good.

Now, this second group splashes up. These people are no longer simply lead providers. They want to structure the sale and set the prices – using your data.

I cannot believe any dealer knowingly signed away this information. Instead, it was trickery hidden deep within a vendor agreement.

Most dealers are ecstatic if they even make a profit selling a new car. Many new-car departments lose money. Yet, many of today’s third-party lead providers hype themselves as protecting consumers against dishonest dealers who overcharge customers.

So, what do you do?

Every dealer needs to have a full audit of what companies are taking information from your DMS. Then dive deeper and find out what fields of information they’re extracting. Are they taking only what they need to render services you are paying them for? Or are they taking things way beyond that?

What does your agreement with these vendors specifically give them the authority to take? Believe it or not, some of these agreements give them the right of data ownership once they’ve acquired it.

Do these vendors have automatic renewals of their agreement? Some of them automatically renew and you have no right to cancel unless you remember to do so within a small window of opportunity. They are counting on you not to remember.

Make them rewrite the agreements or stand up and cancel them. It’s time to stop this needless extraction of our data.

Jim Ziegler, president of Ziegler Supersystems, is a trainer, commentator and public speaker on dealership issues. He can be reached at [email protected]. WardsAuto readers also may comment on this article by logging in or registering below.