Dealers across Canada who are worried about losing exclusive control of customer data when they use third-party dealership management system (DMS) providers can take steps to prevent mismanagement of consumer information, experts say.
Todd Bourgon, executive director of the Ontario-based Trillium Automobile Dealers Association (TADA), said dealers want assurances that manufacturers will not use customer contact data as a way to circumvent dealerships.
“There’s always been, and will always be, a battle over who controls the customers,” Bourgon said.
Part of the worry, he said, is what happens to the data when it is in the hands of DMS providers that have contracts allowing them to share it with other third parties.
“Is it being repurposed? Is it being monetized?” Bourgon asked. “My question is, why would they need [such clauses]?”
Every dealership, regardless of size, uses a DMS provider, said Bourgon, adding “there’s no way to run the service department [in particular] without them.”
Contractual clauses that authorize a DMS provider to share data with a third party, such as a manufacturer or marketing firm, are the root of the concern.
If a DMS provider uses the data or sells it to another organization, then “multiple mixed messages” could be emailed to consumers, Bourgon said. Under the Canada Anti-Spam Law, customers who receive too many emails can simply unsubscribe and cut off all contact with a dealership, missing essential information such as recall notices.
“It can be a vicious circle,” Bourgon said. Jim McManes, principal of McManes Automotive Group in Calgary, said a lot of dealers are worried about keeping exclusive control of their data, especially if manufacturers are able to purchase dealer data from a DMS provider and use it to reach customers directly.
“A lot of times, manufacturers think they don’t need us,” McManes said. “They do need us.”
The issue of securing customer data, he said, was on the agenda of the Fiat Chrysler Automobiles dealer council meeting in late October.
There are about five large DMS companies in Canada and more than a dozen in the United States, said Tom Hope, vice-president of D.I.S. Services, a DMS provider owned by PBS Systems Inc. in Mississauga, Ont. Each has its own approach to data-sharing rights.
PBS Systems maintains the databases at the dealership and effectively acts as the dealers’ IT department, Hope said. Other DMS companies store the data off site.
Ohio-based Reynolds & Reynolds is one of the larger DMS providers. In an email response to Automotive News Canada, the company said it does not use dealership data for remarketing or any other similar purpose.
“We do have visibility into the DMS in the dealership in order to support dealership operations and monitor system performance,” the company wrote. “If necessary, in that support role, we can view data elements. Those types of actions on our part, however, have high security hurdles; are monitored, tracked and password-protected.”
Although it would not share an example of contract language, Reynolds & Reynolds said it does not move dealership data to any entity without the dealer’s permission and requires detail on which data is to be moved.
Hope said the dealers themselves often request a DMS provider to share the data with a third party. For example, a customer’s contact details if he or she wishes to subscribe to the Sirius satellite service.
But “that’s the dealers’ decision that they want to interface with that company,” Hope said.
He noted that once the DMS provider passes along the data to another third party, the provider no longer controls how the data is used. It’s up to the dealer to ensure the third party will not then resell or repurpose the data.
Hope welcomed the growing awareness among dealers on data security.
“In the old days, it was the wild, wild west — before CASL and PIPEDA [Personal Information Protection and Electronic Documents Act],” he said.
Bourgon agreed. “We’ve been telling our members for years now that data is becoming very, very valuable. You can’t have blind faith about this.”
Bourgon and Hope made recommendations to dealers to mitigate the risk of having their data fall into the hands of third parties:
Before a dealer signs an agreement with a DMS provider for data management, have a legal expert review the contract. This does not have to be an expert in data management but, rather, a lawyer who is an expert in contractual law and can ensure that the contract has appropriate exit clauses, for example.
Before signing an agreement, reach out to the provincial dealers association for advice.
Do your due diligence on DMS providers. Although Bourgon said no database that ranks companies exists, dealers do share information about their experiences. It’s best to attend conferences where you can discuss DMS providers with a number of dealers.
Make sure the dealer understands how the data stored by the DMS is being used and ensure it complies with anti-spam and privacy protection laws.