Posted on November 2, 2021 by Travis Peterson
At a recent presentation I was giving on the DMS exit costs, an attendee claimed my opinion on exiting a DMS was faulty; he explained that if a customer has a long-standing relationship with a DMS, that DMS would have no problem giving data back to if they ended their agreement. This belief is not uncommon, but it is an unwise assumption.
There’s a reason this misconception persists: the DMS giants want you to believe your loyalty is more valuable than your financial value. Ultimately, exit barriers exist for a reason: they don’t want you to know that they can essentially hold your archived data hostage until you pay a fee, or change your mind and re-up your contract.
They can play dirty. For example, dealers have been backed into a corner before and ultimately paid a “reasonable” DMS fee of $10k upfront to convert their own data, and then $900 a month for 36 months after that to keep their own data online. In fact, this is generally proposed as the “budget friendly” option to the dealer; helping them avoid the much larger lump-sum expense of paying for the total conversion up-front.
We just recently spoke with a client that has been using one of these DMS systems for years only to find that the cost to get their data back will be $300 per month that he wants retained. 10 years… $30,000 in addition to the costs he has already paid for the services he was contracted for. IF only he knew this upfront, what decision would he have made?
Other legacy providers shut-off data feeds prematurely or add “necessary” security features that make it impossible for a new provider to retrieve all of the records. All in an effort to make it more painful to leave.
After years in the data archiving business, I know the tricks vendors play because I’ve seen it. No matter how friendly your relationship, or long your partnership, it’s still a business agreement. All the brownie points go out the window when your DMS stands to lose your business.
It’s better to be safe than sorry. Before making a DMS switch or selling a store, take the following 3 steps to avoid a costly tug-of-war over your own data.
Request written notice of data exit costs. This is something of a red herring because I’ve never come across a DMS that has a generic formula for data exit costs. Instead, they hem and haw, give “estimates,” or tell dealers not to worry about it. That response should tell you everything you need to know about what’s to come. You should be skeptical about a provider that is not forthcoming. Before cancelling an agreement or signing a new one, always ask for written costs to retrieve archived data. Whether you get numbers or not, the process tells you a lot about business practices so you can prepare your dealership to be data-independent if needed.
Research third-party data archiving solutions. A third-party provider is the only way to ensure you can always retrieve your archived data at no extra cost. Yes, I work for a third-party provider. But I’m not advocating for our solution. I’m advocating for you to do your research, compare pricing and features, and determine if investing in outside archiving now will be cheaper in the long run, no matter if you’re planning to switch DMS providers or not. None of us have a crystal ball. We don’t know where your business will be next year, or ten years down the road. Data-independence is an extra safety net for the future – and it gives you control over the process.
Budget with data archiving costs in mind. Be aware of data extraction expenses. Always consider exiting a DMS contract as a possibility. We all know that celebrities consider prenuptial agreements long before they say, “I do”. When researching possible vendors, build a cushion into your budget to account for exit costs and/or for third-party data archiving. Upfront planning can ease some of the pain if you find yourself in a costly situation. Or ask… find out how much the exit costs would be.
In summary, relying solely on your DMS provider to archive your dealership data can be a costly mistake. The big guys don’t want you to know it, but they will most likely charge exorbitant fees to retrieve and convert your own data if you decide to switch providers. Take control over the process by:
- Requesting written notice of data exit costs.
- Researching third-party data archiving solutions.
- Budgeting with data archiving costs in mind.