10 Ways E-Contracting Can Help Increase Dealership Profits
As the automotive industry races toward a fully digital experience, with global online car sales expected to surge from 7.1 to 7.3 million units in 2024, dealerships that don’t adapt could be left behind.
E-contracting, a digital solution for handling finance and lease agreements, is a powerful tool that can streamline operations, enhance customer satisfaction, and boost dealership profits. By automating the contracting process and eliminating the inefficiencies of paper-based systems, e-contracting offers significant benefits.
10 Ways E-Contracting for Dealerships Can Boost Profitability
1. Reducing Operational Costs
Switching to e-contracting dealerships helps significantly cut costs tied to outdated paper-based processes. Manual contract handling methods involve expenses for printing, faxing, mailing, and storing physical documents. Additionally, maintaining paper records requires storage space, incurring further costs for real estate and security. Over time, these expenses can add substantial amounts to dealership profits.
With e-contracting, all these costs are eliminated. By adopting dealership management software, contracts are created, signed, and stored digitally, reducing the need for consumables like paper, ink, and printers and minimizing postage fees and courier services. The result is a streamlined operation that saves money and eliminates logistical inefficiencies.
For example, a dealership processing 1,000 contracts annually could save approximately $50,000 by transitioning away from paper. This estimate includes savings from reduced materials, faster processing times, and improved storage efficiency.
2. Faster Deal Closures
E-contracting dealerships streamline the finance process, reducing contract completion times from days to hours. Automating document generation accelerates approvals, enabling dealerships to finalize sales quickly.
A shorter sales cycle allows dealers to handle more customers daily, boosting sales volume. Moreover, customers appreciate the time saved, which enhances their overall experience and increases their likelihood of returning for future purchases.
With faster deal closures, sales teams can focus on improving the average dealer profit on a new car. Additionally, the integration of CRM for car dealership processes can help sales teams track leads effectively. Read our blog on 8 proven car sales tips to close more deals for more tips on closing deals quickly.
3. Enhanced Customer Experience
In an era where convenience is king, e-contracting helps dealerships deliver a seamless and efficient car-buying experience. As the process becomes digital and automated, customers no longer need to deal with stacks of paperwork or endure long waiting periods. Integrating automotive CRM tools ensures smooth communication and follow-up. Satisfied customers will likely leave positive reviews and return for future purchases, boosting dealership profits.
4. Improved Compliance and Risk Management
E-contracting systems offer solid compliance features and rely on car dealership software that ensures all contracts meet regulatory requirements, significantly reducing the risk of errors or omissions. This is particularly important in the highly regulated U.S. automotive industry, where failure to comply with laws such as the Truth in Lending Act (TILA), Gramm-Leach-Bliley Act (GLBA), and Electronic Signatures in Global and National Commerce Act (E-SIGN Act) can result in steep fines and reputational damage.
- Truth in Lending Act (TILA): Requires clear disclosure of loan terms, including interest rates and total costs, to protect consumers from predatory lending practices. E-contracting systems automate these disclosures, ensuring accuracy and compliance.
- Gramm-Leach-Bliley Act (GLBA): This act mandates the protection of customer financial data. E-contracting platforms incorporate encryption and secure storage to safeguard sensitive information, minimizing the risk of data breaches.
- E-SIGN Act: This act grants electronic signatures the same legal standing as handwritten signatures, streamlining the contracting process while ensuring legality.
E-contracting systems provide digital audit trails that log every step of the contract process. These records create transparency and help dealerships demonstrate compliance during audits or disputes.
5. Faster Responses from Lenders
E-contracting enables real-time submission of finance applications, allowing lenders to process and approve loans more quickly. Faster funding reduces delays, enabling dealerships to close deals and collect payments sooner. This improvement in cash flow management is particularly crucial for dealerships that rely on quick turnover to maintain inventory levels and meet operational demands.
With quicker lender responses, dealerships can close deals faster, but generating leads remains a top priority. To optimize lead generation efforts, check out our guide on how to generate leads for car sales.
6. Reduced Administrative Burden
Manual contract processing is often bogged down by printing, faxing, mailing, and organizing physical paperwork. With e-contracting, these time-consuming activities are replaced by a fully digitized workflow.
Sales teams no longer need to focus on administrative work, allowing them to dedicate more time to engaging with customers and closing deals. This reduction in administrative burden increases productivity and leads to a more streamlined operation, freeing up resources for other value-added activities.
7. Better Inventory Management Through Insights
E-contracting platforms often integrate with dealership management systems (DMS), providing real-time insights into customer preferences and market trends. Dealerships can use this data to optimize inventory and stock the right vehicles at the right time.
Advanced data analytics also allow dealerships to identify high-demand models and adjust pricing strategies, ultimately increasing profitability.
8. Increased Sales of Add-Ons and Upsells
During the e-contracting process, customers can receive personalized recommendations for add-ons such as extended warranties, service plans, and accessories. The system's automated prompts make upselling seamless and effective.
9. Building a Strong Online Presence
Customers increasingly begin their purchasing journey online, exploring inventory, calculating payments, and pre-qualifying for financing. E-contracting ensures a seamless transition from this online research phase to in-person interactions, creating a consistent and efficient customer experience.
By offering streamlined digital processes, dealerships can appeal to tech-savvy customers who prioritize convenience and time-saving options. A strong online presence and e-contracting capabilities attract more buyers and position your dealership as innovative and customer-focused in a highly competitive market.
10. Future-Proofing the Dealership
Adopting e-contracting positions dealerships as innovative and forward-thinking, essential traits in a rapidly progressing industry. This adaptability appeals to younger buyers and helps dealerships stay competitive in an increasingly digital market.
Additionally, partnerships with financial institutions and technology providers strengthen a dealership’s ecosystem, ensuring it is well-equipped to handle future challenges.
Tips for Implementing E-Contracting: Utilize ATN’s Expertise
Implementing e-contracting effectively requires a blend of the right tools, training, and strategies. Here’s how your dealership can transition seamlessly while utilizing ATN’s comprehensive training and consulting services for maximum impact:
1. Choose the Right Platform
Select an e-contracting solution that integrates with your existing dealership management system (DMS) and offers customization options tailored to your needs. ATN’s consulting services can help dealerships evaluate and implement platforms optimized for operational efficiency and seamless integration, ensuring a streamlined digital transformation.
2. Train Your Staff for Success
Your e-contracting system is only as effective as the team operating it. ATN specializes in virtual and in-dealership training programs that empower sales and finance teams with the necessary skills. From mastering digital lead management to overcoming objections, ATN ensures your staff can confidently and efficiently handle the shift to e-contracting.
3. Utilize Data Analytics
Use insights generated by e-contracting systems to refine your inventory, marketing, and pricing strategies. ATN’s tailored consulting services, including financial training and executive strategy sessions, help dealerships harness data for smarter decision-making. This ensures that every e-contracting feature aligns with overarching business goals.
Transform Your Dealership with Expert Training from ATN
E-contracting enhances dealership profits by streamlining processes and improving compliance, but success requires skilled teams to utilize its full potential. That’s where ATN comes in. With over 40 years of experience and services tailored to your dealership’s needs, ATN bridges the gap between technology and performance.
ATN’s live in-dealership training, virtual programs, and bootcamps equip your sales, finance, and BDC teams with practical skills.
- Virtual Training: Interactive modules that enhance retention and provide live coaching for targeted learning outcomes.
- Bootcamps: Intensive 4-day sessions that equip your sales and management teams with actionable skills for digital transformation.
- In-Dealership Training: Personalized workshops that align with your unique dealership processes and customer engagement strategies.
By combining ATN’s training expertise with e-contracting tools, your dealership can achieve higher efficiency, close more deals, and deliver exceptional customer satisfaction, amplifying short-term and long-term profitability.
Discover how ATN’s training programs can complement your e-contracting strategy and transform your dealership’s performance!