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One dealership’s rapid growth meant loss of expense control. Another suffered high data overage fees. In both cases, a telecom service review resulted in big savings.

Impacts of financial decisions

Slashing Telecom Expenses at Dealerships: Two Case Studies

  • 9/27/2016

No matter how large or small your dealership is, telecom services play a vital role in your everyday operations. But there is a very good chance that you are paying too much for them without even realizing it. We’ve previously discussed why this is and what you can do about it, but because it’s a fairly complicated issue, I’m continuing that discussion with two specific case studies that help illustrate things a little more clearly.

Case #1: Rapid growth leads to uncontrolled expenses

With 15 dealership locations and several acquisitions on the horizon, a partnership grappled with the challenge of centralizing its new and existing facilities and preparing to bring prospective stores into the corporate fold. Managing telecom expenses was just one task in this reorganization effort, but a particularly unruly and cumbersome one: Each location separately contracted its own telecom services, and there was no consistency or control over telecom at the corporate level.

The dealership’s executives wanted to understand what services each store was using and how much it was paying for them. For the untrained person, however, reviewing telecom contracts and bills is a bit like reading an MRI when you’re not a radiologist or interpreting an abstract painting when you’re not an art historian. It plainly requires some in-depth knowledge of telecom itself; otherwise, it’s downright mystifying.

Our telecom advisory team was engaged to help make sense of all the high-tech confusion so the dealership’s executives could be assured that their sites were getting the best telecom value and service. We started with cost analyses at each location and worked closely with all the sites’ leaders to contract the best quality service at the most competitive market rates.

In some stores we identified services that had been replaced (either with a new carrier or new technology) and should have been disconnected but weren’t. For example, one location had upgraded to a 50M integrated circuit but was also being billed for the previously contracted 3M circuit. Our professionals placed the disconnect order, tracked its progress, and verified final disconnection and rightful billing. I’m afraid it’s not uncommon for businesses to be billed for telecom services they are not actually using.

For several of this dealership’s locations, our telecom specialists reduced costs by negotiating with current carriers, obtaining pricing comparisons from alternative providers, and seeing the transition through to its end. One store’s existing provider could not offer renewal options, even though the services were out of contract and were billed at tariff rates. To remedy the problem, we got competitive quotes from other telecom providers. The dealership was then able to make an informed decision and contract further services with confidence, while we placed the orders and coordinated the onsite transition.

To date, all of this added up to a dealership-wide reduction of 11 percent in telecom expenses — more than $4,000 per month and nearly $50,000 annually. But the news for this business gets even better: Our team has found an additional (pending) savings of $7,500 each month and is working with the various sites to finalize and implement the savings options. All told, this dealership will save up to $139,000 annually in telecom expenses.

Case #2: Juggling two telecom providers and high data overage fees

The finance team at a dealership with five locations, two telecom service providers, and 213 wireless devices had a gut feeling they were spending way too much on telecom bills. Plus, data usage was always threatening to reach the limit or actually exceeding it, leading to huge overage fees. They wanted to consolidate to one provider and get data usage under control, but the dealership’s employees who used the wireless devices were fiercely divided on provider preference. So they asked our telecom advisory team to help find a solution.

Our people first examined the wireless accounts and homed in on the high data-using employees. We identified one user alone who was liable for more than 80GB of data each month, and we worked with him and other above-average data consumers to better manage their usage and bring it down to acceptable levels.

We also took a look at both providers to see which one might be eliminated. While some devices could be moved to the primary provider, there were some that were still under contract with the second provider, and cancelling the contract would mean high early termination fees (ETFs). With this risk in mind, we moved the devices that would not incur ETFs to the primary plan and right-sized the other rate plan to fit the remaining users. Our telecom advisors also helped the dealership make a plan for gradually moving those final devices to the primary provider when their contracts were complete (thereby eliminating all ETFs going forward). In the process, we discovered several devices that were inactive for at least three months and worked with the telecom provider to remove those from billing.

Throughout the entirety of our work with this dealership, we joined its executives in provider meetings to represent their interests, liaised with the telecom provider’s agents, and made an informed case for better account management and service quality. The dealership ended up with a monthly telecom savings of 26 percent, or nearly $3,000. Annually, the savings amount to more than $35,000.

How we can help

Many dealerships have that sneaking suspicion that they are being overcharged by their telecom service providers, but reviewing telecom contracts and bills can feel like reading War and Peace in a foreign language. CLA’s telecom advisors can help you regain control of your telecom expenses and provide you with the tools you need to operate smoothly and efficiently.