CDK Digital Marketing: Addressing Channel Conflict with Data Analytics

Abstract

Four years into a five-year contract with General Motors to be the exclusive website vendor to its U.S. network of more than 4,000 dealers, CDK Digital faced a crucial contract renewal at the end of 2012. The case follows Melissa McCann, director of strategic marketing, and Chris Reed, CMO, as they prepared for a critical meeting in July 2011: a presentation to the customer relationship management (CRM) subcommittee of the Chevrolet dealer council. Although GM dealers, like all auto dealers in the United States, were independent franchisees, GM saw the renewal of CDK Digital's exclusive contract as a collaborative decision between dealers and GM. According to Ed Vogt, GM's executive in charge of the renewal, if the dealer councils said no, the contract would not be renewed.

This case challenges students to use CDK's big data and analytics capabilities to address the inherent conflict between dealers and manufacturers: when marketing to potential customers, manufacturers wanted consistency across dealer websites to maximize sales of their targeted brands, while dealers wanted flexibility to sell what they had in inventory.

This case was prepared for inclusion in Sage Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or used for other commercial purposes.

2024 Sage Publications, Inc. All Rights Reserved

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Resource

Exhibit 1: Average Dealership Financial Profile ($)

Jan–Oct 2011

Jan–Oct 2010

% Change

Total sales

28,739,459

25,282,693

13.7

Total gross margin

4,192,674

3,731,935

12.3

As % of total sales

14.6%

14.8%

Total expense

3,471,159

3,138,526

10.6

As % of total sales

12.1%

12.4%

Net profit before tax

721,515

593,409

21.6

As % of total sales

2.5%

2.3%

New vehicle dept. sales

15,482,494

13,222,223

17.1

As % of total sales

53.9%

52.3%

Used vehicle dept. sales

9,427,957

8,506,922

10.8

As % of total sales

32.8%

33.6%

Service and parts depts. sales

3,829,008

3,553,549

7.8

As % of total sales

13.3%

14.1%

Advertising expense

298,823

270,239

10.6

As % of total sales

1.04%

1.07%

Per new vehicle retailed

$627

$654

-4.2

Rent & equivalent

335,560

314,212

6.8

As % of total sales

1.17%

1.24%

Per new vehicle retailed

$704

$760

-7.5

Floor plan interest

(20,461)

(17,335)

18.0

As % of total sales

-0.07%

-0.07%

Per new vehicle retailed

($43)

($42)

2.3

New vehicle selling price (retail)

$30,401

$29,547

2.9

Gross as % of selling price

4.62%

4.58%

Retail gross profit

$1,406

$1,352

4.0

Used vehicle selling price (retail)

$17,176

$16,371

4.9

Gross as % of selling price

12.76%

13.71%

Retail gross profit

$2,191

$2,245

-2.4

Source: NADA Industry Analysis, http://www.nada.org/Publications/NADADATA/dealership_profile.

This case was prepared for inclusion in Sage Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or used for other commercial purposes.

2024 Sage Publications, Inc. All Rights Reserved

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