True car changes to become dealer friendly v2


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True car changes to become dealer friendly v2

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True car changes to become dealer friendly v2

  1. 1. Is It Time To Reevaluate Your Opinion About TrueCar?By Ralph PagliaI have seen many issues polarize dealers, and at times energize them during my 30years in the car business. Very few issues have rallied so many people in the autoindustry to cry out than the advent of TrueCar’s advertising campaign in the Fall of2011. In fact, since the creation of the two automotive professional networks I aminvolved with, and, there hasbeen no other issue that has attracted a tenth of the visitors to these sites, orengagement in the form of comments and subsequent posts… From October 2011through January 2012 the most popular subject matter on many online sitescatering to people working in the car business was the thorough vilifying ofTrueCar.Meanwhile, the outcry from dealers reached a crescendo of volume that was enoughto get many State Attorneys General and State Dealer Associations to “investigate”TrueCar for potential violation of everything from brokering without a license, tooperating out of compliance with advertising regulations.Amazingly enough, despite all the name calling and personal bashing that executivesat TrueCar received, not a single “cease and desist” letter was sent, or lawsuit wasfiled by TrueCar against those of us who pushed our criticism of TrueCar beyond theboundaries of civilized and professional discussion or debate. In hindsight, I amvery surprised that TrueCar took such a beating without resorting to legal measuresagainst some of the worst name callers and accusers, including yours truly!After receiving several phone calls and speaking with Scott Painter in December2011 I put off visiting TrueCar’s headquarters at their invitation until just a fewweeks ago. My first encounter with TrueCar executives on a face to face basis was inMarch 2012, at the Automotive Leadership Roundtable in Miami, FL. BernieBrenner from TrueCar’s board came over to my table and asked me if I would sitwith the TrueCar team during the lunch session and discuss changes they weremaking to their business model. Curiosity piqued, I accepted. Looking back on thatlunch, I gave the TrueCar executive team a fairly strong rebuttal… I was polite, butexplained my objections to their business model as inserting an unnecessary dealerexpense. Mike Timmons, Bernie Brenner and a couple other TrueCar executiveswere polite, rational in their explanations and determined to convince me that theyhad seen many of the problems with their pricing models and were making changesso that TrueCar would make sense for dealers as a means of acquiring incrementalbusiness at about half of what the NADA average cost of advertising is Per VehicleRetailed (PVR). At the time I remained resolute in my stated opinion that TrueCarwas a bad deal for car dealers. However, I will admit that maintaining that opinionin the light of new information, changes TrueCar was making and the logic aroundtheir affinity model was already starting to erode the certainty I had in my positionon TrueCar… Not that I was admitting any of that at the time!
  2. 2. The next time I saw any TrueCar executives was at Digital Dealer 12 in Orlando lastApril… Bernie Brenner approached me and asked me to bring any dealers who wereavid TrueCar haters to him so he could meet them and listen to their grievances.Seemed like an odd request, but he was sincere and the entire TrueCar team waslooking for people with negative perceptions of their company so they could showthem all the aspects of their business model that had been changed, so that with newinformation these dealers might reevaluate their perception of the benefits of doingbusiness with TrueCar.What I have since learned is that from the beginning of January through May of2012, TrueCar experienced a large number of dealers cancelling their TrueCaragreements and dropping out of the TrueCar program. This, combined with variousstate legislative issues is what prompted TrueCar to make so many dramaticchanges to the way they do business. They simply had to change in order to moveforward. Something that more people in the car business ought to consider!When I accepted TrueCar’s invitation to visit their headquarters in Santa Monica, CAthe timing was perfect… I arrived the day before a “all hands on deck” meetingwhere every TrueCar employee who works out of the headquarters was traveling into attend. During my visit and tour I was able to spend more than an hour of qualitytime in detailed conversation with Scott Painter. Mike Timmons arrived a couplehours after I did and took me on a tour to meet various team leaders anddepartment heads in the two building that TrueCar operates out of. I met manypeople and watched a team of TrueCar employees working directly with dealers allover the country, helping them to put deals together and sell cars. The people I metwere intelligent, well spoken and knew what their part of the TrueCar mission was,and how it tied into selling cars. What I found was hardly a bastion of evil, nor werethere any indicators that they were trying to eliminate car dealers or harm anyoneworking in a dealership. Like many companies I have visited, such as Edmunds,Kelley Blue Book, Dealix, AutoUSA, Cobalt, Reynolds, ADP and others, what I foundat TrueCar was over 250 people who are educated and intelligent going about theirspecific duties and focused on generating more car sales for their participatingdealers.So, what about all these so called “changes” that TrueCar has made since the end of2011? Let’s take a look at ten of them, why TrueCar made the changes and theirintended impact.10 Key TrueCar Changes – January to April 2012In late 2011, TrueCar started receiving significant feedback – much of it critical –from the automotive retailing industry including dealers, dealer associations,manufacturers and industry consultants. In the first half of 2012, TrueCar madesubstantial changes to address industry concerns. By no means is TrueCar finishedwith implementing changes and revisions, but they do feel they have taken the
  3. 3. necessary actions to ensure TrueCar is acting as a key auto industry partner. Listedbelow are 10 key recent changes:1. Changed Website Experience Nationwide and Billing Model in Certain States toAddress Regulatory Compliance ConcernsWhat TrueCar Heard: Through trade publications, dealer associationcommunications and social media sites, there was a lot of attention on whetherTrueCar’s novel business model complied with the existing regulatory framework incertain states.What TrueCar Did: Completely overhauled its website experience to address state-specific concerns related to advertising regulations. Among other changes, dealersno longer communicate price offers relative to invoice through the TrueCar websiteexperience. Additionally, “bait and switch” concerns have been addressed throughwebsite features expressly clarifying that TrueCar users who use our website toexplore the new car market are configuring “virtual vehicles” – not vehicles that areactually in inventory at our participating dealers. TrueCar has also implemented asubscription-based billing model in certain states. 30 of the 50 states continue withTrueCar’s pay for performance model, while 19 other states have variationsdesigned to comply with that state’s laws. Lousiana remains a state not served byTrueCar.2. Overhauled Display of Information on TrueCar Price Curves and Dealer Portal toAddress Dealer ConcernsWhat TrueCar Heard: Though not our intent, TrueCar heard loud and clear fromdealers that the TrueCar price curves and Dealer Portal did not provide the mostcontextualized, relevant, and informative display of information to assist consumersand dealers.What TrueCar Did: TrueCar’s continued success depends on providing services thatresult in a better car buying experience for dealers and consumers. TrueCarchanged the TrueCar price curves in January to provide more robust,comprehensive data that allows consumers to understand what constitutes a “fair”price in the current market. They also switched from providing “network-pricing”information in the Dealer Portal (which focused on the pricing of other TrueCardealers) to providing “market-based” pricing information driven by recenttransactions in the dealer’s local market area (not just transactions by TrueCardealers).3. Reduced DMS Data Received From DealersWhat We Heard: A small number of industry consultants used social media sites tospread misinformation that participating dealers’ sales matching data is used to
  4. 4. create the TrueCar price curves and/or that TrueCar actively markets to customersfound in the dealers’ DMS. To be clear, these are both myths.What TrueCar Did: TrueCar only requires dealers to provide customer contactinformation (name, address, phone, email for buyer and co-buyer) and basic vehicleinformation (VIN, make/model/trim, year, new/used, stock number, sale date) inorder to perform the sales matching, billing (in states with performance-basedbilling models), dealer scoring and analytics and reporting aspects of their business.TrueCar does not directly access dealer DMS systems and we never have. All dataextraction and compilation is handled by respected third-party vendors, DigitalMotorworks (DMi) and Netlink. All dealers also have the option to “push” theirsales matching data via FTP to TrueCar’s third-party vendors; the data received byTrueCar is the same whether the dealer chooses automated or manual sales datareporting. To address concerns that TrueCar was receiving extraneous data from itsthird-party vendors, TrueCar worked with both Digital Motorworks and Netlink inFebruary to remove all unused fields from the data feeds sent to TrueCar, reducingthe fields to just those listed above.4. Rolled Out More “Dealer-Friendly” Dealer Agreement, Including IndemnificationWhat TrueCar Heard: Some dealers told TrueCar that the dealer agreement neededto be more fair.What TrueCar Did: In February, they rolled out a new dealer agreement, the keyaspects of which include: (i) dealers can cancel at any time for any or no reason; (ii)more clarity and control on how dealers provide sales reporting data to TrueCar;(iii) confirmation that the dealers’ sales reporting data is NOT used to createTrueCar price curves; and (iv) confirmation that dealers’ sales reporting data is NOTused to send marketing-related communications to customers. In April, we added alimited indemnification provision to the new dealer agreement. The decision toindemnify dealers is another manifestation of TrueCar’s commitment to their dealerpartners and underscores that they are fully invested in standing behind thevaluable services that TrueCar provides.5. Launched TrueCar National Dealer CouncilWhat TrueCar Heard: Many dealers, dealer associations and manufacturersexpressed concern that TrueCar was making major product, process and policychanges without incorporating feedback from dealers.What TrueCar Did: In April, 2012 TrueCar launched a National Dealer Council with20 Members representing 24 states, 35 unique makes and 281 franchises. Thepurpose of the Council is to ensure TrueCar is actively listening to dealers, and theCouncil is chaired by Gary Marcotte (former SVP Marketing & Strategy atAutoNation). The inaugural full-day Council meeting in April was excellent, withgreat feedback from the Council Members. Going forward, the Council will meet
  5. 5. periodically with TrueCar senior executives to provide guidance on how TrueCarcan improve the services it provides to dealers.6. Initiated Dealer Associations OutreachWhat TrueCar Learned: TrueCar had not historically communicated with state andlarge metro dealer associations and paid a price for not directly engaging thisimportant constituency.What TrueCar Did: In March, TrueCar hired Pat Watson, VP of Industry Relations, todirectly communicate and work collaboratively with dealer associations on how tohelp our mutual partners – dealers. Pat is the former CEO of the South CarolinaAutomobile Dealers Association, where he worked for 38 years.7. Started Participating In Key Industry ConferencesWhat TrueCar Learned: Prior to 2012, TrueCar did not have an active presence atkey industry conferences, which was perceived by some as an indication thatTrueCar did not care to engage directly with the industry.What TrueCar Did: In 2012, TrueCar has sponsored and actively participated at keyindustry conferences, including Automotive Leadership Roundtable in March andDigital Dealer 12 in April, and the upcoming AutoCon 2012 in September. TrueCarwill continue to have an active presence at future conferences, including DigitalDealer 13, Driving Sales, J.D. Power Automotive Internet Roundtable, various 20Groups, trade associations and dealer group events.8. Improved TrueCar’s Social Media Response and PresenceWhat TrueCar Learned: Social media can be a powerful medium for individuals inthe automotive retail industry to share opinions and shape stories.What TrueCar Did: Mike Timmons, EVP of TrueCar and an auto retailing veteran(VP Operations AutoNation; ran brokering company; has sold cars) has takenownership of monitoring and responding as appropriate to social media related toTrueCar and industry-related issues. Additionally, Mike has directly reached out tokey TrueCar detractors to understand and address their concerns, as well as tocorrect any misinformation, and he will continue to do so. In the future, TrueCarwill be taking a more proactive approach to leverage social media to showcase ourproduct and company changes.9. Increased Communication With ManufacturersBefore: Previously, TrueCar’s communication with manufacturers was sporadic andreactionary, sometimes leading to significant misconceptions.
  6. 6. What TrueCar Did: In the past four months, Larry Dominique, EVP Data Solutions,with over 27 years of OEM experience (former VP Advanced and Product Planningand Strategy, Nissan, plus stints at GM and Chrysler), has met with key decisionmakers from 20 manufacturers to listen to their concerns and inform them as towhat TrueCar is all about. Going forward, TrueCar will continue to directly engagewith manufacturers to discuss ways that TrueCar can improve the services itprovides to dealers.10. Added More Dealer SupportWhat TrueCar Heard: Dealers have told us they want more face time and supportfrom TrueCar dealer-facing personnel.What TrueCar Did: In the first four months of 2012, they added 13 new employeesto the TrueCar Dealer Development Team, including Ken Potter (VP DealerDevelopment; former VP & GM of Internet Brands / CarsDirect; former GM of twodealerships), Amir Rizkalla (Director Account Management; formerly of FiskerAutomotive and Toyota), two Area Sales Managers and four Account Managers.TrueCar is currently looking to hire 9 additional dealer-facing employees in the next60 days, including six more Area Sales Managers (Philadelphia, Charlotte, Atlanta,Seattle, Des Moines, and St. Louis) as well as two more Account Managers, to ensurethat we continue to provide dealers with the support they want and need.After traveling to TrueCar headquarters on a Monday and then visiting SouthernCalifornia dealers, I returned home to Phoenix on Tuesday evening. Later that weekI had an appointment with the owners and management team at Courtesy Chevroletin Phoenix. This is the same Courtesy Chevrolet that I worked at from 2005 to 2007,and I have a close bond with the leadership team there… During my visit, which wasto convince them to attend AutoCon 2012, I mentioned visiting TrueCarheadquarters earlier in the week. The response I received from the owner andseveral managers was “we really like the TrueCar program, they have gotten a lotbetter about invoicing us and the business we get from them seems to be purelyincremental… deals we would not otherwise have made.” These statements and thediscussions I had with the team at Courtesy, as well as all the information I hadwitnessed firsthand during my meetings at TrueCar, and from the conversations Ihad with at least a dozen TrueCar employees lead me to a conclusion I feel verycertain about. It would be foolish for any dealer to ignore the changes that TrueCarhas made and not reevaluate whether to do business with TrueCar based on the newinformation available and the changes TrueCar has made to the way they dobusiness.