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I have a friend who works for a major automotive lead provider... She sent the following bullet pointed lists to me, and asked that I do not disclose her identity.  She copied these lists out of an email that her company's newest VP (who came from True Car and worked directly for Scott Painter) sent to their internal team.


  • Zag model is still the core which is the affiliate model of becoming the provider for (USAA, AAA, AMEX, Costco, etc…)
  • The only way a dealer can get the leads for these customers is by partnering with TC
  • Sales Team of 8 outside (# as of last summer, most likely a lot more now) go out and build the affiliate network
  • Inside & Outside sales teams call on dealers to recruit for the program – 12 inside sales reps that handle a variety of duties
  • They similar to Direct sign up 3 dealers in a “market”
  • Dealers use an online tool to submit pricing, and won’t be picked as a match to a customer unless they have good pricing that is closing salesIt’s what goes into the algo that tell a consumer where there best dealer match is that drives the sales probability and is the call to action for the consumer
    • Waiting list of dealers in most markets
    • There is a sophisticated algorithm that looks at
      • dealer distance to consumer
      • price of vehicle submitted by dealer
      • what’s available on the dealers lot
      • how many deals the dealer has closed
      • Consumer is always presented 3 dealer options
      • Secret Sauce is how they present the dealer options to the consumer:
        • Based on their matching criteria they have data on close rates that will match a customer to a dealer who may not be priced the best or the closest, but the are the right choice based on what the algo spits out as best close rates by dealer
        • If your not closing sales as a dealer you will show up less often, and you get a visit from the TC rep and they may bring in another dealer
        • Dealers do end up competing to be one of the 3 dealers & then really working hard to try to close as many as possible
        • The more deals you close as a dealer the more business that comes your way
        • Thought it was $280/sale from the dealer invoiced to TC, but then thought it might just be flat $300
        • The key is the dealer has to give them DMS access to their sale data and they have a big team of folks analyzing that data to determine if a car sold:
          • Doesn’t have to be the car on the lead, dealer must pay if that customer (wife, son, daughter, they match the data) buys a car from the store
          • They boast a 99% success rate in determining if a TC customer bought a car there
          • 5K – 8K dealers signed up – waiting list
          • They use the DMS data they are pulling (Don’t have AN DMS Data) to populate local pricing offered
          • TC runs at a net loss, Zag piece (affiliate programs) break even with the 2 combined – trying to get consumer mind share subsidizing TC with Zag profits
          • Getting the DMS data is giving them a bunch more data that their analytics team uses to fuel their dealer option algorithms, and set pricing. ALG acquisition helps on the data side as well.
          • Outside Sales
            • New dealers for their Zag/Affiliate program
            • Dealers competing for that seat
            • Pricing drives down through competition, dealers submit pricing online
            • If a dealer low balls the price, the algo calcs the % of deals closed, how many times the price is presented, and with dealers waiting to earn the spot they manage themselves to stay honest to the model. If a dealer is playing games then they get a visit from a rep and dealers are removed.
            • The hope is customers bring in the quotes branded as TruCar, and with the TV & Radio offline ads they build a name where dealers feel like they have to be a part of the program. Dealers fight to be preferred dealers and they hope the feeling is they cant afford to not play
            • Inside c/s svc QA team does work on post sales with customer to see how their experience was, but there is no pre-sale consumer interaction
              • They QA the dealer, make sure sale went through, and dealers service was good
              • Inside Sales team calls dealers to train, work on pricing, and showing dealers how to submit competitive pricing
              • They have a big team doing data extracts like we do on ESP to make sure they know if a customer bought a car
                • They have an algorithm that automates a piece of this data extract as well – again 99% success rate quoted in matching sale data
                • THE SPECIAL SAUCE
                  • Evidently they have done a ton of work to calculate the probability of sale to figure out which 3 dealers to present to the consumer and how exactly to present those choices to give the best chance of closing the sale – and it works!
                  • The website will say:
                    • Dealer ABC is 50 miles away, match, best price
                    • Dealer XYZ is 10 miles away, ok match, 2nd best price
                    • Dealer 123 is 15 miles away, perfect match between distance & price
  • The webpage drives the consumer decision, and all prices are within 3% generally
  • They close more sales by presenting the “right” alternative
  • Comes down to how you present the dealer options based mostly on: It may not be the biggest dealer in a market that is the best match, often it is not
    • Dealer Location
    • Dealer Price
    • Close Rate
  • They look at who performs the best also from their affiliate (Zag) dealer network and closing ratio’s there
  • Big issues – Consumers pissed that they got hosed on their trade-in (They are close to rolling out TrueTrade model) – not working with AN on it
  • Dealer not honoring price cert – Consumer gets switched at the store, and feels like price was bogus
  • is their used car channel truetrade built from this model
    • They are scraping the DMS systems of dealers to get data, aggregate the online listings like vAuto
    • Phase 1 – Here is where to price your trade
    • Phase 2 – CR – Condition Report – Use 3rd Party Inspection company (Data Scan, AiM, AutoVin/Adesa, EAA, others…)
    • Phase 3 – Cash offer for car (see my AutoNation notes on how they suggest to do it)
    • Newer COO/Pres Steve Hanson is a good operator
    • DMS extraction is key for them to get the data that drives their complicated algorithms
    • They are getting a ton of data from the DMS extractions and using it against the dealer to drive pricing down – this is a big risk for them, if dealers cut them off they are hosed.
    • Their customer matching process catches customers who change cars, names, address, phone #, email, etc… so they get paid on every customer they send to a dealer if a car is sold, any car is sold
    • They want to convince dealers to pull all of their 3rd party ad dollars back (Trader, cars, us, etc…), and use that money to help drive unit pricing down so they can drive volume to the stores
    • AutoNation just ended their relationship and cut TC off completely
      • Rxx Fxxx was an exec at Zag (CEO I think he said, or COO) – he knows the secret sauce and stated they would never agree to let TC have access to their DMS data – they do get their CRM data
      • Rxx is not a fan and thinks dealers are going to come around and not let TC have DMS access
      • Brought up trade-in value issues TC is having
      • Also brought up lack of control at the store to mitigate bait and switch


Select Affinity Partners (No-Haggle Auto Buying Program) – Zag traditional model – only premium dealers get these leads

  • American Automobile Association (AAA)
  • American Express
  • Bank of America
  • Capital One
  • eBay Motors
  • Geico
  • The Hartford Financial Services
  • Liberty Mutual
  • National Education Association (NEA)
  • Overstock
  • Progressive
  • Nationwide Insurance
  • Pentagon Federal Credit Union (PenFed)
  • United Services Automobile Association (USAA)
  • UPromise

Distribution Partners (TrueCar Price Reports)

  • Automobile Magazine
  • Car Buying Tips
  • Car Price Secrets
  • HomeNet Automotive
  • Honk
  • Motor Trend Magazine
  • New Cars
  • Price Quotes
  • The Car Connection
  • US News Rankings and Reviews
  • Vehix
  • vLane
  • Web2Carz
  • Why Pay Sticker



I am posting this to the ADM Forum section to generate discussions around the topics referenced in each section and the bullet points that follow... What is your opinion or insight on the listed sections shown?

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Tags: Information, Insider, TrueCar

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OMG!  Why any dealer would want to pay these crooks is beyond me.  This is just amazing!  Nice post Ralph!  Every Dealer needs to read this!

Crooks is right… What most dealers don’t know or don’t understand is that the “Data” is being extracted in a CSV file, excel, or something like it. You can set up a report on a schedule to run daily, multiple times a day whatever you want. Then put at on a desktop for any vendor to grab. You now control what every vendor is taking from your DMS. So if they say they are only taking your inventory that’s all you give them in the report. We as dealers are still in control if you take the time to learn your DMS, or work with your vendors. If you want to sign up for TrueCar or Zag or whatever crap buying program it is today to sell cars for $2,000-$3,000 under invoice before rebates thats your problem... We have no problem over coming truecar pricing.

P.S. just converted at true car buyer on a new Nissan about 30min ago. ADM helped me in this. Thanks!

Chuck:  I sure love that P.S.  Great news!

I think it is interesting that TrueCar's biggest customer shut them off from DMS access... AutoNation (AN).  Also, it seems that their algorithm is designed to charge the dealer for sales that the dealer would have most likely made regardless of whether or not they are using ZAG or TrueCar.

Ralph, that is a point that I hit Painter with today:  I believe every one of the sales he "enabled" would have been made anyway.  $1.5billion "saved for consumers" . . . that's a lot of lost profit to dealers.  And thus lost paychecks to employees.

And to vendors.  Or are you vendors not waking up yet to this threat?  Can't train showrooms without salespeople.  Can't charge for CRMs that need sales staff.  Etc.

I don't think there are any surprises here - it's what many of us have been speculating about. But this is a great post with insider info -- nice job, Ralph.


AN never let them have the DMS data from what I understand -- AN dictated the data TC received from them.


I have never seen AN let ANYONE have DMS access, so I can't imagine why they would start with TrueCar. The more I read about this company the shadier it becomes. I spend every day of my life telling dealers that most digital advertising sales teams aren't trying to screw them, I may have to rephrase.

very interesting read....i didnt realize they had access to the DMS data as well, jeez

Dare I say smoking gun? Wow, good stuff Ralph. Thank you.

Great Job! Thanks for posting...

the pricing model for the service does make sense to me and represents real value to me as a dealer. The "we do a name match from the DMS to verify what we bill you for sounds like an easy way keep things uncluttered. The rest of it seems to be absurd to me. Price alone can't guarantee volume and even a rookie GM would figure out pretty quick that a reverse auction that makes negative leaps of HUNDREDS of dollars will spiral quickly out of control. 

The coercion (?) from the Reps is really appalling. I am not closing deals so you threaten to pull me and "advise" I lower my prices in order to pick up my volume through the program. So I do and I win for a while but next week the same guy is telling the third dealer in the metro to do the same thing and the first guy withdraws and new dealer comes in and the cycle begins anew. Seems like a Three Card Monty Game to me. Each of us wins enough that we are ready to bet the farm on where the little pea is. I find out the hard way that the hand is quicker than the eye and leave busted while a new player is loaned confidence and then goes bust. 

We can all see the simple ways to defeat the "will you honor" questions and it is not hard to offer affinity pricing on your own, so as Ralph points out you will not be getting any drop ship requests from across the continent from these guys. Knowing that all these people are in your sales locality and drive by your store and see all your adds would pay the guys anything?  Why not just focus on building your own leads and retaining them in fixed operations? 

PS with how tight new car inventories are today even if you are the perfect true car dealer there will be a gap between buyers and inventory on the ground that you will have buy from surrounding dealers. I would hard pressed to give any of my inventory to a dealer on this service. 

PPS this reverse auction pricing to the consumer model makes a really big assumption that all cars can be a commodity at all times and in all places. Sorry True car just not true... The price of goods (absent inference in the market) will always be based on the supply and the demand. You must have forgotten that I would normally be willing to discount heavily any car in a unpopular color to free up the space and earn a better color or one with more appealing equipment. But at certain times of the year or with certain models if you want the red one with a sunroof and Bose audio the price is much higher I don't care if you go elsewhere. I get two per month and twenty offers. I would be silly to let it go low. 

Andrew - I think you have described quite clearly one of the most negative aspects of the TrueCar Automotive Sales program... What you describe is like a "skull and crossbones" over a financial statement... Profit Poison!


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