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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.
Select Affinity Partners (No-Haggle Auto Buying Program) – Zag traditional model – only premium dealers get these leads
Distribution Partners (TrueCar Price Reports)
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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Very interesting Ralph. Thanks for posting. Noted: "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." Where are the multi millions of dollars of funding coming from? TrueCar looks more and more like a house of cards ready to fall (falling). Keep up the pressure. You all are providing a VALUABLE dealer service with this one. Good Selling! dtg
when you think about the Zag = $ and TrueCar is ? on the $, understand the $200million bet to the billion-dollar IPO of stock is this: pre-owned (www.ClearBook.com), insurance (expect www.TrueInsurance.com or some such), financing (same for www.TrueFinance.com), aftermarkets (same for www.TrueGAP.com and www.TrueServiceContract.com). They are in it to win it, and I mean ALL of it: They are going to be the Expedia, with perhaps a PriceLine twist, of the auto industry. Anybody book travel with a travel agent any more?
It seems to me that the real problem that dealers should have with TrueCar/ZAG is not as much the disclosure of transaction prices in the now infamous bell shaped curve at TrueCar.com, but instead, the insidiousness of trying to predict who will buy a car from a dealer ANYWAYS and then charge that dealership $300 for a vehicle sale that TrueCar did not actually facilitate. I said to Scott Painter during our phone call that if he is successful in enrolling 10,000 dealers he will have in fact implemented a tax on every new vehicle sold for $300 that TrueCar collects. Three dealers in each geographic area that TrueCar defines, and the leads go to the dealer that would have been most likely to sell that car even if TrueCar was not involved... Paying for sales a dealership would have made anyways!!!
If you get enough time, I put the recording of the call I had with him up here in the Videos section (also in my "Tear Down This Wall" blog). I told him that I believed he has the wrong answer for modernizing the auto retail business, AND that I am sure that dealers would have sold just as many vehicles as without TrueCar (if they shut their doors now, we would NOT miss them). $1.5billion "saved for the consumer" . . . that's in some part DEALER PROFITS which pay all of us, dealer, vendor, and consultant.
I will say that their use of the DMS data, and the critical nature of it, is the Achilles heel. Cut them out of that, and they are a data house.
Here is a topic that we have not paid much attention to and I feel is in reality, TrueCars biggest threat to the automotive retail industry. This is an excerpt from Scott Painters Tech Crunch video.
"...future releases will address other parts of the car buying process, financing, leasing, insurance, maintenance, repair, refueling it’s a four trillion dollar ecosystem, it’s the biggest category on the web today and from a business model perspective, being able to aggregate an audience is core to the advertising business model and the auto category is one of the most lucrative in terms of a CPM and lead generation basis…”
Scott Painter - TrueCar
This shows Painters true vision of automotive retail as a "Ripe for the picking" cash crop. With TrueCars USAA and Capital One affiliation it appears to be only a matter of time before the consumer walks into your store with their Truecar Deal jacket to take delivery of their new car.
At the risk of being flamed, I wanted to point out one thing.
First, I did listen to your entire recorded phone call with Scott. It was very interesting and Scott is a very articulate speaker.
Second, on the "we would've gotten the sales anyways without TrueCar" part. I agree with your position that the consumers would probably have bought the vehicles they did whether TrueCar existed or not. I think his point was that TrueCar may have steered that sale to its dealer partners INSTEAD of another dealer. Some (not all, mind you) of those sales went to TC dealer partners instead of their local dealer or whomever would have captured the sale normally and that's a part of the value that TC offers to its dealer partners. Those people may have bought cars, Keith, but they might not have bought them from YOU.
I think that was his point and I could see that as being accurate.
Arnold, TrueCar is charging $300 for a pricing, distance, and PARTICIPATION algorithm to drive business to an individual dealer--correct. The industry doesn't need him or his company to sell the exact same # of cars. He isn't incremental business, he is directed business. I stand by what I said. WE don't need him, and in fact dealers who use him could easily find shoppers with better margins using better online marketing. We didn't need to "save the consumers" $1.5billion--any dealer who uses TrueCar now is just funding their www.TrueFinance.com, www.TrueInsurance.com, www.TrueGap.com, www.TrueServiceContract.com (and www.TrueTrade.com, which is live and called www.ClearBook.com). He has said this is TrueCar's goal. Total domination.
I don't think your head is on straight on this item. If you think your voice is one of sanity in the wilderness of anti-TrueCar emotion, I'd suggest you reconsider. In fact, I'd suggest you become suddenly converted the other direction. Otherwise, nobody is going to have to flame you.
You'll be burned, anyway.
If I were still in retail, I would sign up for any performance based lead provider. I was with Autotropolis and CarsDirect. I sold many cars through them and I ALWAYS controlled if I was going to agree to pricing. With CarsDirect, I simply provided a list of pricing on particular models each month but this was a list I created. I would certainly rather do this than pay $25/lead.
I've also seen quite a few dealers comment in many different places that said they were happy with TrueCar and sold cars.
I don't disagree that IF they are taking this data from the DMS (which Scott denied in your phone call) that the dealer should police their data. I was just pointing out MY 2 cents on the whole "we would've gotten them anyways".
Scott did NOT deny taking the DMS data. He denied the specific use of it for the pricing curve. Very different, especially if you read Ralph's email above, from NOT using it.
Because TrueCar.com is damn sure personal to me. Right now.
I stand corrected, yes, he did say what you are saying. I meant to drive his bell curve. I shouldve been more clear.
Mike, In cases like these, I always made sure that I only paid the vendor which I received the lead from FIRST. If a third-party lead provider or whomever wasn't willing to agree to this, then I wouldnt sign up with them. Of course, we were spending $15k+/mo on leads so they mightve been more lenient towards me than others.
Betcha they still wanted to be paid. Hey, whose customers ARE these, anyway? :)