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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
  • www.clearbook.com is their used car channel http://clearbook.truecar.com/- 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?



Find more videos like this on Automotive Digital Marketing Professional Community

 

 

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Tags: Information, Insider, TrueCar

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Arnold - I call it "Ransom" when TrueCar sends a customer to us through their "introduction" system and that customer was previously working with us before they ever discovered TrueCar... TrueCar puts an ad on TV and our customer who we are already following up on submits an inquiry, then when TrueCar discovers that this particular customer is MOST LIKELY to buy a car from our dealership ANYWAYS, they send the lead to our dealership and demand $300 when the customer buys from us.  TrueCar did not stimulate the sale, they simply put their name on the deal as if they were a salesman who never followed up but said "hey, that's my neighbor... put me on half that deal so I can get paid."

I agree with you Ralph. A dealer shouldn't have to pay TrueCar when they have already been working with the customer. In cases where you have NOT been already working with the customer (ie. a new lead), then I have no problem paying the $300. That's all Im saying.

About Our Data

TrueCar obtains data directly from car dealers, respected dealer management system (DMS) providers, and well-known data aggregators within the automotive space. We also acquire vehicle configuration data, customer and dealer incentives data, financing and loan data, vehicle registration and insurance data, and much, much more. TrueCar is insatiable about data with our goal to find 100% of all purchase transactions, even if that means finding the same transaction multiple times from multiple sources within the car-buying ecosystem. Our data is among the most timely and comprehensive in the industry, as we are able to process most car sales within a week of the actual sales date, and have a substantial fraction of them on the site within 48 hours of the actual sale. TrueCar believes the greater our informational accuracy, the greater benefit we provide to both dealers and consumers.

http://www.truecar.com/about_us.html

This was the one thing in Scott Painters video that left me scratching my head, if they have  access to data from so many sources like they say, why do they need access to the dealers DMS?  With all of the ways they collect data, at some point the selling dealer will show up in that information giving them the ability to verify that lead.

Jon - It is almost like lead scoring... TrueCar needs the DMS data to power their sales scoring and predictive modeling software that predicts where a customer is most likely to buy a car so they can be more likely to assess a $300 referral fee from that dealer.  It is like this, if they can predict who is most likely to sell a car, they can put that dealer on the referral slip to more likely ensure they can put their name on the deal and get their $300 referral fee.  It is like picking which up to do a hand-shake T/O so that you are more likely to get on half a deal after the salesperson you flip the deal to does 90% of the work.

Interesting...

 

Here in Virginia vendors cant charge on a per unit deal.  We pay a flat - about 8k based on thier matrix.  There is a large dealer group in our area on the program too... when they set thier pricing they are using incentives that all customers do not qualify for (against the program rules) in order to be competitive and get click conversions we need to do the same- that being said- it puts dealers that do that in a very tough spot when we have to explain to a customer that the pricing on TrueCar is inaccurate for the other dealer... the customer goes to the other dealer to find out that they dont get that price... but all the dealer has to do is beat our price by a few $$. 

 It seems that everytime I turn on the TV I have been seeing the advertising for TrueCar - ... its a True Double Edged Sword! 

Same thing in Texas, except its about not being able to charge per "lead" that converted a unit (otherwise, they'd be a broker, oh . . . ).  A dealer here had a big jump in the charges for "introductions" once the advertising began.  A friend of mine was watching a game last night 9:30pm in Hooters (don't know why that's relevant, but . . . ) and he called me right in the middle of it.  There was a 2min "infomercial" on TrueCar right during the broadcast.

This is an asteroid called TrueCar.  

Haley Paglia has registered a special vanity domain and short-cut URL for the ADM Professional Community and assigned it to this Forum Discussion:

www.TrueCarStory.com

Please feel free to use this short-cut URL to refer people to this discussion and to get here without having to start at the ADM Showroom page...

http://www.automotivedigitalmarketing.com/video/keith-shetterly-s-c...

Sorry for the first three minutes of phone fumbling GoToMeeting and then TrueCar staff.  The agreement in email was to not edit the call at all if I was going to record it.  The notes are worth a look even if you don't listen.  I do think most will like the point at 48min0sec just for the fun . . . ;).

Keith

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