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I read this article yesterday, AutoNation is stepping up their game...

AutoNation's big digital push

Dealership group plans to spend $50 million to attract tech-savvy buyers

Written by Amy Wilson

Automotive News | October 1, 2012 - 12:01 am EST

FORT LAUDERDALE, Fla. -- AutoNation Inc. has poured $500 million into store renovations in the past three years. But customers still can't purchase cars as easily as they buy electronics at the Apple Store or books on Amazon.com.

 

That's why the country's largest dealership group is trying to remake itself. It wants to compete for the business of millennials and others who dislike traditional dealerships, including AutoNation's 215 stores.

 

"The move into the digital world is incredible," AutoNation COO Michael Maroone said. "People come into the e-com world looking for an experience they can get at other retailers, and it just doesn't exist in auto retail."

 

So AutoNation is investing $50 million during the next three years on new dealership Web sites, tablet computers in the service drive and a so-called new digital storefront. The vision: Speed transaction time and let customers control their shopping experiences, whether online or in the store.

 

It may never be as simple to buy a car as it is to purchase an iPhone, but auto retailers such as AutoNation are trying to close the gap. Other dealership groups also are using technology to go after tech-savvy customers who don't like traditional dealerships. Sonic Automotive, for instance, is putting iPads and iPhones in the hands of most dealership employees.

 

Test drives and bricks-and-mortar will always have their place, but many customers want to do as much online as possible, said AutoNation CEO Mike Jackson. To illustrate, Jackson points to what he calls the first moment of truth in any vehicle purchase -- when the customer provides contact information. Today, that happens electronically in one-third of AutoNation's vehicle sales, and that ratio will only increase, Jackson said.

 

Customers are "empowered, and they have choices this power has given them like never before," Jackson said. "But they're impatient and time constrained. They want things simplified, and they want technology to do that for them."

 

That means AutoNation must provide that experience or those customers will buy their cars and have them serviced elsewhere. Helping Jackson and Maroone are three executives hired or promoted in the past year: Alan McLaren, Dave Koehler and Greg Revelle.

 

'Scotch tape'

They have big obstacles to overcome. In the way are multiple technology platforms "hooked together with Scotch tape," Maroone said.

 

Handling a service appointment, for instance, means moving among multiple vehicle inspection systems, the customer relationship management tool and the dealership management system. The resulting complexity is "brain damage for our employees and our customers," said McLaren, senior vice president of customer care.

 

The proposed solution: Get the systems talking to each other in the background. When a service adviser greets a customer in the drive with a tablet computer, the adviser will automatically see the customer's purchase and service history and any rejected repair work. A customer can even pay in the drive instead of waiting in the cashier line.

 

That approach will be tested with pilots starting in November. The company plans to roll out service tablets to all of its stores in 2013. Other big retailers also are using or experimenting with tablets in the service department.

 

AutoNation will build a proprietary system to manage the customer experience, setting up the digital storefront and new dealership Web sites. Maroone calls the $50 million outlay the biggest information technology project in company history.

 

Think of the AutoNation system as a hub surrounded by spokes, many of which will be filled by vendors, said Revelle, senior vice president and chief marketing officer. The key will be integrating the system with AutoNation's dealership management system, which is provided by ADP. Other vendors will be asked to provide a la carte services.

 

Details are sketchy, but the ultimate goal is to link the online and bricks-and-mortar worlds. In other words, when the customer who shopped online at midnight in his pajamas comes to an AutoNation store the next day, staffers could have selected cars ready for a test drive. If the customer initiated an online trade-in, the store could be ready for physical inspection and finalizing the transaction.

 

"We believe customers need to be able to find a vehicle, an exact price, build their own menus, get their own payments, appraise their own trade, if that's what they want," Maroone said. "And all that work that's been done online needs to be easily accessed in the showrooms."

 

Leading the digital charge
Dave Koehler
Title: Senior vice president of sales
Age: 45
Big task: Prepare dealership staffs for the changes

Alan McLaren
Title: Senior vice president of customer care
Age: 46
Big task: Introduce tablets in the service drive

Greg Revelle
Title: Senior vice president and chief marketing officer
Age: 36
Big task: Oversee the new digital storefront

 

15-minute delivery?

Customers will control how much information will be shared, Maroone said.

 

Cutting transaction time is a main goal. If most decisions are made online, Maroone said, it ultimately could take as little as 15 minutes to finalize paperwork and deliver the car. Today, the traditional process takes two to four hours depending on the day of the week.

 

The digital storefront and revamped Web sites are expected to roll out in the first quarter of 2013.

 

The investment means change for dealership staffers. Koehler, senior vice president of sales, is getting them ready. Managers and salespeople are being trained to reduce transaction times.

 

3-year search

Finding Koehler, McLaren and Revelle was phase one in reinventing the customer experience, Maroone said. It came after three years of interviewing candidates inside and outside the industry.

 

Koehler came from Sonic Automotive in April 2011. A runner who hits the pavement before sunup and is in the office by 7 a.m., Koehler initially was hired as a market president, and promoted to the top sales job in late 2011.

 

When Jackson learned McLaren was leaving Mercedes-Benz to return to his native Australia, he called and asked, "If I make you an offer you can't refuse, will you stay?" It worked. McLaren, who oversaw Mercedes customer service and the company-owned flagship store in Manhattan, started in January. Like Koehler, he spends a lot of time at dealerships and is typically among the last to leave the office each night.

 

Revelle, a former executive at Expedia, a travel Web site, was hired in April. Jackson felt he needed someone with online experience to lead digital investment. A Seattle Seahawks football fan who studies game strategy, Revelle analyzes various possible outcomes of a business plan before making a move.

 

The three lunch together once a week to trade ideas. They are in their 30s and 40s, but this is not a race to determine who will succeed Jackson, 63, and Maroone, 58, company leaders say. Maroone and Jackson say they intend to stay for the long term. They want to see the customer experience change on their watch.

 

Said Maroone: "Both of us are very committed to the business and seeing this through and to delivering to the customer a remarkable and unique automotive retail experience."

 

IT investment
Autonation wants to reinvent the customer experience with technology.
Budget: $50 million
TImetable: 3 years
Goal: Speed transaction time, let consumers control their shopping experiences

 

SOURCE: http://www.autonews.com/apps/pbcs.dll/article?AID=/20121001/RETAIL0...

Views: 1562

Tags: Alan McLaren, AutoNation, Automotive, David Koehler, Digital Push, Gary Revelle, Marketing, Michael Maroone

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Comment by Tom Gorham on October 5, 2012 at 4:47pm

Doug thank you.  I am familiar with that code.  Limited rebates such as military rebates, college grad rebates, lease rebates cannot be used in an advertised price even with a disclaimer.  If you are advertising a lease, it must clearly state upfront that it is a lease and then you can use lease rebates.  Actually the AG in Illinois is quite a stickler.  And I understand the fines or penalties escalate drastically if you continue.  We shall see.

Beyond the law, I would like to see companies such as AutoTrader, Cars.com bounce dealers who are guilty of deceptive-illegal advertising of prices on their sites.  Evertime a consumer walks into a dealer and can't buy a car for the price show on their sites, they lose confidence in those sites.  It's reputation management for those companies as well.

Lastly, the manufacturers should take note.  Their fanchise agreements clearly state that dealers must comply with the advertising laws within their State.  Turning a blind eye because a dealer is selling a lot of cars can eventually "bite them in the butt" both in reputation and possibly legal repercussions.

Comment by Doug Davis on October 5, 2012 at 7:40am

 it appears (at least for now) to be a cost of doing business. 

If they continue to do the same things they got fined for, that's playing with fire.  

Section 475.310  Advertised Price

It is an unfair or deceptive act to advertise the total price of a motor vehicle without including in the advertised price all costs to the purchaser at the time of sale, or which are necessary or usual prior to delivery of such vehicle to the purchaser, including any costs of delivery, dealer preparation and any other charges of any nature; provided, however, taxes, license and title fees and a documentary service fee, as defined herein, may be excluded from the advertised price if clearly disclosed in the advertisement that these costs are excluded from the advertised price. Purchasers shall be able to purchase  all vehicles described by the advertisement at the advertised price.

(Source:  Amended at 25 Ill. Reg. 4819, effective March 20, 2001)

That is the code for Illinois.  File the complaint.

Comment by Tom Gorham on October 5, 2012 at 5:10am

Doug, I like that set-up.  The dealer body enforces its own code of conduct.  Since I wrote that article, several Chicago dealers have received fines from the Attorney General. But for some, it appears (at least for now) to be a cost of doing business.  Time will tell.

Comment by Doug Davis on October 4, 2012 at 8:51pm

Tom, I spent a good portion of my early career in Louisiana.  They have a Motor Vehicle Commission that is made up of dealers that are elected by the Louisiana Dealer Association.  The regulations are strictly enforced.  They are all dealers and no appointed bureaucrats.   They can level hefty fines and eventually pull your licence, if you continue to ignore the regulations.  It kept the playing field level.  

The FTC allows manufacturers to advertise prices without the destination fee because it varies from State to State.  Most State motor vehicle regulations forbid this.  By having that on their website and third party display advertising, they are probably breaking the law and leaving a paper trail for the Attorney General.

Comment by Tom Gorham on October 4, 2012 at 6:56pm

Doug, thank you.  I am one who is trying to educate them.  http://applechevy.wordpress.com/2012/05/26/beware-deceptive-car-adv...

I saw a dealer webstie yesterday using a price (+Destination Charge).  Who are these guys fooling? The fact is that they're a dying breed capitalizing on the moment that they can fool a few people... until their reputations takes a fatal hit.

Comment by Doug Davis on October 4, 2012 at 5:25pm

Tom, I priced my new and used cars.  Consumers are getting educated on those disclaimers, "plus dealer installed options".  Our internet department sold 70% of the new and used vehicles and our average total gross profit was higher than the floor.  When you consider that store had a very good fixed operation, it minted money.  

Comment by Tom Gorham on October 4, 2012 at 4:30pm

Keith, you're right.  Sometimes the online pricing of new cars is generating the "Silent No".  When some dealers are pricing online at $1,000 - $1,500 below net/net, it doesn't matter what an honest dealer puts there.  It's going to be a billboard telling customers that they're higher in prices.... even AT net/net.  It's a slippery slope to unethical and illegal behavior that can drive down brands and any resemblance of profit.

Comment by Keith Shetterly on October 3, 2012 at 9:39am

@ Doug, I don't think much of AN at the moment.  I'm considering, though, what new direction that $50million is funding.  Food for thought.  Thanks!

Comment by Doug Davis on October 3, 2012 at 9:34am

Ashley, I'm shocked to hear that AutoNation has a store that sells more cars than anyone else in the market.  We had three Nissan stores within 20 minutes of us and we crushed them.  Looking at the RDR reports, our internet department sold more new cars than their stores.

With a decent CRM, we can print all of the documents needed to put a customer in F&I but are they planning on doing "box closes"?  Are they going to have a "no turn" system where everything is handled by the ISM?  It is being done, successfully at a store, here in Phoenix.

If they plan on the later, they don't currently have the talent to make this work.  They aren't going to be able to recruit, that level of talent, at what they currently pay. 

Keith, I look at websites and third party display advertising and there is absolutely nothing remarkable about AutoNation.  In Dallas, for new cars, they are in the standard listings on AutoTrader and they have their vehicles at MSRP on Cars.com.   Looking at one of their websites, half of their used cars have either stock photos or "photos coming soon".  They are not overly aggressive on their used car pricing.

Comment by Keith Shetterly on October 3, 2012 at 9:05am

There's more than one lesson here, but an important one is your online pricing generating the "Silent NO" on the Internet--do you really think there was a $2500 difference between dealer's on the same car?  Or is it more likely that one had MSRP on the new cars and the other had a discounted price (rebates, dealer cash, etc.)?  Another lesson is the mobile website is more important than you know.  And so on.

http://www.readwriteweb.com/mobile/2012/10/how-my-smartphone-saved-...

How does this line up with the article here?  Imagine your online pricing is very competitive with great pictures and video, and you have compelling calls-to-action to help drive contact before the visit, and you offer as much paperwork ahead of the visit that can possibly be done per each buyer's credit and needs profile.

I think that last is a good summary of AutoNation's direction--it's not just buying from people, it's driving traffic to your salespeople so that they can BE the people that customers buy from.

The article I posted here shows you exactly what happens when your website(s) drive folks to your competitors.

My $.02.

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