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When it comes to our data and how it affects our business, to how we can and must make money with it, we in retail automotive need to wake up!  We need an "Internet Moment"--but, first, what the heck is that?  Understand that the "Internet Moment" was birthed this way at a very famous company:  The mid 90’s were a crazy time at Microsoft. The Internet was taking off, and it had actually left without Microsoft—and that was Bill Gate’s mistake, as he had written quite a bit internally at Microsoft about how the Internet was not going to be big.  I worked there back then, and he had led the whole company in that "anti-Internet" direction.  To put it in our perspective for automotive, that would be like Henry Ford and his descendants deciding way back that larger engines and eventually automatic transmissions were not important.  But worse.

And what would have happened in Ford’s case when he realized not having those was going to lose his market?  Thankfully, for Microsoft, Bill Gates had that realization, that “Internet Moment”, because he finally listened to the people who worked for him—and the rest of the world—that the Internet was going to be huge.  Bill Gates turned Microsoft around overnight to match the market, and the strategy extended Microsoft’s dominance another ten years—not forever, but to be part of that certainly changed me forever.

In retail automotive, I feel that we are at our own “Internet Moment”, but it's not about the Internet alone any longer:  It's about our data.  I have recently seen, with my own eyes, just a small business wave on what is an enormous ocean of data.  The immense size of it is hard to grasp, and so some have suggested we can stop the data sharing and lock it back up.  We cannot.  Absolutely, we cannot.  First, the size of what is already happening with the data is thousands of points of data on every shopper in the USA, regardless of what they are shopping for.  Billions of data points.  The size of that d ike in just automotive alone is far past the number of our fingers, and far past the amount of time it would take to even try:  By the instant we achieved even a fraction of "stopping the leak", we would already be drowned by the other data sources.  We cannot stop it.

We have to decide, in our retail ships that ride this giant sea of data, whether we will sink in it or do business on it.  And it's not because of TrueCar.  It's not because of Google Cars.  It's not because of Yahoo.  It's not because of anybody else, in fact:  As Pogo once famously said, "We have met the enemy, and he is US!" (Google it if you don't get the reference, as ironic at is is to suggest you do that while writing THIS article!).

This is the mantra I look for and measure companies and partners by:  I support companies that protect and use this data to help dealers close deals and make more profit.  Nobody is perfect, but are you a partner to build business or a parasite taking profits?

We are having our "Internet Moment", and it is about our data.  It won't matter what we want to happen, it will only matter what the consumer wants to happen.  If someone like Bill Gates can't control the consumer, do we think we can?

Of course not.  We cannot fight it, because for sales we must follow where consumers go.  And the data (including OUR data) is how we will get there fastest and strongest.

The 2010's will be remembered as the "Data Decade", but you don't need to end up a memory, yourself.  You can do great business with your data for profit, with all the data, and you should.

In fact, it's no longer an option whether to do that:  In our "Internet Moment" for Data, you must.

P.S. "“Big Data is the new definitive source of competitive advantage across all industries,”… “For those organizations that understand and embrace the new reality of Big Data, the possibilities for new innovation, improved agility, and increased profitability are nearly endless.” - Forbes, 2/18/2012"

by Keith Shetterly, Copyright 2012
All Rights Reserved  www.keithshetterly.com
keithshetterly@gmail.com

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Comment by Keith Shetterly on August 16, 2012 at 11:04am

Smartass.  :)

Comment by David T. Gould on August 16, 2012 at 11:03am

Thank you Keith for staying at the fore front of Big Data.

Comment by Keith Shetterly on August 16, 2012 at 10:40am

And, before anybody's TrueCar Antennae start twittering, just because Gary thinks I'm right doesn't make me wrong.  These are my opinions from research and my own moment of revelation, both of which had absolutely nothing to do with TrueCar--except that researching THEM led me, ultimately, to seeing an ecosystem of data that, for sales (for dealers) will soon crowd out what we even knew as Internet 2.0.  At least, sooner than folks think (if they even know about Big Data).

Regardless, thanks Tim, David, Gary, and Jason, for participating in raising the awareness of Big Data.  Even if you are skeptical, it is still important to hear and learn about it.


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Comment by Gary Marcotte on August 16, 2012 at 10:35am

Well said Keith!

Comment by Keith Shetterly on August 16, 2012 at 10:31am

David, it's not about rolling over.  If you think that, my friend, you don't understand Big Data at all.  It's not about TrueCar, either.  Big Data is the "next Internet", and the Internet had (and has) national and local results, and it happened whether dealers wanted it to or not.  And it has little effect whether DMS data is pulled or not. 

In TrueCar's instance, and this is my opinion, Big Data is crunched to REDUCE it to pricing trends--and TrueCar's real challenge was in coming at it from a "consumer" perspective yet CHARGING the dealer.  If there's any real change for them, judge it by whether that has changed at all--if someone thinks it's still too consumer-oriented, then don't use them.  It's simple.

But equating Big Data to TrueCar is incorrect--they applied what is really very little of it to their purposes.  And they are one vendor.  What we need is more vendors coming to the dealer with ways to help them sell more cars being DEALER-oriented first.  And that's available, actually, and I'll talk more about that later.

Nail the DMS shut!  Weld it and bury it in concrete!  Focus on TrueCar.  So what.  As I said in a comment in the other thread, you've locked up one ship in a billion-ship alien invasion fleet.  Dealers will have the same choice about Big Data as they originally had about the Internet:  Learn to use it to make sales, or ignore it and lose sales.

And Big Data will change things far more than the Internet ever did, in my opinion.  "Rolling over" has nothing to do with it, and is--to my view--actually a distraction.

Thanks!


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Comment by Gary Marcotte on August 16, 2012 at 10:02am

You guys would serve your dealer clients better if you showed them the value of Big Data (as Keith is suggesting) and how to take advantage of it to a) serve customers better, b) make better inventory and pricing decisions, and c) better coach their associates.  Big Data is not dependent on the DMS - it comes from tracking shopping behavior online and turning those insights into better selection, a better match between customers and inventory and providing real insights to both consumers and dealers.   The value and monetization comes from these insights and not from selling the data.  This comment is in my role as a student of Big Data and the companies using it and not at all related to my role as Chairman of TrueCars' Dealer Council.

Comment by David T. Gould on August 16, 2012 at 9:58am

@Keith, it should come as no surprise that I don't agree that dealers should just roll over and give in to "big data" just because it is "big". The relevance of big data to a manufacturer (nationwide) or Dealer Advertising Association (regional) is far more compelling to me than the individual dealership point. Dealers have been assigned areas of business (points) that have historically brought them the majority of their business from the proximity of their customers. From my experience, as TrueCar dealers cancelled contracts around us, we saw leads from further and further away. Please take note of the "saw". Our closing ratio on 50 mile out leads was horrific. The comparison I used with management was that we were looking at, in market Toyota buyers, BUT not in our market. TrueCar was using our group pricing to crush the profit potential of dealerships out of our market. Not long after we were out.

As of this time, I have still not had a reasonable explanation of how TrueCar (and other data consolidators) get real time new car, used car, trade, and warranty deal data without extracting it directly from the dealerships themselves. State tax / motor vehicle records do not fly with me. There are too many factors involved with the "deal" (over allowance, accessories, under allowance, ect...) For the data to be that exact that fast. (and it is that exact)

Ultimately, dealers are responsible for their customer's data privacy. I highly recommend at least getting a signed data release form with each deal if your dealership is not going to make the effort to protect it.

This is my take on Big Data, and I'm sticking to it. (for now)

DTG

 

Comment by Keith Shetterly on August 16, 2012 at 9:17am

Oh.  I meant to say this:  If 100% of dealers cut their DMS access, for example, for anyone besides themselves, that would be like someone coughing on the Ringworld:  It wouldn't affect Big Data at all.

Comment by Keith Shetterly on August 16, 2012 at 9:15am

Tim!  :)  Thanks for the reply.  Yes, 100%, the horse is out of the barn.  My point on "never" was to be careful for that word, not that it should, er, "never" be used.  For TC supporters, it was the statements about the past that were incorrect in the "never".  I think your point here, though, is that something could be done, rather than nothing can be done, about data?

I don't agree, simply because the large retailers have been investing in this same type of tracking for over ten years at the point of sale.  It's theoretically possible that gravity might turn off tomorrow, and I'd find that more likely than merchants would ever give up an advantage like this.

And it is mind-boggling HUGE.  If you've ever read Niven's "Ringworld" series, Big Data is like the Ringworld:  From a distance, it's amazing in perspective; down on the surface, it is boggling in its size; in the mind, the concept is digestible but the scale is unbelievable.

What should dealers do?  Put Big Data to use for THEMSELVES to obtain sales.  How?  I'll have more to say on that in a future article; this was a "wake up!" moment.  Bigger than the Internet, in that it is broader and grows that much faster.

Thanks Tim!

Comment by Timothy Martell on August 16, 2012 at 9:04am

Keith, this may come as a shock, but I don't entirely agree that the horse can't be put back in the barn. You're right, though, RIGHT NOW big data is a tremendous opportunity for industry that can use the data to derive a competitive advantage. No question. 

The reason I don't think the horse is never going back in the barn is government and legislation. We are seeing this happen now on smaller scales and not in area's I necessarily agree that privacy should be protected - criminal background checks. 

Very soon, businesses will no longer be able to run criminal background checks on prospective new hires. (There will be exceptions for sex offenders and major crimes) The supposition is that once you've paid your debt to society, you should get a clean slate and that data should be protected.

The one thing you can count on beyond death and taxes is the expansion of government and legislation. Because the data is currently accessible doesn't mean everyone has a right to it. Random companies do not have the RIGHT to pay insurance companies for their consumers information. 

If there were a loud enough out cry of this, I believe government would step in sooner. But because dealers (in general) are so far out of the loop on topics like big data, they don't even know what they don't know. Because of that lack of knowledge they don't even know there remains a shadow of a hope to stop the bleeding.

The lack of organization on the part of dealers is why the level of transparency is what it is. Consumers don't have a fundamental right to know how much a dealer paid for their merchandise any more than they have the right to look at the financial statements of private companies. Dealer's have allowed the OEM's they serve to bleed them dry.

No other industry offers this information to the consumer. And why should they? The consumer didn't shell out millions of dollars of investment and risk to earn a lousy 3% return on sales. On top of that they want the dealer to share some of that return with them?

Recently the boating industry tried to do the same thing as automotive and the retailers have stopped it. 

Keith is right. Its huge. The amount of data that big data aggregators have access to is incomprehensible. Those companies who have successfully built tools to organize that data in meaningful ways have the ability to look at consumer behavior in ways that were never before possible. 

I wouldn't be so quick to speak in absolutes, as Keith so correctly pointed out on DE yesterday, its the NEVER, EVER that gets us in trouble. 

Keith, the next point I would ask is, say dealers do agree with you, now what?

What do you really expect dealers to do about it? The retail business model operates on such thin margins already, what are they supposed to do? Pay to get access to the same data that Fortune 500 companies have? Hire in house personnel to be able to make sense of it? Hire more suits to have meetings about what to do about the info the data suggests? Hire MORE vendors to trim MORE profit to tell them what the data says?

Hell it would be CHEAPER and MORE PROFITABLE to collectively hire a big time lobbying firm to get the government involved in privatizing the data so they COULD put the horse back in the barn!

My 2 cents... Have a great day!

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