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Scott Painter (CEO of TrueCar) speaks to Stan Sher (President of Dealer eTraining)

It was Monday December 12, 2011 and I had decided to take a nap at 4:00 PM as I had just spent an average of 14 hours per day working from my home office.  I actually spent all weekend working on projects and creating more curriculums.

My nap was rather long and I slept until 8:00 PM.  I woke up and looked at my cell phone only to find a voice message from a random phone number in California.  I listened to the message and saw that it was one of Scott Painter's people trying to contact me because Scott Painter wanted to have a conversation with me. 

 

My initial thought was, "WOW, the multi billionaire guru with a Wikipedia page wants to talk to me.  I feel special."

 

I called the gentleman back and set the call up.  I later learned that he was also speaking to Jim Ziegler.  As far as I knew we were the only two people that Scott Painter was talking to.  I had prepared my list of questions and was excited to talk to this person just to see what he has to say.

 

Fast forward to the next day.  I started to think a few things.  I was thinking that maybe I made Painter so angry that he was trying to get his attorney on the phone with a cease and desist message.  On the other hand, I do think great things of myself and I know that I am a very abstract thinker so I was thinking that maybe Painter would be looking for my help to make his product better and stop hurting dealers.  I had spoken to Jim Ziegler and knew that he had a call at 1:30 PM so I was anxious to find out what happened.  So at 5:30 PM (30 minutes before my call I called Jim again).  I learned from Jim that it was a regular Q&A session and that he was offered a trip to California to explore the TrueCar operations.  Jim had spoken well of Scott Painter as he Scott was very professional and seemed to be an easy going person to talk to.

 

Moving on...

 

It is now 6:00 PM and we get on the call.  It was a 55 minute call.  We started the call and Scott had informed me that he might have to get off sooner because his wife was about to have a baby any minute now.  "Congratulations Scott and family!”  I had congratulated Scott.  I also started the conversation by giving him my respect.  I too am a college dropout and I too have visions of doing huge things in the future.  I started the conversation with an upfront from the heart compliment.  Anyone that knows me knows that I have a huge heart.  If I am against what you represent it I will let you know that too.  However, if you are brilliant enough to come up with a huge idea and get to the level that Scott has I have to give credit to where it is due.

 

I continued to explain who I was and what my background was.  I had explained to him how I got in to the automotive industry and my experience in retail.  In addition, I talked about my roles in dealerships and how I started Dealer eTraining.  From there I moved onto explaining to him why I am completely against his product (TrueCar) and I gave him at least three real scenarios from when I worked in dealerships as a sales person and a manager.

 

He understood where I was coming from.  Scott was also very professional and knowledgeable with his answers.  He seemed to give me legitimate responses.  I told him about my theory of how I believe he is pricing cars out of the market and how he is hurting the business.  I even compared him to Edmunds where I said, "at least when Edmunds is advertising True Market Value (TMV), the vehicle is priced a few hundred over invoice".  I added to that by saying, "if we were selling cars a few hundred over invoice and you had your pricing fairly structured like that no one would be hurt."

 

When asking him about where pricing data comes in he started to tell me about how when a car gets sold the data is available to multiple sources and how many of them are partners are TrueCar.  When I asked him where he gets these ridiculous low prices to put on the bell curve under "Best Deal" he told that consumers actually provide them with pdf files of their purchase.  This is where I am still puzzled after everything he said to me.  Something here did not seem to sound right.  Why would a consumer give you a copy of their retail agreement?  It is one thing when you survey the customer and they tell you what they paid for the car (which cannot be a fact sometimes).  It is another to have someone takes the time to send you this information.  I had not asked more questions on this because this was the one thing that made me actually want to go and see the TrueCar operations for myself.  

 

The majority of the discussion was exactly like the one that Jerry Thibeau had with Scott.  The only difference is that I literally have 30 ideas that can turnaround TrueCar for the better if in fact this beast cannot be defeated.  I had mentioned two ideas right off the bat.  Here they are:

 

1. Ok if you are going to advertise on the bell curve, "Best Deal".  Can you at least have the decency to omit the sales prices from customers that stole the vehicle?  I mean there comes a moment when a sales manager makes a mistake and we roll a car and lose $2,000 on it and the customer makes out like a lucky bandit.  This is where I assume these figures are coming from.  So I said, "I know Honda does not allow advertising under invoice so why not keep the sales figure legitimate and have some profit in it to keep all things fair".  

 

-Scott told me that his AutoNation people have brought a similar idea to them.

 

2. I had mentioned that if they incorporated reviews and partnered up with a review site.  Take the reviews and incorporate them underneath the prices in the bell curve that they can now offer a lot more than just pricing.  I am talking about value added benefits.  Now the customer has a choice if they want to pay more for a better experience or pay less for a worse experience.  Now that is real transparency in my opinion.

 

-Scott told me that his brother in law is a GM of a Mazda dealer and he was mentioning something similar.

 

What are my thoughts?  

 

My thoughts are that Scott has opened up as much as he is willing to open up.  I still disagree with what is being done with TrueCar and why TrueCar is partnered with some of the current partners.  I also believe that there are a lot of ways that the TrueCar model needs to be reworked.  TrueCar has a lot invested and the commercials are there like AutoTrader.  If they are going to grow and advertise to the public they need to fix the problems that they are creating.  TrueCar needs to follow all state regulations and all OEM regulations.  They should also make it so that whatever is being advertised allows for dealers to remain profitable and actually makes automotive dealers look good instead of bad.  If they want to make innovations to the industry they need to help get consumers respecting dealers instead of plotting against them.  I believe that incorporating other transparent strategies and not basing things solely on price can make a difference.

 

Now the reality is that these things are probably not going to happen if Scott's intentions are really what he made public when he did the videos and presentations.  Perhaps Scott was looking for a way to win me over because I have a lot of influence.  Perhaps Scott did not think before he spoke when he was quoted in the past.  No one will ever really know the truth.  One thing that I do know is that Scott handled the call with me professionally and very humbly and he was great to speak with.  Scott invited me to visit their operations so that he can show me what they do and how they do it.  I know other people have declined.  I am going to accept it.  The reason why I am going to accept it is because I want to see it for myself.  It is an educational experience and it will allow for me to bring back even more thoughts to the industry.

 

Look we all want to see this fail (including myself).  We need to consider how big it has become.  I mean over 5,000 dealers need to cancel.  If we can get them all to cancel then great.  Otherwise, there is a chance this will continue to grow since the marketing tactics and investments have pushed for the massive growth to happen.  If we cannot defeat this gorilla then we need to help create ways to make this gorilla work for dealers without hurting them.  I am proposing to have an open mind here and have a strategy for what happens is we defeat this as well as a strategy for what happens if we have to live with it.  If we have to live with it let's at least consider the options of making TrueCar make changes that benefit the dealers.

 

I am not going soft on your guys.  The negative experiences that I had with them at the dealer level will never change what I think of them.  But it is my mission as a member of the industry to give back to the industry that has provided me with skills, opportunity, knowledge, and training to be a better human being.  This is what Dealer eTraining (my company stands for).  Go to my website www.dealeretraining.com and look on the home page.  I have a section there where the last sentence states, "Dealer eTraining is about the dealership’s success first and foremost.”  This is my signature motto.  Anyone that has worked with me, been trained by me, or has met me knows that I mean well.

 

I welcome thoughts and comments.  When you respond I want you to do it with an open mind.  I have done everything with an open mind and you should too.  Thank you.

 

Stan Sher

Views: 922

Tags: dealer etraining, jerry thibeau, jim ziegler, phone ninjas, scott painter, stan sher, truecar, zag

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Comment by Stan Sher on January 4, 2012 at 8:08am

Trust me.  2% is a BS number.  I have had a chance to experience TrueCar for a full week.  They are taking over a whole market.  A dealership that gets 600 normal leads from their sources (that are not out to hurt them) now gets 1600.  1000 comes from TrueCar and they sell 30-40 cars per month out of it.  That is a 3-4% closing ratio when we should be at 10%.  I found out calling these leads that the customers are being steered in that direction.  TrueCar has done a great job getting in front of the consumers with their commercials and marketing. But when 70% of your leads are 80-120 miles away and they do not want to make the drive no matter what value you give them or how good of a closer you really are you start to really see what a horrible company TrueCar is. If you want to clutter your CRM with garbage and let your DMS be used to extract data that will be used against you then TrueCar is your solution.

TrueCar is not a friend to the industry.  TrueCar is worse then cancer.

I spoke to a BDC manager from a NY Chrysler Jeep Dodge dealership.  He called me because he was looking to contact his TrueCar rep and when he googled to get contact information he stumbled on my blogs.  He actually defended TrueCar saying that he does well with them and they are good.  When asking him how he feels about getting the runaround from leads that are 80 miles away he simply responded that he does not waste time on internet leads at all.  He follows up with them for 7 days and if nothing happens he just gives up.  He did not believe that a lead needs to be managed for 90-120 days.  I wonder what training he got.  That is not a good BDC Manager at all.  I cannot believe that dealers allow things like this to happen.

There is nothing out there that can prove that TrueCar deserves to have a place in the marketplace.  I was going to go out and see the operation for myself.  But I realized I want nothing to ever do with them after TrueCar started submitting bogus leads with my information to their own dealers.  I had 100s of dealers from NJ, PA, and even CA call me to follow up with me because they thought I was an internet lead.  These leads came from TrueCar.  A company that is supposed to be a partner in helping dealers sell more cars is not only hurting them by taking their data but it is wasting their employees time calling on bogus leads instead of focusing on the real leads that should be coming in.  Come on dealers, wake up!!! How can you let this happen?

Comment by James A. Ziegler on December 21, 2011 at 4:34pm

KANSAS AUTOMOBILE DEALERS ASSOCIATION
 

 

 

IMPORTANT NOTICE: Brokering Prohibition – True Car/ZAG

 
To:      The Members of the Kansas Automobile Dealers Association
 
From:  Don L. McNeely, President
 
Various models for motor vehicle sales programs have brought increased attention on marketing practices in Kansas and across the country.  Commentators have most recently focused upon such programs as that offered by TrueCar/ZAG though there are many forms under which a dealer may be functioning, particularly in online arrangements.  This comment will focus upon how such programs can actually unwittingly or otherwise set you up for possible violations of the Kansas Dealers and Manufacturers Licensing Act, particularly those declaring motor vehicle brokering illegal in Kansas. 
 
It is KADA’s opinion that the manner in which programs such as that offered by the True Car program as it is currently structured and being offered in our state do in fact violate the Kansas brokering prohibition.  This is particularly so as it relates to a dealership paying a direct marketing fee, which can be likened to a commission, for each vehicle sold. While it is not unlawful to pay an annual or monthly advertising or subscription fee for vehicle leads, it is a violation of the Kansas brokering law to pay a third party a fee—or other benefit--for bringing buyer and seller together.  
 
It is our understanding that a number of Kansas franchised new car and truck dealers are currently doing business utilizing the TrueCar/Zag format.  It is also our understanding that several formal complaints have been filed with the Kansas Department of Revenue’s Division of Motor Vehicles requesting an investigation of those dealers who have been identified.
 
As a reminder, the Kansas broker prohibition statute was enacted in 1990 and was ultimately upheld by the Kansas Supreme Court in 1992 (Blue v. McBride).  K.S.A. 2010 Supp. 8-2404 (q), (r), and (u) which respectively pertain to new and used vehicle brokering describe prohibited and allowed practices and exceptions (display, advertising, soliciting and acting as a broker).  These are also discussed and tempered in the McBride case to allow for the free exchange of information, but one must still keep in mind that brokering practices are squarely prohibited.  
 
You have to pay attention to the laundry list set forth in the law.  It defines a broker to be any person who, for a fee, commission, money, other thing of value, valuable consideration or benefit, either directly or indirectly, arranges or offers to arrange a transaction involving the sale of a vehicle, or is engaged in the business of (1) selling or buying vehicles for other persons as an agent, middleman or negotiator; or (2) bringing buyers and sellers of vehicles together, unless excepted.  (See K.S.A. 2010 Supp. 8-2401(x).)  As you can see the arrangements that are prohibited forms of brokering describe many elements of the TrueCar program which you should review carefully before engaging in such practices. 
 
Another thing we have heard expressed about marketing arrangements are concerns related to legal issues of privacy, data use and ownership, as well as data access, particularly where a dealer has given outside access by a unrelated third party to its DMS system.  The TrueCar/ZAG structure serves as a significant example of the issue.  It collects transactional data from supposedly various sources to determine “the right price” to pay for a car.  Vehicle pricing points aren’t necessarily the only issue, though.  KADA is of the opinion that this can be ve

Comment by Stan Sher on December 20, 2011 at 10:24am

Slowly but surely TrueCar is getting what they deserve coming to them.

Comment by Matthew Swenson on December 20, 2011 at 10:13am

Once TrueCar is as transparent about themselves as they are with the proprietary information they have obtained from somewhere (DMS of their subscribers?) and is willing to enforce their own rules, then a rational decision can be made about signing up to their program.  Until then, be wary.

Comment by James A. Ziegler on December 16, 2011 at 12:24pm

Okay Honda has taken a courageous stand and banned TrueCar pricing with it's dealers. I know for a fact VW is strongly considering doing the same. I hope VW realizes that they've just began to get some incredible momentum in the market AND now is NOT the time to allow an invader like truecar to devalue the brand in the public's eyes. No matter what you sell, TrueCar cheapens your brand.

Group 1 made sure their dealers cancelled after looking at the exposure of having these people rooting around in their DMS, especially with AutoNation's CEO on the board of Truecar...

Group 1 was smart enough to see the writing on the wall and run as from away from these people as possible. When is Asbury, Penske, Sonic and others going to awaken and realize they people appear to be a huge threat? Even large private groups like Rick Hendrick should be looking at the evident danger we're all perceiving here. 

Where are FordGeneral Motors and especially...where is Toyota in this escalating skirmish? I am embarrassed that mark Reuss, president of general motors would actually go to TrueCar Headquarters and play with Painter showing him a 750HP Camaro.

I did not mention Nissan because their dealers are using Truecar to sell way below invoice so they can collect stair step money. You guys are smiling now BUT if Nissan takes away the program, you're screwed royally because of the benchmarks you set with TrueCar making your brand image "Ultra Cheap Nissan"

Does Mark Reuss NOT understand that his dealers are being raided by these people cheapening the product down to unprofitable and below? I find it hard to believe that Reuss would publicly suck up to these people if he truly understood.

There are a few investigations of TrueCar popping up here and there AND we're still urging dealers to put more emphasis with your dealer associations to get off of the sidelines and represent us... I know a couple of associations are doing their best while others limped off of the battlefield without firing a shot...  weak. 

I am especially disturbed about Toyota staying quiet while Honda takes a stand. It's like sending a message that Toyota has less value. 

This thing will gather increasing momentum and I predict TrueCar will find some high-profile weak suck who will sellout their integrity for the publicity or hard cash and take a stand publicly backing them and betraying dealers.

Of course, this is all a lot of conjecture, speculation, supposition and opinion...I might be wrong. :)

 

Comment by Rob Fontano on December 16, 2011 at 8:27am

My position is and will remain that auto dealers need to change the public's perception of them one customer at a time. The market that has made TrueCar a viable product was created by the dealers themselves over years and years of well deserved mistrust. Not because dealers wanted to earn a fair profit, but because they did so despite having customers waited on by unprofessional, untrained sales people. There must be a unified goal towards improving service and customer experience overall. We don't need to give our products away, but we do need to meet the consumer on their level and give them a reason to pay us the gross profit we deserve.

Dealers without a structured and consistent training programs should reach out to a proven results oriented automotive sales trainer. Your managers and service advisors need it every bit as much as your sales people do. Consumers will pay a profit and higher price for value and experience, just look at Apple. If you walked up to an Apple store and there were three guys standing out front smoking "Welcome to Apple, what brings you in today?' where would they be?

Consumers want a better experience, they want to be treated like they are intelligent, well researched people because they are! Giving them a great experience means having a trained professional working with them and giving them a product demonstration worthy of one of the largest purchases they will ever make."It's the experience, Silly!"

If your sales managers don't have profiles on ADM, LinkedIn, Driving Sales or DealerRefresh then they are out of touch, period! Many of these managers will be unemployable in two to three years. Unfortunately, auto dealers are like the tribes of native Americans on the great plains, too proud to unite. Instead they would let the TrueCars of our world pick them off one, by one.

If by some chance TrueCar is taken down or greatly altered (which is far more likely), there will be another right around the corner, learning from the mistakes of the fallen. They will seek to undermine and industry that is ripe for the picking. If nothing else is learned by car dealers from this TrueCar adventure it's that now is your moment of truth.

Comment by Joshua Michael Friedman on December 16, 2011 at 6:33am

Mark, Curtice -- we're another dealership that saw the good in ZAG about five years ago, when it was mostly about marketing to USAA members, and we aren't going to play the games now, just because other dealerships see TrueCar.com as a platform to pull in customers with fantasy pricing.  Today, TrueCar.com is a great and visible test of a dealer's integrity.  The big tv ad campaign that launched TrueCar.com to the greater public will likely drive that other kind of nonsense back to the darker corners of the lot, as price-spiraling dealers create expectations they can't frequently meet -- and attract the attention of state regulators.

Comment by Mark Ziehr on December 16, 2011 at 6:01am

Stan, great read.  Thank you for sharing your call with Scott Painter and your observations.

 

I have been in Internet sales for 11 years, and was with ZAG/Truecar when they enlisted USAA members.  Which by the way, was a brilliant business move.  When Scott's Cardirect.com model didn't work, to resurface through member programs to get back into dealerships was just pure genuis.  We left the ZAG/Truecar (USAA) model after getting badgered, and beat up over our pricing and when American Honda reacted to Truecar's under invoice "target" pricing.  My round about point is this, Scott and Truecar are just passive aggressive bullies. They will reach out to you with one hand and poke you in the eye with the other.  Stan, you did the right thing by listening, investigating and responding.  We need you to go and see their operations, because without a clear perspective this whole thing will just turn into a pissing match.

 

With all that said, Truecar is turning customers into bullies as well.  Plenty of people have retold stories of customers that just turn on you when you tell them that you will not match or much less "beat" the price they have from Truecar, as if that is the ultimate authority on price.  We all know that the car buying experience is so much more than just price.  Unfortunately, with the focus and encouragement that customers get from Truecar (or Consumer Reports) that life long relationship that so many quality dealers have worked so tirelessly to build with their customer base and community has deteriorated into a mass of smiling faces that punch you in the stomach in blind lock step behind "transparency."

Comment by Curtice Spencer on December 15, 2011 at 11:06pm

Stan, excellent read and I appreciate your insight.  As a dealer within the Group 1 Automotive group I was surprised at how fast this has all transpired.  I've been with ZAG/USAA for several years and always considered the leads provided by them as my "cream of the crop leads."  Earlier last month we saw the lead conversions falling, quality vs. quantity, and then noticed some duplicate leads with other venders.....I have to admit this had occurred some in the past bu nothing on the scale that we were seeing. 

 

I too am disappointed in the direction that Scott Painter has choosen to take TrueCar and will miss sucessful partnership we had with ZAG/USAA in the past, I have to agree with everyone else here that undercutting the dealerships, and the sales people on the front line, is not an ethical way of conducting business.  Most dealerships that have survived over the past few years already have transparency and fair practices in place to provide customers with a great purchase and ownership experience.  Buying cheap is not always the best practice and neither is paying too much.....finding the middle ground with fair profit margins vs customer satisfaction is key.

I'm looking forward to what google is currently working on and would love your input on that as well when you have time.  Thanks

Comment by Jason Manning on December 15, 2011 at 9:41pm
Stan,

TrueCar's CEO wants to eliminate American Jobs in the name of transparency. His goal is to reduce dealers. His ideas are elementary. He repeats the over used term of "transparency" in the description and presentation of his product(s) like some "experts" repeat SEO. We're past most of that. It's elementary.

How can he insist that dealers become transparent, yet he calls his data "highly confidential.". It's our dealer data. So when it gets to his company he takes the transparency away and makes it highly confidential. We are fools to partake in this childish game.

Get back to data security, company secrets and proper handling of sensitive information and data. We are being fooled. This is a crime against the next generation. The price of a car should be negotiated. Dealer pricing creates jobs and security and taxes for local government and famklies in need. I cannot tell you how many hard working Americans have come to my dealer over these past years and asked us "How has business been? You guys aren't going anywhere are you?" They know the tax dollars that run their police n fire resources. They know where the support for their schools come from. They know the tax support that brings value to their zip codes and therefore property.

We need to understand that we are pillars in our communities and we support a whole nation of freedom and democracy. There is a price to everything. Dealers can easily secure their futures and local tax dollars by securing their data. There is a big picture here. We need to make this intelligent commitment to secure and keep our data.

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