Digital Retailing is the latest and most talked about trend dominating the auto retail industry. But what does digital retailing really encompass, and how can your dealership out-perform the competition? Here to discuss digital retailing in more detail is Tim Cox, Senior VP of Sales and Co-Founder at CarNow. Tim gives us his own perspective on digital retailing and explains exactly what it is and what about it dealers should be paying attention to. Additionally, he discusses trends within digital retailing as well as what consumers are saying about it. To hear more on these topics check out the full interview above.
VIDEO TRANSCRIPT:
Jim Fitzpatrick:
Hello, everyone. I’m Jim Fitzpatrick. Thanks so much for joining us on another edition of CBT News. Here to discuss digital retailing in more detail is Tim Cox, Senior Vice President of Sales and co-founder of CarNow. Thanks so much for joining us, Tim.
Tim Cox:
Thank you, Jim. Happy to be here.
Jim Fitzpatrick:
Let’s kind of jump right in and talk a little bit at a lower grade here. From your perspective, what is digital retailing for the dealers that are out there that are like, “We want to hear it from an expert.” What exactly does digital retailing mean?
Tim Cox:
Well, I mean, what we’re seeing is digital retailing is the buzzwords, I guess. We’ve got a lot of dealers that have tried some sort of digital retailing company and maybe did not put the process behind it. And then it failed and then they canceled and said, “Well, it just doesn’t work for me.” More so than what I think, or we think, or any talking heads thinks, let’s look at what the consumers are saying. When we look at what Carvana is good in the market, sold more cars than a lot of leading dealers last year, that’s what our customers are saying.
Tim Cox:
But when you really unpack what they’re actually doing … We had a colleague of ours buy a car on Carvana. The person that delivered the car to him was a notary. In that car was a deal jacket with a power of attorney and a odometer statement and everything else, and had amazing experience. But if you ask all these customers if they bought their car online, they’re going to say yes. But it’s about the experience. It’s about serving the dealer.
Jim Fitzpatrick:
Sure, sure.
Tim Cox:
Right.
Jim Fitzpatrick:
For the dealers that are out there right now that heard that Carvana story, they say, “Well, I mean, this is something that we’ve been doing for a long time.” We talked a little bit about that before we started here today in terms of before the interview, in that this is something that dealers would do 20, 30 years ago, 40 years ago, when somebody would say, “Hey, I’ve already bought the car from you. Can you just bring over the vehicle? Take mine back to the dealership. Bring the deal jacket. I’ll sign everything in the comfort of my home and everybody will be happy.” Right?
Tim Cox:
Right.
Jim Fitzpatrick:
Yeah. This is something that now we’re saying we’re going to drive more people from the consumer side to do just that.
Tim Cox:
Right.
Jim Fitzpatrick:
Right?
Tim Cox:
Right. Part of that is the technology, the technology on the website, being able to calculate a correct payment, a correct lease payment, having the ability to get an idea of what a trade’s going to be worth. As long as the consumer has a good idea of their trade, they can do the deal online from the comfort of their own home and calculate those payments. People still like buying … They still like going in and picking up the vehicle in a lot of cases. So I don’t believe salespeople are going away. What they don’t like is the three hours in the business office, the back and forth, the if I could, would you? As soon as you get out of the car, if you find one-
Jim Fitzpatrick:
Yeah, you get tackled.
Tim Cox:
Yeah, you get tackled. If you find one, are you coming home today with this vehicle? That’s the part that they don’t like. If you can do that online when you cast your digital net, safety net, per se, online, those are the dealers that are successful.
Jim Fitzpatrick:
Yeah, for sure. I think one thing we all agree on in the industry, and that is that digital retailing’s here to stay.
Tim Cox:
Oh, yeah.
Jim Fitzpatrick:
More and more consumers, whether it be millennials or whether it be baby boomers or whoever that say, “Wow, if I can do at least 95% of this process online and maybe just use the dealership as an experience where I go in, test drive the vehicle at any dealership and then decide that’s the car that I want, I’m going to go online to a dealer near me.” But I guess in digital retailing that doesn’t even have to be the case. It could be a dealership that’s 30 miles away from me. Because they’re bringing the car to me and taking mine back. Then I can have it serviced anywhere, right?
Tim Cox:
Right.
Jim Fitzpatrick:
This is a whole new area that we are in as dealers out there, right?
Tim Cox:
Yeah, absolutely. As a matter of fact, again, let’s take it back to the people, to the consumers. Chip Perry and TrueCar did a study and then Urban Science came back and did the same study, same questions with 2,700 car shoppers.
Jim Fitzpatrick:
Oh, wow. Yeah.
Tim Cox:
So whether you believe it, you don’t believe it, this is what they found. There were several questions that really got our attention. But some of those questions were this. Consumers were asked, “If you knew you were going to have a great experience ahead of time or you knew you were going to have a typical throw your keys on the roof, three hours in the business office experience, two questions. How much more would you pay? How much further would you drive?” 89%, not my thought, not your … 89% of your consumers that are buying in dealerships across the country said they would drive 30 minutes further to get a better experience. Those same customers, 58% said that they would pay $1,000 more. I know what dealers are thinking because I thought it too. Well, not in my market. In my market, I’ve got this dealer and that dealer and everybody’s-
Jim Fitzpatrick:
The race to the bottom.
Tim Cox:
… triple net, race to the bottom and I pray to God we make 1,500 on the back. I mean, that’s what everybody says. But when we just pump the brakes a little bit and not think about the way we’ve been doing it since 1989 when I got into the car business, but think about the scoreboard and what is CarMax telling us.
Jim Fitzpatrick:
Yeah, that’s true. Yeah.
Tim Cox:
Because CarMax sold more cars than a lot of big dealer groups last year, and they averaged 1,200 per car higher than the rest of the field. So we need to pay attention to these trends and see what we can do to recreate that experience on our own dealerships because we’re the ones spending millions of dollars on these buildings that the OEMs are demanding from us.
Jim Fitzpatrick:
That’s right. And car companies like Carvana are kind of coming in the back door and saying, “We’re taking your customers in your market. We don’t have those big fancy dealerships and we’re shipping the vehicle right to one of your consumers in your market.” It seems like dealers don’t necessarily mind losing a deal to a fellow dealership, right, that has made the investment like they have.
Tim Cox:
Right.
Jim Fitzpatrick:
But man, when they start losing the deal to a company like Carvana that has bypassed that commitment, that financial commitment that most dealers have made, it’s time to sit up and smell the coffee, right, as they say.
Tim Cox:
Yeah. There’s no blue sky there.
Jim Fitzpatrick:
Yeah. That’s exactly right. I think that we’ve done a number of shows on digital retailing. We’ve spoken to a number of dealerships out there. A lot of the dealers are still cautiously optimistic about digital retailing. I know the reason that we called you in today is your company actually kind of holds the hand of the dealer through this digital retailing process. Talk to us about that.
Tim Cox:
Well, I mean, no matter what company, whether it’s ours or another company, I think the most important thing for any dealer’s success, with quite frankly, any tool, is ongoing training. Because, again, I always say facts trump feelings. Because we can’t go into a dealership that sells 900 a month in Miami and put in processes in place or even solutions in place configured that one way and then go to, let’s just say New Hampshire to the dealer that sells 80 or 90 a month and expect it to work the same.
Jim Fitzpatrick:
Not [crosstalk 00:07:22].
Tim Cox:
We can’t give any, here’s your software, it’s just going to work everywhere. So being able to break down … It’s all about people, process, and the actual product. But we really believe that no matter what the product is, we need to assess your people and then develop a process around it.
Jim Fitzpatrick:
Talk to us about F&I. That seems to pop up in every discussion that we have regarding digital retailing. Dealers are concerned. How do you deliver a vehicle online and still maintain your 1,000, 1,500 bucks, some dealers are doing two grand, a copy on the back end, which is … That’s great news. But how do you maintain that if you’re not sitting across from somebody in an F&I office? A number of dealers have shown that … have expressed their concerns with us to say, “We think we’re going to give up the last frontier, which is F&I profit.”
Tim Cox:
That’s a great question, Jim. We’re actually seeing the antithesis of that.
Jim Fitzpatrick:
Really? Okay.
Tim Cox:
Because what happens, even when I was a sales manager in a dealership and we incentivized our salespeople to sell a Clear Bra or a Stonex or a GAP or whatever, when we incentivized them, they showed that early in the process. And when they showed that early in their process, imagine that. The PVR went up on the back end.
Jim Fitzpatrick:
Yeah, all the time. Sure.
Tim Cox:
It’s not that it’s a magic pill or my company or your company or everybody’s doing it. It’s just, again, human nature. When we plant the seed earlier, we are seeing, and I only deal with facts, we are seeing a 24.2% increase in F&I products when we look at a GA account or a Vistadash or a Clarivoy or something like that, increase in F&I products when they are shown earlier in the process. We’re actually making money, excuse me.
Jim Fitzpatrick:
Wow. So talk to us a little bit about what your company does at CarNow and actually how it helps dealers with this.
Tim Cox:
Well, we developed CarNow as I was actually managing a store here in Atlanta. When my partner started talking, when we started collaborating together, we were thinking about recreating this process. How do we even make it a better process online to where they come in and they’re excited about that car and they have all the information that they need and then they can purchase the car quicker, quite frankly?
Jim Fitzpatrick:
Right. Right.
Tim Cox:
Even though chat was our first product, digital retailing … We saw it four-and-a-half years ago, actually almost five years ago now. As we started developing this and showing it to different people in the industry, oh, you can send a video. You can send a brochure. You can do this. So we saw it very early on. They wanted to time it accordingly to make sure that we had … the timing was right and dealers were ready for it. So we kind of started in the baby end of the pool and worked up to where now we’ve been very fortunate and we’ve seen uber success. And when you set the tone, I call it setting the tone early in the process. You set the tone early on. It changes everything-
Jim Fitzpatrick:
That’s right. That’s right.
Tim Cox:
… as long as you follow through.
Jim Fitzpatrick:
That starts with when you tap onto that dealer’s website and the chat pops down and you start communicating with that dealer. It starts right there, doesn’t it?
Tim Cox:
100%.
Jim Fitzpatrick:
A lot of people think in terms of customer experience, well when that customer hits the front door. No longer is it when they hit the front door. Right? It happens way before that.
Tim Cox:
No, because they have the ability to just click on and go someplace else.
Jim Fitzpatrick:
That’s right.
Tim Cox:
That’s why [crosstalk 00:10:31] dealers can customize our tool to whatever they want. That’s why we highly encourage what we call that Chick-fil-A. “Hey, this is Tim Cox from Hennessy Lexus. How may I serve you today? Thank you so much. It’s my pleasure. Do I have your permission to …” When we do those things, we set the tone, mentally. Not that we’re trying to trick, but we’re setting the tone because we generally want to serve that customer and when we serve other people it’s reciprocal and they show up in our dealerships.
Jim Fitzpatrick:
That’s right. That’s what it’s all about today.
Tim Cox:
100%.
Jim Fitzpatrick:
Yeah, exactly. Tim Cox, Senior Vice President of Sales and co-founder of CarNow. I want to thank you so much for taking all this time out of your busy schedule. It was tough getting you in here because you’re crisscrossing the country working with dealers. So thank you for stopping by.
Tim Cox:
Thank you very much, appreciate it.
Jim Fitzpatrick:
Thanks.
CBT Automotive Network, the number one most watched network in retail automotive. This has been a JBF Business Media production.
