automotiveMastermind Founder and Co-CEO Marco Schnabl joined Jim Fitzpatrick on the CBT Stage at NADA 2020 in Las Vegas to discuss the state of dealership marketing in 2020 as well as automotiveMastermind’s Market EyeQ platform.
VIDEO TRANSCRIPT:
Jim Fitzpatrick: Thank you so much for joining us on CBT news.
Marco Schnabl: Thanks Jim.
Jim Fitzpatrick: Pleasure to have you.
Marco Schnabl: This is our fourth time, back together?
Jim Fitzpatrick: Exactly. So we’re almost finished with day one at NADA convention here in Las Vegas. Talk to us a little about what’s going on at your booth and some of the things that are happening with automotiveMastermind.
Marco Schnabl: So, we always have a great NADA, this year has been overwhelming, quite frankly. It’s been a very, very busy at the booth. We now partner with every major OEM.
Jim Fitzpatrick: Wow. That’s great, congratulations.
Marco Schnabl: Yes. Thank you.
Jim Fitzpatrick: Is that something new in the last year that’s happened?
Marco Schnabl: That’s correct.
Jim Fitzpatrick: You guys had some partnerships.
Marco Schnabl: Correct. So, we added seven, the last seven major OEMs in the last six months. We now partner with 30 OEMs across the United States. And it has opened up some tremendous partnerships, right? And open up the market that we can serve.
Marco Schnabl: Specifically important, if you think about a dealer group, that wants some centralized system, that can’t just serve as 20%, 30%, 40% of their business, but all of it. So, that’s really been a major enhancement and the reason why we’re probably so busy right now.
Jim Fitzpatrick: What else can we expect from the company in 2020?
Marco Schnabl: So, getting the OEMs right is really important and that’s one of our major priorities. And just to elaborate that for one second, part of what mastermind does is very, very precise data mining behavior prediction, trying to find that right customer and really making an offer that is relevant, right? Something that they can take to the dealership and say, I would like this, I’m interested or I want to transact. In order to do so you need to get the incentive, the underlying incentive structure correct and right. And that was a major overhaul for us by adding these OEMs to get that underlying incentive structure right, to make the offers highly accurate and relevant. That’s number one.
Marco Schnabl: Number two, our dealer partners have taken that aside and said, Hey listen, we’re realizing a shift here and we have seen a two-hour parent company, IHS Market talking about how important pre-owned has become in the last two years. So that profitability is slowly shifting or has shifted from the new car side to the pre-owned side. So predicting that pre-owned buyer has become a really big priority for us. And, to date, what we’ve done is predict a pre-owned buyer and offered them a new car. What’s coming this year is an accurate prediction of a pre-owned buyer for a pre-owned vehicle if we believe that’s the right vehicle for them. And it also will allow dealerships to take the inventory that pre-owned inventory and find the right buyers, but as it’s aging and depreciating, we want to make sure, in real-time, to find that buyer.
Jim Fitzpatrick: That’s fantastic. So, talk to us a little bit about you, you’ve made a lot of different announcements and it seems there’s a strong use case for dealers to be signing on with Market EyeQ. Talk to us about that.
Marco Schnabl: Yeah. So Market EyeQ was our large announcement last year. And what we did is, typically, our partners, our dealerships have referred to us at automotiveMastermind, a mastermind. And as we were adding products, we first wanted to find a brand off the newest product we were adding. But what Market EyeQ really is, and that’s where we are revolutionizing again, is a comprehensive sales platform. So, where, initially, you had the equity mining, evolution into data mining, we’re now doing audience mining. We’re really trying to help dealerships, in their entire Market, to find not only their loyalty or retention customers, but also service customers that are likely to buy. And lastly, conquest customers that haven’t interacted. So, it’s a holistic 360-degree view under, built on tremendous data assets that are not just coming out of the DMS. They’re coming out of our sister company Carfax, our other sister company Polk, I just mark it as the parent umbrella. We have data that’s a powerhouse, that nobody else has access to. And that really fuels Market EyeQ and allows dealerships to drive exponential results.
Jim Fitzpatrick: That’s fantastic. I mean, you’ve built such a machine that dealers can use. It’s all about data today, isn’t it? I mean, talk to us a little bit about the state of dealership marketing in 2020 as you see it.
Marco Schnabl: It’s tough, right? I mean, dealers are facing a multitude of problems. The new car side is under so much pressure. Profitability goes down, you’re thinking about how do I get that right? Used car buyer to me, how do I get used car inventory? Then thinking about the crossover from light passenger vehicles to crossover SUV’s, I mean, that shift, we have never seen a shift in the industry from one vehicle class to another as drastic as what we’ve seen over the last five, maybe 10 years. Yeah. So dealers are thinking about how do I take that sedan buyer and now offer him up the right crossover vehicle. And that data is super, super helpful there. Data can guide you and pinpoint you at the right customer, with the right message, to bring that line to you and bind them to your dealership, to your brand.
Jim Fitzpatrick: What do you say to the dealer that’s listening right now? That says, “Well, I hear what Marco is saying, but we’re doing just fine. We’ve sold all the cars that we can and it was a good year. Do we really need to be looking at data so much moving ahead?”
Marco Schnabl: No way. That’s a great question. And I will say there’s tremendous dealers out there that are working very hard, with very little technology, driving exponential results already. It’s remarkable, right? I mean those are veterans in the industry that really know how to do all of that analysis almost by hand. But you can’t do it by hand anymore, right? And the consumer expects a different level of engagement, especially when we talk about the outreach. A simple…is not going to satisfy the consumer anymore. We need sophisticated outreach strategies and technologies that touch the consumer just at the right time. And I would challenge the dealer and say, “Look, if you’re already doing great, let’s partner up and do even better.”
Jim Fitzpatrick: So, all of this really leads up to the number of OEM relationships that have exploded with you. I mean, they see that as well because the customer experience today starts with that click, doesn’t it?
Marco Schnabl: Yeah. Look, the evolution in which we have gone through, and somewhat even lead, is bringing us to continue an accelerated growth into our company. However, you’ve got to be careful, right? When you grow very fast, you want to make sure you remain a very valuable partner, be it to a dealership or to an OEM. But, yes, to answer the first part of that question, all of the OEMs have taken notice and we were an underdog six, seven years ago today, we’ve become part of this industry, we’re proud of it and we’re a leader in behavior prediction. And I think understanding what the consumer journey needs to look like starts with tier one, continues to tier two and three. And we believe there needs to be a tier less approach to consumer outreach. The co-mingling of multiple messages is confusing to the consumer. So we want to help the dealership but also the OEM to align those messages and bring it down to the consumer where they get one aligned voice from the brand, from the dealership to drive value in the communication and help them convert at a higher rate.
Jim Fitzpatrick: That’s for sure. While you’re talking about 2020, what other trends do you see having a major impact and potentially disrupting the industry?
Marco Schnabl: Again, I think we’re seeing obviously more and more of the EVs coming to market. I don’t see dealerships today being as aware or concerned as the OEMs are. They are aware, and I think there’s some concern, but at the OEM level, we clearly have these conversations daily to think about, okay, what does EV mean? Autonomous is also part of the conversation, but if you think at an OEM, great OEM like BMW, they’re adding half of their fleet over the next five years, it’s going to be electric. So, how do you think about taking a buyer who has been driving combustion engines for decades? And offering them an EV? It’s a different conversation. I don’t think about conquering customers from Tesla. That’s not the approach. You’ve got to think about your own clients as they drive their cars today. How can they be moved over to electric vehicles?
Marco Schnabl: So I think that is a big piece. Clearly, the shift from light passengers to crossover SUVs. But I would say we have already a lot of processes in place there, the industry has adopted well to it. And then just continuous change in consumer behavior. That younger buyer is now here, expects a different conversation, expects more data, more transparency and great service.
Jim Fitzpatrick: That’s right. Because the customer, at the end of the day, is driving this right? They’re really in the driver’s seat. We’re kind of following what their lead is in many cases, right?
Marco Schnabl: Yes and no. I think the customer is, as it relates to EV, it’s also the government, right? I mean if you look at European countries, there is clear regulation that combustible engines are not being sold beyond a certain date. I mean that is not the consumer saying I want electric. That is the government saying this is what needs to happen.
Jim Fitzpatrick: And you’ve got to have the infrastructure, which is a big part of that as well.
Marco Schnabl: And I think, I mean us as a global organization, if we go beyond master mentor, parent company, IHS Market. One thing we’re seeing is that this entire discussion on climate change is becoming a really sensitive topic. Right? And yes, maybe outside of the U.S. a bit more sensitive than we see it on U.S. today, but the younger generations are pushing for this. So, when you’re a parent and your children on school and all of a sudden the conversation comes down to, “Hey, are you driving electric?” That changes consumer behavior overnight like this, right? So, we are on the forefront of those discussions. I mean, not just market, it’s deep in the energy sector or financial sector and the transportation sector. But, think about what that means for the energy sectors too. When you have non-renewable energies powering cars versus renewable energies, big topics, right? These are macro-level topics that we are listening to and trying to be engaged in.
Jim Fitzpatrick: That’s right. We will be sitting here 20 years from now, God willing and talking about watching that evolution over the last 20 years, right?
Marco Schnabl: Yes. And for me the biggest question is if I think about that evolution to EV, is hydrogen ever going to be the bigger or better technology? There is great technology behind it, but the government are pushing very hard on EV right now. So, again, what does it mean for a dealership? I think it means you’ve got to start thinking about it. You’ve got to have an awareness, you’ve got to start educating yourself and really find good technology and partners that can help you identify what in two or three years, how you take your existing customer base and start switching some of it to electric. And that’s a challenge.
Marco Schnabl: Think about us. We talked… I love being on the showroom floor, I love to sell cars and you talk about six, eight, 12 cylinder cars right? That discussion doesn’t exist anymore. And then what does it mean to the service centers? These cars, these electric vehicles have tremendously lower service dollars attached to them. So where do you find the profits then? You got to think about other services. This is an important topic.
Jim Fitzpatrick: It is. No question about it. And one we’re going to be discussing a lot on CBT news and one that dealers are, I think, nervous about. They’re having, right now, the industry’s doing great business and everybody’s hitting high fives and enjoying another great year in the auto industry. But it’s kind of lurking back there, cause it makes sense at the end of the day, right?
Marco Schnabl: I guess it does, right. Because it’s just something that’s being driven partially by government, partially by consumers. And who knows if we ever have a change in our government here. And who was in the lighthouse may be that all of a sudden becomes a super high priority for the United States and then it becomes a super high priority for dealers. We are on the track. It’s something we can stop. We got to start educating ourselves now and be prepared for.
Jim Fitzpatrick: Marco Schnabl, thank you so much for joining us on CBT New.
Marco Schnabl: Thank you so much.
Jim Fitzpatrick: Always a pleasure. Really love having you on.
Marco Schnabl: Same here. Thanks.
