Few Lessons From Evenlevel

I am waiting for my girlfriend to get ready for her birthday dinner and wanted to quickly write down a few lessons I’ve learned from Evenlevel. I went in to Evenlevel with the idea that dealers were antiquated, I was wrong. Dealers provide serious value to the consumer:

  1. They help the customer make an informed buying decision
  2. They make it easy for the consumer to find financing
  3. They make it easy for the consumer to get rid of a trade
  4. They provide service after the sale

Consumers are looking for a change in the interaction between sales people and customer, but not an end to dealerships.  Customers may think they want to save money, but really they want convenience. If something goes wrong with a car, regardless of how much they saved, they want the dealer to take care of the problem.

The trick, in the coming years, is how to make dealers more profitable by more aggressively adopting technology to improve sales, margins, and the customer experience.  2% net margins are ridiculously low, and according to a McKinesy report, well run dealerships are four times as profitable as poorly run dealerships. The industry still needs to change, it’s just back to the drawing board.

3 responses to “Few Lessons From Evenlevel

  1. EJ… Dude… you are exactly correct… dealers do provide a number of terrific services in the marketplace and yes 2% margins are ridiculous. I think it is more like 5-6% on new cars and 6-8% on used, but the point is the same… skinny margins. Dealers use the finance markups, extended service contracts, GAP protection, credit and life insurances, etc. to get back up to a typical hard good operating margin of 8-10%.

    The disconnect you mention has to do with (among others) the fact that a car is a large ticket item, a few unsavoury dealer practices go a long way to soil the reputation of all, no one really believes some of the crazy advertising messages that are broadcast and there is a general lack of perceived trust in the marketplace as a result.

    But as for the drawing board the solutions of today were being devised 2-3 years ago… In my case this meant opening up car dealer websites for transactional ecommerce via shopping carts that represent the real deal are the first step in the restoration of the trust factor. It still takes well trained staff and a supporting in dealership process to pull it off, but transactional dealership websites where a consumer can:

    1) schedule their own service appointment online and have it confirmed (www.timehighway.com)
    2) buy parts and accessories on any vehicle, pay for them via credit card and have them shipped (www.insigniagroup.com)
    3) self-serve their own car deal via a shopping cart (price, price guarantee, window sticker, credit, interest rates, rebates, trade in equity, extended service contracts, protections, tax, title, fees and accurate monthly payments – my company http://www.ai-dealer.com)

    Are all here and enhance a dealer’s brick and mortar operations for the reasons you mentioned as they adopt a click and mortar strategy.

    The Web 1.0 / Dotbomb companies that said they were going to replace car dealers missed those essential functions in the marketplace that you mentioned. They also “forgot” that dealers are very powerfully politically, well organized, the single largest payers of state sales taxes and the only ones with access to the supply of new vehicles, factory auctions + premium used vehicles in the form of trade ins. Their service + parts operations are significant profit centers to help them weather the inevitable ups + downs on the sales side, making it quite a resilient business model… it is why it has stood for 75 + years.

    But… consumers are tired, leary + hiding on the Internet… the trust must be restored to the new medium + those of us who saw it several years ago began to devise solutions.

    This is a big market. One of the biggest actually. There is lots of room for lots of big new ideas and lots and lots of room for lots of highly profitable niche ones. Shopping cart ecommerce for car dealers may be one of the big trends emerging in the industry (it sure has reshaped every other industry), but there will always be a next big thing.

    From one entreprenuer to another, study the market, cast about in other industries, look for points of pain, devise something no one else is doing, focus on high value innovation, something you love to do, something “remarkable” as Seth Godin would define it (Purple Cow), read Blue Ocean strategy for inspiration, project ahead 3-5 years to where you think the market is going and devise a solution that will get there first… and don’t ever give up.

    And here is an interesting link…

    http://www.mediabuyerplanner.com/2007/10/09/one-in-five-in-market-consumers-would-buy-a-car-online/

    But go be with your girlfriend. Being an entreprenuer puts tremendous stress on the relationships that matter most.

    My best.

  2. Brian,

    Thanks for the comment and for the encouragement. New opportunities are always there, it’s just a matter of being in the right place at the right time.

    Improving customer/dealer interaction is definitely an interesting challenge and I am sure there is a way to do it.

  3. One thing Web 2.0 concepts demonstrate is to not replace people and relationships, rather enhance the relational experience.

    Today I encountered a problem with my email campaign system. I was prompted by the system to report the problem. Within an hour, I received generic yet personal-enough email explaining the situation and apologizing. I was prompted to try again and was able to complete the task.

    In the end, I was satisfied not so much because I was able to complete the task, but because the service provider had already prepared an automated response to the situation AND resolved the problem.

    As you pointed out about customers wanting the dealer around when a problem is encountered. Technology must serve to enhance and automate that, not remove the relational element.

    Now RSS Marketing, however, does seek to remove the relational aspect. But that is a whole different story.

    Kudos for the transparency EJ.

    PS – Hi Brian.

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