I think a challenge is that you're direct consumer and you've got one price. If you're not moving those vehicles, you have to drop that price across the board. You might not need to have dropped it in California, right? Oh, right. That is very interesting. But you maybe needed to drop it in Wisconsin because, you know, the battery range was not getting what it did in the winter in California.
What's up, everyone? This is car dealership guy. You're listening to the car dealership guy podcast, which is my effort to give you access to the most unbiased and transparent insights into the car market. Let's get into today's episode.
Phil O'Rianni is CEO at Shift Digital, one of the leading digital marketing tech companies for dealerships and car manufacturers. In this conversation, we discussed how Shift Digital built an app store for 16,000 dealers and car manufacturers. The pitfalls of a direct to consumer car sales model, enabling innovation in the car business, the current state of AI and dealership tech and much more.
Phil O'Rianni是Shift Digital的首席执行官,Shift Digital是一家为汽车经销商和汽车制造商提供先进数字营销技术的公司之一。在这次对话中,我们讨论了Shift Digital如何为16000家经销商和汽车制造商建立了一个应用商店。我们还讨论了直销汽车销售模式的陷阱、促进汽车业创新、当前人工智能和经销商技术的现状等等。
But before we get into the show, this episode is brought to you by cars commerce. The platform is simplified everything about buying and selling cars, including the quote unquote follow up. Let me explain dealers fast and effective follow up is crucial for converting leads in customers. But here's a problem. 40% of shoppers report that they are not getting timely or helpful responses from dealerships. This is a huge problem because your own team could be leading four out of every 10 sales opportunities on the table.
Cars commerce makes it simple to measure and improve your follow up performance. A cars.com experience report tracks the percentage of leads your teams are responding to and how customers rate those responses while dealer inspires retailing technology enables your team to quickly text follow ups with personalized financing options to make the most out of every opportunity.
To learn more about how you can measure and improve your team's follow up performance, go to carscommerce dot inks slash experience or click the link in the show notes below.
This episode is also brought to you by Auto Fi. Most digital retail platforms are limited in their capabilities and fall short on empowering dealers to convert shoppers into buyers while protecting profitability. Auto Fi delivers done deals by empowering your dealership with the technology to land customers on the right vehicle and deal from payment configuration, F&I product selection, credit and real time lender offers plus the back end selling tools to help close the deal. This accelerates the deal no matter where the customer is on the dealer's website over the phone or in the showroom and translates to a faster sale with better customer experience and higher profits. In fact, the most engaged dealers on Auto Fi see $411 more back end PVR versus non-autified deals. Go to auto fi.com slash CDG to learn more or click the link in the show notes below. That's auto fi.com slash CDG and start working with done deals today.
Yeah, I think a lot of people in this industry have a story about, you know, how they fell in love with the car business and minds. Probably not too dissimilar from a lot of them. Now, I was on a merry-go-round of living in lots of different places around the country. My dad was in elevator construction and the merry-go-round stopped in Dearborn, Michigan of all places. We lived about a mile away from the Ford Research and Development Center. And back then I used to go and look and see these cars that were camouflage. You can back that a lot more camouflage. You just had to kind of sense and hop in and go check out, you know, what was coming. That's always just so enamored by. It have cars that they bought from other manufacturers. They were ripping apart and you'd see things that you know, you just never saw before. That was back in the days like spy shots were a really big thing.
What was the spy shot? So it used to be, you know, before, you know, OEMs would launch, you know, cars. They would be developing these cars. And that's before they would even really camouflage. And so there was a, you know, there were people that would go take a picture and be like, Oh, that's the next Mustang that's coming out. And then, you know, that would find its way in the car and driver magazine spec then.
I've never heard that term, but then again, you know, I was never too close to the OEM side. So I'm not too surprised, but that's a good one. Yeah, some spy shots for a big thing.
So being a Dearborn, like everybody worked for Ford Motor Company in some sort of fashion supplier, whatnot.
作为一个迪尔伯恩人,就像每个人都以某种方式供职于福特汽车公司,做供应商之类的工作,之类的。
And I really took a liking to the dealership side of the business. We had local dealership, Village Ford, you know, great operating store, you know, obviously built in customer base, right?
Being in Dearborn and like age 15, I got my first job as a quarter, you know, that taking snow off cars, washing cars, prepping cars, and just, you know, watching how everybody can work together, you know, ultimately to service a customer that was walking in the front door and everything that happened behind the scenes.
Just fell in love with it, right? The experience, the whole, you know, idea of a new car back then, you know, going to, you know, the North American Auto Show with my dad and looking at the new vehicles that were out there.
And I started to see what was happening with digital. And it was still super early. I remember I had to log customers, right? Like take a piece of paper, you know, right down the customer that came in.
And if, you know, E.L.E.D., right? Obviously, the big CRM tool, bought by CDK.
如果你知道E.L.E.D.,对吧?显然,这是一个由CDK收购的重要CRM工具。
Back then we would fax the list of customers to E.L.E.D. and they would send the customers cookies. Like E.L.E.D. would bake cookies and send them to the customer.
Like physical cookies, not the digital ones. Physical cookies, right?
像是实体饼干,而不是数字化的那种。是实体饼干,对吗?
And the guy that was handling leads back then was somebody that they've just put the very back of the dealership and, you know, I'd go spend time with them.
And, you know, just realized that was a goldmine, right?
而且,你知道的,我刚刚意识到那是一个金矿,对吧?
Everybody else is waiting for ups to come in. And here's this guy in the back room that's just literally got customers coming in on the phone with them and was selling more cars than anybody else. So that was just a great kind of, you know, entry into the business that, that kind of led me to where I am today.
Yeah, the journey for me starts at Ford Direct. That was, you know, one of the first employees at Ford Direct, you know, has brought in entry level, doing deal of support back then.
是的,对我来说,旅程就从 Ford Direct 开始了。那是我作为 Ford Direct 的最早一批雇员之一,当时是做了一些基层职位,提供业务支持。
You know, my initial responsibilities were, you know, trying to sell third-party lead programs to dealers. Right.
你知道的,我最初的责任是,你知道的,试图向经销商销售第三方潜在客户引导计划。没错。
If you go back to the early 2000s, right, dealers didn't really participate heavily in digital. They relied on third parties, right?
如果你回到 2000 年初,对吧,车商并没有在数字化领域参与得很深入。他们依赖第三方,对吧?
Not just the traditional, you know, auto traders of the world, but back then there was greenlight.com and car order. Right.
A lot of these companies were trying to sell cars directly to consumers or at least have that perception of that.
许多这些公司都试图直接向消费者销售汽车,或者至少给人一种这种印象。
But you couldn't sell a car directly to consumer. Ultimately, it had to go through, you know, the franchise dealer network.
但是你不可能直接向消费者销售汽车。最终,它必须通过,你知道的,特许经销商网络。
And, you know, what Ford did, which was, you know, going back then, I think extremely innovative at the time, you know, they got with the dealers and the dealers really changed it then and said, why are you for trying to partner with all these different third parties to sell cars?
You know, they saw that as a threat, you know, you're taking the dealer, the relationship the customer has, you know, they think they bought a car from, you know, car order.com, you know, not Village Ford.
And we lose a lot of our, you know, value that we have on building that relationship for service and support.
我们会失去很多我们在建立服务和支持关系方面所拥有的价值。你知道的,这会对我们造成很大的损失。
And so, you know, Ford dealers came and said, stop partnering with them, partner with us. And that was the impetus of the creation of Ford Direct, which was a dealer manufacturer partnership.
So a lot of what I learned when we kind of had the opportunity to go over to start ship digital was, you know, based on if you do what's right by the dealership, you know, in the digital space, it's really going to benefit the manufacturer, ultimately, and such a competitive management.
Yeah, I, you know, it's been a while since I've been around Ford Direct, I've been at shift for 15 years, but, you know, Ford Direct was trying to take a very large network of car dealers, right?
Very, very hard to do. Make them be excellent in digital, right? Digital was such a competitive advantage early on as traditional media dollars were starting to shift and customers were doing all their research online that, you know, the dealers, right? And they're so diverse. You know, I think it really needed help on what are best practices. What should I be doing? Where should I be focusing my dollars, right?
You know, how do I capture customers all the way to great? I got to lead the team through. Now, what do I do, right? The obvious is, well, of course you responded. There's so many nuances in just doing that. We've got so much data. We have access to how that, you know, dealers have higher close rates that respond between five and 15 minutes, right? Respond under five minutes. Your close rates lower. Why is that? It's almost as if people, people, people want to work with someone that's responsive. Yeah, they want to work with somebody that's responsive, but they also want somebody that takes the time to understand what they're asking for and have a very, you know, well thought response.
So now it tells us what does shift digital do, right? Compare that against the four directed, your evolution. What do you do at shift digital and explain this to me in like the simplest way possible?
Sure. Sure. I'll start by where the idea came from. Manufacturers in the 2000s, one, it started to realize like, our dealer networks get a lot of visits, websites, leads that are generated, et cetera. And we want to make sure that our customers are having the best experience and it was a very diverse experience across every lead that came in, every individual to a website. But they would, they would typically force the dealers to use a single tool. All four dealers back then had to use a tool called sales point as their CRM, right? They had one website that they all had to use and dealers as entrepreneurs are extremely competitive. They want the best tool that's in the market.
So where our light bulb came on is we said dealers are taking leads that go in the sales point and they're manually entering them into elite or dealer socket, right? Whatever tool they're using and they're working the customer there. Can we get the manufacturer, the transparency of data and give dealers choice on the best in market tools for them? That was where the light bulb really, you know, started for, for the idea of shift is if this can be applied across all the technology providers that, you know, a dealer utilizes, then you now get this marketplace of dealer choice with technology tools that are best in market, best in class. And the manufacturer gets access to data to make their media more efficient, that they're buying to understand the customer journey and ultimately it creates a better customer experience.
So that idea came when Chrysler back in 2008, they were bought by Cerberus and they were trying to do things different, right? I don't know if you know the history of Chrysler, but, you know, they had a lot of different owners over the years, right? Going back to, you know, Daimler, Cerberus, you know, and, and the wheel continued its turn ultimately led to great partnership that they have in creating Stellantis. So back then they were struggling, right? The product wasn't necessarily that of close to where it is today and they needed a competitive advantage.
So we came up with the idea and our founder, Steve St. Andra, who is a amazing visionary in this space, great mentor of mine was like, let's do for you what we think the entire industry needs and create technology vendors that are best in class and offer that to your dealer network. And five months later, they filed for bankruptcy, right? So as we started the company, myself and two other guys came over to join Steve, our only client. Wait, just, yeah, you're saying Chrysler, Chrysler, Chrysler, Chrysler filed for bankruptcy, right? They were the only client.
所以我们提出了这个想法,我们的创始人史蒂夫·安德拉(Steve St. Andra)是这个领域的杰出愿景和我伟大的导师,他说,让我们为您做我们认为整个行业需要的事情,并为您的经销商网络创建最佳技术供应商。五个月后,他们申请破产了,对吗?所以当我们创立公司时,我和另外两个人过来加入了史蒂夫,我们唯一的客户。等一下,你是说克莱斯勒,克莱斯勒,克莱斯勒申请破产了,对吗?他们是唯一的客户。
So the thing they, and they were, they were your only client. They were the only client. So the thing that you don't think about when, you know, you're, you're looking to do something new in your career is that, you know, an automotive manufacturer is going to go bankrupt. And we didn't know what that meant for us, right? But what we found is that we were the shining light in that building, right? We had a great value proposition and as they can have worked through bankruptcy, you know, Chrysler brought us along through that process and really held us up as something that is going to be a part of the new code, right? Because the value that we were creating with the dealers.
Just to recap that very very simply, right? I'm a dealer. I don't know what, you know, website provider, who's going to create my website, who's going to do, who's going to be my CRM, right? And I'm a four dealer in this sense or whatever, a GM dealer. You are the technological expert. That's the middleman, right? Or you're in the, in between the OEM, the car manufacturer and the dealer. And you're, you have the job of essentially saying, Hey, let me help you out. That is what I specialize in. Let me go find what is the best website solution for GM or four dealers. And once I find that, you know, assuming that the car manufacturer, Ford or GM or whoever approves it, you can then use this approved vendor at your dealership.
Yeah. Think about it as middleware, right? I think it's the better term. We build enterprise software that measures every click, every engagement, every lead, every dealer engagement to take all this data in and help the dealer understand what's the best technology provider for them, right? Choice was the main impetus for this of if you just have one provider as an OEM, you're essentially granting them a monopoly. And what happens in monopoly cost tends to go up support goes down. If you create the way we framed it up is a customized app store for dealers that's customized by every manufacturer on which dealer website providers that they choose to have in, which digital retailing providers, chat tools, trade in tools, right? The marketplace now is technologically enhanced, meaning we are measuring everything independently. We're taking the manufacturer data, build data, incentive data and integrating it into those technology providers so they can provide the best experience to the dealer and then ultimately the customer. And then we're independently measuring for two ways, right? One is, you know, who is best in class for what a dealership wants. And number two is to provide that data kind of blindly back to the technology partners that we have that say, look, your mobile experience is lacking versus these others that are out there.
This is something your company should focus on. So the value proposition for us has to be a for the dealer and value that we're providing it getting the best in class integrated technology providers. The value for the brand, which is now aggregating all of this data to make them more efficient and then understand where they need to spend resources to help dealers that maybe are underperforming improve, but also importantly, the value proposition for this app store, right? All the technology providers that are in here to help their business improve, understand maybe where they need to innovate, maybe where they need to focus time on and ultimately take some, take some things off of their plate, like tier one support, right? That can overwhelm the company.
So people ask me all the time, you know, like dealers spend billions of dollars a year on marketing, right? It's just you watch, you know, just traditional television, YouTube. I mean, you'll see car commercial after car commercial. I think people are always wondering, you know, how does that actually work behind the scenes? So can you explain to us, you know, the tier one tier two tier three advertising and automotive? What do that even mean and how it sort of breaks down?
Yeah, I'd say it's definitely evolved, right? Tier one advertising is where the brand generates, you know, advertising dollars and then spends that to drive traffic to the brand website. Many, many different ways. They typically have big tier one agencies, right? The brand being the car, the car manufacturer, manufacturer, right? Tier two is a group of dealers that get together in a market and maybe an individual dealer can't afford to, you know, buy, you know, a mass amount of TV. It's going to make it different so that the group gets together, you know, your, your Ford Metro Detroit dealers or, you know, there's so many different manufacturers that have a tier two association that pull dollars together. And then tier three is the individual dealer. I think the, the majority of innovation happens at tier three, right? Because they're targeting lower funnel and we've seen an evolution that where the dealers used to sit back and say, I'm just going to go buy leads, right? I'm going to buy leads from, you know, auto web, auto by tell who's, you know, now kind of, you know, gone to the wayside and I'm going to work these leads where we saw dealers should be spending their money is on attracting their own customers, right? Why outsource to somebody that's going to say you should buy a car from auto web and I'm going to get you a quote and I'm going to shotgun that to two or three or four dealers doesn't create the best consumer experience.
是啊,我可以说它肯定发展了,对吧?一级广告是品牌产生广告收入,并用这些收入将流量引导到品牌网站的方式。有很多很多种方式。通常会有大型的一级代理机构,对吧?在这里,品牌指的是汽车,汽车制造商,对吧?二级是市场上一群集中在一起的经销商,也许一个单独的经销商负担不起购买大量的电视广告时间。所以他们会组成一个群体,比如你们福特的散布底特律地区的经销商,或者其他有二级关联的制造商。然后三级是各个个体经销商。我认为大部分的创新都发生在三级,对吧?因为他们的目标是更加具体的销售环节。我们看到了一种演变,以前经销商们只是坐在那儿说,我只是要买些线索,然后从AutoWeb或者Auto By Tell这种网站购买线索,但现在这种方式不再流行了。我们看到经销商应该把钱花在吸引自己的客户上面。为什么要外包给某个人,他们会告诉你应该从AutoWeb这里购买车,然后给你一个报价,然后把这些报价发送给两三或四个经销商?这不会给消费者带来最好的体验。
As the dealer, you own the inventory, you set the pricing, right? You're best to sell that customer a car. So tier three has evolved tremendously. And I think one thing that we were able to do through accessing all this data was where are the best ways to spend your dollars, right? What are the best mediums to do? And that's a ball when we started this, our very first certified program, get access to all the co op funds, where dealers are spending their money.
And 10 years ago when we launched our first, you know, digital advertising program, 80% of the dollars were being spent in display ads, right? Okay. There was a little known trick in display that the dealer would feel really good because they'd go to their Detroit news.com and, you know, they were actually being retargeted and they'd see their ad on the front page of Detroit news.com. What they didn't necessarily realize is that not everybody that goes to the Detroit news.com is seeing that ad, right? So a lot of money was spent there, but when you started looking at the results, there were way better areas to spend your money, namely search, you know, 10 years ago.
So using all of this collective data to help dealers make better decisions on where to spend that next dollar was something that I think we help bring to the marketplace to move dealers away from inefficient digital spend, make them less reliant on, you know, third party, me generators and start to own their own market.
I have to ask you a question. I mean, I don't think it's a, it's a shocker to you. If I tell you, I love marketing. I just, I were, to be more specific, I love the idea of finding a creative message that gets attention, right? From a consumer and, and creates an action. Like I just love that entire thing. It's super to me. That's like my creativity and I'm always, you know, look, I just like to observe that.
Here's my question for you. Do those, you know, traditional OEM commercials actually work. Like what, you know, and you know, exactly what I'm talking about, you know, Nana, $99 and 99, and we're not 99. I'll say 999 nowadays with inflation. Do those actually work or is this just like a, we're stuck in this like habitual kind of bureaucratic OEM, like let's just spend spend spend on this brain advertising on the Super Bowl. What's your thoughts there as an insider?
I think everything evolves and I'll be the first to say that I'm not an expert on traditional big tier one, you know, media dollars that are spent. I do think there's a halo effect that can be created with the right marketing of a message that's out there that trickles down. And that's one of the hard things about this industry is how do you attribute a Super Bowl commercial to actual leads and sales, right? Because you'll have a really big spike.
I mean, one of the realities is at any given time, you know, it's high single digit percentage of people are in market by a car. So obviously you're not spending the money on a Super Bowl commercial. Just to try to get those people to buy your car right then and there. It's something bigger and broader than that.
I think that post COVID, you know, things changed a lot in the car business, right? Number one, we saw an industry that went from having to create a ton of demand to sell the inventory they had, right? 90 days supply, whatever the numbers were, but then all the way down to single digits. And, you know, I think that there was a lot of, um, thoughts that this was going to be sustainable, right? That just in time inventory and, you know, it brought up a lot of conversations around, you know, direct to sale. Uh, is that a better way to engage with a customer and a franchise model? And it didn't take long that manufacturing and supply chain ramped up.
And then all of a sudden we have, you know, this, this demand generation problem again, right? It's a very complicated ecosystem. So while I'm not qualified to say, does that Super Bowl commercial work for, um, you know, this big, ethereal brand, you know, building, I'm not qualified there, uh, from a dollar spent to how many cars that I sell the next week, that map typically isn't going to work, but I don't think that's the, yeah, it's a good way to put it.
You mentioned tier three, right? Being the marketing that dealers actually do themselves being just the most creative. I think it's creative or effective or used what there's a word used efficient. Yeah. What do you typically see, right? When it comes to just, you know, dealers advertising and, you know, delivering like a great customer experience, what do you typically see or what have you seen recently that maybe stuck out to you and like, wow, this is unique. This is novel or just, you know, this works super well in today's environment where, you know, inventory is starting to rebound for most manufacturers.
Um, you know, albeit rates are higher, which is, you know, has what a bit of a, uh, you know, it's a hindered sales in a way, but what are you seeing when it comes to just, you know, kind of unique marketing tactics that the others are using on tier three? You know, whenever I'm talking to dealers, I think that, you know, what definitely doesn't get presented by advertising agencies, what that is, all the things you can do for free, um, that is going to make a big, big difference.
And that starts with what is consumer facing your website, right? I think we learned a lot from Tesla and Carvan. And I would point even more to work, Carvanna of really being a pioneer in merchandising the piece of inventory, right? These great 360 shots with hotspots that built trust with the customer. Oh, there is a ding here or a dent there, right? That, that how important that was merchandising the inventory, creating content locally, right?
You could have a post on X and if you only posted, you know, once every two months, it wouldn't be that interesting. Same thing for a dealer website. If you're just leaving it static and you're not writing something about you as a dealership and the difference you make, I mean dealers are, I think the most phenomenal entrepreneurs in almost any industry. They're not just franchisees, right? Their lifeblood is this dealership and they're some of the most creative people in the world putting the time and effort into exuding that personal relationship you have with the community, right? Dealers are so active in their community. You need to get, take credit for that in this consumer experience, right? You're not just selling this commodity of a car. You're selling what you are, you know, in the community.
So there's so many free or low cost things that a dealer can do before they even decide to spend about that, you know, spend that first dollar. I think it's important to understand data. I've gone to, you know, some different 20 groups and you kind of see the variety of reports that come in that they, you know, go all the way from a spreadsheet to things written down on paper to more advanced and actually having a dashboard. I think understanding the traffic that you're getting, where it's coming from and ultimately how it's performed. You don't have to measure everything down to a sale. I mean, that's obviously the best if you can do that.
But we see like you're, you're in the business of selling new CPO and use cars. Who's going to those pages, right? The vehicle detail page is probably one of the most important indicators of what your demand truly is. And the variability of how people engage with the VDP is tremendous. If you have a stock image on there, guess what? Somebody's not going to go through a digital retailing process and put down a deposit and buy that car. You know, unless it's something that's, you know, super, super popular and you know about, but for the average car, they want to see the car. They want it to be a then specific experience. They want to see that's the actual car. If it's in transit, this is what's coming. So that experience that the dealer can create, I think, is the most important for you invest in first dollar.
Do you think it all else being equal? Do dealers have the tools to compete with the likes of Carvana from a technological perspective? What's your opinion on that?
Absolutely. I take it back just to this community of dealer entrepreneurs and this amazing vendor network that is in automotive. And to be clear, I'm not referring to like, you know, competing on an inventory, finding none of that strictly technological. All the technology that exists in Carvana is available to the dealer community today. Right. The inventory merchandising tools, right? The ability to really express what that piece of inventory is, the financing, the engagement with the customer and a digital retail experience. Do I want to have it delivered to my house? Do I want to, you know, walk into the dealership and buy an integration with all the after sales and finance tools? It's an extremely complicated, you know, technological process, but the vendor community and putting it all together, right? And that's part of what shift is, right? In these, you know, manufacturer, dealer, partner, app stores that we created, right? Our goal is to make sure all the vendors are walking together and talking together, that the data is being shared.
And I think that's one of our biggest value propositions because you'll have some vendors that want to have their own ecosystem. Like the only way you can get this, you know, really great experience is if you use all of my tools. But again, was looking all the data, what we've learned is the best website provider, isn't necessarily a best chat tool provider, isn't necessarily the best digital retailing provider, and probably doesn't build the best CRM. A dealer wants the best of every category. And that constantly changes. So it's getting all of the data to work together. What do you think about this trend of the leading Sir Automotive, you know, software and services companies integrating lots of different software under, you know, one umbrella, right?
CDK, cars, commerce, Cox, I am an investor in cars commerce. I really believe in Alex's vision and what the team over there is building for the industry and frankly, their tools. But I'm curious to know how you think about that, right? Putting everything together under one umbrella with, you know, as I alluded to, right? Creating an experience that's connected. That's ultimately, it's easier for people to buy a car. It's easier for a dealer to sell a car, which is all.
So there's two ways to do it, right? There is a way of saying that we're going to continue to invest in this umbrella and we want the value of that suite to be the best for the dealership, right? And two ways to do it. You can forcefully push that down that all of these integrations are only going to happen if you check all of Oxes of me as this big technology firm or you can say, we're going to continue to invest and build and buy companies to have this vision of, you know, a suite of products. And I do think if there's something better out there for the dealership that will integrate, right? Yeah, we'll connect with that tool. It should make them better because if dealers are saying that, hey, you know, and Alex I've known for, you know, over 20 years and that makes you build a phenomenal vision of having this integrated stack. It makes you better if you find tools that you've invested in that maybe aren't best in class that dealers are selecting to use. Okay, we need to get better in this specific area. So I think that dealers always want the best in class for every product that they bought. And as that connected network can ultimately reach that vision, which a lot of big companies have been working and spent a lot of money for a really long time on this utopian vision. If that can eventually get there, I think it'll be what's best for the dealer. Right now, I think everybody has a lot of work to do.
And I think more open source is the best way to create the best products for a dealer. First, so you're clearly the expert here to be clear. I think where I agree with you, I think the I green concept. The one thing where I partially disagree is you look at a company that kind of put everything together like Carvana, right? I use that as an example because they do have a great mousetrap. And I think that even if certain elements are maybe subpar to, you know, another service that's out there in the market, I think the fact of having everything integrated, the net benefit of that is so substantial that I would almost be willing to live with, you know, a chat tool. That's a, you know, not as great or whatever, because I know everything was done for me kind of seamlessly. I didn't have to, you know, click through so many different tools, websites and whatnot. But I totally agree with you. Like it needs to, and if you don't have such a substantial, you know, increase in the customer experience of having everything be together, then it, the trade off might not be worth it. Yeah, it's, it's definitely a utopian vision that on paper makes a lot of sense. And even if, you know, Cox and cars.com, you know, can't get to that perfect utopian. I still think what they're building for dealers that see value and it adds a lot of, you know, value on, you know, having everything in a single stack and being integrated. It's really tough to do when you're a dealer group, you've got multiple franchises and you've got, you know, different, different ways of doing business. You know, some dealer groups are going to more centralized, you know, mandated tools across the board. Other dealer groups still say, like my GM is going to be the best for this specific manufacturer to know which tools are working best. So there's a lot of components at play that may, you know, single stack tech service for a dealership, you know, you know, very hard to kind of achieve that, that utopia.
I think my favorite, my favorite question to always ask is, you know, who's your customer and how do you make money? Yeah. So, you know, our customer is three, three, you know, the three, like, it's still the dealer, the manufacturer and the technology vendor marketplace, right? And we have to have, and we do have a value proposition for each one of those, right?
We make money because we do something that's very difficult, right? Building enterprise software is very boring. It's not some flashy consumer facing widget that, you know, gets all the attention. It is having thousands of integrations with manufacturers, these technologies, enders, dealers, et cetera, that there's nothing real sexy about it until you start to realize what it can do.
And bringing all this data together can make that whole technology vendor marketplace that ultimately services the dealership better and more efficient. And we're seeing that now with kind of our shift 2.0, you know, first party data engine, where we're able to take customers that are shopping on brand website, right? That dealership would never have access to and be able to create an audience and push that to that dealer in their local market, right? So if somebody goes to, you know, brand website dot com as a dealer, I don't know that. They're in my market and they're shopping for a vehicle that I have in inventory. Using all this data and these connections together, you can add value to the dealership and something they could never get from an individual vendor.
So that's the goal is all three, you know, create value propositions for. And yeah, the way we make money is by providing value. I mean, if you know automotive, we go through very rigorous automotive purchasing protocol where it's typically triple bid and, you know, we have to, you know, compete on value, our innovation, constant innovation. Nothing's ever stagnant and, you know, show that we're the best in the industry. And it's worked so far. We've got, you know, 80% of the automotive industry is as clients and, you know, we work directly or indirectly with about 16,000 franchise dealers today. It's incredible.
It seems to me like you, you are almost like a, you know, a digital auction. I could sit, not, you know, actually an auction, but it's incredible how, you know, you have sort of, you know, centralized this, you know, just trusted source able to provide the software to dealers able to help the OEMs vet. And, you know, something that you wouldn't even think exists until you have this conversation.
And so on that, on that topic, you know, what does for people that say like, hey, direct to consumer, right? Like let, you know, let the OEMs, let the car manufacturers sell vehicles directly. What's your, what's your take on that? Like what is the risk with that kind of model, right? Because even right now maybe OEMs are not selling vehicles directly, but they are, you're obviously vetting the software for them indirectly. So what does that world look like? You know, what is the risk associated with that type of model?
You know, obviously the big buzz word is customer experience, which is such a broad, you know, term, but something that that we think has come out of this perception that Tesla created a better customer experience by, you know, selling directly. And when you pull that apart is, you know, what was it? Was it the product? Was the, the experience of Tesla had a dealer network where they have been just as successful. And I think that it was the perceived experience, right? When you buy a Tesla today, it, you don't just click a button and it shows up at your house, right? There are phone calls, there's going to their retail outlet, there's paperwork that you have to sign. It's still such a very complicated transaction that happens.
And I think that the vendor community has saw that as that's where we need to get to. And the only way to get there and we're making a ton of strides in doing it is manufacture and dealer trust in creating that experience. And that trust includes sharing data, not just capturing data from the dealer and the manufacturing use it, but pushing data from the manufacturer down to create this experience. And I think we'll see we have some, you know, integrative programs that are launching that still give dealers choice in digital retailing and has a shared experience on. Brand site.
And so that, any perfect deal that you generate, right, goes down to the dealer and the dealer is still the one in control of the pricing, selling all their after sales and aftermarket products and financing and control and that. So the partnership and having that trust together is going to be the competitive advantage to leads to that same experience for the customer as DTC has today.
Do you think it's still DTC truly or is it sort of like that perceived consumer experience? I think it's the perceived consumer experience that the franchise and OEM model to get to that rivals, that direct consumer perceived experience.
I think that one of the things that, you know, and we're going to see it, right, and we're seeing it right now is part of direct consumer ease with Tesla and Rivian is that there was way more demand. And there was supply. And that is starting to show cracks, right? If you're Tesla, what kind of cracks? What do you say that? What kind of cracks? You don't have a franchise dealer network, right?
Franchise dealers and entrepreneurs know their market better than anybody. And they know how to price a vehicle, how to price a trade-in and how to, you know, incentivize the customer to go through and that transaction. I think a challenge is it's your direct consumer and you've got one price, right? If you're not moving those vehicles, you have to drop that price across the board. You might not need to have dropped it in California, right? That is very interesting. But you maybe needed to drop it in, you know, Wisconsin because, you know, the battery range was not getting what it did in the winter in California. That is extremely interesting.
And you're saying, and you know, my just common sense tells me that you can't, as an OEM, you can't regionally kind of segregate pricing because that's probably goes against like FTC regulations and whatnot. But as a dealer, you could discount the car locally. Oh, totally, right? I mean, again, dealers know that, okay, I need to move this car. It's been on my lot. They are entrepreneurs. They know their market better than everybody. They know that if they get that car out the marketplace, they've got, you know, a good relationship to customer, get them back in service and, you know, they want to continue to get more units in operation in their market to feed fixed operations and see the business. So nobody can do that better than the entrepreneur, which is that franchise dealer that's in their market.
Have you seen any dealers like harness the power of organic social media very, very well from a business to, you know, to generate business? I think that, you know, probably one of the biggest untapped resources that a dealership has is taking a step back from just advertising and leveraging the personality of the owner operator of that store. There's so many phenomenal operators that are out there.
And I think it's similar to you in what you did on X on having something that's relevant to say to your audience. You know, a general manager at a store that, you know, knows their local market, they might be better served, right? Having, you know, getting active on X, getting active on different social media channels to really talk about what they're doing in their community and, you know, how they make a difference. And, you know, leveraging testimonials and whatnot through people, right? But it's a big leap for a lot of people, right? A lot of people don't like to put themselves out there. They stand behind the dealership. It's quite honestly, it's what we did in shift. We stood behind the brands that we were servicing and never really got out and had our own voice out in marketplace. So I think that there are some very vocal progressive dealers that have a lot of great things in their community to talk about that.
If they took that leap, they would see, you know, phenomenal results and how the brand is perceived locally. Yeah, I had Rick, I had Rick Reicard on the podcast a month or two ago. He does a pretty nice job on YouTube. I was pretty impressed. Just, you know, creative stuff. But I do agree with you, like organic. It's so powerful. Like I see it every day. People DM me, you know, like, Hey, I want to buy a car from you. Like, nope, can't help you. Like, this is, you know, this is a very focused here.
And I think part of the ethos of car dealership guy that I've sort of developed is I want to actually benefit, you know, everyone, not like one specific, you know, dealership or dealer group. Hence why I do these things that, you know, kind of, you know, help just lift all the dealers, not, you know, just myself or anything like that.
But it is, it is very powerful when you, when you provide entertainment or like educational content or both, or you do, you know, combine to provide entertainment. And educational content in one. It's pretty, it's pretty crazy how it works.
I'll tell you a funny story. I tweeted about Buick's, you may have seen this like, it was in the beginning of the year. I think it was January, February, I tweeted and I was like, there was a stat that Buick's are, you know, crazy day supply. So just me putting like my personality on it. I, I, and we'll pull it up on the screen here. Johnny, the producer can, you know, show up on the screen as I'm saying this. But I was like, you know, Buick's are so, you know, you know, XX day supply. They're, they're rotting on Carlos, like trash. You can score a deal on one if you're not embarrassed to be seen driving in a buke. And it was, it was meant to be like a joke, but the thing went viral. I think it did like 3 million impressions. And I had people, people sending me messages like I'm going to buy a Buick. I'm going to buy a Buick. And it was just a combination of delivering a real insight, which is that there was an oversupply of Buicks relative to demand. And adding the entertainment factor, which was, you know, it was, it was pretty like provocative kind of somewhat sarcastic, but it worked very, very well.
So I just can't recommend it enough to your point, just kind of putting yourself out there. Whatever platform also feels most natural to you, you know, to me, X felt most natural because I, I like writing and kind of piecing my thoughts together and whatnot. I'm less of a, you know, video person. But I do see lots of salespeople and stuff and other dealers that are more active on TikTok and these other platforms. And so I think, you know, to your point, it's very, it's just still a great opportunity. If you can put yourself out there, not be embarrassed, scared, and, you know, see kind of what works with the audience.
I think, you know, one of the benefits I have in this community that I'm in is, you know, when I want to buy a car, I know so many dealer owners, right, that I can shoot attacks to or, you know, Ensky, they better give you a good deal or the price goes up. The reality is, I don't know if I'm getting a good deal or not, but just having that direct link where they're like, here's my trade. And they're like, okay, here's the value for it. Now, I'll be honest, like I did send a car to like two different really close friends of mine and the value difference is about a $10,000 difference on the trade it, right? But for me, it's, if you could expand that experience to your entire customer base, now not that a dealer principal is going to respond to every customer. But if I'm a dealership and I'm out there and it does build that trust, boy, that's such an advantage. And quite honestly, people probably pay a little bit more money if they have that trust relationship. So many dealers do such a great job in doing it. I think social and putting them out themselves out there personally is probably a good medium for them to explore.
What does the world look like if Shift Digital didn't exist? There's a power struggle between fenders that get really, really, really big and new innovative companies that can't break in to that world. Right? If you think about it, right, you talk about cars.com and, you know, hacks automotive, they can get an audience with any manufacturer for the most part, right? And talk about vision and, you know, how they benefit, you know, dealers in the manufacturer. But full path or or be or, you know, these startups that are truly, truly innovating, you know how hard it is for them to get audience at a manufacturer. I think that what we've been able to do is create a voice for innovation that not only helps that entrepreneur, but if they had to think about starting a company and didn't go into a network like Shift, where we've got distribution built in, if they have a good product, I've got a higher salespeople. I've got a higher dealer support people. I've got to invest all of this, you know, in a market today, which money is really, really, really hard to come by, hard to get inexpensive. I think we provide that value for innovation. And I also think bringing those options into the app stores, the certified programs that we create, push the big ones to do better.
So I think if we work with distribution, the distribution, it's all about distribution. If we did not exist, I think that the dealer ultimately would not have as much innovation that they see in best end and get a lot of benefit. Prices rise and prices rise, right?
Tell me more about, I'm curious when you think about just the change in technology, a dealership's AI. I'm going to have to assume you're in the forefront of this.
In some extent, are you seeing anything actually work that's changing the dealership experience, anything on the AI front?
在某种程度上,你是否看到有什么真正有效的事物正在改变经销商体验,例如在人工智能领域有任何进展吗?
Yeah. I mean, look, everybody's going to say they use machine learning and AI and all the book buzzwords that are out there. I think for us at the enterprise level, it's very bad. It was like 2023 hit. It was 2023 started and everyone's website updated. Right.
Exactly. We're all AI and look, AI is built into a lot of developer tools that a lot of companies use. So it's easy to say that you use it. What are you using it for?
From our standpoint, we're looking at billions of interactions and engagements on brand and dealer websites every month. How do you take all that data and make sense out of it into customer journey, attribution, spending extra amount of dollars over here? What am I bringing to my dealer website? How are they performing? You have to use AI to be able to make sense out of that massive amount of data.
I do think what's going to be interesting to follow is on the consumer engagement side of AI. There's a lot of companies out there like Stella AI that are training AI models to interact with the customer. One of the biggest challenges in a dealership is labor, staffing, fixed-top service department. If you've ever called a dealership to take it into service, it can be a very mixed experience that you have. So I'm really curious to see how that continues to evolve. Do I mind if I call a dealership and I get some voice activated AI that sounds like a human that walks me through a list? If it is easier, if I'm not getting transferred three times or the call being dropped which happens all the time, then I think it can be a very efficient tool for dealers to use. Then we'll see how that translates over onto the sales side.
We've had a lot of companies that have built out AI chatbots and engagement. I still think it has ways to go because one of the biggest challenges with AI chat GBT and whatnot is the context of your business. I'll give one quick example. I'm a chat bot and I'm integrated into a dealer website. I really hope that if the customer asks, is this the best dealership for me or that it doesn't come back with a response? I've seen this that says, here are the ratings of other dealerships in your area that are rated higher than this dealership. Or somebody goes to a Chevy chatbot and says, is this the right truck for me? Is it the best in what I'm looking to do? Well, the Ford F-150 has higher towing capacity. You've got to contextualize it.
Yeah, that's interesting though. One could make the argument that it's almost too honest. What I mean by that is you're trying to obviously sell your product and then you're selling a competitor's product on the way. You have to be cognizant of that. Knowing that if you go to a chat GBT and you ask it a question, it's going to be very unbiased, I think, and what it gives you a response. But that might not be what you're trying to do in highlighting all the benefits about your dealership and your product. But the evolution of it is happening every second of every day. So I do think that it's going to be a big part of dealers and it's going to be productized for dealers in a way that works for their businesses.
How do you think just the general dealership technological landscape evolves here over the next five years? I mean, getting down to the very tactical level, what do you think for dealers and consumers alike? How does this entire car buying experience change?
Look, I think dealers have access to a tremendous amount of data. And this whole notion of creating a customer data platform, CDP, first party data, I think has a lot of likes. The challenges in doing so are how do I get the data out of my DMS, my CRM, all my marketing tools, my website, etc. to be normalized and be useful. Once that happens and it is happening today and it's something that we're focusing a lot of time, effort and energy on is the integrations. You use that centralized data that is the dealer's lifeblood to make your email marketing better, to understand that if I send out customers here, these are the people that engage to make my advertising better, to make my service engagements better. But that is the hub for dealers and OEMs to really empower the technology landscape and all the providers that are out there. That's when I say open source, it is built around the brand and the dealer's data to empower and make better the technology tools to plug in. I still think we have a long way to go in getting all the players to work together and having bi-directional APIs to get to that vision. But I don't think we're far off.
Yeah, I mean, I think that we're always under pressure to constantly innovate. If I look at Shift 1.0, how do we take all these disparate areas of data that live in so many different areas and make it make sense and be actionable for users that want to understand something about their business in real time? Shift 2.0 is now I've got access to all this data. How do I make that data actionable for the dealer to support them in a way that helps them grow their business? There's a lot of nuances around that. We're always in the business that a dealer's data is their data and we can only use that data to make sure that we're helping them in their market.
And so we do that currently right now through a lot of practice reports and here's what's working, what's not. I think that that's going to be the future of Shift is enabling the dealers to handle all these integrations to make their engagements with customers beyond the best in the business. And to be able to actually leverage all this data that we're all collecting and it's a tough task to actually put it to work. It is. It is. And dealers get, they start to look at their part statements and their vendor bills and they can get software to debt. So where do you start to break out where maybe I don't need to spend money or I don't need this tool that I've been paying for for three years and really not utilize. You see that all the time. Right. How do you take that whole invoice you get and say data is going to make me less reliant on these four things. So I don't need to spend money there.
Well, you built a fascinating company, my friend. So super impressive. Appreciate you coming on. And if anyone wants to learn more about your Shift Digital, where can they go to learn more about you? Yeah. You know, obviously, Shift Digital.com. We make ourselves very available to dealers, OEM, clients, et cetera. You know, we're expanding into different verticals have done so into power sports and mortgage and other areas as well. But we try to be always accessible. We love to talk to dealers. So, oh, that's interesting. You're expanding to actually other industries. We are. Yes. So we've been in the power sports business. Any time there is a large brand that has franchise dealers or locations that are out there, we do work in hospitality. Power Sports is the easy entree. Right. Harley Davidson is a great client. Balleris is. And then we're looking at other verticals as well, like mortgages. You've got tens of thousands of brokers. Some of these really big wholesale providers like UWM and Rocket Mortgage. How do you turn 10,000 brokers into digital experts in their own local market? So, yeah, lots of fun things on that horizon, but our core focus is automotive and that's where we continue to innovate and see where it takes us.
Well, I appreciate you for following and supporting CDG. So I love to hear that. And I'm excited to see what you build to feel things are coming on. Yeah. Yeah. Really looking forward to continuing to see what you put out there and wish you all the best in the world and you're doing a great thing. And to your point, hopefully others take you as a role model and say, I don't need to do this nationwide, but maybe I can do it in my local market and make a difference. So be careful what you wish for.
Great. This is a, it's been a crazy foray, man. Just doing this stuff. There's a lot of upside to it. There's a lot of downside. Just like everything. But, net net, it's great. I definitely love it. Well, thanks for having me and look forward to seeing what you do in the future. Appreciate it. Alright. Hope you enjoyed that episode. Please give the podcast a rating. Consider subscribing to the show and check the show notes for links to what we talked about. Thanks for tuning in. I'll see you guys next time.