With all of the focus that automotive advertising agencies are placing on the failings of TrueCar I was surprised that few people discussed the most glaring problem with their business model. They rely on either buying new customers using price as the key differentiator between dealers or paying for old ones enticed away from your showrooms with automotive advertising funds sourced from your fees.
The market has already conceded that third party leads are a distant second in value from customers that come directly to your facility or website and previous customers are the true low hanging fruit which should be picked by automotive advertising agencies before all others. Investing in building awareness and value in your dealership has a much more stable and proven ROI than selling vehicles as a commoditity as proposed by TrueCar. Frankly, the negative energy that surfaced about TrueCar was surrounding issues that can and likely will be resolved as evidenced by their recent accomodations to the Colorado AG office.
I anticipate that TrueCar will adjust their business model away from transaction fees to either lead fees or monthly marketing fees to overcome claims that they are operating as Brokers. References to invoice pricing on their site can be similarly eliminated where required and clearer language in their agreements concerning their access and use of sensitive DMS information can surely be adjusted to be more like other vendors that require similar data to power their solutions. Finally, Scott Painter will either temper his anti-dealer position to still the raging waters or prove his initial assertions that auto dealers and automotive advertising agencies no longer provide sufficient added value to customers to justify their existence; NOT LIKELY BASED ON MY RESPECT FOR THE ROLE THAT AUTO DEALERS PLAY IN THE SALES AND SERVICE PROCESS!
My answer to the conversation for and against TrueCar is to focus on customer satisfaction before, during and after the sales/service process for the reasons stated above. Price will always be an issue but people and product will always have a value for customers who want the best deal – which includes more than the lowest price.
The controversy regarding TrueCars Conquest sales strategy vs. other vendors providing Customer Retention based marketing plans has a clear winner; the one that focuses on customer satisfaction.
For example, internal database marketing platform solutions provided by vendors like DrivingLoyalty offer no risk to dealers concerned over protecting sensitive customer information sourced from their DMS. People like to do business with people that they know and like and solutions like DrivingLoyalty offer virtually automated sales processes to alert past, present and pending customers when they are inequity on their present vehicle, require service or simply want to know the value of their current vehicle or one they are considering.
Transparency is a word that TrueCar uses often as a unique added value that they provide to customers. However, I know of no more transparent message than one that includes the OTD price and payment for a similar vehicle to the one that you are driving just when you can trade up with little or no money down. Combine that with the added value of having a customer portal that provides updated information on your vehicle along with required service reminders and I find little reason to search for two strangers who want to do business with no vested interest in eachothers continued satisfaction with the transaction.