ACV Dealer TEC Talks: NADA 2023 Featuring Kraig Quisenberry from ACV and Robert Grill

June 9, 2023

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ACV Dealer TEC Talks: NADA 2023 Featuring Kraig Quisenberry from ACV and Robert Grill

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Summary: 

Kraig Quisenberry, of ACV, speaks with Bob Grill from CARFAX at the NADA 2023 event. The discussion emphasizes the importance of focusing on the needs of dealers and consumers within the dealer community. Quisenberry highlights the significance of providing perspectives that address the requirements of dealers and consumers, rather than solely promoting specific products or solutions. The discussion touches on CARFAX's history and its evolution from fax-based reports to comprehensive vehicle history data. They discuss the consumer journey, the role of data in the buying process, and the changing expectations of millennials in the market. They emphasize the importance of transparency, accurate pricing, and creating a personalized buying experience. They also discuss trade capture trends, the impact of disruption on the retail transaction, and the need for dealers to adapt and maintain a personal touch in their interactions with consumers.

Interview:

Kraig Quisenberry: We are all here at NADA 2023. It's awesome to be here. Good to be back. Here at ACV, we decided to do something a little different. Many of you heard Randy Barone, an amazing speaker, Doug Hadden, a wealth of knowledge. But all of this starts honestly with the dealers. That's what NADA is all about, the dealers, and the dealer community. And I thought it would be interesting to get perspectives that are not specific to ACV, not that are specific to our products or solutions, but specific to answer the needs of the dealer today. And more specifically, the consumer…the person who actually is buying the cars or servicing the cars in our dealerships across the country.

I invited someone who is a wealth of knowledge and a very, very good friend of mine, Bob Grill with CARFAX. I know it because I was with CARFAZ when fax was actually still a thing. Fax machines. You were faxing things to anybody. If you needed to do anything, you had to have them. And so, CARFAX has been around a long time. How long has Carfax been around?

Robert Grill: Since the eighties.

KQ: Early eighties, was it?

RG: Yeah, the early eighties. It started out in Missouri with an MB employee. He started the company when he realized that consumers were buying cars and knowing literally nothing about them. And in the beginning, the proverbial bad CARFAX was just that it was for branded titles. That was the main.

KQ: Right. 

RG: Branded titles. And it was a fax. That's right.

KQ: Yep. It was, but it was fax. It was just literally it was a fax. I forgot about that.

RG: You didn't have to roll it out then. But it was.

KQ: And back then back, I know we're going way back. Back then there was no data. You had data on the car, but there was no real data gathering.

RG: No, it was pretty much a state-level record. It was strictly branded. Right. But then people started doing the ODO stuff in the big ones. All the bad carpet. Now, anything's a bad blemish is a bad–

KQ: Carpet. Any mark on there? Any discrepancy? If they misread it. This talk is gonna be about the consumer journey because as a dealer, and I'm a former major dealer, with many different groups, this talk or session that we're gonna discuss, it's about your consumers. About what do they go through. So with CARFAX today, moving past the fax machine, how many, if you know, these aren't curveball questions, but roughly a car on a dealer's lot, how many car faxes are pulled on a VIN on a dealer's lot, roughly?

RG: That depends on how you look at it, right? When they're acquiring vehicles, as you know, most of the dealers have an unlimited program. They go on your product, for example, and they pull 'em off. Yes. They pull 'em off on the lot. They keep one when they originally buy it. So they know how to talk to the consumer. But things change, right? We get 7 million new data points a day. So if a vehicle's on a dealer's lot for more than even a week, something take, maybe it's their own records, right? Like maybe they serviced it, they provide us that, you know what I mean? So on about 10, eight to 10, during the lifetime of the car actually for sale on the–

KQ: –If you're a dealer and you're listening,I just want you to think about this. Because that to me is fascinating. So every VIN, every parking space, we'll use parking spaces. I like those though. Every parking space is having a CARFAX pulled eight to 10 times before the transaction.

RG: Now that's just the dealers. So when you think of the consumers that pull in, right? It’s 7 billion that get pulled by consumers. 

KQ: 7 billion.

RG: Yep. So that number is all over the place. The dealers pull eight to 10 during the lifetime of the vehicle on the lot. Wow. Consumers could be thousands. Wow.

KQ: Wow. Significant influence in buying decision. Obviously today, digital age, everything is digital. The consumer's journey or experience. What are you guys seeing? I mean, you have lots of data, and some of it you can probably share. Some you don't. What are you seeing in the whole funnel of this process of consumers at home and they start shopping and then what do you guys see happen after that?

RG: The interesting thing is that with millennials now being 70% of the buying public, right? They brought something brand new to the experience. 50 years ago, it was how much is the car? How much is my down payment? What's my payment? What's like trade four square? We all did it for 50 years, but now the millennials bring future costs to the table. So, hey, that's a really great deal. What's it gonna cost once I drive it home? So they wanna know the best predictor of the future is to pass. They wanna know if it was taken care of. Was it in an accident? Yep. Was it from Buffalo like me or is it from Phoenix? All those things matter. 

So today, if you think of it this way, dealers as we were, we get in a rush, right? We, 12 years ago, it was photos, photos, photos. Well, today there's so much information that the consumer actually gets frustrated. Their number one frustration part is that we don't tell 'em anything. If you think about it, try and name a car today that doesn't have power as car locks. Tilt and cruise, can you name them?

KQ: Yeah. 1976 Chevy–

RG: Monza. And no one's got it, but the one for sale.

KQ: Right? No, they've got everything. Well, almost.

RG: Almost every single dealer's listing and what's it say? Parwin par. Now they have the window stickers with them. Car lock. Got that. When you go right below the description is the listing of standard equipment. Now on average, they got 27 photos. Do you know what the photos are of? Power windows, car lock, you've literally told the consumer four

KQ: Times. Yeah. Four–

RG: Times what they already knew. And so it's frustrating with them. Everyone's beautiful online. Their number one frustration point is they can't tell the difference. Anyone can call a car certified. Everyone's got beautiful photos. They all have windows locks, cruising.

KQ: Right?

RG: That's the change in the journey. That's why dealers today, you'll talk to any dealer and they're telling you, our traffic's down, our effectiveness is down our dollar, our road. That's because they're starting off to talk the way these consumers want to be talked to. The information's changed and it is what it is, 70% of the buy.

KQ: Again, that's something many of you obviously may know that. But what you're saying is the data or the consumer-facing position of data for the current buying generation? Because honestly, I figure you gotta do an oil change. I'll be really disappointed when I get an electric car. 

RG: Yeah, I know.

KQ: I just bought my daughter her first car for a first official job. Very excited about that. All online. Went through one of our dealer partners…just in case you're a dealer out there. I did choose a dealer partner, but I did it all online and I did pull a CARFAX. It's free, free is a good price. I looked at the whole thing and was shocked the whole thing online. That's what you're seeing. Are you seeing that affect price? Like the price of the price?

RG: Now here's the thing, right? As we all went through the last two and a half have helped in the inventory and all those things that you helped with, but as a dealer, you gotta maximize your opportunities. You gotta know when I can ask more, when I should be all that's more important than it ever has been before. You know, it's starting to lighten up a little bit, but being able to get whatever you want whenever you want. Not yet. We're not back there yet. 

When I have something, what do I have? We talk about market price versus vehicle price, right? So is it important to know the market a hundred percent, right? That's, that's one piece of it. So the arbitrary mark, whatever vehicle it is, you have to market or be 98% aggressive or 102% profit that don't even make sense to market a one.

Every VIN is a fingerprint. No two are the same. Right? So when you take into that future cost, that's what the consumer's looking for. What do I have to gimme confidence in the car? Everyone's damn near price the same to market price. So that isn't a deterrent. The photos, I would say all the descriptions. I would say if you go to any major metro now today and you go online as to how many cars are available for sale on the major, the gurus, the cars. It's 50,000 to 60,000 within 50 miles of any major metro. We're all sitting here going, there's no cars. There are no cars. But what really, what will you forget is one-third of our cars sold are by people, not by dealers. Right? One-third of all them.

If you're a consumer, and I encourage you to do this. Go to trader cars in Guru. See how many on average are within 50 miles a year dealership. And if you're major metro, it's 50,000 plus on average. Wow. So if you're a consumer, that's overwhelming. We get used to it. We're like, oh no, look at that one. To them it's overwhelming. So they're looking for why should I pick this one? Right. What makes a difference with this one? 

And if you're a consumer and you kind of go by price, but they're kind of all price the same. Think about this, a three-year-old car, the same year, make model miles if they're all within 1200 bucks Some that don't tell you anything. And then when you look at the listings and they're all the same, and you'll at the photo, you've seen my point. So what dealers that are hitting it right now are recognizing and changing their description from Windows Lock still through there into this one is priced above market because, or this one's priced below market because,

KQ: So being transparent about their pricing.

RG: Well–

KQ: Here's not just pricing the car transparently, but actually saying, this is why I'm pricing it.

RG: And here's why. Cause we use transparent way too much, if you let the internet do what it can do best, let it find the right buyer for your car. You want a hundred leads or 10 people at the door. You do the math.  Leads are expensive to work 'em, to do 'em. Just the way we did it, it's the way always do it. Here's nutrition. 

But if you let the internet do what it can do, find the right buyer, that person shows up. They understood the value of why you price it the way you price. Unless you screw that up when they show up, that should be a car deal. That's the difference. The dealers that have become more efficient during covid and they had fewer people, less inventory, less money, but need to be more profitable, they're becoming more efficient. They're letting their tools do what their tools can do for them instead of trying to control the tools, let the tools do what they can do. 

Your tools are a perfect example. Right. If let how many of them maximize the tool and how many just use the same two things they always look at Right. Right. Use the tools for what the tools can do for you. Right.

KQ: You are right. As everybody probably knows, we have a strategic partnership with CARFAX. And the other reporting company. You allow us in our True 360 inspections to validate or verify the data, verify that that is correct. And if it's incorrect, allow us, which is awesome of your company to do this, allow us the privilege to change that. With very, very well-trained, extensive professional inspectors that are certified to do this. That's really cool. 

So what, one of the things that, as I think about that, when I think about series three 16, I think about CARFAX all. Do you think, and we haven't talked about this, but do you think today, based off what you said, the SRP is more important than the VDP. In other words, just to clarify, standard retail page, which is the landing page when you're looking at cars versus a vehicle details page, which is when you're looking at one car, you drove all the way in. Are you seeing people, this generation right? The buyers today, are they living more on the SRP?

RG: Yes. Yeah. So the proverbial clickthrough rate and all those things we used to measure. Yeah. Look at it this way. If you had a lot of traffic, your traffic's good, but you're not selling the cars. Is that a good job or a bad job?

KQ: You're not selling. So if you're not selling cars, it's a bad job. It doesn't matter if you're a dealer, if you don't have as much traffic and you're selling more cars, is that a good job or a bad job? 

KQ: That's a word called efficiency. 

RG: Which pays better, right?

KQ: Yeah. A whole lot better.

RG: That's the difference, being able again. What does a hundred BDPs if one person showed up and bought a car, right? You have 10 employees who have to work those hundreds. That's not very efficient. To answer your question without question. Yes. The SRP is becoming more important but less effective for clickthrough rate because they're not gonna click through.

KQ: They don't click through.

RG: They don't bother. It looks the same. That's, you know, there, there's nothing to draw their attention.

KQ: Sorry to interrupt. Then the buying, the buying experience for the consumer, it should be available on VDP, but it really should start on the SRP. Rather than trying to funnel your customers down to a bucket to get to, I'm gonna buy this car online and execute, it really should be available to them way earlier in the cycle. Step one. Interesting.

I would not have known that or even thought about that. So what other things are you seeing at partner? We've got a lot of dealers here, obviously almost all the dealers in the nation anyway. What other things are you seeing that are influential that dealers need to know?

RG: We buy your car. Right. So if you think about it, tradition history, lineage, however you wanna look at it, the consumer only knew the dealer could be the negotiator. They knew they weren't any good at it, but they went anyway and did what they did for four hours. Well now when you make them the seller, they're very uncomfortable. 

KQ: I can see that.

RG: So now you're asking them to reverse the roles and they know they're going up against experts. It's a very intimidating thing to have to do now as dealers didn't have inventory and dealers can pay a lot of money and all that happened, it was exciting. A lot of people dumped their cars cause the market's hot, but they experience the dealers that maximize it, and realize quickly to take the salespeople out of the equation. Because it's an acquisition conversation, not a sales conversation. And a salesperson's an eight trade. What you pay them for is to turn an opportunity into a sale, not the right connection for turning an opportunity in the inventory. 

KQ: You're saying a whole different approach, whole different team, not even a different mindset.

RG: Yeah. Not a little different. Completely. And the dealers that learn that recognize it, were willing to adopt. They kill it. The dealers that have the salesman with the donuts and they don’t fly anymore.

KQ: They don't fly anywhere. So, in CARFAX, you have the ability to provide dealers the ability to connect with their customers to buy a car from consumers that want to sell.

RG: Here's the thing, right? We have a product, you know, we have a history-based value too. We take, unlike everything else, which is year, make, model, miles, we go the next level for the historical elements. When we are communicating with the consumer, we're the consumer company. That's who we are. What we try to do, and nothing's a perfect science, is try to set up a realistic expectation. So when they do show up, you can print up what they looked at and it's a realistic expectation. 

You know, you can drive more traffic if you play with the numbers, but it's a lot of work when they get there. It's frustration, all those things. So when, if we're gonna talk to the consumers, which is what we do, we're gonna set up a realistic expectation between the dealer and the consumer. And you know, when we talk to the consumer there is, we do have an advantage because we don't sell 'em anything. So they listen, they take our advice.

KQ: Your third-party independent data.

RG: That's exactly right. So how they handle those leads, again, if you're just taking that traffic, putting it through your standard BDC, going through the standard funnel, going through the standard salespeople And you go, well those buyers aren't real well, they were. Sellers were. You know, you gotta pay attention to the details, you gotta make the adjustments. Most importantly, you need to stay on offense. 

KQ: In an important metric, and I don't know if you guys are seeing this, we are, because we have a product called Drivably, that you can do consumers, dealers can empower their ability to acquire cars from consumers in a very good transparent process. But what we are seeing in this, and I don't even know if you know this number, we've been studying trade capture. We've been looking at the trade capture nationally. I talked to a lot of dealers nationally. And what we're seeing is a lot of new car dealers A lot of franchise dealers are seeing fewer trades captured. We're seeing 'em start in the beginning of the transaction. We're seeing 'em in the CRM, we're seeing 'em in the beginning of it. Maybe they're ordering a car or maybe they're just waiting to come in, but the car disappears somewhere else. 

RG: That's right.

KQ: And that number roughly, so normal trade capture, during our challenging COVID times around 42% according to our metrics. But now it's running around 31 to 33%. So roughly a third of the trades are going elsewhere.

RG: You know, it's the same thing about the lease return. You talked to dealer and elsewhere. Consumers are just keeping the cars and getting the cars. They're not, no, they're not. Where's selling the thing is, the aggressive dealers out there got a hold of the list. Don't turn that in. We'll give you two grand more for it. I don't care what it says. And so in order to do that, the owner has to buy it. Consume the lease, but then they turn around and so they still need a car, they just don't talk to you anymore cause you didn't, you know what I mean? 

KQ: But you're not part of the conversation. You're not part of the conversation. And so, I wanna kind of bring this to some closure, especially for dealers. Cause you've been great to hang out this long. So that's disruption.

RG: Yeah.

KQ: I mean by any other, any other word. That's disruption. We're changing the journey where the consumer is now having options to change the retail transaction. If they're changing the retail transaction that's affecting dealers.

RG: And as dealers, were slow to change. 

KQ: It's slow to catch up. I think I used to think of slow to change, but I think we're trying to catch up and always happens for a while. So with that in mind, with that disruption happening, what things, from a CARFAX perspective, what would you tell our dealers?

RG: Yeah.

KQ: One or two, three things that they should absolutely do. You're here, we're all going home Monday. What should you start doing? What should you and your teams do Monday? How would you execute Tuesday? What would you say? 

RG: I'd say quickly concentrate on the numbers and concentrate more on the transaction. Put the personality back into it. Keep it as, as levity as you can make, understand the pressure. I'm the consumer. You're trying to sell a car and if you don't, you'll try again in five minutes. This is a big moment. And there's dealers, we forget it. They went through COVID too, you know, I mean, they're under trench too. They're in the same world we are. So you need to keep personality and levity in anything you do. Talking to the consumer. That's what they need. 

There's a study that just came out, I'm sure you already read it. Automotive Remarketing. In fact, it's in Automotive News about that starting to trend backward the total online purchase because dealers just will adopt. And so consumers, if they're in front of you, talk to you, they feel like you could have a conversation online. It's cold. The process is cold and calculated and leads to a conclusion. They feel that as a consumer. So enter your levity back into it. Put a personality and have a conversation. Right. You know, let 'em buy from you rather than trying to sell 'em all the time. And that's the best advice I can give because that's what consumers tell us. 

KQ: You're getting that feedback. And what's interesting is at ACV as a company, we talk about this a lot. Real simple. People do. Business people they like first. I'm just telling you there is nothing that, and thanks for that. There is nothing that is better than a relationship. Success, trust, and transparency. Hundred percent. 

Well Bob, thank you. Thank you for this. This has been wonderful. Appreciate it. Hope you dealers appreciate it. We look forward to chatting with you again. Always a pleasure. Thank you. 

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