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It's been a great week for online car dealers raising capital, with Carvana announcing $450 million in equity financing and Vroom filing for a $100 million IPO. (Check out my articles for both Carvana and Vroom's transactions for an in-depth look). But what about brick and mortar dealerships? Most were shut down until mid April, when the federal government declared vehicle sales an essential business. However, this is just a recommendation, so each state has the discretion to be more conservative and keep them closed. This article will take a look at some of the marketing solutions that are helping auto dealerships connect with customers virtually.
Auto sales hit rock bottom at the end of March, but have actually been recovering for the past 6 weeks straight. A lot of bounce back can be attributed to unprecedented sales and financing incentives. Many dealerships are offering 0% APR loans for 72 months and deferring the first payment up to 6 months. 26% of the auto financings in April were some type of 0% interest rate loan.
The Current State of Dealership Marketing
Today, Cox Automotive is a market leader in dealer marketing software with solutions like Dealer.com for integrated digital marketing and HomeNet Marketing for digital merchandising. HGGC acquired and combined Dealer-FX and AutoAlert to create a leading platform for marketing and customer experience management. These solutions have been around for a long time, leaving room for newer point solutions to come in and address specific dealership pain points. These products need to work seamlessly with the dealership’s existing software suite and must add significant functionality.
Examples of Dealer Marketing Point Solutions
Omnichannel: Roadster and Modal. Helps dealerships build a continuous in-store and online buying experience by making key processes like viewing payment options and assessing trade-in values available online
Finance & Insurance: AutoFi and AutoPay. Allows customers to secure financing for a vehicle completely online from partner lenders before going to a dealership to complete the purchase
Video and Imaging: SpinCar and LESA. Takes 360 photos and videos of cars on the lot and adds them to all listing sites, enhancing dealers’ online presence
On-Demand Services: Wrench and Spiffy. Provides on-demand car servicing or car washes at the consumer's home
I think we're going to see continued investment and M&A in these value-added services, as these businesses will gain significant customer and operational synergies by joining a larger platform. The top acquirors will continue to be Cox Automotive and HGGC. I also think VC funds will keep flowing from firms like Madrona Ventures (invested in Wrench) and Propel Ventures (invested in Modal). Finally, look out for deals advised by Presidio and Vaquero, two of the top sell-side investment banks in automotive tech.
I had the chance to chat with Nick Kaptain, Co-Founder and CEO of Quotible about how Quotible helps dealerships make lead responses more meaningful and personal. Quotible is a lead response tool that responds to interested buyers originating from the dealer’s website and listing sites like AutoTrader, and engages them through text and email. The market standard today for lead response is a static e-mail generated by the CRM that has low user interactivity and low conversion. With a Quotible quote, the customer receives their personalized quote, clicks into it, and can interact with Quotible’s payment calculator, see coupons/rebates, and learn about the dealership. In the future, Quotible wants to be the go-to solution to handle all marketing communications for the dealership. Quotible welcomes integrations to other tools, and sees this as a great way to make the product more dynamic and sticky.
From catching up with Nick, I learned that the business has been holding up nicely amidst Covid. Nick says, “Quotible is actually a critical tool under current conditions. It is built for salespeople to interact with customers virtually and right now, salespeople have to rely on almost completely virtual methods to close deals.”
The Quotible team has taken advantage of shelter-in-place and used the extra time to build out many new product features, outpacing their previous product release timelines.
New Quotible Features
Multiple vehicle quotes in one message
Integrations with SpinCar and LESA, which show 360 images and videos of the car
Option to show taxes and other fees
Automated non-working hours response
Improved user interface
More robust reporting dashboards
Automated delivery of quotes based on VIN numbers, today quotes are sent manually
2-way direct text and chat with the salesperson (coming soon)
View CarFax reports (coming soon)
Overall, Quotible has proven to be a great tool to increase user engagement and conversion of online leads. Nick says, “Some dealers using the platform send out 2,000 quotes through Quotible per month. Visit percentages of users opening the personalized quote is 85%. On average, users visit the quote twice and spend 4 minutes interacting with it.”
However, Quotible still faces the same selling challenges that other auto softwares have. Auto dealers are notoriously slow to embrace new software, and find it difficult to justify the additional price tag. Furthermore, selling into dealerships is difficult because most dealerships act independently of one another, with each dealership’s General Manager being the ultimate decision maker. Today, Quotible uses a combination of resellers and a growing in-house sales team to sell the product.
Fun Founder Facts
Exercising in the Backyard with his trainer and kids is Nick’s favorite activity during shelter-in-place
Raku Japanese is a Las Vegas restaurant he highly recommends
Porsche SUVs are Nick’s favorite type of car
About the Founder
In 2002, Nick began a career working for one of the largest hospitality companies in Las Vegas, formerly known as The Light Group. In his early 20’s Nick held a management role for two nightlife venues as the Director of Marketing. In 2009, Nick had launched a software design & development company, Adlava LLC, in Las Vegas, NV. Adlava quickly became the largest software development company in the city with clients from various industries. A few of his clients include The City of Las Vegas, Treasure Island Hotel & Casino, Caesars Entertainment, & other local and national businesses. He got inspired to build a better lead response tool for auto dealerships, and co-founded Quotible in 2017.
About the Author
Bonnie Young runs the Amplified blog. She shares her insights on market trends and interviews founders that are shaking up the tech scene. Please reach out to her on LinkedIn with your questions and feedback. She is currently looking for a growth equity or VC role in the Bay Area.