DealerInspire Purchase by Cars.com Elicits Praise and Concern

This past week Cars.com announced their purchase of DealerInspire and Launch Digital to the surprise of many automotive dealers. The comments posted on my LinkedIn article were interesting to read and were a mix of praise and concern from members of the automotive community.

A number of comments congratulated Joe Chura and the accomplishments of the DealerInspire team. An equal number of positive comments were directed toward Alex Vetter and Cars.com's vision to incorporate DealerInspire's Online Shopper and Conversations Messaging Platform into their online marketplace.

There were also a number of comments that could be best summarized as doom-and gloom fortune telling: DealerInspire's days of innovation are over.

I am aware of the many high profile technology acquisitions that have not worked out well for dealers. I understand some of the pessimism but I am confident that the partnership will work out well because of the CEOs and the nimble executive team surrounding them.

Of course there were a number of "haters" that had nothing positive to say because it was Cars.com who purchased DealerInspire. Comments confirm that some automotive professionals hate all third-party platforms and wish they would go away. It surprises me that in an era where shopper data is readily available, members of the automotive community have failed to realize the strong attraction that platforms like Cars.com, CarGurus, and Autotrader.com have with consumers.

Dealers cannot afford to ignore third-party marketplaces

Learning From Past Acquisitions

I encourage the leadership at Cars.com to become a student of automotive history. Learn from past technology mergers by seeking council from members of the automotive community and executives involved in past technology mergers. Two cases come to mind, so let me illustrate what not to do with DealerInspire.

Number 1: DealerSocket Acquisition of DealerFire (DF) in 2015 - DealerFire websites were first recognized with an ASMA Award (now called AWA Awards) in 2009. The company became a hit with dealers as more people learned about their cutting-edge platform through the ASMA press releases, my personal advocacy, and great execution by the DF team.

Their websites had fresh, clean designs which inspired many of the web templates that we see today. Eric Hoopman, CEO of DealerFire, and his team were smart, innovative, and invested in website content, User Interface (UI) design, and SEO as differentiators.

I thought that DealerSocket could solve the dysfunctional data exchange between most automotive CRM platforms and website platforms used by franchise dealers. I also thought that the additional financial resources could help grow DealerFire to become a serious contender to Dealer.com and CDK Global because of the popularity of DealerSocket CRM.

After the merger, DealerFire became a ghost. My conversations with DealerFire developers, sales managers, and/or executives ended. The DF buzz seemed to quickly fade as changes to DealerFire's sales and support team structures were made. Eric Hoopman was no longer a visible advocate at conferences and some have said that he had other interests, outside of automotive, that could have hurt post-merger momentum.

While I can't confirm the truth of this story, I was told that DealerSocket believed that their CRM sales teams could also sell websites and digital marketing services. This type of thinking has sunk more than one product acquisition in the auto industry. It is not easy to sell websites and digital marketing services. Especially for people who have been mostly order takers with a captive audience.

Today, I don't hear DealerFire's name included in website platform decision-making calls from dealers seeking advice from me. The top-of-mind website platforms, outside of Dealer.com and CDK Global, are Dealer Inspire, Dealer eProcess, DealerOn, and fusionZONE. I can't recall the last time I came across new thought leadership, technology, or case studies published from DealerFire that would show a reinvigorated product team.

The missteps by DealerSocket, and DealerFire, made way for DealerInspire to become the darling of the auto industry.

What can Cars.com learn from DealerFire's history?

• Don't mess with the culture at DealerInspire. Until they no longer hit their sales objectives, let them do what they have shown they do best: innovate and serve dealers.
• Don't assume that Cars.com field sales teams can sell websites or integrated digital marketing services.
• Continue to have Joe Chura, Bruce Etzcorn, Allyn Hayne, and other DealerInspire leaders speak at conferences and push thought leadership in the automotive industry.
• Continue to allow DealerInspire to use video marketing as a way to convey the passion of their team and how they are changing the face of automotive retailing.

Number 2: Cox Automotive's Acquisition of VinSolutions in 2011 - VinSolutions was a rapidly growing company that was turning heads in the automotive industry with their CRM and website designs. Mike Dullea, Kendall Billman, Sean Stapleton and the VinSolutions teams were brazen and delivered amazing results for dealers.

Most dealers that heard Sean Stapleton speak about VinSolutions came away believers; he was that good. The VinSolutions sales team meeting, just hours before the start of NADA convention, orchestrated by Mike and Sean, is still one of my favorite motivational meeting experiences.

VinSolutions was 10 years ahead of the industry with integrated consumer website engagement tracking tied with CRM alerts with their VinLens technology. Dealers loved their websites and Matt Watson, VinSolutions CTO, was extremely visible on social media. I still smile when I think about Matt's social media strategy. He posted weekly on Twitter to inform dealers how many new features his team added to the platform.

The cultures at Cox Automotive and VinSolutions could not have been more different, but the merger promised to create synergies between Cox media platforms (Autotrader.com and KBB) and VinSolutions technology. Dealers we excited to hear the Cox product roadmap which promised greater data sharing, integration, and sales throughput.

I can't speak to all the challenges this merger faced but, in the end, the pace of VinSolutions CRM innovation came to a halt. For the most part, the core CRM software and website platforms remained the same for years. A botched switch to Haystak responsive websites further frustrated dealers. The successful VinSolutions management team was transitioned out of the organization and the once powerful VinSolutions culture was neutered.

Promised integrations were late to market and the buzz about VinSolutions technology faded. This gave rise to new CRM platforms (i.e. Drive Centric) as well as giving both DealerSocket and ELEAD CRM ample opportunity to conquest their customers.

Cox Automotive sales teams became fragmented. It was common to have three different representatives calling on a dealer with the right hand not knowing what the left hand was doing. Thankfully the Cox Automotive team has realized that dealers need a single point of contact that can competently talk about the entire Cox Automotive portfolio, but it has been a painful learning curve.

What can Cars.com learn from VinSolutions's history?

• Rethink and build new training and certification programs to create the next-generation of sales and support professionals under the Cars.com umbrella that can handle questions regarding all products. Understand that this process will take time so don't rush the process but have a goal in mind.
• Respect cultures and do all that you can to retain key talent that built DealerInspire.
• Document the current pace of DealerInspire innovations and use it as a guide to measure if innovation is significantly slowing.
• Get feedback from the existing DealerInspire customers over the next few years and ask if this merger is benefiting or frustrating them. Don't give the opportunity to competitors to point out your shortcomings to dealers.

There Is Always Room For Innovation

The DealerInspire story, like the VinSolutions and DealerFire stories, show that there is always room for innovation and disruption when companies rest on their laurels. DealerInspire rose to prominence because they delivered great customer service, innovative technology, and integrated digital marketing services.

There is also ample opportunities for redemption. DealerFire and VinSolutions could get their mojo back with dealers with the right decision-making in 2018. Cox Automotive has an amazing portfolio of products that just need the right spokespersons, customer support infrastructure, and a working integration of cross-platform data to power sales attribution.

I'm Optimistic About The Merger

The last acquisition completed by Cars.com was DealerRater. I love the way that they have integrated dealership and sales associate reviews into the Cars.com platform. The plans to integrate DealerInspire technology into Cars.com is ambitious.

However with the addition of two seasoned automotive professionals, Darren Haygood (Chief Revenue Officer) and Gregory McGivney (COO), don't be surprised to see some show stoppers at NADA.

This acquisition also puts some pressure on CarGurus to expand their platform with additional services to better assist dealers with their sales strategy. Could Dealer eProcess be the perfect fit for CarGurus since they also have an innovative product lineup, great customer support, and home-grown technology? Time will tell but the pieces on the chessboard continue to change.

Looking For The Best Digital Strategies?

The 8th annual Digital Marketing Strategies Conference (DMSC) will be held once again in the Napa Valley June 3-5th. The top dealers, general managers, and digital marketing directors come each year to hear from industry leaders and their peers. The lineup of speakers and quality of dealer panels makes DMSC a must attend event for progressive dealers.

All attendees of DMSC this year will also get a copy of the 2018 Digital Marketing Playbook which contains over 100 specific plays to improve online sales and dealership profits. Register today: https://digitalmarketingstrategies.org/

P.S. Dealers attending NADA this year should reach out to me for a special event, by invitation only.