The 88% Problem with David Steinberg

Paul J Daly: 0:00Have you ever been friends with a note taker?Unknown: 0:09

This is Auto Collabs, like someone who takes notes a lot crazy people, people, Michael.

Paul J Daly: 0:19

Michael, you are one of the biggest note takers I've ever known.

Unknown: 0:23

It's unbelievable.

Paul J Daly: 0:24

Oh, there comes another one full of notes and another note pad. I gotta say there's notes about where you take notes. Like, you know, we're a good place to he's like, dear note. I'm

Michael Cirillo: 0:36

not kidding you, if we pulled up my YouTube right now, there would be videos about how to organize notes better, like that

Kyle Mountsier: 0:43

little thing that records your whole life

Unknown: 0:46

is also taking notes for me. Guys, unbelievable.

Kyle Mountsier: 0:50

Oh, do you ever have time to go back and listen to your notes so you can take to your notes to

Michael Cirillo: 0:55

extract all the action items for me, then they make their way into our

Kyle Mountsier: 0:59

projects, though I, you know, I there's been times in my life where I take a lot more notes, and it is like the tactile memory that you get from, like, actually writing down. You don't actually have to go back to it, because it connects something your brain to, like my body, connecting the words and the things that I'm trying to translate way

Michael Cirillo: 1:19

back this, this goes way back in it, and it ties into like data collection. But one of my mentors early on, because I was big note taker like this, I don't remember the number, so don't fact check me on it, but you'll get the point. He's like, when you do this, you are firing 10 neurons in the brain to retain information. When you do this, and you consider the movement of every muscle and ligament and everything, you're actually connecting 10,000 plus neurons in the brain nuts, which is why so and it just

Unknown: 1:51

Yeah, find my remarkable

Michael Cirillo: 1:55

Well, my retention. I notice when I take handwritten notes, my retention is through the roof when it's retain nothing. Dude, you're

Paul J Daly: 2:02

so right, because you can type literally thoughtlessly, yeah, like this. I have to people usually see that as a benefit. I could type notes without even thinking about it fun,

Unknown: 2:11

cycles like, ah, that's the problem. Somebody

Michael Cirillo: 2:14

tried to talk me out of this once. You probably can't see these, but I write in cursive too. I did

Paul J Daly: 2:19

notice that. Wow,

Unknown: 2:21

yeah,

Paul J Daly: 2:22

just so the person next to him can't read it, yeah, he doesn't need a

Kyle Mountsier: 2:27

screen. And their jaw goes like

Michael Cirillo: 2:28

this. There's going to be a day when I pass away and my kids are going to pick up whatever collection, data, collection, okay,

Paul J Daly: 2:36

this is your dream. Yeah, you're like, and

Unknown: 2:38

delete. They're like, AI, summarize this in five words. Michael, dad, cupcake. Good. Dad, love cupcake.

Michael Cirillo: 2:50

Feed this to AI, make a summary, and it's gonna be like your father was always enraged.

Paul J Daly: 2:59

Okay, go. One more sentence you never knew.

Kyle Mountsier: 3:02

You never knew. Well, we don't, never knew David Steinberg, who's who is joining us again for Auto Collabs today. We'd love having conversations with him, because he's dialed in. He's smart cat, and he's been building stuff in auto for a while, so he knows what's up. We hope you enjoy this conversation, and we promise Michael Michael will take notes.

Michael Cirillo: 3:25

All right, here we are another episode of Auto Collabs. We all know Dave Steinberg from four eyes. Thanks so much for joining us today, pal. Hey, thank you for having me. Great to be here again. We were just chatting pre show, and I just got to get this out of the way, because now I'm flattered that you have been you might be the only person I've talked to, except for the people, of course, that I grew up with, that lived in this area, who know where I come from. You have been to the place,

David Steinberg: 3:51

the Vernon, Kelowna, that whole uh, region, interior. BC, it's amazing up there.

Kyle Mountsier: 3:55

This is just an injection from the side. You answered a questionnaire that said you were in a like, scary movie, zombie thriller. Thing was that a mess? Were you messing with us?

David Steinberg: 4:10

Buddy of mine, a buddy of mine, just filmed a thriller. Filmed a it was a real deal. It was a real budget. Movie was shooting in LA, New Orleans, and he was trying to get me. He wrote a part for me. I was a child actor. Went way back when he wrote a part for me, like, I want you to be the dad. Like, I don't have time to be the dad. It was too many days in LA shooting. I was like, I don't have time to do that. And so then he called me. He's like, I got this part for you. You can, we need to do a reshoot of the origin story of the killer, and we want, I want you to play it. Oh, so nice. I did that. Yeah, it was, it was great. You're the

Paul J Daly: 4:42

killer. Before he realized he was a killer, yeah, things on fire, staring at people too long, yeah. So

David Steinberg: 4:49

I came out of my acting retirement 30 years later, and got

Paul J Daly: 4:52

to play the when, when? When can we see this movie in theaters? You know, I

David Steinberg: 4:56

don't know. They just, they just sold a bunch of right? I've learned how movie rights get sold, but they sold rights. They're selling rights to other countries right now, all over the world. Okay, kind of sell it, you distribute it, you sell the rights different places. And so do you

Paul J Daly: 5:10

have, do you have a profile on IMDb right now? I have a profile,

David Steinberg: 5:14

maybe under my stage name, which I'm not going to tell you today,

Unknown: 5:18

yeah, because I would be looking it up while, yeah, okay, I had

David Steinberg: 5:24

to have a different name, because

Kyle Mountsier: 5:26

deep research tell me,

David Steinberg: 5:30

in the Screen Actors Guild, you can't have two people with the same name. And when I was a kid and I got cast in a show and got into sag you, they had, they were like, you either have to be David L Steinberg or change your name. And my agent was, like, your name's really Jewish. Like, you need to change your name. You're gonna get typecast as the Jewish kid on every everything you do change my name. Okay,

Kyle Mountsier: 6:01

so this is actually all super relevant, because, like, origin stories typecast, like the data around what you've been working on since your early days in auto without appearance, and then bringing four eyes to the market is a lot about, like fishing out the deeper thing, like figuring out where, what makes people tick, what's going on, how to ingest that data and then relate it to, like, what needs to happen in the showroom or in the BDC or things like that. I'd love for you to, like, go to the origin story of why you began creating tools. Yeah. See data in a

David Steinberg: 6:40

different way. Yeah. I mean, I think at its core, like, you know, my background before at parents and before four eyes, I had a I had a software company. I was a came from the software field, and we built a software package for the lumber industry that's still in business 25 years later today. And I left that company to start my own Lumber Company, and I started my own Lumber Company, and I

Paul J Daly: 7:02

built, okay, you went from lumber software to actual lumber, yeah, because I wanted

David Steinberg: 7:06

to see if I could do the things that I was telling people to do. So I was like, right package. I'm telling people to do this. I should try it myself. And so I built my own Lumber Company. Didn't use my software at all. Ironically, realize, but, but ended up building what is, what became the first prototype before us, which was, like the idea of, like, using the data that was shoppers were doing on my website to sell better. And as time has gone on, you know, I'm really into the idea of sales enablement, which is, how do you make sales people more efficient, more effective? What are you doing? I think that, like in the in the sale, auto sales is inventory, marketing, sales process. There's no such thing as a great dealer with bad sales process, right? So, so sales process is a universal thing that you have to have to be a great dealership, and it's where people spend the least amount of time, because it's the hardest. So

Unknown: 8:03

it's probably, you know what, but they can have bad marketing. You

David Steinberg: 8:07

can be a great dealer with that marketing. Truth, you can absolutely be a great dealer with that marketing.

Kyle Mountsier: 8:14

I wonder if. Okay, so you said inventory, marketing, sales process. Let's just like, inspect this real quick. Bad marketing. Seen it? Bad website, great dealer, large volume. Dealer, bad website, terrible marketing, right? No, I've bad inventory. I think at some level you could argue maybe bad inventory, right over, bloated, a little bit too much inventory, low turn, things like that. But have figured out volume, right? Have figured out this, but sales process, I think you're actually right. Yes, I don't think, I don't think you can overcome bad sales process with great marketing and great inventory, exactly,

David Steinberg: 8:49

and I think, and we'll talk about this a little bit more, but the auto industry is completely over served on marketing. And the reason primarily is because marketing is a thing where you're a vendor and I can take your money, and I don't need to ask anything of you, very little of you, right? So I get just to go here, give me your money. I'm marketing for you. I'm doing all the marketing well. It's a great arrangement, right? Well, when you go into the sales process, you there starts to be more of a handshake, there starts to be more of a dance. You have to do with the with the dealership.

Kyle Mountsier: 9:20

I have a question, because I wanted to get your opinion. I'm going to be a little bit controversial. I won't call out who it was, but I saw this post on LinkedIn, and basically this dealer was looking for a marketing vendor. And basically the post was written as like, all I want to do is send it was basically that. I'll take care of the sales process. Don't get involved. Don't worry about it. We've got it. Your whole job is to get us more traffic. That's all you that's all you get to do, go get more traffic, release great campaigns. Don't talk to me about sales process, because I got that. But what I'm hearing you say, and maybe, maybe you, maybe you'd actually agree with that, because it's like, Yo, if. Manage sales process. Well, it doesn't really matter what's coming in, but I feel like the the marriage is, the is the is the like gold nugget in the sky.

David Steinberg: 10:08

Well, yeah, I think one of the epiphanies I had in having that parents, and then getting rid of that appearance, and just having focusing on four eyes and starting to look and get more and more data collection and really understanding what's going on underneath the hood. I always had the question, so in that parents, we had a million times where dealer was having a bad month, and it's halfway through the month, or having a bad month, and you're like, Okay, we're gonna turn up marketing. We're gonna turn it up. We're gonna get you more marketing. We're gonna turn up your marketing. We're gonna solve the help. Help you fix this bad month. I don't remember a time it ever worked. Honestly, I don't remember a time it ever really worked. And now what I've had the epiphany, and having all this data that I realize is part of what happens is that when a dealer needs more leads, and they tell their marketing providers, I need more leads, what happens is, there's certain leads that are easy to get. There are certain leads that the dealer doesn't actually need. They have plenty of inventory. They're going to sell through it no matter what they don't need their paid search provider. But all of the providers go out in and even the endemics go out and generate more leads on the stuff they don't need, because those are the easy leads to get. And so it's not that they needed more leads. Is that they need more leads on certain things, and they're the container they have of data, their data, systems that hold their data, their CRMs, they don't tell them that well enough. They're not good enough. Those systems aren't good enough to give them good access to that information. And so that's part of the problem. And I think too, like, you know, like going on this podcast, talking with you guys, I think like, part of our job is like, how do we give your listeners a different way to look at something, or see the underside or something they they're doing. And like one of the big exciting, it's both exciting and terrifying. Where I think we are right now with with automotive is that if you look at the automotive business, it's been it's a lead generation business, right? Similar to lots of other industries, you generate leads. You close those leads. So the auto industry generates leads, and on average, they close 12% and they throw out the other 88% and that's been enough to work really well for years and years and years. But that model is sort of, is there's water in the basement, and it's sort of rising on that model, and it's no longer finance. You know, part of the reason why it works to throw out the other 88% look this. It's a it's an online to offline sale. And the staff you have, even though, even if it's a BDC staff who's relatively low paid, is still high paid by world standards, you're paying a high paid staff to go and do all this follow up. You know, we see after day four, after day four, leads close at like 2.3% Wow. So most 65 70% of a dealer sales coming within the first three days of a lead. So it doesn't really,

Paul J Daly: 12:55

don't. What could, can you walk us down? Like, generally speaking, that percentage from day one to four? Yeah,

David Steinberg: 13:00

so day four is 2.3 so, so day four to day 30. So if a dealer closes 12% They're close. They're closing 9.7% in that first zero to three days, and their other 2.3% come in days four to 30.

Kyle Mountsier: 13:17

So 25% or just under 20 23% or whatever, come the next like, you know, X number of

David Steinberg: 13:24

days. Yeah, but, but. But part of that is also endemic to the fact that what dealers have done with their businesses, they've, they've developed a cherry picking model. So the cherry picking model is, how do we pick the low hanging fruit? Low hanging fruit, low hanging fruit. The there's all sorts of structural reasons now why that's starting to break down, right? So, so one of the problems with that model is you send away 88% of the consumers with a relatively bad experience. And so you create a, you create a mood of disruption, right? You create like, it's really interesting to see what Amazon autos is doing. You know, Tesla has eroded the franchise agreements. You see Amazon autos, you see eBay, you see Walmart. You see these, all of these people kind of chomping at the bits. They're sort of like zombies coming up to the gate, looking at this business model of of cars. And there's a lot of movement there. I mean, God, I challenge you to go into any OEM, if you can ever see on an any OEM, the the access logs of who's coming into the OEM you'll be terrified, like the people that are meeting with the OEMs and having more, there's a lot more meetings with the OEMs. Interesting by people like trying to go direct than we we care to. And you

Paul J Daly: 14:36

then we realize, I mean, so this, there's this cherry picking model that's always been a part of the sales process. You're telling us about the water in the basement in this old way. We talked so much about AI and technology disrupting the BDC. Steve Greenfield, on one of our programs about a month ago, said, you know, or a couple months ago, one of his predictions is that the BDC is going to be obsolete in 24 months. Or maybe it was even sooner that, what is your perspective on AI in the sales process, and as far as it integrates with, you know, the BDC, as we currently see it. So

David Steinberg: 15:08

I think AI in the sales process is really exciting. Obviously very exciting, because it's there's an efficiency model, right? You can have. So for example, like we have AI tools that go after leads in the day four to 30, look at all the CRM activity, and you can have a lot of engagement at scale with those leads that aren't effective to send your staff after. And you can sort of hand hold, how do you bring those back to your staff? And it's

Paul J Daly: 15:31

you go chase that 2.4% or whatever it is, and let me know if you find something. It's

David Steinberg: 15:36

super exciting. But I actually think that the bigger problem in automotive is different than what we're talking about, because ai, ai works, is only as good as the data you give it. And there's still a there's still a data problem in automotive and and the biggest problem is that the infrastructure we have, which is your CRM, your DMS, right, the main containers of customer data are horrible containers of data. So for let me give you an example, a CRM

Kyle Mountsier: 16:06

not event stream based. They are, they are, they're not trigger based event stream based, right? They are based on limited injections, very limited.

David Steinberg: 16:18

And they don't, they don't store the customer preferences, nor. Part of the reason why the close rate is so high within zero or so low after day four is because what happens is think about it. Think about this. When we see a good sales person so like we have it broken down by sales person who their close rate in these lead buckets, they 00, to three, four to seven, eight to 14, we see some sales people that do not have the atrophy of sales rate in day four and they close. They're closing 5% day four to seven, they're closing 3% day seven to 14, what those sales people are doing differently is they're understanding why Kyle wants to buy a car. What is it you're looking for? Right? The cherry picking model is, Kyle wants a Jeep Grand Cherokee. I have Jeep Grand Cherokee. Kyle, come in for an appointment. Come in for an appointment. Come in for an appointment. Kyle's moved on from Jeep Grand Cherokee and is looking at other things. I don't pick that up. I have no understanding of Kyle, right? So, so where I'm looking at AI, what we're looking at AI, is like to help build the understanding of Kyle, to say, well, Kyle, why? Why is it you wanted the Jeep, Grand Cherokee, and if you don't want it. Now, what is it that change? What is it that you can what conclusion did you come to that made you not want it? Oh, I wanted a third row seat. Oh, I wanted towing capacity of this. Oh, I wanted this. Those are the features that make you so you you're gonna buy or not buy. That's what you need to know in order to sell you in day eight and day 14. That's what the dealership doesn't know. The CRMs are horrible containers of that information. They don't store that information well,

Kyle Mountsier: 17:50

well, because they don't have pre lead information and post lead information, they have single, single, single data points, right? And typically, those data points are pretty poor, because our forms aren't actually looking for great form data from like, you know, I mean, like, I just looked it up just while we're on the call, average click to conversion to purchase on Amazon is 9.84% if a logged in user clicks, 74% conversion rate that means to the purchase. Now, granted, we're looking at widgets compared to, like, large$30,000 purchases, but the fact that we're comfortable in auto with 12% conversion rates on people that have sent their information to us is still mind boggling,

David Steinberg: 18:32

mind boggling. And the fact, and, you know, and I think back to, like, back to my Lumber Company, like, in my Lumber Company, when I first started doing PPC pay per click in 2003 it was, I was paying seven cents a click, 12 cents a click. I was generating a lead for four bucks, and then I was selling a lead for 40 bucks, and I was selling them $40,000 in material I could throw out every other lead I didn't want all day long, right? But as leads start to get more expensive, suddenly you start to have, you have to go, oh, shoot, I got to get more value out of these 88 leads that I'm throwing out. And by the way, those 88 leads are your future customers. Those 88 leads, you know, like the other thing I think has changed in automotive underneath our fee is sort of the rise of the consumer. The consumer has significantly more value today than they've ever had, right? We sort of, what do you

Paul J Daly: 19:22

mean when you say has more value? Why?

David Steinberg: 19:26

Well, because you know you the the easy anecdote is, oh, social media and bad online review. They they have more power to put more leverage, right? Leverage, right? But, but that's just one set. That's just the extreme example. Just think about this, if you're at dinner with somebody now and they tell you they had a horrible experience at a store, we now have more access to information because we're getting Instagram feeds. We're going to remarket it. We're getting all of these competing products selling to us. So if, if you tell me a horrible experience about a a. A place that you just bought something at, I can just cut that out the consumer. Now, the friends of the consumer go, Oh, yeah. So we're not doing business. We're done. We have, we have enough choice, right where? Before choice was proximity. Choice was, well, this is, you know, you go to Dick's Sporting Goods, because the only place to buy a soccer ball around here, well, now I can buy a soccer ball from Amazon. I can buy a soccer ball from anywhere. I can do

Paul J Daly: 20:24

it, yeah, anywhere, Costco, online, have it shipped. So if someone

David Steinberg: 20:27

says, I hate Dick's Sporting Goods, and they tell you why you're like, Yeah, I'm making it up. But just as just to like, so the consumer has way more power now. So now the cost of throwing out the other 88 is higher than what you mean. I

Paul J Daly: 20:42

understand what you mean. I mean, David, I feel like this conversation could easily be an hour long. Sure, I have a feeling that you and Kyle could break off and nerd out over some some real nerdery over the course of an hour or two and some coffee or a drink. Michael, I forgot Michael was here because he's taking so many notes and not talking. Look, show him your notepad. Michael is always writing down like voracious notes.

Unknown: 21:09

Yeah, that's just a prop. That's not

Kyle Mountsier: 21:16

a prop. That's real

Paul J Daly: 21:18

legit. Isn't a prop. I guarantee I've seen it in person, but David, as always, thank you for sharing your insight. And like, I love how you framed it up in the beginning. Like, our job on this podcast is to help people see things and think through things in a different way. And I think we accomplished that. I know we're gonna be making some more content together. And, man, I just can't help help but need to, like, leave this podcast and think for another five minutes after we're done, just about, like, Oh my gosh. Like, what? How? What does that mean to everybody? And you'll probably hear drippings of this podcast on our show tomorrow morning, because we're going to be chewing it around. So, as always, thank you for sharing your insights. Yeah, great to meet

David Steinberg: 21:56

with you guys again. So you guys keep doing, keep doing what you do. It's awesome. You're getting out there. I can't

Paul J Daly: 22:02

wait until the next time. We'll

Unknown: 22:03

talk to you soon. All right, thanks, guys.

Paul J Daly: 22:10

All right. Michael, what your notes say? Oh, he took so many notes that that David didn't believe him. David's, I guess, a prop.

Michael Cirillo: 22:19

There's like, little things that I pick up on, right? I feel like, you, I feel like the three of us were just talking about this the other day, the amount of leads that are going to waste 88% you think about 88% compounded month after month. I'm gonna say it again. We were talking about it the other day. You're paid in California, right? Yeah. Yeah. Like, can you imagine, if you look back over 20 years and averaged out and took that 88% of all the leads you received, it is it's like the

Paul J Daly: 22:50

person in your market, it's Nazi seven times over. And

Michael Cirillo: 22:53

then you think of the impact that that has on marketing, and the best marketing being the relationship and human to human contact and presence and how we're playing in the community. It's no wonder why there are high achiever, high performers in our industry who are all about making sure there is throughput to everything they do. Yeah. And then there's, well, I think

Kyle Mountsier: 23:14

about, okay, let's just say, let's just say that we say 20% is a good closing rate, is a great closing

Paul J Daly: 23:21

ratio, and it is 80%

Kyle Mountsier: 23:25

of those people are making judgment calls on your business, not just for now, but for the next time, right? So you're not just right for a reason. You're telling them, don't buy from me now and don't buy from me ever. Actually, yeah, if you're not, if you're not considering every interaction that you have with them, from day one day 30,

Michael Cirillo: 23:50

I turn into the Hulk because angry, because now think about that. Think about the compounding ripple effect of that. Dealers today who are like, I don't get it. We used to be so strong. I know that's really pointed. You guys know I love you. You are experiencing today the back end of really easy car selling in the past, where you didn't even have to think about this stuff. You didn't have the you didn't have to think about the impact on reputation alone through those time periods and now the struggling GM, the you know, we see this all the time. A new GSM, or new GM, comes in to save the store, because they were a great operator over here, and then they can't get it to turn over here. And it's like, yeah, because you don't realize You torched. You're in a town of 15,000 people, and for the last 26 and a half years, you've been torching 88% of your population with a bad experience, yeah,

Kyle Mountsier: 24:44

so recovering from that is in one month and done. Oh man, see, we're gonna have to talk about that was

Michael Cirillo: 24:50

a big one. But then I also write down things like 9% are closing within zero to three days. And then just I write down little short form things like this. That I think are so intriguing.

Kyle Mountsier: 25:02

Well, I appreciate your notes. Michael, I do too. I hope the people appreciate you

Paul J Daly: 25:06

when they one day, we'll publish them and they'll be like, you know, the Federalist Papers back in the day,

Kyle Mountsier: 25:11

there you go. Well, if you're looking for the Federalist Papers, you found them here. Maybe you should just come back for the next Auto Collabs, because we, we're having a lot of fun with these, and I think, yeah, we're digging deep into the things that are making this industry tick. So on behalf of Paul J Daly, Michael Cirillo and myself, myself. Kyle Mountsier, see you next time here on Auto Collabs,

Unknown: 25:33

sign up for our free and fun to read daily email for a free shot of relevant news and automotive retail media and pop culture, you can get it now@asotu.com That's asotu.com if you love this podcast, please leave us a review and share it with a friend. Thanks again for listening. We'll see you next time you welcome to Annika. We recording. You.

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