The Consumer Has Moved with Alex Vetter

September 6, 2022
7 hours online before they visit a showroom. CARS.com has a lot of consumer data, and is seeing many trends and disconnects in the automotive industry. CEO Alex Vetter joined us on Auto Collabs to talk about the digital customer experience, trust reservoirs and giving power back to the small business owner.
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What we talk about in this episode:
0:00
Intro with Michael Cirillo, Paul J Daly and Kyle Mountsier.

4:29 Alex and CARS have a philosophy of “If you want to go fast, go alone, if you want to go far, go together.” They use this mantra to promote collaboration and innovation, something that Alex sees across the entire industry.

“Share points are usually won through teamwork and collaboration. And so it's a big cultural tenant we have inside our company, but I think it's important for the industry. I mean, I think what I love about dealers is that you know, they're competitors by day but they're partners through and through. They want to learn from each other. They want to share what's working. And they know that innovation has to always happen in order to keep relevant and current in the business.”

9:12 Are regular Metaverse vehicle purchases coming? Maybe eventually, but right now, Alex sees consumers spending much more time in digital spaces than physical spaces.

12:40 Don’t believe the negative hype surrounding dealers. CARS.com has 10 million customer reviews through DealerRater showing dealers are doing a phenomenal job in sales and service.

23:33 Customers are searching for trust reservoirs, areas where they can get objective data and reviews. Alex thinks we need to embrace these trust reservoirs and see them as a part of the process.

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Paul Daly: 0:00So Alex Vetter is somebody who I think has really risen to the top.Unknown: 0:04

This is Auto Collabs

Paul Daly: 0:13

of dealers lists in the last couple of years when the pandemic lockdowns began, and things are moving slowly, but what wasn't moving slowly with dealerships being closed. And you know, Alex is one that likes to, you know, follow the rules, but at the same time, he's like, this is too slow, we need to do something to help. So what he did was he hired a lobbyist on behalf of auto dealers across the country, and spearheaded this massive effort to get the laws to recognize dealers as essential businesses. And if that's not troublemaking, I don't know what it's,

Michael Cirillo: 0:44

that's something that stood out to me, I follow him on LinkedIn, I've never had the pleasure yet. I'm, I'm excited about this at ASOTU CON, to be able to meet him in person. But what's always stood out to me is that advocacy for the dealers, right, I can't remember the specifics of it, but it was a post he put out at time of recording about maybe two months ago, you and I both commented on it. And it was just so apparent, his love for this industry, and his care and concern for the dealer body, and to your point, how essential they actually are to the ecosystem, to the economy, to people's livelihoods, to impact to charity to there's just the I think we sometimes forget the far reaching expanse of just a single dealership and a community, whether it's a small town or whatever. And so it's really, it's really exciting and hope filled. When you see an executive at that level who can really tap into that and make something happen with it trouble, troublemaker's the perfect word?

Kyle Mountsier: 1:44

Well, and you know, what's really cool is that when you think of a brand like cars, obviously, they have acquired dealer tech and have a very, you know, the the paying customer is the dealer because of the third party inventory level. But really, a lot of their advertising and marketing efforts go to the consumer public, and to see a company and a leadership structure that is tied in deeply with both sides. Right, right. That that says like, yes, we understand that customers need something out of our platform, the things that we're delivering, that dealers are integrated with, and but also to be so caring for dealers. And, you know, the very first time I met Alex in person was actually at a Brian Pasch event and it was over lunch. And it was just the most unassuming conversation literally, I remember that. Right. And that, that's, you know, you made the joke on on previous podcasts that you put your pants on the same way that everybody else does, and the butler and all that type of stuff. And I think a lot of people see, you know, a lot of people see CEOs or anyone in executive seats, especially at publicly traded companies, and they're like, oh, there's that guy or gal and they're, you know, kind of untouchable, right. And here comes Alex walking into a conference on assuming and just sitting down having a meal. And, you know, that's the experience that I get every time he's on a podcast or, or on LinkedIn, it's this, you know, very unassuming, yet care careful about his words. But but just a part of the fabric of both the customer and the dealer side.

Paul Daly: 3:30

Without a doubt, you never have to wonder if you're an auto dealer in this industry, whether or not AV, as they call him, has your back. We're excited for you to hear this interview, the one and only Alex Vetter. Alex, thank you so much for dropping in with us today. I know you have a zillion things to go going from meeting to meeting. So thanks for giving us a little bit of your time today.

Alex Vetter: 3:58

It's great. Great to see you guys.

Paul Daly: 4:00

So in this podcast, we've been talking to a lot of folks about kind of the layer under what seems to be going on in the surface. And one of those things we're seeing and what your perspective on is we see a deeper desire for industry partners to do collab with one another collaborate with dealers, we're seeing an increase in that. And we were wondering, you know, why what you're seeing and why do you think it is the way it is right now?

Alex Vetter: 4:29

Well, look, I always say inside our company, if you want to go fast, go alone if you want to go far go together. And I really believe that that share points are usually won through teamwork and collaboration. And so it's a big cultural tenant we have inside our company, but I think it's important for the industry. I mean, I think what I love about dealers is that you know, they're competitors by day but they're partners through and through. They they want to learn from each other. They They want to share what's working. And and they know that innovation has to always happen in order to keep relevant and current in the business. And so you see that through like, you know, clubhouse calls where dealers are sharing, it's happening so much faster Kyle than ever before. And Paul, like, I just know that, you know, it used to be you get together with your dealer group 20 group every every quarter. Now they're connecting weekly and sharing ideas and tips and the market is moving faster. And so I think it's exciting.

Kyle Mountsier: 5:36

Well, I think that's it's a really interesting counterpoint to like your first thing, which was fast go alone, farther together. And I think what we're actually experiencing as an industry potentially, is we're recognizing that historically, we thought fast was alone. But actually, we we we speed up innovation by going together. And it gives us a further trajectory. Are there places where you've seen that because you because people are connecting and or like a product is connecting with a dealer that says, hey, we need this, that actually you are able to speed up innovation, especially because CARS is so deeply ingrained? And not just like, you know, CARS is, is as much further away from just a listing site and much more a technology partner and a partner to dealers across the spectrum. Are you seeing these relationships with dealers and industry partners in the way that people are going actually speeding up innovation in certain aspects?

Alex Vetter: 6:33

Well, I'll let me hit that on two fronts. There's been a lot this year about with I think, OEMs, and dealers talking about, you know, the direct to consumer model and, you know, changes in the reservation or ordering system, I have a prediction that the manufacturers that fight with their dealer partners are going to lose market share over time. And then if you look at the manufacturers that are going to work with the retail system, to create a better experience for the last mile, they're going to take market share. I really believe that. And but it also goes it's true on the on the marketplace front. A lot of dealers historically looked at CARS.com as a third party, we're trying to be a first party platform for dealers, we are you talking about dealers, I've seen dealers sell their dealerships saying that they can't they don't think they can compete digitally. And I feel like we failed them. It's like yes, you can like if you leverage the distributional strength of CARS.com. And you embed our dealer tools and technologies through Dealer Inspire and Accutrade and CreditIQ, you have all you need to win sales and customer relationships, leveraging technology as opposed to the physical plant. And I think the industry is going to shift harder towards tech. And and I encourage any dealer that has any doubts about their ability to compete to call me like we are an enabler. And I think we can help the retail system evolve at a much faster rate than trying to build it. You know, some of the big dealer groups, I get it, they want to try to build that technology in house, but I think they're going to spend a lot more capital than they need to. And we are building this business to be an enabler for the industry.

Michael Cirillo: 8:24

How do you see the technology progressing? And our usage of it? And I'll preface that by saying, you know, obviously, there's big tech companies, not an automotive, just, you know, might start with the letter F rhyme with acebook. But, you know, they seem to be going all in on this concept of Metaverse, this, this idea that at some point, you will be able to buy a car sitting across a digital desk from a guy dressed like a banana, or a gorilla or whatever. Do you see it going in? Is there a segment for that? Or what's your vantage point working inside of your tech business of where things might actually add within the next 3 5 7 10? Well, look, I

Alex Vetter: 9:10

think it's very durable that consumers want to save time, and they want to remove and they want transparency. And so we tend to focus on those things, what can speed the transaction and save consumers time? And then what creates trust, and transparency and trust are often interlinked. And so, you know, when you look at things that we're doing, it's like, boy, we know that consumers distrust online or are they distrust the financing process? Am I getting a fair deal and you see that in massive differences in terms of who will finance who for what and so we're investing a lot in online financing and helping dealers. Put more of the information into the hands of the customer. which will reduce the time that they're spending in the physical store. So I think like your Metaverse question, I would maybe come a little bit more near term. I think what's gonna happen is that OEMs have got to stop mandating capital investments into the physical plant, and make more help dealers invest more in the digital plan. And whether it's in the metaverse or in digital tools and technologies, that we've got to shift to a much more digital first industry and Metaverse may come. But I think there's more middleware that has to be built, before we get to virtual, you know, experiences where, you know, it's entirely happening online. And look, I think the way the OEMs are handling capital allocation now has got, it's got to shift. And today, they outsource technology decisions to third party intermediaries that recommend which solutions to use. And I think that OEMs have got to think a little differently, they got to put more money into first party technology providers that can speed this shift for both consumers and dealers.

Paul Daly: 11:09

You've always been since the first time I met you. I've always been struck by the dealer advocacy side of your personality, just and then obviously cars kind of follows in those footsteps. But I don't know about like, why you care about dealer so much, or you know how you even got into the auto business in general. And that's something we'd like to talk about on this because we think the texture is important. So can you tell us about like, why you even got into retail automotive?

Michael Cirillo: 11:40

Well six, decided, yes, I want to do

Alex Vetter: 11:48

I love I, you know, Oh, I love technology, you know that. But I also believe that most technology companies have negatively impacted small business. You know, Amazon being the chief example. And even the big box companies wiped out a lot of companies on Main Street, we set out to build a tech company that's fundamentally different, we want to give power back to small business and let them use technology to their advantage, as opposed to disrupting what is really the bulk of American jobs in this country, right are small to medium sized businesses. And look, dealers, I think, do it. I also will tell you this, I believe the last mile Automotive is a tough one. And I think the retail system does a damn good job about it. You know, when you think about, there's so much media coverage over the, you know, negative dealer experience, but but our data shows, that's the minority, I mean, we get through DealerRater, we have 10 million reviews that actually showed dealers are doing a phenomenal job, both in sales and service, but it's not a good story. So the media doesn't talk about it. And, and, you know, I just think that we're trying to use technology to enable the long tail of this industry. And when I say long tail, I mean, that starts with Carmax and automation, but goes down to Sal's autobarn like we want the auto industry to digitize, and I think that's an exciting journey that we're on.

Kyle Mountsier: 13:14

We were, I I'm struck by a couple of things here, one that, that leveraging technology to give power back to the small and medium businesses is that is a, that is a wildly different perspective than most technology companies have. But then I want to go actually back because, you know, my, my background, and my, my heart is around technology, and I love wrapping my hands around that, especially for dealers. But you know, when you think about, and I'm gonna, like, contextualize this a little bit and then ask a question, but the idea of, you know, providing capital to resource, you know, physical buildings is a massive part of the OEM infrastructure and financial, you know, help for the dealer. And then and then they leverage capital on particularly the co op system, which is again, managed by these third parties, both in the providers that are utilized, and as well as you know, the recapping of that Co Op system. And, you know, the, the real estate situation is very, very hands on from the OEM, and the dealer has a lot of responsibility and feedback and, and there's, there's a good working even even within the community, and there's almost a research and development element of the real estate side of the OEM business and I, what's your, what's your perspective on, on how we can enable dealers to live within a research and development mindset with technology partners and, and, and actually have a hand to play in the innovation instead of kind of, like, you know, because things are managed by third parties or because, you know, it's only tech companies making the decisions. How can OEMs leverage the innovative and entrepreneurial minds? that of a dealer to give them the r&d, budget and mindset into their digital properties. If that makes sense.

Alex Vetter: 15:07

Well, okay, Kyle, you're hitting on a big shift that I think has to happen, let's take auto shows is a isolated example. You know, we've got more people looking at makes and models on CARS.com In a minute, then an auto show will generate in a week. And yet OEMs don't look at that digital experience in the same way that they invest a million dollars to put their cars out at a convention center. And so I think there's got to be a mindset set shift at the OEM that the vast majority of time spent by shoppers today is online. And their capital is stuck in preserving these legacy. Show models show remodels both at convention centers or even at the dealers physical plant, and the OEMs that realize that the consumer has already moved, and they reallocate capital to how are we going to build bigger consumer experiences online, create better shopping and, and buying experiences online, those OEMs and their dealer partners are going to take massive market share, it will start with the small wins first because the small ones always move faster. And they are scrappy, or they're more dialed in to how the behaviors change. But, you know, I just think that that part of that is going to, unfortunately, probably take some changes happening with the legacy decision makers with more modern thinking and more progressive investment strategies for how to win the customer. But it's happening online without a doubt.

Paul Daly: 16:41

There's, we know that web traffic and just the way customers were coming into the market, and shopping for cars during the pandemic obviously substantively changed. Now, you know, 2022 is here. The the effects of like lock downs and things like that are, you know, pretty much their history, right? Not too far back. But everyone's out and about, again, what do you see as the the the some significant changes? Or what are you seeing in 2022? For how consumers are engaging the shopping experience? Obviously, you have a unique perspective?

Alex Vetter: 17:16

Well, look, they're still doing considerable amounts of research online, like seven hours online deciding on a make and model before they ever physically physically visit any showroom. And that is to Kyle's point, like so why is all the capital being invested in a new showroom or bigger facility or a coffee bar, when the time spent in store is fractional compared to the amount of decisioning? That's happening online? So number one, like I just think consumers, the trend of consumers spending more time online, is already been established. And I don't see that eroding. In fact, they'll spend more and more time I think some of the other more micro trends around financing, trade-in these things can all be done now virtually, and and accelerate the time in store. And so I do think the car companies that embrace that and provide more upfront transparency around both the buying and selling experience, are going to take market share. It's without a doubt, because that's where the shoppers are.

Paul Daly: 18:24

So you're saying seven hours is kind of the number right now? Yeah, that's

Alex Vetter: 18:30

been very durable over time, right? Consumers are, are just spending more far more time and look at our EV content, we launched leading EV content, because we saw so many consumer questions around charging stations near me, you know, the pros and cons of various makes and models. And so we started building evey content over a year ago based on what we saw in our CARS.com user data. And now you can see EV interest surge in we have we're educating people online, they're not going to some physical store to learn about the pros and cons of EV. They're engaging with us online now.

Kyle Mountsier: 19:12

We need nobody. Nobody's like, huh, it's a Saturday. Better go get a brochure and the showroom because that's probably where I'm gonna find out all the things about EV, right? That this

Michael Cirillo: 19:23

thing's not even a trifold. It's just an eight and a half by 11. They must be I haven't hard time.

Alex Vetter: 19:29

This is where some of the disconnects that we got to fix as an industry like you've got OEMs playing to drive people to oem.com type stuff. You've got dealers trying to drive people to dealers websites, but nobody's looking at the connected commerce that can happen from the research phase into the showroom into the transactional phase. And, look, we've got 6000 dealer websites, we've got the industry's leading marketplace. I can see research all the way down to Do you know the dealer's website and we know that consumers This is one of the few categories by the way, where the closer the consumer gets to the transaction, the purchase funnel actually widens. Again, in almost every other category. It's a, this is an industry where it's all everyone knows it's the size of the transaction, people panic at that last mile. And this purchase funnel expands at the very end, because of consumer desire to get it right. And so two things one, I think technology plays a pivotal role in making sure that the last mile is won by a given brand. But I also believe that dealer in the retail system does the best job of closing the closing the door at the last mile, right? Whether it's, I can take your trade in, I can show you two makes and models side by side. So you can see which trim you want. Like the dealers do a phenomenal job closing the loop at the last mile, but tech is where the bulk of the time is spent.

Michael Cirillo: 21:08

You bring up a really interesting point to circle back to something you said earlier, Alex about, you know, essentially pawning off the technology decisions to third parties. And I'm always fascinated by this, because we are an industry at large that speaks to the importance of the customer experience. You've just mentioned the seven hour figure, this is a lot of time, when you really sit and look at seven hour, a full workday. Essentially, somebody is spending time doing research online. But then I think about the importance of being able to actually, you know, remove the handcuffs, and give people the ability to deliver an online customer experience. And what I mean by that is customer goes from Google, to CARS to wherever else to the dealer website. And literally every one of those touch points has a learning curve to it. There's no standard methodology of how to do the research and whatnot. And I think about how much friction that that causes. Do you think that if we were able to, you know, perhaps create more standard and stop pawning off some of those important decisions that there would be less friction in the process? Would that would that seven hours maybe go down to four?

Alex Vetter: 22:26

Well, I think there's been a lot of investments to try to do that. I mean, the car companies, they've created these, you know, retail showrooms at shopping malls, and they've created, you know, retail experiences at auto shows and right. And but but candidly, what we what we see is that consumers have a high range of anxiety here. And so they do seek out third parties who can distill information, you know, in an independent, objective way. So I don't think you're going to be able to organize the information in such a way that people will stay in a site, one silo, they are seeking trust in objectivity prior to purchase. I think that the challenge I see more, Michael, is that, you know, we need to look at, I mean, Apple sells iPhones on Amazon, you don't? I don't think people have to like question Apple. Like they know, you know who they are, and, but like, they still sell a ton of iPhones on Amazon. And I think car companies and need to figure out that like, people are going to go to these trust reservoirs online, to seek out objectivity. And they need to show up in those environments with like, their best foot forward. And unfortunately, a lot of that friction between third parties in the industry is a desire for control. And if there's one thing that isn't going to change in this category, is that people are going to go seek out independent objective information prior to purchase. I always say we're in the pre tail category where the industry is in retail, my business tends to be in what I call pre tail, which is that enormous amount of time people spend prior to purchase.

Kyle Mountsier: 24:18

I'm going to start using the word Trust reservoir. He's like all the time because I just think like, hey, some people trust the OEM website. Some people have an incredible relationship with their dealer. They're never going to any other website. Some people have been shopping on CARS.com Since it started and that's where they start and finish their process. And some people need validation across a bunch of different sources in order to shop and to say that, that we can push all customers into a single funnel is is almost insanity. I love your example of the iPhone. You can purchase an iPhone on Apple's website at an Apple store in the showroom or in a mall you can go to Amazon versus isin, Walmart, Costco, all of these different places, depending on what your appetite for trust of those different resources for retail, you go where that makes most sense. And I think that, like, what we're trying what like, especially a lot of car companies are trying to do is going up, we don't need all these other trust reservoirs, which I'm loving it, I'm just going to use the heck out

Paul Daly: 25:22

one more time. And it's yours. You should too, you should trademark it before I do it, right.

Kyle Mountsier: 25:27

But I love that perspective and appreciate that perspective. And I think that what you're saying is like, hey, look, CARS is just one of those trust reservoirs. And it may not be the right one for everyone, but at least a dealer dealers and OEMs, recognizing that, that it's a valid one for people to be a part of is is is an important thing.

Alex Vetter: 25:49

Kyle, by the way, you know that our platform strategy is fundamentally different than that a lot of marketplaces withhold customer information in order to generate activities on their platform. We actually are promoting the dealers as part of the trust platform, right? Like, we actually promote the the dealers as being the logical next step. And I think where the the OEMs and dealers that work together are going to win is that today, an OEM and their agencies typically look at campaign analytics to say how many people can we get to leave CARS.com And come to our website, we're having a few OEMs actually have a major breakthrough, which is, wait a minute, isn't the next logical step to get them into the physical dealership. And so we worked with a import OEM recently in a key geography and said, look, the goal is not to get someone to leave the marketplace and start over at the oem.com. But let's work to get as many people as we can to go physically to that dealership that day. And when the OEM starts looking at dealer arrival as being a success metric, that's when the magic happens for the reasons we talked about. The dealers are phenomenal at closing the door, and they know how to handle that last mile. uncertainty that exist and get conversion. And this this industry is going to have to shift towards a more connected commerce environment and and I'm excited about what we can do next year because the companies that work together to collaborate as we started this right go if you want to go far go together. I think our the world is their oyster right now.

Michael Cirillo: 27:35

Man, I love everything about this conversation. And I know I'm speaking on behalf of all of us here. You know, Paul and Kyle, we are incredibly grateful for your leadership and for your advocacy for the dealer body. It's very inspiring, very needed. And I know it's bringing a lot of hope to to the the automotive community worldwide. So thank you for that. This has been so much fun. We want to thank you for joining us here on Auto Collabs.

Alex Vetter: 28:00

Hey, Michael, Kyle, Paul, I appreciate all you guys are doing for our industry as well. So thank you guys appreciate you.

Michael Cirillo: 28:11

You know, what stands out to me is we hop on a call with CEOs of massive companies. And like I'm thinking about Mr. McKelvey. I'm thinking about Mr. Vetter just because it sounds so formal. And you know, what both of them had in common one was sitting in a bedroom, propping his computer up on like, hampers laundry baskets. And, yeah, and willing to say it, and then we get on a call with Alex and willing to say it, he's like, Yeah, I'm propping my laptop up on a briefcase and stool and like balancing it on a rock on a Zen garden or something. And you're like, Ha, you know, and I love getting that inside look into the worlds of, of the CEOs of these massive companies, because sometimes I feel like they're untouchable. But certainly, when you get them in this format, you realize how approachable and how accessible they are and how desirous they are for that accessibility to the industry that they serve. And, and so I love guys like Alex just for shining a light and being a beacon in that regard.

Kyle Mountsier: 29:13

Well, and what what then that what that translates to is in you hear this through this interview is is the fact that for him, he's he's willing to say all the hard things, you know, I kind of I had a couple of moments where I kind of winced. I was like, oh Boy gonna shots fired. They're just a little bit but at the same time, he's going, Hey, look, this is me, I'm a part of the automotive community. I'm gonna say the things that need to be said, you know, from the perspective of the dealer from the perspective of the OEM, from the perspective of of this two sided marketplace that they've they've kind of coined as as cars, like they're saying the hard things they're pushing back together with with the dealer community and him as a person has an opinion and I appreciate that he's willing to say those things about the automotive ecosystem because that's the level of collaboration that we're actually asking for through this podcast. And and I think there's something almost about putting your computer on a briefcase with a few guys on a zoom that allows you to, like break the barrier of like that third wall of communication. And I've really appreciated his his approach to this, this conversation with that.

Paul Daly: 30:21

And so you blend together. You know, Kyle, what you just said is him being willing to say what he needs to be what needs to be said? Right. And that's an element of care and then Michael, the willingness to stack his computer on a briefcase and tell us right and be informal exudes a level of confidence. So that care and that confidence really do embody who Alex Vetter is as a person and a leader. So on behalf of Michael Cirillo, Kyle mounts here myself, thank you for listening to Auto Collabs.

Kyle Mountsier: 30:47

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