From Mountain Drives to Bachelorette Parties with Alan Krutsch

Paul Daly: 0:00Michael, I see you have a hollow body guitar hanging in the backgroundUnknown: 0:10

this is Auto Collabs

Paul Daly: 0:12

is this is this a new addition to you or just a new addition to the studio,

Michael Cirillo: 0:16

just a new addition to the studio because all of my guitars are still in Canada, but my wife felt bad. And bought this for me for Christmas.

Paul Daly: 0:24

Wow,

Michael Cirillo: 0:25

it just fills the space better than those weird wood things I have.

Paul Daly: 0:31

What's more personal too.

Kyle Mountsier: 0:33

So there's a thing I used to hang my guitars up in, in, in my in like rooms in my house. And I realized at some point that I played my guitars less when they were hanging on the wall. Really? Yes. Okay.

Paul Daly: 0:46

I think the conventional wisdom is usually opposite of

Kyle Mountsier: 0:49

that, right? I know. But when I hung them up, I felt like weird pulling them down and put them back on. I don't know, that was just me. So I just guitars just gonna stay there forever.

Michael Cirillo: 0:59

There was where the I went through the same phase. But it was usually it was mostly because my middle son Tristan was a climber as a kid. And I was worried that I was just gonna, like walk into my studio and

Paul Daly: 1:12

wings, right? Yeah, he's just so great. I don't try to think of how we're going to tie this to today's guest, Alan Krutsch with Fuse Auto Tech, Alan is one of my favorite people to talk to. Because he's like a renaissance man. Right? You could like talk, he doesn't want to talk about like a specific product or anything. He always just wants, like, let's zoom it out for a second. And let's talk about how all of these things are implications on what we're trying to do in this one lane. And I was like, you know, that's my kind of person I would gladly get in a three hour conversation, when we really just got together to talk about something that would take two minutes,

Michael Cirillo: 1:47

just how I broke down, dare we say it's like, a perfectly crafted augmented ninth chord. Ah, oh, no, augmented individually sound like crap. But when combined, you gotta you got a real strong jazz to you

Paul Daly: 2:05

gotta Google that one has no idea what he's talking about. But yeah, if you play an Augment of nightguard people are gonna be like, is that thing broken?

Michael Cirillo: 2:13

Yes. And that's like all the different facets of what he's experienced in the auto industry. That's a great

Paul Daly: 2:18

Well, let's see if we can get Alan to play an point. augmented ninth chord. In our interview in our conversation with him. Alan, it this is actually the first time we've like sat down not in like the rush of another event or something and had a conversation. So thanks for joining us today.

Alan Krutsch: 2:40

It's Yes, the first time and here Here I am in my prestigious Bozeman Montana home office. Actually, what's

Unknown: 2:52

great about your home office is every time I get on with you, I always think that could be a zoom background or occasionally that your office is so dialed in and has all the books that a Zoom background would

Alan Krutsch: 3:06

absolutely. There's plenty of signaling going on. If you were to look at the books that reminds me of the people that gone to ENN enjoy. See him there.

Paul Daly: 3:18

Right, right. Right next to like, the Harvard textbooks that they got at the antique store, right? It's like, oh, I'm very, very prestigious reading this, just this month, this would be next

Alan Krutsch: 3:31

for you guys. I'm kind of uncomfortable. I'm trying to put my finger on it. And you know, maybe Oh, yeah, this will help.

Paul Daly: 3:44

If you're just listening, he just he just reaches aside after after a semi Emmy award winning acting job and pulled out a black hat from the desk and put it on. So now we oh my gosh, well, I'll tell you what, whenever you mentioned the name, Montana, my heart actually just slows down a few beats. But my wife and I have been watching these like shows of people like buying houses in Montana were like all the all the city folk buy houses in Montana, and all the local folk pretend that they're excited about it. And so I love the idea of Montana. It's just a place that I've always wanted to visit. I will sometime maybe I'll just knock up. We're getting into conversation thinking about what's going on

Alan Krutsch: 4:28

Well, I think what is most exciting to me right now in automotive right now. You've always been kind of a broad thinker. So I like to ask the question, just in a broad sense, what has captured your attention as we're into q1? Now? You know, we're in January, we have, you know, just kind of getting our bearings in q1. Where is the trajectory of your thinking going? What is the thing that's actually captured your attention or imagination a little bit? and is having the biggest impact on on decisions, whether it's at retail, whether it's a vendor, whether it's an OEM, is the pace of change. And I'm sure I can't even list all of the factors but you have the adoption of EVs. You have the adoption of new retail models, powered by process, customer experience and technology. You've got China. You know, I don't I don't hear a lot about China. But when you step back and think about it, this is the world's largest auto market. You've got companies like BYD who have now passed Tesla, in terms of sales. And, you know, all of us grew up in the car business, never thinking about China. Some of us are old enough or old enough to remember when the Japanese entered the US market. And of course, lots of naysayers there, they will never compete. Their cars are too small. Who cares?

Paul Daly: 6:05

That's a crazy thing. If you're new to the industry, that was an actual sentiment and conversation that existed and then

Kyle Mountsier: 6:11

tore it was like tundra.

Paul Daly: 6:16

Actually, Tundra.

Alan Krutsch: 6:18

Well, Yoda and Honda both were, you know, you have these crazy dealers that were saying, you know, pick me, I'll put one of those dealerships somewhere in Southern California and give it a try. And so, you know, are we going to see a similar thing with China? You know, one of the little thought experiments that I talked to some colleagues about is, you know, imagine that you have a Chinese company, whether it's Neo BYD whoever it might be, and they decide to come to the US market. And let's say their product line looks like this. Two models, crossover SUV, regular SUV, three colors each two trim levels each. You've got cool and you've got cooler, cool has most of what you want and including CarPlay. Cooler has leather seats and a moonroof. And you can do this on an app. Because it's simple. You know, now you subsidize the price, the CCP, Chinese Communist Party, they've got their thumb on the scale all the time, especially when they say we don't have our thumb on the scale, and we're not subsidizing the auto industry. What what are the things that are going to happen in the next, not this quarter, but in the next five to 10 years? When we have another global entry into the US car market? Chinese are going to get here somehow, and

Kyle Mountsier: 8:02

is entering this month later, right.

Alan Krutsch: 8:05

They did last month. BYD I didn't know this, but you know, they're looking at the US. BYD makes all the electric buses for Los Angeles. They have a they have an electric bus factory in Lancaster, California. Wow, they've been here for a while.

Kyle Mountsier: 8:25

They're already here. Hire

Paul Daly: 8:28

people so that they know how to be here and not let anybody know they're here. Right? Like,

Alan Krutsch: 8:33

no, they came in overnight when nobody was watching. And of course,

Unknown: 8:40

well, and you're not? Yeah, I think it's what's

Alan Krutsch: 8:40

Well, I think you know, like most changes, that interesting to me. And when I'm like, whether it's dealers, it doesn't matter. OEMs and people like Well, that's five years, that's 10 years until there's like real market value validity and viability for the product and and how does that impact me? I think like at minimum, there's a reverse engineered process that goes let's just say I believe that that's never gonna happen for five years. What am I needed to reverse engineer I'm headed to NADA I'm, I'm talking about my my 2023 balance sheet. I'm thinking about my staffing my my HR policies, how do I reverse engineer because five years when it comes to like, the trajectory of a business is not a long time. I mean, we just think about, like, How long ago COVID started, some people were like yesterday, right? It's two and a half years ago, you know, things things move, you know? happens very gradually all of a sudden, yeah. Slow, slow, slow, and then overnight, you go, Oh, my goodness, what just happened? And you know what, when we look ahead, I think that there's there's kind of two things if we go back just to some basic principles. For all of our businesses I'm, I'm loath to give advice to car dealerships, because I worked in dealerships a good part of my career. And they don't need advice from dudes like me telling them how to run this very complicated business. I think our company can be helpful, but not going to give advice. But I'm going to talk about principles, which are number one efficiency. And I remember back when I was in a dealership, and I told the folks that were on my team every year, I said, all of us, including me, are going to have to do more to earn the same money we did last year, it is the way of the world, you got to be more productive, more efficient, and you got to continue to deliver more value. So whether you're a vendor like us, whether you're a car dealership, it's looking for ways to be more efficient, to save cost and deliver the value that you need to value. The second principle is customer experience. We have to compete on customer experience, if we think we can do it just on price, just on location, just on the franchise or franchises that we're able to represent. That's not going to get it and I think the as I've thought more about this, what strikes me is that today car shoppers, consumers are comparing every experience to every other experience, not just the category experience. You're not saying, Hey, you're pretty good for a car dealer. Yeah. Why don't I get treated? At my Toyota Chevrolet, you name it dealership, like I get treated at Nordstrom, like I get treated at the Apple Store. So we're being judged against,

Paul Daly: 11:53

I think you can lower their prices, you can lower that standard. They're not even thinking Nordstrom or Apple Store. They're like, why can't I be treated? Like I'm treated at my, you know, tech forward grocery store, right? Like, why can't like they're not like they're going Nordstrom and expecting that, right. Like the level is lower, I believe, like, just think of a good real retailer. That's not an exemplary retailer. They're just used to a faster, more, you know, like accommodating process, period. Yep.

Alan Krutsch: 12:23

I think that's true. You know, there's certainly retailers that have worked on process and experience. The other thing is just personality. I mean, sometimes you can have a little bit of a rocky personality. But if you've got the right culture in that business, and people act like they care, everything kind of gets smoothed out. And the reverse of that, too. If your process is a little rocky, and you have indifferent people, then you go, Oh, my goodness, why am I a disaster? How do we get out of this? You know, well,

Paul Daly: 13:00

that's that's an interesting point, like when, because everybody knows what that experience is where something didn't go, right. But the person taking care of you was so good, that it didn't matter. Right? Well,

Alan Krutsch: 13:13

sometimes it's a plus. I mean, I don't think we want to create problems. But there's a lot of research says that if you're awesome at making a recovery and fixing a problem and making it right, you may actually earn more loyalty. And we've probably all been to one of those restaurants where something bad happened and the dish came out cold or whatever. But the manager was at your table in 30 seconds, and they're bringing it out of the park. And you know, I'm always absolutely you know, the

Paul Daly: 13:47

first the only dealership I actually worked in as an employee was my the first time I ever went into dealership, I was a service advisor and the owners name is Chris Barrett, bird Chevrolet in Oswego, New York. Now his son runs it, of course, Jenner, he's the third generation running it. But Chris Barrett said to me, because I was a service advisor, I never, you know, I knew people and I liked people, which is the only reason he hired me because I didn't know anything about and, and he said, he said, when there's a problem, he goes, that's your opportunity to make a more loyal customer than ever, you ever would have been able to if there was never a problem. He's like, because when there's a problem, he goes, they will remember how you fix it more than they'll remember the problem if you do it, right. And it's exactly what

Kyle Mountsier: 14:27

you're talking about. I know, I know, a couple of GMs that they're like, my favorite part of the day is when someone brings me a fire. Bringing on the heat case, I'm coming for it right because it's just like lavish everything on you know, everybody's happy to serve that the smiling customer. Everybody sit down, slow down, so we can keep up. Go ahead. So I agree. Well, and here's here's what I think is is and it doesn't just go to customer experience. I think that in retail, we have this responsibility to understand that every part of the read sale experience, whether it be touching, you know, like the the actual sales experience or the marketing experience or the after sales experience is that all of that is being put up against just general retail. And even just like the platforms that people are engaging with pre sale is important because their mindset is I'm doing like, for instance, give you give you a little insight into the mind of Kyle. All right. So, boy. Oh, so I mean, this is real simple. But um, you know, so here in Nashville, we have these, you know, the little parking space spaces where you pay, you scan a QR code, and then you have to pay to park? Well, one of the most ridiculous things to me ever is that is that I can be in an app based solution that's completely digital, no physical location. And all of the sudden, get to the checkout screen to pay for my $2.50 cent checkout. And they make me enter the card number. With on my phone, I'm like, everybody knows you're gonna be using your phone, and you haven't like the ability to integrate stripe into that right? Apple Bay. So that Apple Pay and Google Wallet and all that type of stuff. So when I think about that, I think about all those micro moments of like the interaction, not even just like the person to person interaction, but the micro moments along any shopping journey or service journey, that start to cause some level of disbelief, it may not even be a heat case. But we're kind of like battling this retail ecosystem. That is so tech forward. And so process forward that if we don't recognize that those are dropped points, even if we never hear about them, that are that are contributing to someone maybe going like back to your point of of Japan, like maybe Vinfast has a deposit where you drop Apple Pay in it. And they couldn't succeed with that, even though they tried with the you know, the other new car that they were looking for.

Alan Krutsch: 17:15

I have some insight into Nashville parking technology for you Kyle. So what you've experienced there is a purposeful process to try to bring down the number of bachelorette parties that come to Nashville, the year they're trying.

Kyle Mountsier: 17:41

You can train them away, it's not possible they're coming

Alan Krutsch: 17:45

for a drunken wobble up and down the street, in Nashville with these lovely young ladies on their last hurrah.

Kyle Mountsier: 17:57

Ride riding around on pedal taverns in the dust, just so. You knew exactly, uh, you knew exactly what the whole issue is there at see? solved.

Alan Krutsch: 18:11

So, but, but your point is a good one. And going back to kind of some basic principles, faster, simpler, easier, always wins. And so when you put friction like that into something as seemingly simple as a parking lot, people get frustrated. On the other hand, when you do it, well, you buy an iPhone at an Apple store, and you go, Wait, what just happened? I spent $1,200. And I'm out of here. People compare that to the car buying experience. It isn't fair. But you're right. They're looking at all those little moments and going why is this taking too long? Why am I sitting in the lounge waiting to give somebody money? Why is the person that's supposed to help me buy a car, giving up three or four times to talk to that other person? That other person is so smart? Why aren't they over here at the desk helping me? You know, so all of these little things, I think they contribute to that lack of satisfaction. And, and further I think that what happens in car dealers where we know that they're, in many cases, our opportunity for improvement is that people are nice. Shoppers are mostly nice, and they're mostly patient. And so we should not mistake the basic niceness of human beings, the level of patience for extreme satisfaction. And so I fear and this is a generalization that in some dealerships where they think we give a great customer experience we hardly ever get any complaints. I don't complain about my dentist. I don't like Going there. I like having clean teeth. But it's something I do every once in a while. And when it's over, I go, Yeah, great. But I don't sit there and rave and say, got the dentist is great. And I fear some people may think of buying a car like that little bit painful, but I get it. And I feel really great once I leave with my new car. Because I mean, this is, I don't mean to insult anybody, maybe I will. I'm sorry. There's nobody, at least on this call. But it's been at a backyard barbecue. And had somebody say, Oh, you're in the car business. Hey, I gotta tell you about this. It was so awesome. I picked up this car, I met a really nice person. And then I got to wait in their lounge for some old drinkin old coffee to talk to somebody else in an office that I didn't want to go into. It was. Cool. I want to do it again. Nobody says because it is a little bit of a clunky process. What a lot of people say is like my car dealer. I love my new Chevy. I love my new Ford.

Paul Daly: 21:17

They don't talk about process because it's not I got a pretty good car guy there.

Alan Krutsch: 21:21

He calls me back, she calls me back, they follow up. But the whole process, probably some opportunity for improvement. It's one of the things that we work on it at Fuse auto tech, and we certainly work on it with our consulting division is how do we pull the friction out of this and I dare co say even add a little delight to the process that went a little faster went a little easier. And one of the things that's missing from the car buying process, just a personal opinion here is that the lack of control on the part of the shopper. And so when you start to give them transparent payment options on a screen, when you let them see what's going on. They feel like they're in control that starts to lead to trust and to use a a car driving analogy. We've all probably been on a mountain road with a family vacation. No fun being in the passenger seat looking over the cliff. If your hands are on the wheel, everything seems fine. I think this is like our like this is like buying a car for some people where they're going about ready to spend $50,000 What are those two pieces over the desk, as opposed to they're bringing me along with them, I can see it on the screen. I'm starting to relax a little bit. So

Paul Daly: 22:55

that's a great, that's a great visual, such

Kyle Mountsier: 22:57

a great analogy. And actually, what's interesting is we're kind of like starting in well, getting closer to the ending of our day to day, but we wrapped up with a podcast today that like relationships are built on trust and building that trust through a relationship. And if there's moments of surprise and delight, that build on the trust, I think that that's where we're gonna that's where we're gonna build lifetime. Customers, both for dealerships and for OEMs. And all of that. Well, Alan, I'm telling you, we the three of us could probably jam for three more hours because that's just the way we go. But it should be a pleasure hanging out with you. I can't wait to see you in person at NADA and and continue kind of just dreaming up with the car industry. I will be like So on behalf of myself and Paul, thanks for joining us. I promised there was nothing combined with the fact that we talked about Cirillo's guitar and his background in that in that episode, I was not trying to go with like the background joke or anything like that. But it is interesting because speaking of background stop segue time different podcast. But you know, the background, the breadth, the depth of knowledge that Alan has from both being in dealerships and out of dealerships to really see like to have that zoom out picture and take a measured approach at the next the next movement of our industry and recognize that this consumer experience this customer having, you know, their hands on the wheel of the process, I think is really, really important for our industry to understand that customers do have their hands on the wheel of the majority of purchase process these days. And, and it's a guided process though, and instead of having to like manhandle customers through some sort of sales process that that they actually have a new opportunity with technology and that actually frees people up to do better. You know,

Paul Daly: 24:54

it's like you think about if if a customer doesn't have doesn't feel like they have their hand As on the wheel, what are they all of a sudden going to do? They're going to start fighting for control, or they're going to just leave. Yep. So it's almost like the thinking of like, instead of thinking like in sales, training and stuff, a lot of it historically is like, How can I keep control of this process? How can I keep control the word track? How can they keep the control of what they're going to say? Or want to do next? But what if the, what the perception was shifted to? How can I continually give them control of this process? So that they didn't fight for the wheel and they went through it? That's an interesting conversation. I mean,

Michael Cirillo: 25:33

one point, he brings up the concept of the dentist, and you know, every dentist on planet Earth in order to forecast their revenue tries to get you back in every six months. Will you ever notice that when they tell you you need to come back even though you know, you need to go out? You're like, none of them know. And ultimately, it's when you feel pain when you have to take a woodshed to lay Yes. But But it goes to show that no matter what's prescribed for us, our human nature is always no, well, I need to be in control. So, to me, it's just validation around what you said, Paul, that just let them have the control. Like, you know, I think sooner or later, we need to realize that the chairs in our showrooms sell six cars a month just because they exist. You know what I mean? Like customers.

Kyle Mountsier: 26:20

Oh, that's hard to hear. That's hard to hear for some people now.

Michael Cirillo: 26:24

But it's like for me, I'm one of the guys that just goes and sits in the chair like, oh, cool, the doors are unlocked. I'm gonna sit down papers in front of me, where do I sign? And that's that's the case for a lot of people, because they have more control now than they ever have. And I mean, this didn't happen overnight. Google's been around for how long? Google has been placing more control back into the consumers hands so it's like, follow suit or kind of step aside and customers will find their own way to make things happen.

Kyle Mountsier: 26:53

Have you enjoyed this conversation with Alan Krutsch of Fuse Auto Tech, from myself, Kyle, Paul over there, Michael Cirillo, here at Auto Collabs thanks for listening.

Unknown: 27:06

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