Mike Darrow on Helping Consumers Find Their Fit

‍SPEAKERS

Mike Darrow, Paul Daly, Kyle Mountsier

Paul Daly  00:01

Today we have Mike Darrow, CEO of TrueCar.

00:04

This is Amplify, a retail automotive podcast brought to you by Reuters events and ASOTU. It's time to make the most innovative voices in retail automotive, louder.

Paul Daly  00:23

Mike, it's good to be here with you today in person on a podcast.

Mike Darrow  00:26

Thanks for having me. I love talking to you guys. And this is a great opportunity to do that.

Kyle Mountsier  00:31

Man, I love the conversation. I

Paul Daly  00:32

know, we're already settled. Get ready receipt. So we're here at the Reuters automotive retail event. So we have this mix of OEMs and dealers, industry partners, I think that industry partners hold quite a bit of influence. In this current situation we're in because we are just looking at the shifting landscape OEMs have big challenges to solve. dealers have big challenges to solve. And then you find yourself right in the middle of those challenges.

Mike Darrow  01:01

Yeah, it's, it's a great industry that we're all a part of, and I got a chance as I cut my teeth in this industry to work on a number of different sides of it, I started on the OEM side and got to learn the business there. That business has changed a lot. I'm realizing just recently, with the OEMs, coming in going direct to consumers, it's put more pressure on the OEMs. It ends up getting squeezed onto their dealers. So I'll just give you a couple of examples. Back when I was working for Nissan, if if a pricing discussion ever broke out, we had to leave the room. Right, the OEMs would say don't get involved in pricing. That's the dealers business.

Paul Daly  01:34

Okay. Wow. Yeah. So really, they made to

Mike Darrow  01:37

step out, we go to an advertising Association meeting, we decide what we're going to run for the month pricing came up, it's get out of the room, right? We don't deal with pricing, retailers handle that. Now the pressure that's been brought on by like Tesla, and Rivian, and all that control in the full chain all the way to consumer, I think has put a little bit of strain on that relationship. And we're seeing a little bit of that. But as long as we all and there's so many talented people in this industry, the OEM luxury dealer, as long as we keep an eye on the customer, we can work all these issues out, it'll always work out in the end.

Paul Daly  02:06

Explain what you mean by that. So like, how does that practically play out as long as we because I think everybody would say, of course, we're keeping an eye on the customer, right? Like you're saying that and the OEMs are saying the dealers are saying that, but what do you mean, when you say as long as we're doing that, unpack that?

Mike Darrow  02:22

I think when we get into these arguments, we tend to look internally at each other and find friction points versus looking at the consumer, and what type of problem are we trying to solve? What do we need to keep focused on to solve it as a group, rather than coming at it from different directions? And a perfect example, I came up in one of your sessions this morning was retailer selling over MSRP. Right? The dealer, you had said we don't sell cars over MSRP. Yeah. Right. So I think in those battles, if they just step back and say, Okay, what do we do, if we keep our eye on the customer? Right, you probably bring that pricing down a bit, get closer to MSRP, because you want the customer to come back. And I listen, I understand the dealer's point of view. Oftentimes, they were selling cars pre COVID under invoices. So they've been on both sides of it. So it gets interesting. So but I think as long as when we get into these conflicts, we always say, hey, what, what are we trying to do for the consumer? Right? What are we trying to accomplish and make sure that we're building the right cars, we're delivering the right way, we're creating the right buying process, those things tend to work themselves out.

Kyle Mountsier  03:25

What do you see as like, maybe one or two of the major freight friction points or, or problems that we as an industry need to solve for the consumer right now? What are the what is the consumer demanding of us? Yeah,

Mike Darrow  03:40

I think for us, it's being willing to give up control, right, our industry in a lot of cases has been built about controlling the process, 12 Step sales process, do this, take the customer through that, make them take a demo, drive, do these things. What customers are saying these days is helped me buy your products the way I want to buy them and where I want to buy them. So you gotta meet them where they are. And you got to give them opportunities to use processes that meet the way they want to absorb that vehicle. So I think those are the two big things. It's a little unnerving. Because if you believe that really in your core, you got to give up some control.

Paul Daly  04:15

Right? You can't do can't have it both ways. That's right. Right. And I think we've talked about that a lot. This the spirit of innovation on one side and kind of humility, on the other top, understand that this is a give and take just like any good relationship. That's right, right. There's not a good relationship or a good marriage, or a good parent child relationship, that does not exhibit a healthy measure of good intake in the midst of the friction.

Mike Darrow  04:37

That's right. And as long as everybody's growing from that we all learn something and we all gain something from other people's perspectives. That's how you get to the best answers, I think,

Kyle Mountsier  04:46

Well, that and the growing part of it is like we just we sometimes we just hold so dearly, to our ideals or our opinion. Sure, right. And all of a sudden that stifles any level of innovation or care that we could have for someone across across the way,

Paul Daly  05:03

you know? Because the moment you're right, yes, we're done growing. Exactly.

Mike Darrow  05:07

That's right. That's right. And I see it the most. I'll run into it with our sales team. Some of those folks are here, they get so passionate about our products, I'll go on a sales call with them, they'll break into a big elaborate pitch, which is well done. But really good sales happen by listening. Right? You listen to the dealer, you start off with a question, Mr. Dealer, how can I help you? What's your biggest problem? How can I help you today? How can I help you solve a real problem? And if you start there, then the conversation takes you where you need to get to. So I think there's a lot of opportunities to listen, ask questions, and really learn from each other. There's so many smart people in this industry, there really is they're at all levels, retailers, OEMs, third parties everywhere.

Paul Daly  05:47

There's there's an element and we talked about this in the beginning the seat that you have. You said you know, if listen to the consumer, what ways do you have you know, we have a lot of traffic to your platform, we have a lot of people giving you their their idea of what they want and how they want it. Give it give us some insights, like what are you seeing with the volume and the traffic that you have? What we're

Mike Darrow  06:08

seeing is, if you try to solve all consumer issues in the buying process, one way, you're not going to make anybody happy. Right? So we've started working on things some some companies call them personas, we've started to call them buying cohorts, where we identify a group of buyers who demonstrate similar needs, right? Maybe it's a, it's an economically challenged buyer who needs help with financing, right, you see those buyers come through the site, you can start building flows and products that cater to them, right? You help them get free financed ahead of time you listen, you lean in and see where they need their help. So for us, it's, we get about 9 million monthly uniques. So we see a lot of things, we see a lot of things happening, we've begun to cluster consumers together and try to find ways to develop unique solutions for different buying groups.

Kyle Mountsier  06:58

I love I love that idea. Because a lot of the times when we talk about a process, or a way to do business or anything like that, what we start to say is like the best way to do business is blah, right, whatever that is, and we like we're tired about opinions, and we're right. But that's the bet like everyone should buy a car like this. Actually, we have a good friend, Matt Lasher. He's like, Well, digital retailing is actually built around the idea that credit is not an issue. Right? And a typical Lasher. Right. But but but it really is West Herr automotive, yeah, from the rest of West Herr Automotive Group. And, and so if you if you just if you think like everybody wants to buy that way, and a whole subset of culture can't buy that way. And that's just one example. There's probably multiple other examples, right? Maybe they don't know how to trade in a car, they don't know, you know what financing options are out there. They only they only select x instead of y. And, and if you and so what you're saying is like if you can start to map some of those, you can create custom journeys for buying personas that say that that's that that's an option. I think that's a really unique place that like a third party marketplace can play because like a dealer only can deal with a certain subset of people and trying to do all via all things to all people is actually pretty difficult. So you do have that unique opportunity. Yeah.

Mike Darrow  08:18

And the best way to get at those things is by asking questions, right? So we take consumers through. Justin, who was on one of the panels mentioned the Fit quiz we have

Paul Daly  08:27

Yeah, I love that name. Yeah. Just understand what it is. Yeah. Help people

Mike Darrow  08:31

help people determine or let us know what's important to them. Is it a third row of seats is a trunk capacity is a fuel economy.

Paul Daly  08:38

Is there any financial conversation that happens then? Like, what's your price range? And the Fit conversation? Well,

Mike Darrow  08:43

what the other thing we found out is for a certain group of buyers, you're doing them a disservice if you don't help them, look at the right cars, right? So we have close to a million cars on our website. No shopper is going to look at a million vehicles. That's kind of a that's a vanity metric that we throw around industry, so many cars, but

Paul Daly  09:02

you only have to have the one called it out. You only have to have the one. That's

Mike Darrow  09:06

right, right. So so what we've started to do is we ask people to answer a few questions prequalify. And we can come up with a downpayment and a monthly payment, and then sort our inventory based on that. So they're only looking at cars that they can afford, when they get to the end, they don't go through a full process, get to the very end of it and find out they're looking at a car they can't afford. So there's a lot of ways you can do that. But you got to lean into the consumer and you got to ask the questions, they'll lead you to the right answer, as long as you can work with them.

Paul Daly  09:34

So we have one final question. Sure. What how would you define the role and I want you to speak to all the other industry partners, right, because we've been leaning in, you know, we're friends with a lot of industry partners. And we've seen them as a critical component to solving this. This issue, right? The consumer shoe. What's your encouragement to the industry partners out there? What position should they be taking as we enter this next era of the auto industry?

Mike Darrow  09:58

I'm hoping they are all doing like we're doing and they're they're focusing first on the customer, but then also realizing that if you're going to be a real marketplace and industry player, you've got to have supply as well as demand and put as much energy into creating great products for the supply side, which is the OEMs. And the dealers, right? I mentioned Uber in my presentation, they do a great job of that people love to drive for them, and people love to ride with them. So you know, you're a really good marketplace when both sides are happy with you. And if you spend equal amount of time focusing on both sides of the equation, I think that's when you end up with the right answers.

Paul Daly  10:33

Well, I don't think it said it any better. Mike, thank you so much for joining us today. Thanks for having us of luck in this next year. It's a big one.

Mike Darrow  10:41

All right. Absolutely. Talk to you guys.

10:44

Thanks for listening to the AMPLIFY podcast brought to you by Reuters Events and ASOTU. For more engaging episodes like this, subscribe or follow us on your favorite podcast platform. You can learn more about our hosts Paul J. Daly, and Kyle Mountsier by visiting ASOTU.com

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