Tag: Cox

Owner Loyalty in the Service Department

I was asked recently to explore the service retention space.  This is a little outside my F&I comfort zone, but everyone knows why service retention is important.  Parts and service make up 40% of a typical dealer’s gross profits.  And, there is actually some overlap with F&I.  Consider, for example, a service contract with “zero deductible at original dealer.”

Here, I present my impressions of the space in workflow terms, plus some thoughts on the features I found technically interesting.  The workflow has a natural break between the onsite procedures of the service department, and marketing procedures which may be a different department (or outsourced).

The space is dominated by two recent mergers: AutoPoint, which acquired DME about a year ago, and Dealer Track’s Service Pro offering combined with Xtime.  See Cox Strategy Redux.  There are some pure play marketing firms in the space, but these two vendors cover the full cycle.  They are able to exploit not only workflow synergies but technical ones.

For example, you want your telematics to feed information to both the shop and the invitation process, and you want your intake procedures to include information from the accepted invitations.  Also, if the vendor has analytics that can drive a marketing program, maybe they can optimize shop loading as well.

If you are looking at a full-cycle vendor, then the distinction I am making about workflow may seem arbitrary.  Here are features and functions commonly associated with software support for the service department:

  • Greeting boards and RFID tracking
  • Mobile greeting/CRM tools with write-up capability
  • Service menu with “loyalty products” as well as shop services
  • Scheduling and shop loading
  • Status tracking with text alerts for customers and technicians

Pure marketing, on the other hand, brings in additional vendors and different offerings.  In addition to the usual mailers and campaigns, these might include a box of cookies, owner loyalty “membership” programs, and prepaid maintenance.

If you’re in F&I, you may have sold the Ultra Care prepaid maintenance product.  The provider of Ultra Care is not a normal warranty company, however.  Performance Loyalty Group (PLG) offers this product as a service retention play.  Here are features and functions on the marketing side:

  • Multichannel marketing campaigns including call center support
  • Analytics to plan and evaluate the campaigns
  • Telematics interface
  • Geo-fencing and mobile apps

The service invitation process is well established, and now understood to include all media from cookies to WhatsApp.  What is interesting is the use of analytics to make best use of the media.  Text messages may be cheap compared to mailers, but there is a cost in terms of the customer’s attention.  AutoPoint has an advantage here, because they do original research on aggregated data.  Analytics is only as good as the data you put in.

Strategically, telematics is not only a powerful tool but a barrier to new entrants.  It reminds me of how the big DMS vendors once had a lock on OEM dealer communication systems.  For updates on the “battle for telematics data” follow Bob Chabot.

The holy grail of owner loyalty marketing is having the customer run your app on his smartphone.  This may even compensate for not having telematics data.  You can push invitations to it, and then manage service visits from scheduling through payment, along with geo-fencing and notifications.

Owner loyalty, of course, is not confined to the service department.  An app can be the touchpoint for new and used vehicle marketing as well.  Here, I am thinking specifically of the “velocity” method, in which the dealer is actively seeking vehicles to remarket.  For a list of popular app functions, look at AutoPoint or My Own Auto.

Cox Strategy Redux

It has been a few months since I posted my lighthearted Cox Automotive home strategy game.  In that time, four new projects have been announced linking members of the conglomerate.

I am still watching for some extension of auction functionality into the used-car department, maybe leveraging vAuto.  No word yet on the development of COXML.

The Expanding Dealer Automation Space

In my earlier article on Cox Automotive, I wrote that the subsidiaries tile our “function space.”  By this, I usually mean the F&I function space, although Cox is broader than that.  In today’s post, I will explain about function spaces and why this idea is important for software strategy.

Let’s say that you have been asked to identify all the functions performed in the F&I office, and then find software to automate them.  I did exactly this for AutoNation, back when PVR was $600.  The first thing you discover is that a simple list won’t do.  You at least have to put the functions into workflow sequence.

Tasks in sequence are a one-dimensional function space: a timeline.  This will help you to define where the credit process ends, for example, and menu selling begins.  Ah, there’s the rub.  Maybe the workflow branches out, and now it occupies two dimensions.

As I wrote in F&I Magazine, the workflow that produces a finance contract is a lot like the workflow that produces a VSA.  If you can picture the “F” workflow as parallel to the “I” workflow, this is much more useful than a simple timeline.

Function Space

Typically, when you see a diagram like this, it is already partitioned into the familiar systems: CRM, Desking, etc.  That’s the definition of “thinking inside the box.”  If you were designing an integrated system, you would want to start with the unpartitioned space.  That’s the only way to properly scope and organize your web services.

In fact, it may give you some new insights about how to pass data and control among the functions.  Should a desking system pull VSA rates?  Should the menu run OFAC?  Can you instantiate a “deal object” somewhere, and pass it by reference?

Last summer, I wrote about mapping dealer-system functions onto the consumer space.  So, that’s a third dimension based on who the user is, plus a strategic imperative that the online experience must dovetail with the dealership experience.

Pillars

What we see with Cox Automotive is an expansion of the domain covered by a single vendor.  The space dominated by the old CDK-Reynolds duopoly is a subset of this one (I will illustrate this in a later post, using a function point inventory).  The overarching function space was always there, of course, but it was filled with disconnected niche vendors.

In practical terms, this means that an increasing share of the dealer’s software budget will flow to integrated vendors outside the duopoly domain.  Since this is a strategy post, I will close with a Go metaphor.  Reynolds and CDK have been playing the game on a quarter board, and now Cox has highlighted their absence from the other 280 points.

Cox Automotive Home Game

After Dealertrack, I started noticing how many other companies Cox Automotive has acquired. Many of my old friends are now Cox employees. I wondered if Cox would be able to find synergies among the subs. Acquirers always talk about synergy, which means that the combined entity should make more money than the subs could on their own. For example, listings on MakeMyDeal come from Autotrader, which benefits both.

There are other examples that I am not at liberty to disclose. Strategy buffs can play along using the exhibit below. Click the thumbnail for a larger image, print it out, and then draw lines connecting subs where synergies are possible. Look for cross selling, channel sharing, vertical integration, etc.

Cox Game

Be creative, but don’t be vague. You must be able to identify a project that will exploit each synergy. Extra points for stringing subs together in workflow sequence. Here is one that I spotted while making the chart. Any resemblance to an actual project is purely coincidental.

  • AiM snaps a photo of an off-lease vehicle. This photo, plus some data, is uploaded to Manheim, then forwarded to HomeNet and advertised for resale on Dealer.com … all using a proprietary message format which we’ll call, playfully, COXML.

You can see that Cox tiles our function space pretty thoroughly (not to mention the Chinese holdings) so there is plenty of opportunity. Enjoy the game, and feel free to share your results.