AutoNation's big digital push
Dealership group plans to spend $50 million to attract tech-savvy buyers
FORT LAUDERDALE, Fla. -- AutoNation Inc. has poured $500 million into store renovations in the past three years. But customers still can't purchase cars as easily as they buy electronics at the Apple Store or books on Amazon.com.
That's why the country's largest dealership group is trying to remake itself. It wants to compete for the business of millennials and others who dislike traditional dealerships, including AutoNation's 215 stores.
"The move into the digital world is incredible," AutoNation COO Michael Maroone said. "People come into the e-com world looking for an experience they can get at other retailers, and it just doesn't exist in auto retail."
So AutoNation is investing $50 million during the next three years on new dealership Web sites, tablet computers in the service drive and a so-called new digital storefront. The vision: Speed transaction time and let customers control their shopping experiences, whether online or in the store.
It may never be as simple to buy a car as it is to purchase an iPhone, but auto retailers such as AutoNation are trying to close the gap. Other dealership groups also are using technology to go after tech-savvy customers who don't like traditional dealerships. Sonic Automotive, for instance, is putting iPads and iPhones in the hands of most dealership employees.
Test drives and bricks-and-mortar will always have their place, but many customers want to do as much online as possible, said AutoNation CEO Mike Jackson. To illustrate, Jackson points to what he calls the first moment of truth in any vehicle purchase -- when the customer provides contact information. Today, that happens electronically in one-third of AutoNation's vehicle sales, and that ratio will only increase, Jackson said.
Customers are "empowered, and they have choices this power has given them like never before," Jackson said. "But they're impatient and time constrained. They want things simplified, and they want technology to do that for them."
That means AutoNation must provide that experience or those customers will buy their cars and have them serviced elsewhere. Helping Jackson and Maroone are three executives hired or promoted in the past year: Alan McLaren, Dave Koehler and Greg Revelle.
They have big obstacles to overcome. In the way are multiple technology platforms "hooked together with Scotch tape," Maroone said.
Handling a service appointment, for instance, means moving among multiple vehicle inspection systems, the customer relationship management tool and the dealership management system. The resulting complexity is "brain damage for our employees and our customers," said McLaren, senior vice president of customer care.
The proposed solution: Get the systems talking to each other in the background. When a service adviser greets a customer in the drive with a tablet computer, the adviser will automatically see the customer's purchase and service history and any rejected repair work. A customer can even pay in the drive instead of waiting in the cashier line.
That approach will be tested with pilots starting in November. The company plans to roll out service tablets to all of its stores in 2013. Other big retailers also are using or experimenting with tablets in the service department.
AutoNation will build a proprietary system to manage the customer experience, setting up the digital storefront and new dealership Web sites. Maroone calls the $50 million outlay the biggest information technology project in company history.
Think of the AutoNation system as a hub surrounded by spokes, many of which will be filled by vendors, said Revelle, senior vice president and chief marketing officer. The key will be integrating the system with AutoNation's dealership management system, which is provided by ADP. Other vendors will be asked to provide a la carte services.
Details are sketchy, but the ultimate goal is to link the online and bricks-and-mortar worlds. In other words, when the customer who shopped online at midnight in his pajamas comes to an AutoNation store the next day, staffers could have selected cars ready for a test drive. If the customer initiated an online trade-in, the store could be ready for physical inspection and finalizing the transaction.
"We believe customers need to be able to find a vehicle, an exact price, build their own menus, get their own payments, appraise their own trade, if that's what they want," Maroone said. "And all that work that's been done online needs to be easily accessed in the showrooms."
Customers will control how much information will be shared, Maroone said.
Cutting transaction time is a main goal. If most decisions are made online, Maroone said, it ultimately could take as little as 15 minutes to finalize paperwork and deliver the car. Today, the traditional process takes two to four hours depending on the day of the week.
The digital storefront and revamped Web sites are expected to roll out in the first quarter of 2013.
The investment means change for dealership staffers. Koehler, senior vice president of sales, is getting them ready. Managers and salespeople are being trained to reduce transaction times.
Finding Koehler, McLaren and Revelle was phase one in reinventing the customer experience, Maroone said. It came after three years of interviewing candidates inside and outside the industry.
Koehler came from Sonic Automotive in April 2011. A runner who hits the pavement before sunup and is in the office by 7 a.m., Koehler initially was hired as a market president, and promoted to the top sales job in late 2011.
When Jackson learned McLaren was leaving Mercedes-Benz to return to his native Australia, he called and asked, "If I make you an offer you can't refuse, will you stay?" It worked. McLaren, who oversaw Mercedes customer service and the company-owned flagship store in Manhattan, started in January. Like Koehler, he spends a lot of time at dealerships and is typically among the last to leave the office each night.
Revelle, a former executive at Expedia, a travel Web site, was hired in April. Jackson felt he needed someone with online experience to lead digital investment. A Seattle Seahawks football fan who studies game strategy, Revelle analyzes various possible outcomes of a business plan before making a move.
The three lunch together once a week to trade ideas. They are in their 30s and 40s, but this is not a race to determine who will succeed Jackson, 63, and Maroone, 58, company leaders say. Maroone and Jackson say they intend to stay for the long term. They want to see the customer experience change on their watch.
Said Maroone: "Both of us are very committed to the business and seeing this through and to delivering to the customer a remarkable and unique automotive retail experience."
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