Published in Automotive News Nov. 24, 2014
In 2008, the recession was raging, the automotive business was a bust, and Joe Cardinale decided to make some changes.
So during the next couple of years, the president and co-founder of Cardinale Automotive Group reinvented the way his dealership group works.
He committed heavily to online sales and marketing. But he also parted ways with third-party lead providers, developing his own systems and software to manage his online presence so as to be ready to take advantage of what he calls the "zero moment of truth" -- the point at which a consumer decides to buy a vehicle.
He also installed an approach he calls "management driven," which seeks to anticipate industry trends rather than wait to follow the market. And he set stringent goals for his staff and held them accountable for results.
Those disciplines and cultural changes guided the Seaside, Calif., group through the recession, are helping it ride the current economic wave and, Cardinale predicts, will insulate it from the next downturn.
Cardinale, 63, owns 11 new-car dealerships in California and two in Arizona. In California, he also owns two Harley-Davidson dealerships and one used-car store. In 2013, the group sold 5,565 new vehicles, up 45 percent from 3,838 in 2009, and 8,732 used units, nearly triple the 3,210 it sold in 2009.
Industrywide, U.S. new light-vehicle sales rose 49 percent from 2009 to 2013. But Cardinale is grateful simply to have weathered the storm.
"It is by the grace of God that we survived 2008 and 2009," he said.
Cardinale founded the group in 1979 with his brother, Tom Cardinale, who is the dealership group's vice president and co-owner.
In the very beginning, the brothers crafted their Cardinale Way brand promise to develop "outstanding relationships where everybody wins." In other words: Treat people fairly and in such a way they are happy with the relationship, Joe Cardinale said. "It's our founding commitment."
Cardinale bought and sold many dealerships over the years. He lost a Chrysler-Dodge-Jeep dealership in South Lake Tahoe, Calif., and a Buick-Pontiac-GMC store in Scottsdale, Ariz., in 2009 when General Motors and Chrysler shed hundreds of dealerships and reorganized under bankruptcy protection.
Back then, Cardinale was a "brick-and-mortar dealer," hoping to convert third-party leads into sales. That left his dealerships exposed to the whims of a poor market, he said.
"All we had was a website and third-party lead providers," he said. "That's not good enough anymore. I don't want you shopping on some other platform site. I want you shopping inside my website."
So he became a digital dealer. He began using his online presence to manage his dealerships' reputations and to make their vehicles visible not just on third-party sites but on sites that consumers go to before and when they decide to buy.
He began utilizing virtually every facet of digital marketing, including videos in English and Spanish, reputation management, 24/7 live chat platforms and other sophisticated digital tools tailored to the eight automobile brands his stores sell.
"Everything communicates together; everything integrates," he says. "If you touch one of our classified listings and don't shop one of our stores, then we're going to send you a video of the car that you looked at to draw you back into the site.
"Go to Facebook, and we're going to put a post on your Facebook wall to remind you of the car you looked at."
The group had so much success with its digital dealer efforts that last year, it created a separate company, ZMOT Automotive Digital Velocity, to handle that business. ZMOT, which stands for "zero moment of truth," markets the Cardinale group's processes and system to just fewer than "a couple hundred" dealers in the U.S. and Canada, he said.
Sales associates receive ongoing training in customer-experience and telephone skills that he likens to concierge training at a fine hotel.
They are charged daily with talking with at least 20 potential customers and setting up at least two in-dealership appointments. Sales managers follow up with a telephone call to prospective buyers.
The dealership group monitors and measures the number of calls handled and appointments kept at each dealership each day.
Each store's general manager must agree to the company's strict policy of generating a net profit that is equal to 20 percent or more of the store's gross profit.
"People come to work for us because they know they will be successful here. We will provide all of the support, all the tools, all of everything you need to be successful. For us, that's non-negotiable."
Undergirding the changes is Cardinale's "management driven" approach, which he considers opposed to being market driven.
"Market driven is the theory that says, 'The market is up. We need to increase our cost base'" by expanding, Cardinale says. "But what goes up comes down, and we would be fat and ill-prepared to survive in a reduced market."
In contrast, "Management driven says we make our own weather. We decide what our goals and our objectives are, and we don't care what the market is doing. If we choose to expand, we'll do it" in a way that aligns with the company's strategic plan, not as a reaction to a rising market, he says. Then, when the market turns soft, "we will not have to let people go and close stores."
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