A Fresh Look at NADA, Part 1

Getting ready for NADA 0:00

Steve Shaw: Dave, what's going on? How you doing? Welcome!

Dave Rogers: Hey buddy, how you doing, man? Everything's great.

Steve Shaw: Awesome. I'm doing spectacular today. What's new in your world?

Dave Rogers: I'm trying to finish up a month and getting ready to go to NADA for the annual dealer show.

Steve Shaw: That's awesome. There's nothing better than the convention for me. I've been going for years, and it's the most fun. It's like being a kid. I get to see all my friends, everybody in the world. I like to say I walk around, meet old friends and tell some lies.

Dave Rogers: That's pretty good. I like that. I never got a chance to go when I was with the public group. They had people that did that stuff. They didn't let us minions go. The first year with this group, a couple of days before, I got an invite to go from the corporate controller, and I'm like, "Yeah, let's do it." I think I've gone every year except one since. It's been great.

Steve Shaw: I never got to go when I was at the dealership either. I worked out of Southern California, but even with the Vegas events, I don't think I ever had a chance to go. But as a third-party vendor, as a trainer, I started going, and I did a booth one time. I think it's a bigger hassle to do a booth than not to, for a small company like mine. I hate to use the term, they say you're not supposed to carpetbag, and I don't do that. I just wander around, because I know so many people there. Being in the business as long as you and I have, I have a little list on my phone, and as it gets near convention, I call up all my friends: "Am I going to see you this year?"

Dave Rogers: That's my plan too, to catch up with some people I haven't talked to in a while. I always see somebody I worked with at one point. You don't talk to them for two years, and then you see them at the convention.

Steve Shaw: Exactly. Actually, I've had a lot of people call me this year who want to schedule appointments and talk training. My calendar is literally getting filled up with people to talk to. I'm headed out to LA, and then I'm going to Vegas on Monday, probably staying through Friday, so I have plenty of time to see everybody and make all those appointments. It's going to be fun. Are you looking for anything in particular? What are you doing out there besides goofing off? Wait, Tony: Dave is going to do business, go to training and find some deals. That's why he's going to be there, just in case you're watching.

28,000 steps and a list of vendors 2:57

Dave Rogers: I'm actually like an idiot when I go to these things. I get there at 8:30, get in as soon as I can. Most days I sneak in early if I can, and I go from vendor to vendor to vendor. Last year in New Orleans, I put 28,000 steps on each day. I was wiped out. I think I tore up the Achilles tendon on my right leg, which hurt me for six months. And at that show everybody was really desperate, because it snowed. There were more vendors than people. I was holding my hand over my badge so nobody would chase me down. These guys are great. They can pick off your first name from a half a mile away. It's amazing.

This year I've got appointments with some of the vendors we currently do business with, and I started picking off a list on the app. I want to look at some AI, some voice AI, some data mining tools. I think the data mining is where it would really help us the most. The phone stuff we've had mixed results with. As I've told you before, I don't know if all this stuff is really AI. Some of it, I think, is just fancy bots. It's not, what is it, the large language model or whatever it is. It's not that intelligent when you read the dashboard and look at some of this stuff, or it doesn't integrate with your DMS or your CRM. That's the other problem with this stuff. It's great if it can answer a phone and make a service appointment, but if it can't put it in your DMS, then somebody else has to do it. It helps answer the phone, but it's not really saving you much time. I understand most of the stuff is demos and not a live site, but I just want to see what else is out there. There are hundreds of new vendors this year.

Is it really AI? 5:06

Steve Shaw: It's amazing how many different people are out there. I know AI is the buzz. When you look around social media, everybody's talking about AI, and I wonder too, is it really AI? I could say our university is AI. Technically, there is some artificial intelligence there. But is it full-on AI? Well, we work on that, and I've had lots of discussions with AI companies to make us a little more unique. But just because it says AI on it, what does that mean? What's the real benefit? I think some people put AI on the back of it just so they can charge more money.

Dave Rogers: Oh yeah, it's in everyone's web address now. I don't want to be negative, because I'm high on AI. I think it's going to be great. It's just like everything else. It's going to take a little time to bake in. I think it's only as good as the data. If it can't read from all of your sources, your DMS, a different appointment scheduler, a different CRM, maybe vehicle specs, your inventory online, it needs to feed off all that, and I don't think they're all capable of doing it all the time. I've got a new company I'm going to meet with again out there. I signed up for a pilot at one of my new stores to try it out. I just keep experimenting. But some of the stuff has been very disappointing, I've got to tell you.

The parts robot 6:37

Steve Shaw: Have you heard of the robot? The parts robot.

Dave Rogers: The parts robot? Yeah, I've actually seen it. A friend who works for Penske was showing it to me when I was at one of his stores. It's funny, the Reynolds and Reynolds sales rep hit me up about two weeks ago: "Hey, I've got this thing." He has a name for it, and he doesn't tell me what it is. And I said, "Yeah, that's the robot you have in parts." He's like, "How do you know that?" I go, "I've heard of these things." It's funny, because you read and you listen. He sent me a quote on Friday, I think, for one of my bigger stores, one of my BMW stores on Reynolds. I haven't opened the email yet. I don't think it integrates with anything but Reynolds right now. I think that's still in the works. I'm not 100% certain.

Steve Shaw: It sounds like a cool tool. I'd love to see a demo of it working. I don't know if it's the same as the restaurant robots, where they come over, take your order and bring you your food.

Dave Rogers: Yeah, it is. What I saw had a little flatbed on it, and I was told they were coming up with a rack system so you could put two or three technicians' parts on it and not have to make one run per technician. So they're evolving it a little bit. They program every tech and every bay, you load it up, punch it, and it goes down the middle of the shop and stops off at the tech.

It's funny, I worked at a store in Eatontown years ago that had a track system up top, with baskets that came out of the parts room. Have you ever seen a working chicken coop, with the rails and the carts? It had this iron beam that went around the whole shop, and they had a parts delivery system. I have no idea how it worked, because it was all mechanical and all metal. I worked there in probably the early nineties. I guess they put your parts in there with some kind of signal for the tech, and when it came by your bay, you pulled your shit out.

Steve Shaw: It's like going to the cleaners. You go in, they punch in your name, and your clothes come up and drop off up front.

Dave Rogers: Exactly. It was the same exact thing as the cleaners. It's pretty funny. But this robot looks cool. I really do think it looks neat.

UVeye scanners 9:12

Steve Shaw: I'm interested in seeing that. A couple of our dealers have the UVeye machine that does a whole-body scan of the car. I think that was big a couple of years ago. I'm interested in learning a little bit more, because we have so many stores using it now, and I don't think any of them are integrating it into fixed ops the best way possible. I'd like to get more information on it so I can help my dealers with that integration. It's amazing how that camera can see every little scratch on the vehicle.

Dave Rogers: We've had a couple of demos on it. I saw it a few years back at NADA, and when I got the price, I just kept walking. I told the guy, "You need to hit up the publics. Hit up CarMax, hit up Carvana, these guys using other people's money, and get traction there, because they can afford to put it in these places, and work out all the bugs." And I think they did. There are a bunch of centralized recon areas for Carvana and different places that use it. Last time I looked at it, for a single-point store, it was a little pricey in our mind. You couldn't buy it, you had to lease it, and the monthly software was a little up there.

Steve Shaw: Yeah, 250 grand or something like that is what it was costing, if I remember.

Dave Rogers: I think we're going to build a place down in Delaware that's going to have four or five stores, and maybe a location like that, where you can split it up and have four stores running cars through it, is the way to go. But it's cool stuff. I love it. It's just a lot of money.

Steve Shaw: It is a lot of money. I do see some return, but they use it sporadically. They're not maximizing it. I haven't been on site with the actual machine, so I've been working with my trainers to help develop it. It's coming along, but I'd like to get a little more involved with that.

Kiosks, and waiting for the bugs to be worked out 11:30

Dave Rogers: It's like anything else. After a while, when they bake in all the bugs and get their R&D out and their initial profit, they're looking for the next two or three tiers of people to buy it. The price becomes more reasonable, or someone else jumps into the market and now there's competition and they drop their price. I love these guys who have the money or the initiative to jump on everything new, but I don't always think that's a wise decision.

I did those kiosks a couple of years back, before COVID. It was before Reynolds bought the company. I got it right around that time. And it worked good. I just didn't think my staff embraced it enough. You pay all the money for it, and it went over like a lead balloon. Once COVID happened, nobody wanted to touch anything. You couldn't clean a kiosk enough for somebody to touch it. So we put them in mothballs and haven't seen them since. I've learned from my owners that patience is sometimes the key. You wait till someone else works out the bugs, see what happens, and you get a better product.

Steve Shaw: That's true. Absolutely. I absolutely love the kiosk, especially in a small store environment, though certainly for a large store as well. A couple of groups I call on have a small Volvo store or a small Mazda store with one advisor. If I could use that kiosk to back up, support and teach, and have a cashier there, do the whole Home Depot model, where people go over to it. Personally, it absolutely drives me insane. I'm never going to the kiosk or the self-checkout at the grocery store or Home Depot. I don't want to lose that personal touch. But in a smaller situation, I think it's great for support and backup and getting people used to it over time. And in a large dealership, I think there's a generation of kids coming up who would rather deal with the kiosk than the advisor. But you're right, it's like everything we talk about. If the manager doesn't really embrace it and want it to work, it's going to sit over there on the side and never get used.

Dave Rogers: At every store where we tried it, they didn't embrace it. One store had a girl in the drive-through who kind of introduced everybody to it, but the manager screwed up the process. The ROs were dumping into a bin and getting reallocated to advisors. Before they put it in, people would line up in the middle of this half-circle area with all the advisors, and they had to stand on the mat, because if they didn't, somebody would bark at them: "On the mat." And the advisors would look down and wouldn't greet the customers.

So I put the kiosk there. I figured people could punch it in. The DMS at the time was Reynolds, and the RO would spit out fine. Then the advisors realized the manager was round-robining these ROs. For some reason, it wasn't staying with the appointment or the advisor. So all of a sudden there was no wait. People would walk in, "Come on, come on." Now the advisors had their heads up and were greeting customers. So it did work in that way. It sped up the write-up area. But it defeated the purpose of having the kiosk.

Steve Shaw: A few years ago, I guess around 2018, I thought when that kiosk comes out, my job is over. Even when video multi-points came out: if people start doing this... But there's still the human aspect that has to be done. And I like the idea that if an advisor thinks their job's going to go away, they might actually work a little bit harder. For a while, I think the kiosks were getting a higher RO average than a lot of the advisors in the store. So from a value perspective, I think it really works.

Dave Rogers: I brought my car to a Dodge store, and the kiosk upsells you on the alignment and different things. But then it was a less-than-stellar service department and experience, because after you check in, you're like, "Now what? Do I leave my car in the drive-through? Do I get a tag? Do I get a copy of the receipt? Do I need to approve that?" "No, you're good." The next day I call: "I just want to make sure you got my car." "Yeah, we got it." "Okay, well, nobody's called me yet." "Okay, well, we will." Thursday I finally get a phone call on it. It's still all about people.

The other thing I liked on that Ecomoto setup is the pickup lockers, where you put the key and paperwork in. You can put them outside or in a central area, and the customer can pick the car up after hours. You just tell them what locker it's in, and the key and paperwork are there. I thought that was a nice thing for after hours, and that might be something I circle back around on, because a lot of stores aren't open as late as they used to be. There used to be nine o'clock closing times, and there aren't anymore. So maybe that would be a nice feature. That's something else I might take a look at.

Voice AI that won't integrate 16:53

Steve Shaw: The AI phone systems, I get asked every single day: "What's the best one? What's the best system? What do you know, Steve?" And I'm like you. I haven't found one that's fully integratable or that works the way we need it to. Like you said, one might work at one store with Dealertrack, but it might not work with CDK or Reynolds. So that's a highly personal situation. I saw the CDK demo one time, and it was awesome. If you have CDK and use their whole system, it's wonderful. But if you're outside their environment, it's not going to work for you. I think that's what happens in a lot of those instances.

Dave Rogers: That's what happened to me last year. I was talking to all these different third-party AI companies, and the problem was none of them integrated with CDK. I went to NADA, and we were still shopping for DMSs, so I was a big hit for the DMS vendors. That tied up most of my time down there. I sat through a bunch of presentations with CDK, and then they introduced me to their AI. And I was like, okay, now it makes sense why no one else can get access to the CDK system. They're hogging everything up so they can sell their AI. That makes sense. And it was supposed to be the first quarter, then the second quarter, and you know what? It still doesn't integrate with CDK, none of the outside companies.

You have to have Xtime or one of the other third-party appointment schedulers that are kind of grandfathered into the integration. Then you can have your voice AI drop appointments into your scheduler, which then pushes them into CDK. So I'm sitting with these different vendors: "Do you integrate with CDK?" "Oh yeah, absolutely." I sat through demo after demo after demo, and I'm like, "Well, how does yours put it into CDK when no one else can?" The salesmen couldn't tell me. Finally, I said, "I need you to tell me right now how it works." They get on the phone with someone and say, "Oh, you have to have a third-party scheduler." "Oh, so you don't integrate with CDK."

The salesmen will lie to you just to sign a contract. That's one of the biggest things. You're going to spend, I don't know, $1,500 for voice, you've got to spend $800 for Xtime, and there's a $1,000-a-month integration fee with CDK for appointments. So now you're at $1,800 with that, plus the $1,500. And by the way, CDK conveniently rolled scheduling into their fixed ops suite. So if you have other stuff in there and you want to drop appointments, you don't save any money now. It's all part of the suite. To decipher all this stuff and peel back the onion, it's a lot more than just seeing a show and a demo. You really have to dive into the details, and that's what everyone misses. All these podcasts, all these LinkedIn posts, all this stuff they're advertising, it's like a bunch of scammer salespeople, and they never get into the details.

AI reporting tools and what they cost 20:20

Steve Shaw: I think that is the one bad thing. There are a couple of AI tools I'm looking at from an analytics perspective. There are the ones that have been around for a long time, which do a great job. But I'm excited to see some of the AI analytics. I was doing a demo, and I'm not going to say anybody's name, but they said, "You can just say, 'Run a report for transmission services. What's the penetration of transmission services on cars between 30,000 and 50,000 miles?'" You don't have to click the button, do the filter and all this. You just ask it to run a report. I was like, now that's pretty cool. That's some real AI. "Include these three stores." In a situation like yours, that would be super cool. So I'm interested in seeing that a little bit more too.

Dave Rogers: Good. I want to look at some reporting tools. I'm not shopping for DMSs anymore this year. I don't really care about any of them. They still want to set appointments, and they take up a lot of your time. But I do want to look at some reporting tools, because it's always bugged me: I've got to have a DMS with all my data, and then I've got to pay a third-party company to extract my data from the DMS and put it into a usable format. So I'm paying a third-party company integration fees. Some of these reporting tools are really slick, but they're not shy about asking for all the money either. They're not shy at all.

And when you have 30 stores, everything multiplies. A thousand bucks a store per month is 30 grand. You're sitting there talking to your owners. I know it would work. I know it would save us money. But you can't pencil an ROI on that. "Oh yeah, boss, I'll save you 40,000 a month on it." It just doesn't work that way.

Steve Shaw: Right, exactly. I know it's tough. We've always taken that approach for ourselves from a training perspective. We're not shy about asking for the money if I have to show up at your store, and generally we can talk to you about your ROI. But from a global perspective, for our universities, we want to be low, under the radar, so you can actually demonstrate an ROI. I went through all of that back during the good old COVID days: what's the best way to price it? For us, it was, we have to keep it reasonably priced, one package per rooftop, because it doesn't pencil if you don't do it that way.

Dave Rogers: There's definitely a happy point somewhere between 500 and 900 bucks where you can kind of slide it under the radar. It's not as obnoxious. But when you get to a thousand, and again, it's not just a thousand a month, it's all the other stuff that goes with it, because you're paying DMS integration fees. The listeners out there with Tekion will tell you there are no integration fees, and PBS will tell you the same, and those are decent DMSs. I've looked at them, but they have their issues too. Tekion is a lot of money to start up and a lot of money per month. So okay, you save on integration fees, but you're paying a lot of money. It's that old thing: pay me now or pay me later. You're paying someone. It always seems like you're paying someone.

The donut test, and a tip for GMs 24:06

Steve Shaw: I like to call it the donut test. If the monthly fee costs more money than you would spend on donuts for your staff or your customers, it's probably too expensive. That's why I call it donut money. If you don't want to spend donut money on training, you probably don't want to train. So if I keep myself in that donut range, hey, we're good to go.

Dave Rogers: I'm stealing that one from you. I like it. Steve Shaw's donut test.

Steve Shaw: I'll put that in the title: the donut test, Steve Shaw's donut test. At NADA, I guess we'll get a sponsor like Krispy Kreme or something. Shoot, on that note, we probably ought to get out of here, and let's catch up one more time before the convention. How's that sound? But first, give us a tip of the day for the GMs out there looking at the convention.

Dave Rogers: If you're going to focus on AI, because that's the latest buzzword, I would focus on something that integrates with your CRM, or make sure it integrates with something. Don't come flying back and sign up for something without working out the bugs. I tell everyone AI is like having a child or having an employee who's green. It doesn't know what it doesn't know, and you have to be willing to train it. Don't sign up for one of these programs without doing the research, because when you get into it, if you're not willing to get on the phone with the developer or get on the portal and say, "This is wrong, this can't happen," I see it over and over again: it's an epic failure. If you're going to sign up for one of these things, you've got to own it. It's got to be yours. You've got to be integrated with it, and you can't pawn it off on someone because it wasn't their idea. That's my tip.

Steve Shaw: Awesome. Awesome. Well, let's stop right here and catch up next week.

Dave Rogers: Yep, see you then.