Jim Fitzpatrick: There’s a few dealers that are out there that are not as familiar with what your solution is. Give us the 101.
Bill Lucchini: Look, Dealer-FX, we live for helping the service side of a dealership be successful. We provide software that takes you all the way from appointment booking straight through to the check-in of the customer to working on the tech, then back to the parts department, checkout, that whole series. We try and make that easy inside the dealership operationally, we try and make it a fantastic experience for the end customer so they want to come back and you have good retention.
Jim Fitzpatrick: Fantastic. And you’re working with hundreds of dealers right now, all across the country, right?
Bill Lucchini: Yeah, thousands.
Jim Fitzpatrick: Thousands of dealers. Wow! You guys have your hand on what’s happening in the fixed ops department, that’s for sure. One platform. What advantage does Dealer-FX have in the marketplace by offering a single solution type setup?
Bill Lucchini: Yeah, it’s interesting. We’re here at NADA, right? We’re talking to a lot of customers, a lot of other vendors. There are a lot of point solutions out there. They do some really interesting things, but we were talking about it before. It’s similar to, imagine taking out your iPhone and you have to give up your iPhone and instead you buy a texting device, a telephone device–
Jim Fitzpatrick: That’s a good comparison.
Bill Lucchini: An email device, Right?
Jim Fitzpatrick: The thought of that.
Bill Lucchini: Then you have to carry four or five of them with you. And that’s what it’s like if you start trying to piece up that whole service experience. So what we’ve done is we stitched all that together, we built it from the ground up. It’s not a bunch of acquisitions stitched together.
Jim Fitzpatrick: As we do see out there in the marketplace.
Bill Lucchini: Yeah, and look, that’s a fine strategy. It’s not our strategy. Our strategy is one experience with one set of customer data so that when that customer goes from one touch point to another in the dealership. Same data, same experience, and no breaks in that experience.
Jim Fitzpatrick: It’s very customer centric. How companies like Amazon, Airbnb have changed or created their business model to be more dealer or more customer centric and how the automotive industry needs to follow suit. Talk to us a little bit about that.
Bill Lucchini: Yeah, it’s an interesting point because you see that in today’s world. If you’re not customer centric, you’re falling behind.
Jim Fitzpatrick: That’s right.
Bill Lucchini: So I’ll give you an example, at this show we were just announcing a customer self check-in. And what we did to launch that, is we did months of research. We started hearing people asking for kiosk check-in. I want my customers to be able to come up and go to a kiosk and check themselves in. We asked them, why do they want that? And we started to get the breakdown of, “well sometimes we’re busy, sometimes we have customers who don’t want to talk to people.” Started to hear the underlying reasons. So then we sent our product managers in to go meet with dealers and observe behavior in the dealers, and really understand the problems. What we realized is, it’s not a kiosk they want. It’s that smooth customer experience and meeting what a customer wants. And so we designed it to work on the phone.
Jim Fitzpatrick: That’s great.
Bill Lucchini: So you can [crosstalk 00:03:27].
Jim Fitzpatrick: Better that any kiosk.
Bill Lucchini: Exactly right. And we all know how to use our phones. You don’t have to learn a kiosk. That’s an example of customer centricity. It’s not just what they say. What’s the real problem? Help them diagnose it, and help find innovative solutions.
Jim Fitzpatrick: And that’s not to say that every customer that comes in is going to use their app to sign themselves in. There may be some, last time we spoke, that may say, “well, no, I want to talk to a service advisor,” or, “I don’t want to refer to my phone,” or what have you. Right?
Bill Lucchini: Yeah, absolutely. You know, my uncle goes to the airport, he checks in with the agent every time. I can’t imagine.
Jim Fitzpatrick: My parents would do that all the time. Right?
Bill Lucchini: Yeah, that’s right. I mean, I always use my mobile phone.
Jim Fitzpatrick: And they wanted that paper ticket.
Bill Lucchini: Yeah, that’s right. And it drives me nuts. One airline I fly, I check it on my phone, and then they make me come get a paper ticket because their systems don’t work. You know that you got to make that crazy process smooth. They’re clearly not understanding customer experience if they do that.
Jim Fitzpatrick: Talk to us about where we see telematics, electric vehicles, autonomous vehicles. These are things that dealers and the auto industry right now is thinking, “okay, how’s this going to change the entire environment?” Talk to us a little bit about that.
Bill Lucchini: Yeah, it’s a pretty exciting time if you think about it. The auto industry has been largely the same for a long time.
Jim Fitzpatrick: It really has.
Bill Lucchini: But if you look at the last few years, you think about the explosion of data where cars are starting to tell us how they’re doing and the amount of data they can create is unbelievable.
Jim Fitzpatrick: It really is.
Bill Lucchini: So for us in the service lane, being able to consume all that data and surface it in a meaningful way to technicians and service advisors, it’s really important. We’ve been doing it for a long time. With our partnership with Fiat Chrysler America, FCA, we use a micro pod to surface that data up onto the tablet so they know exactly how the car is doing. That’s been going on for years. Now the internet enabled the amount of data feeds we have and the ability to integrate that, that is going to be a become a bigger and bigger part of being successful at keeping cars on the road and safe and serviced properly.
Jim Fitzpatrick: That’s really cool. So, it’s right now with FCA, you’re going to be rolling that out in other brands as well?
Bill Lucchini: Yeah. With other brands, we already have tons of different data feeds in different ways and it varies how they do their business. It could be as simple as knowing national service history on a car before you try and do anything with it or knowing what’s going on with recalls or automatically pulling in tire data from your alignment machine. Right? So being able to put it all in one place again gets to; how do I keep that customer safe and in a vehicle they’re going to be happy with?
Jim Fitzpatrick: That’s right. And dealers, especially for the dealers that haven’t made it out to the show that are listening to this interview now, they’re focused on fixed ops like never before. Right? We heard that the [SAR 00:06:27] is probably going to be more like 16 six for new car sales, maybe even a little bit lower on the retail side. So they’re looking for every possible profit center they can have in the dealership. Also the profit centers they currently have to earn even more. And obviously fixed ops is a big area that dealers need to focus on in 2020 and beyond. Right?
Bill Lucchini: Yeah. It’s interesting. I’ve been having a lot of conversations about that over the last couple of days and when car sales are doing really well, it’s really easy to get sloppy about how you run a dealership.
Jim Fitzpatrick: Yes. No question about it, and we all do it.
Bill Lucchini: You know, good hygiene is knowing where the profit dollars come from, and making sure you execute well. Right? And you know, sometimes I apologize to all my fixed ops directors out there, sometimes it’s a little less sexy on the fixed ops side and then maybe closing that deal to sell a new car. But that’s where all the value of a dealership is. And if you have any risk that car sales aren’t going to keep trucking along and you might have a little dip? You need to make sure things are in order on the other side of the house.
Jim Fitzpatrick: There’s no question about it.
Bill Lucchini: So for us, if that happens, it’s actually good for business for us. As much as we want our dealers to succeed on both sides of the house. We’re there for you when things get tough.
Jim Fitzpatrick: And why wait for that? You know? Fix it right now while things are good so that you can survive some of those low points. Having systems like this that that Dealer-FX provides. It’s important for culture in the store. It’s important for retention in the store. It’s important for profitability and it’s important for customer experience, right? I mean those are four areas that every dealer wants to win in. Right?
Bill Lucchini: That’s exactly right. And, if you think about it, dealerships are in a physical location. So there’s people who live around there, there’s only so many of them. Right?
Jim Fitzpatrick: That’s a good point. And that’s your market, right there.
Bill Lucchini: You got to take care of them. Yeah. You got to keep them coming back in. You know, the other thing that we’ve been talking about at this show is our total service marketing offering. And one of the things we do with that is we look at your customers and we can predict who’s likely to fall off and not come back. Who’s going to be a lost customer in the future? Right? So you can run campaigns against those customers and you’ve got to be talking to them. [crosstalk 00:08:49] And if you think back to what we were talking about, the sales side versus service side, and you look at the marketing budget of a dealership. Where’s all the dollars going?
Jim Fitzpatrick: All in variable ops. It’s all that, like you said, the shiny, it’s the sexy thing to say, let’s spend $100,000 a month to get that customer to walk in the door and what are we doing on the service side? Right?
Bill Lucchini: Yeah. It’s exactly right. And I think you’ve got to shift a little bit of that focus. Take care of your customers. That’s going to be the thing that’ll feed you for years to come.
Jim Fitzpatrick: What’s interesting is that represents 49% of the gross profit of the dealership usually in these cases, but yet we take almost 95% of the ad budget to look for that conquest customer to buy a car, right?
Bill Lucchini: That’s exactly right. And I think it comes down to that emotional reason. It’s not rational. If you had an accountant running the business it would be a different investment profile, but when you get excited about selling a new car and sometimes we put a little more dollars there.
Jim Fitzpatrick: The other thing I would say is that it seems though a lot of GMs come out of variable ops. They come up as a GSM, sales manager GSM, and then GM, and then maybe dealer principal if they have an opportunity, and not as many come out of the fixed ops side. You know? You don’t see a lot of fixed ops directors moving on to become a GM. I think that’s a mistake that dealers make, but it just so happens to be the case. Right?
Bill Lucchini: Yeah, I think it’s right. I met with a dealership recently and the GM was fantastic. Really impressive. Knew his business cold. One of the things he did is he started out washing cars. He was a lot boy, he went through every aspect of the business across fixed ops and variable ops.
Jim Fitzpatrick: Great move.
Bill Lucchini: And so he comes to the point, he’s probably only 35 but he understood that business, both sides of the house cold, and really understood how to link them and build a successful dealership and his numbers showed it. It was really impressive.
Jim Fitzpatrick: So what’s in store for Dealer-FX in 2020 for the rest of the year?
Bill Lucchini: In 2020 we’re pretty excited about the year. We think it’s going to go well. We’re focused on three things for our customers. We’re going to help drive growth. We talked about total service marketing. That was one of our key things. We’re looking at efficiency. Again, you stitch together that whole process front to back, make sure you’re as efficient as possible. And then we talk about retention. Create a great customer experience, whether it’s customer self check-in on your phone, whether it’s showing up with a tablet and proving that we know you and understand you as a customer and your vehicle. All those aspects front to back, making sure you have the best experience possible that we retain you as a customer. Those are the three things that we’re focused on 100% as a business.
Jim Fitzpatrick: Those are three good things to be focused on. For dealers that are watching that I haven’t made it out to the NADH show in Vegas this year. Do yourself a favor, go online check out Dealer-FX. Talk to bill. I mean, he’s got the answers. They have the solutions. This is an area that you need to focus on for 2020 if you want to keep your customers happy, you want to keep your employees happy, you want to keep the dollars coming back because we have a retention problem in the auto industry. We all know it. Much as we deny it, it’s there, and if we don’t do something about it, it’s going to get worse. So these guys have the solution. You’re a click away from making more money in fixed ops. Thank you so much for joining us on the show. Really appreciate it. It is always a pleasure.
Bill Lucchini: Yeah. Thank you for having me. It’s great.
Jim Fitzpatrick: Always a pleasure.