IoT in the Retail Automotive Industry | The Niello Company's Dennis Gingrich
- [Ryan] Welcome Dennis to the IoT For All Podcast. Thanks for being here this week. - [Dennis] Thanks for having me. Appreciate you, Ryan. - [Ryan] Yeah, it's great to have you.
This is one of the first episodes of our new focus for the podcast, talking to adopters of IoT technology, so I'm really excited to talk about your story here in a second. But I'd love it if you could maybe just give a quick introduction to our audience, just who you are, background experience, your company, overview of that, just so our audience has some context going into our chat. - [Dennis] Yeah, absolutely. I appreciate that. Well, my name is Dennis Gingrich. I've been in the retail automotive business my entire adult life and actually, my dad was in it prior to that.
So I grew up on his car dealership and watched him provide for our family in this great industry. In terms of what I do now, I'm the Sales and Finance Director for The Niello Company, and we are a locally owned, locally operated retail automotive group. We predominantly operate in the luxury segment of automobile sales. We represent some iconic brands, such as Porsche, Jaguar, Land Rover, Acura, Volvo, BMW, Audi, Mini, and Volkswagen.
And we're right here in Sacramento, California, the capital of California. And our company has actually been in existence for 102 years now. - [Ryan] So let me ask you, if you were to talk to somebody who's not in the retail automotive industry just about the industry in general, the dealership industry, how would you, how would you frame up the breadth of what the retail automotive industry is? - [Dennis] It's massive. There's a statistic, and I wish I had it right off the top of my head, I guess I'm just not that prepared, but really retail automotive touches every facet of business from insurance, finance, credit, naturally sales. We have skilled labor.
To become an automotive technician, there's a massive shortage of those individuals that can work on today's complex automobiles. Naturally, it literally, in some way, shape, or form, automotive touches everybody's life and interacts with almost any industry that all of us would be familiar with. So it's a great business. Naturally, I know everybody is aware of the retail automotive industry as a whole, probably falls somewhere on the popularity scale between attorneys and drug dealers. Some of that is deserved, and I would say that's definitely the exception, not the rule, and we definitely strive to disprove those, that negative perception our industry has here at The Niello Company. - [Ryan] Fantastic.
Yeah, I appreciate that overview. I think it's, it really hinges on personal experiences people have had and there's so many different levels of interaction that consumers have with retail automotive dealerships and organizations that I think oftentimes that perception is not warranted. It's, there's so much human element and interaction and pieces at play that I think it obviously heavily influences people's opinions of something.
But I know my experience in the, like going to dealerships, buying cars has been pretty pleasant. I've gotten that, gotten out of that mindset of the car salesman type kind of a thing that, you know, people, stigma, that kind of people attach to it, that very aggressive, just trying to milk every dollar they can out of you and being deceptive to more of a pleasurable experience, I think, as you start to just really understand it and really understand what you're trying to accomplish and do and at the end of the day, yeah, it definitely varies. - [Dennis] I love what you mentioned, just the human element. And I think it's, when we look at everything we transact with, the way we buy TVs or really anything, it's online, and that human element isn't present really anymore.
Most everything we do online, and I would argue this industry is probably a lot more human focused than maybe another, other industries that we transact with. So it adds complexity and definitely has an opportunity to go really good or with human beings sometimes, we don't do the greatest of jobs, so. - [Ryan] Yeah, and there's negotiations, right? There's, it's a more of a haggle than it is just here's what the cost is on Amazon, so I'm just going to purchase it kind of experience and there's different elements. And I also think a lot of people just don't know enough of all the different pieces of a car buying process to feel comfortable in those discussions to where I think naturally that just creates some level of a barrier on their end to be a little more hesitant and concerned. But the more resources and the more content that's out there about it, I think the more people are starting to understand how it all works and which, going into a buying decision more educated I think helps you feel more comfortable. - [Dennis] I couldn't agree with you more.
As an industry, we need to do a better job of explaining how these things work so consumers can feel confident, and they feel like they have a good experience because they deserve one, quite frankly. - [Ryan] Yeah, I agree. So I wanted to shift over to talking about how the experiences you've had bringing IoT into your business specifically and how it relates to the overall industry or could relate to the overall industry. But before we do that, I wanted to ask you just when it comes to adopting technologies in the retail automotive space, how open are retail automotive companies to bringing in new technologies, new solutions to do things, or are there hesitations that you notice when it comes to the adoption of new systems, technologies, solutions that need to meet a certain threshold of ROI or certain threshold of kind of buy in internally before you feel like it's something that is going to be more easily adopted and integrated into your day to day? - [Dennis] I would say technology hesitancy in our industry has definitely waned a little bit. You know, the environment we work in, technology really touches everything. Complying with regulatory bodies, the system, the software we use to transact not only in sales, but also in service.
It's, and you overlap that with marketing needs. It's a very complex space and, unfortunately, there's a lot of walled gardens in our industry. Just because you have the greatest DMS doesn't necessarily mean it's going to work well with your CRM or doesn't mean it's going to communicate great with your service customers, but it's great for sales.
So there's just, nothing really talks, and I think there's definitely a desire for technology, and I'm speaking more specifically for the employees inside the dealership, to come in break down some of those walls, make the employee experience a little bit better because I really believe if the employee experience is better, that definitely translates over to the consumer. So that's tough to navigate and, but you bring a good comment up is getting buy in at the store level or the human level from our employees is definitely key. I think identifying maybe a little bit more forward thinking, progressive voices within the organization that want to champion technology and prove they can make it work to make them more efficient, I think identifying those individuals and allowing them to pilot and show that they can be successful with something and then all of a sudden the rest of the team and the organization, they're like, hey bro, how do I get signed up with that cool widget you got so and so over at the other dealership. Way easier way to do it. - [Ryan] Yeah, and when you say DMS, that is dealer management systems, correct? Just so our audience knows what we're talking about.
- [Dennis] Yep, DMS. There's three big ones in the space. You got CDK, Reynolds and Reynolds, Dealertrack. There's any number of them. - [Ryan] So as it relates to IoT, the two areas that I know we wanted to talk about were lot management and key management. Prior to these, the solution that you use being brought to your attention, how familiar were you with IoT technologies, IoT solutions? - [Dennis] I wasn't.
I really wasn't. I had a friend that came across them and then we were looking at an alternative solution to what we were using that was more of a vehicle theft recovery device. It didn't really have any usability for the dealership and the employees, and they were just challenging to do business with, and he says you should look at this.
We looked at a lot of them to be honest more than I care to admit. - [Ryan] So tell me about the overall problem that dealerships face where lot management and key management would come into play, just setting the stage of like how things have been done prior to bringing in a solution like this. And then obviously we can talk, we can then dive into kind of the benefits of and talk about the adoption process a little bit more, but just how would you set the stage for people to really grasp the problems that existed and the need for a solution like this to come in to the business. - [Dennis] Starting with the vehicles, when you look at real estate, it's expensive. There's not a lot of it.
Manufacturers historically, they're interested in primarily one thing, and that's grabbing market share. And the way to grab market share is to produce a lot of vehicles. And the manufacturer, they want us to buy these vehicles from them. That's how they get paid, right? So we buy it from them and then they're paid. We have to then in turn figure out how to sell it. But when you have limited real estate, and that's a bigger problem in various regions across the country, and then you have a lot of vehicles, there, we have storage lots and all of a sudden you have this car advertised on your website and all of a sudden Ryan says, hey, that's the car I want, and it's at a storage lot, at the dealership, prior to this solution, we're hoping somebody knows where the car is, or they wrote it down on the log, or if we're super fancy, the shared Excel document that says, hey, stock number ABC one two three is over at the North lot if you need it.
And, as we all know, when we rely on human beings to do some transactional work, there's just a higher likelihood of mistakes or not getting done. And that really bleeds over to the consumer experience because people don't want to come to the dealership, and when they show up, they would like to have a lot of the transaction done. They'd like to have the car ready, so they can put eyeballs on it, take it for a drive, make sure it's what they want. They want to sign and get out of here. And when you're able to quickly find the car to make sure it's where it needs to be, when it needs to be there, we, it really does translate over to the customer experience being what they demand and expect. So it, there's a lot of moving parts and even brand new cars, they come off the truck, and they're wrapped in, looks like armor, and you think when you take it off, they're perfect.
They're not. There's paint work that needs to be done sometimes, you get a little damage, and cars need to go. We might not have that type of capability at our dealership, and we might need to sublet it to a third party vendor. So a car might be over there getting some work done and then it's in their hands and when it goes to a third party vendor, we've found cars where our vendor partner, one of their employees decided to take one of their, our cars home for the weekend and have a good time, and it, that comes with a whole host of other problems and risks and obviously expense. - [Ryan] So this seems like this is providing better insights into your inventory.
Locations, what they're doing, where they are, and which sounds like it saves a lot of time. What does that then enable the organization to do better? Not just have insights into the, their inventory, but I'm assuming this is going to save a lot of time from internal resources. So what does this allow you as an organization to do now that you have this data and this information that this IoT solution of lot management is providing you? - [Dennis] Focus on the customer experience, number one, second is making sure we're spending more time on important topics, such as making sure all the consumer's purchase paperwork is done properly, loans are secured. That's on the customer facing, when, also customer, if a vehicle comes in for service, we can locate it, get it moved around, just a lot quicker, and we all have 24 hours in a day.
We're all busy. We have kids, we have school, we have work, blah, blah, blah. And the last place people want to spend time is at a dealership. So, it really cuts down on the time, and when you look at a lot of the surveys that manufacturers will send to consumers, there's always a question in there relative to, you know, the time expectancy and was it met, and it's all, it's crafted in a number of different ways, but that's a common denominator and look at any study and that's what they'll say. So, we get to focus on the consumer, but also there's a lot of, I call them microtransactions.
If a customer comes in and purchases a vehicle, and they elect to add some accessories, that could be mud flaps, roof racks, hitches, tinted windows, they can elect to purchase various vehicle protection products, that, each one of those is like another microtransaction on top of that. It requires support staff and people in our business office to take care of that, and they have a lot of those individual tasks that they need to do. So when you take something that's a time consuming process like an an inventory audit, every month we got to make sure we touch every vehicle in our inventory, and that takes time, but when we can go boom, touch them all real quick, and then we, at the end, we're like I can't find these five vehicles, we're done, and they're on to these other micro tasks that have to get done because if they don't get done, the customer suffers, and we bear the brunt of it. - [Ryan] So you mentioned something earlier. So this obviously, we've been explaining the value for the dealership, how it translates then over to the consumer.
Is there any direct benefit or direct value that the consumer is seeing outside of their experience being more tailored to them and more efficient, like as far as are they interacting with this solution in anyway? Is there any pieces that kind of tie over to the consumer once they've purchased the vehicle or how does this kind of extend to the consumer as well? - [Dennis] When a vehicle comes into inventory, naturally, we pair the device with the car. That's what makes all these other great things we just talked about happen. But the consumer has an opportunity to basically purchase that device along with the vehicle, and they get a lot of that same visibility that we take advantage of on a daily basis. And what that looks like is when you look at vehicle theft, it's high, it's a problem. You don't have to search very hard to find a timely vehicle theft story.
And when we look at what we do in our vehicles as Americans, we live in those things. We spend a lot of time on the road. Going here, going there. We've got a lot of personal information in there that you don't want in the hands of the bad guys. They can do any number of things with it. Identity theft, they can come visit your house, so on and so forth.
So it allows the consumer to quickly report their vehicle stolen if that's the case. Or maybe they have a young driver in the house that they want to keep track of, hey, where is, where's my son or daughter, because there's a lot of not cool stuff in the world, going on and to know where your loved ones are is a good thing. And then, naturally, if the vehicle is stolen, not recovered, there's a monetary benefit that we elect to do. The customer gets, it's 10 grand, and that also translates potentially into insurance savings, which is good for the consumer. And then not only if there's, maybe they park their car, they're on vacation, they can, in air quotes, lock their car. Oh, if it moves, they get an alert.
A matter of fact, I've heard instances where people are stealing catalytic converters. That's a big problem. California just rolled out some legislation that dealers now have to figure out a way to enact here very quickly. And when, there were some thieves cutting out a catalytic converter out of an inventory car and it alerted the dealership, but that, they were able to do something, prevent the theft, but that same type of benefit translates over to the consumer. And it's not a subscription thing, which is nice. We all have countless subscriptions we pay for and probably don't use, me being one of them.
- [Ryan] Not only does the lot management provide value to you and the consumer, but there seems to be this solution, IoT solution has also opened up additional revenue streams for the dealership that were not present before. And that's a very interesting element of any IoT solution. There are many different values and reasons why somebody would adopt an IoT solution, whether it's for internal purposes, to improve operations, whether it's to get access to data to become more efficient or make different and better decisions or build a solution that is for the customer in some capacity or ability to offer something new to a customer, which in this case, it sounds like the solution does all of the above while at the same time, allowing you to open up new revenue streams, which I think is really interesting to think about because that's one question that gets asked often when it comes to IoT solutions is not only what benefits am I going to see from access to data, operational efficiency improvements, but also how is this going to affect our bottom line? And there's an element of it that becoming more efficient is going to affect your bottom line, obviously, right? But when it comes to actually increasing revenue or driving, opening new revenue streams, that's where I think another level of power from, of the IoT solution is witnessed when a solution is built for that. - [Dennis] I agree. Obviously efficiency is great, it helps you save money, but I would imagine a lot of IoT solutions land in the expense column, and it's hard to measure.
So when you get the efficiency and then all of a sudden you can measure this new revenue stream, it's like, you quickly get a buy in from individuals at the store because it makes lives easier and that, they can have a nicer paycheck, so they can do cool things with their family. And the customer wins as well because it is, it's something they can take advantage of if they want to. - [Ryan] We talked about this like briefly is where does key management come into all this? This seems like it's like an extension of dealership management, but again, my assumption is that it is more about managing the physical key, location of the keys, either internally or for the customer themselves. How is this kind of fit into the lot management kind of just overall solution that you all have? - [Dennis] There are two things people have a real hard time finding at a dealership. It's cars and keys.
And keys are, I can't count the number of times where, you know, it, just as a salesperson, you're running around, I have the car, the customer's here, but somebody put the keys where they don't belong. And it's frustrating for the consumer. It just goes back, when they show up, they want to get down to business. They don't want to be watching Dennis run around trying to find something.
He should know where it's at, but it's a reality. It could be the technician did something with the car to make sure it was ready for sale and just happened to leave the key on his toolbox. It could be a salesperson. Maybe they have a customer coming later in the day, and they're trying to prevent Dennis from selling a car so that they can.
There's just a lot, and we pay a lot of money for various systems, to like a big drawer that an individual can log in. We know that Ryan took that key out at 12:32 in the afternoon, and Ryan has them. But maybe Ryan doesn't even know where he left them. - [Ryan] Going into the adoption process for this solution or both solutions in general, what have you tried prior to adopting this solution, which is called, the solution you all have adopted is called RecovR, just for the audience's sake, to fully bring this full circle to the actual product.
What did you try beforehand? If locating cars, locating keys has been a problem for quite some time, I'm sure things have been tried to improve this experience. And it seems like until the IoT side has come in, it hasn't been fully addressed or been able to be addressed. So what was it like before trying to address these problems? - [Dennis] So locating cars prior to that it was logs and shared Excel sheets and so forth. We had a theft recovery product that was purely as a profit center. And it had a host of problems too because you would have to think of all the inventory you have, it wouldn't be uncommon for us to have two, 300 cars on the ground at any given time, we had to rely on a third party that would come in whatever, whenever they felt, like Tuesday or Thursday, every week, every other week, and you'd have to rely on them to install this other hardware. But it was also a wired solution and sometimes cars don't like having extra things wired into them.
They just don't play nice always. And that has its challenges. And then the tough part was is if a customer didn't want to take advantage or purchase that service, it's in the car, and you just had a dead cost, and you lost the cost of that money with the sale and the purchase.
So from a revenue stream standpoint, it wasn't ideal. And we didn't have anything for keys other than one of those big boxes that people can check in and out of them. - [Ryan] So when you started this, down the road of the adoption process, you were introduced to the RecovR solution. What, when you were discussing internally what this was going to do for you, did you have internal targets or goals or ROI that you were looking to achieve or just like maybe customer, employee satisfaction or employee feedback prior to feeling comfortable to roll this out? Or what was that kind of adoption process like and what challenges did you come across through implementing it into your all's day to day? - [Dennis] Really the, one of the motivating factors in terms of looking for another solution is just the solution we had was incredibly difficult to work with from a billing standpoint. It took a lot of work, time, and energy and then plus you had the loss when we didn't sell the device with the car deal, you lost money.
So it was a heavy lift on the individuals in our accounting offices to make sure they got paid for, registered, and quite honestly, there was no way to know that we, that the third party we were using to install them actually installed them. No easy way, I should say, right? So it just wasn't efficient, and we did a, I would say we did a good job with that device considering what it was, so when I looked at what we were hoping to accomplish, I was really hoping to make it easier for the accounting department to do something that really should be easy. We're buying and selling a good, it's not complicated. So that was key. And I was really hoping to, at minimum, maintain the level of performance we had as a revenue stream relative to the other product.
And really the, those were the motivating factors, and it just so happened all this, the vehicles here, there, and the lots, that was almost like a, like an added benefit. And I think that would be the same when you talk to most retail sales people. - [Ryan] Yeah, I think it's interesting because if you think about how we are able to figure out what's a real fit, what's a real solution to a problem, oftentimes it comes from just testing and trying things.
And trying a solution that you thought was going to solve your problem and then it didn't, then did not. So you had the experience of trying another solution, did not work, so you knew more now of what you were trying to avoid, what it needed to do, what return you needed to see to say this is what we're going to go with, so that when you came across something again, you were able to better evaluate it. What advice do you have for other dealerships, other companies look, or automotive or retail automotive companies, that could help them be successful during the early stages of adoption of a solution in a dealership environment, if that makes sense. Like if there's a company listening to this saying, oh, we haven't really dabbled into the IoT solution space, but now listening to this, makes me want to consider it. What should they be thinking about or what are the pieces of advice you'd have for them in order to increase likelihood that when they bring in IoT solution or technology, whether it's lot management, key management, or something else, that they have a better chance to succeed with it bringing it into their business.
- [Dennis] I would say sales, retail automotive sales in general, sales people, we have a bit of a cavalier attitude about rolling out and implementing new products and tools. And it, and I think it comes back to bite us a little bit. This is, I would say a little bit more process heavy than a lot of the different things that are out on the market. You're taking something away from a third party, and you're taking care of it, but I would say really engage with the team that comes out to help with the installation of the solution and have a clear, defined process and there, there's key points.
Making sure the device gets installed on the car, making sure the tags get installed on the keys. Really identifying individuals on your own team that are going to be accountable to do that because the more hands you have in the pot, the more challenging it's gonna be. And it's not like it's, it's not life or death. It's just when you're dealing with Mrs. Johnson that wants her wheel locks on the showroom floor Thursday on a car she bought three weeks ago, you just don't have time to be dealing with the mistakes of yesterday and by really engaging and working hard on your rollout process, implementation, and investing in that makes the takeoff very easy.
We were one of the early adopters of both these technologies, and we definitely learned what not to do, which was great. And I think you alluded to that earlier. Learning by failure is honestly the best way to learn unless there's a lot of money or lives on the line. - [Ryan] And it sounds like there's also, it's important to have internal buy in across departments and employees prior to something like this really getting deployed across the organization because without it, you face resistance, you face pushback, you face maybe kind of people who are like dragging their feet to adopt something when in reality, the power of this comes in when you have the ability, when it's set up correctly from the beginning, and you invest that time to do it correctly, but also it's being used in the right way because the people who rely on it to be used the right way will not get the full benefit if other people are not interacting with it or using it the way it's intended to be.
- [Dennis] No, a hundred percent. The sales teams, generally speaking, and I'm sure there's retail automotive groups that are a little bit different in this regard, but I would say, generally speaking, if you want something installed in a car, on a car, the sales guys and gals aren't the ones that are doing it. You're better off leaning into your fixed operations department, getting them involved, so it gets done.
- [Ryan] And let me ask you, one of the last questions before we wrap up here is through your experience bringing in this type of IoT solution or solutions in the sense because there are basically two of them, how has this influenced your interest in adopting and exploring other IoT solutions and what ideas have you already maybe been thinking about for other IoT solutions and technologies to come into the retail automotive space? - [Dennis] It's really interesting because the retail automotive space, the product offering and what consumers are used to getting is, obviously it's a car, right? But when you start thinking about other protection products and things, everything is just a piece of paper, a promise, and nothing tangible the customer gets to experience. So I think, in those areas, being able to make it easy for a customer to schedule service, schedule maintenance because I would say 98 percent of the population doesn't know really much about cars, right? They know cars, but they're not mechanically inclined, and having something that's in one spot, and a lot of the different manufacturers have various apps that you can use, but it's more for the manufacturer, I think, than the customer experience, whereas both these two devices with RecovR, RecovR for Keys is a little bit more, I would say it's more customer centric and marrying that up with, vehicle theft recovery devices have been around for a long time. Key replacement products have been around for a long time.
But when you marry something, some piece of technology that the customer can use to make their life easier, that's really compelling, and I think when we just look at maintenance and the different things we have to do as vehicle owners, marrying IoT solutions with something like that to where it makes the customer's ownership experience better and real, that's where I think, it's amazing where the industry is going to go. - [Ryan] I think about the times I've gone to the dealership with my vehicle for an oil change, tire rotation, checkup, whatever. If I was, and I, but I go, I would go into it not really knowing what the day's going to be like. How long are we going to be there? When is it going to be looked at? Where is it in the process? But if there's some kind of ability through sensors and different types of IoT technology to be able to monitor where your car is in the process or when a bay is open or being utilized, which I'm sure is also valuable internally, you can track cars and have a more timely understanding of when your car's gonna be ready rather than having to call a dealership and ask.
Like all those different things to just make the relationship that a consumer has with a dealership from the second they get in the door to want to buy a car all the way through the life of owning a car more enjoyable. I think that just creates not only a potentially a lifetime customer but also just to our point at the way beginning of this conversation, the reputation that dealerships have with consumers dramatically improved. - [Dennis] I couldn't agree more.
And if you think about it, we all get the change oil soon light or the maintenance light come on, but that still requires you to look up the dealership, you got to go on your phone, you got to click it, then you got to call or make an appointment whereas the IoT solution could just say come up on your phone, do you want to make an appointment? Boom. Done. The appointment is scheduled and then to your point, when it goes through, when it's done, customers don't want to call to find out where's their car.
Just say, hey, it's done, they get a text notification They're like cool. They don't need to talk to us about their oil change. - [Ryan] Yeah, and if you think about where this, where the RecovR, RecovR for Keys comes in, it's in the buying process of the vehicle, which is what gets the consumer to now have the application on their phone, starting to interact with the technology in that way, which then as you layer on pieces to this, keeping it within potentially a related experience just makes life way easier for the consumer. So yeah, no, that's, I, that's, I think the future is very bright for the retail automotive space with IoT.
It's a perfect kind of environment for different solutions to be deployed that benefit the organization and the company itself, but also the consumer, where everybody benefits. You all open up new business models and revenue channels while also improving efficiency. Helping with consumer, freeing up your staff to have focus more on the consumer relationship side. Just, you start to eliminate some of those tasks that were a pain and a hassle to deal with now that the technology and IoT is where it is.
And it's very exciting to see. - [Dennis] And this industry is ripe for the picking. Somebody that's smart, forward thinking, IoT, they can make a big difference and also open up some more opportunity for people to have great jobs and live great lives. - [Ryan] Dennis, I appreciate you taking some time to do this.
This is, I know you are busy at the dealership, but this is, I think, going to be very valuable for our audience. We've spent the last few years really just trying to educate people on what IoT is, the benefits it can provide to industries and businesses, breaking down technologies, hearing from experts. And now we're trying to shift that conversation to showing how the maturity of the technology and solution is at a different point now to where industries are really starting to see the benefits of these solutions deployed and hearing from those actually, seeing those in person on a day to day basis.
You saw what, you've been able to talk through what was it like before IoT, what is it like now with IoT in your life, in the business sense, and it's a really cool story to share, and that's what we're trying to do is shed light on that so people really start to see the power that IoT can provide to variety of industries. So I really appreciate the time. - [Dennis] Yeah, Ryan, it was great. I enjoyed our time today and hope you have a great day.
2024-02-06 11:29
