TrueCar has had a roller coaster ride in the automotive retail industry over the past few years. However, it appears things may be taking a turn for the worse (both for TrueCar as well as its participating dealer clients). Read on, as I reveal their new policy changes that will have a negative impact on dealers, as well as my in-depth interview with a top eCommerce Directors about this change.
The TrueCar Cliff Notes:
Having aggregated so much data to benefit consumers over the years, TrueCar challenged the retail market to deliver competitive pricing to their online shoppers. However, as more shoppers funneled into their site (and partnering sites), it was obvious that dealers needed to take notice of the TrueCar machine.
Fairly quickly, dealers began taking issue with the way TrueCar came about some of the consumer-facing data that was being shared. Then the “dust-up” happened. Industry leaders such as Jim Ziegler and Jerry Thibeau led the charge against TrueCar, and urged dealers to cease the data extraction they were allowing TrueCar as it was only being used to bite them in the proverbial backside.
TrueCar, after an unnecessarily long battle to prove what they were doing was acceptable, reconvened with others in the industry and reengineered their site to be more dealer-friendly. Since then, TrueCar has once again dominated the third-party lead segment (with the help of venture capital backing and strong corporate relationships with affiliate partners).
My dealers, for instance, all seem to have significant success with TrueCar opportunities. However, there were questionable charges that frequently popped up. In most instances, TrueCar relented and maintained that the “customer is always right”.In this case, their customer is the dealer. That is about to change.
As of September 1st 2013, TrueCar is altering their “Write-Off Policy” for dealers.
Essentially, TrueCar states that their customers are so much more “deep-in-funnel” than all other lead providers, dealers on their Per-Sale payment model will no longer be allowed to request write-offs. Whether or not those sold customer originated in their CRM before becoming a TrueCar lead no longer matters.
In other words, even if you sold a customer four vehicles in the past, and that customer submitted a lead on Edmunds the month prior that arrives in your CRM, AND comes in and speaks to a sales associate, leaves the dealership, goes on TrueCar, submits their information again, and inevitably purchases from your dealership, the dealer will be unable to request a full write-off.
Click here for a version of the new TrueCar Write-Off Policy, effective September 1st 2013. In the end, the dealer will have to pay. You will see that partial write-offs (up to $100) will be granted to those dealers on the Pay-per-sale model, but only for extenuating circumstances. Subscription-based dealers have no write-offs.
As an automotive consultant, I can see this policy change happening for only a couple of reasons. Let it be known that I did not once take to a public forum during the previously described “dust up” to wage war against TrueCar. I believe their business model was a profitable one, and sense consumer-facing data will rule our industry sooner rather than later.
I made no indictments of them, but did educate the clients of DealerKnows about TrueCar’s initiatives. However, we did this during our normal, one-on-one consulting times and not online. I feel, though, as an advocate for our dealer industry, I should bring to light this policy change that could have a negative impact on all participating TrueCar customers.
TrueCar states that they are not a lead generator, but simply a new consumer strategy with which to purchase automobiles from dealers. For that reason, if another lead provider sends a dealer a lead that predates the time TrueCar sends the same customer’s info, it doesn’t matter. TrueCar still deserves credit because the customer obviously prefers the TrueCar way of shopping, so they say.
From the outside, it appeared TrueCar was back on their way to dominating the lead market, but this type of policy change must mean they are struggling internally with a cash flow problem or that they are just showing their true stripes. Maybe they are the cash-grabbing corporation they were originally assumed to be. It has to be one of those two reasons.
Making this policy change will end up costing dealers more money.
This was admittedly brought to my attention by a respected eCommerce Director from one of our DealerKnows clients in Chicago. This individual prefers to remain anonymous. I thought I’d get his perspective on this policy change, how it affects his dealership, and his thoughts.My Interview with the eCommerce Director around TrueCars…