Instead, they clawed their way back embarking on a strategy that would transform this auto group from a brick and mortar retail operation ‘subject’ to market and economic condition to one of the top retail groups in the country in complete control of their destiny.
It was a journey that turned the Cardinale Automotive Group into a fully-integrated 100% digital operation to now having evolved into what is a sophisticated collection of aligned businesses known as the Cardinale Group of Companies.
As an auto group, the Cardinale Automotive Group has done what so many dealerships wish they could do – manage their stores and market their brands how they want, when they want and where they want completely independent of market conditions or subjectivity.
We recently had an opportunity to meet with Erich K. Gail | Chief Operating Officer | Cardinale Group of Companies | who shared with Dealer magazine the journey of these past five years. It is a fascinating tale with numerous how-to solutions to become a truly weaponized digital dealer group.
ERICH, THE CARDINALE STORY IS FASCINATING; FROM LIFE SUPPORT DURING THE RECESSION, TO NOW ONE OF THE TOP RETAIL GROUPS IN THE COUNTRY. BEFORE WE GET INTO THAT, THOUGH, SHARE WITH US HOW THE GROUP BEGAN.
Joe Cardinale and his brother Tom started in 1979 in Seaside, CA on the Monterey Peninsula with a founding commitment – CardinaleWay: “We Develop Outstanding Relationships Where Everybody Wins.”
Throughout the 80’s, 90’s and early 2000’s, we were blessed with opportunities to expand the company to what is now 17 locations in California and Arizona with more than 600 associates selling nine different OEM brands.
As a now group of companies, the Cardinale-Group consists of the Cardinale Automotive Group, Cardinale AG Vehicle Supply and ZMOT Automotive Digital Velocity. Each of our company’s carry our CW trust mark – as our brand-promise, the CardinaleWay is the defining commitment of who we are in service to our clients, customers, communities and associates.
AND THEN THE RECESSION HAPPENED.
Yes it did. This was a painful reality for us as well as thousands of dealers across the country. We experienced the severity of being ill prepared for a hard drop in the market.
By the very grace of God, the company survived 2009, but not without the loss of numerous employees and multiple stores. You’ll hear us speak about grace a lot. We are a God-First organization. Mindful of the very grace that allowed for our survival, we came out of the recession committed to not ever being in that position again. Never again will we allow ourselves to be ‘subject’ to restrictive market, economic, inventory or credit conditions.
So we formulated an ironclad group-wide commitment to become a ‘ManagementDriven’ company instead of a market-driven organization. What that means is we’ve aligned our operations to focus solely on our goals and objectives, period – without deviation or any consideration of conditions that may in any way affect the market.
LET’S TALK ABOUT YOUR “MANAGEMENTDRIVEN” DISCIPLINES.
For us, it represents five non-negotiable commitments for our automotive group.
1. CRM – DealerSocket. In our culture, the highest level of management will not have any dust on a CRM log in. The CRM is the center nucleus of our entire operation. We lead based upon our defined metrics per associate, per department, per store, per region and we evaluate performance in real-time every day.
2. Inventory Management – vAuto. We have developed clearly defined cost-tomarket, market-day-supply and price-tomarket strategies focused on inventory with the maximum ROI potential.
3. Phone Mastery – Phone Ninjas. We must be outstanding on the phone. Every associate throughout the organization is scored on the phone with a group-wide performance minimum of a 4.5 on 5.0 scale.
4. Continuous Improvement Training – For us, improvement isn’t just about the professional – becoming better sales people, service advisors or technicians. It’s also about becoming better people. We are a family team and we want to help each other live and achieve truly outstanding lives.
5. Zero Moment Retail – ZMOT Auto. The very process by which we align our brand, disciplines, performance and investments. As we continue our conversation, this will become clearer – ZMOT defines our entire strategy.
We are 100% responsible for the performance and ROI of our brands.
SPEAKING OF ZERO MOMENT RETAIL, AN INTRIGUING PART OF THE CARDINALE STORY IS HOW YOU TRANSFORMED INTO A LEADING DIGITAL DEALER GROUP AS WELL AS DIGITAL VELOCITY PARTNER TO DEALERSHIPS IN THE UNITED STATES AND CANADA. OTHERS TALK ABOUT BEING A DIGITAL DEALER, BUT YOU’VE ACTUALLY DONE IT AND NOW ASSIST DEALERS AS WELL. TELL US HOW YOU MADE THAT TRANSITION.
In 2011 when we made the commitment, honoring our Management-Driven principles, to transform ourselves from a brick and mortar enterprise to becoming a highperforming digital retail group.
The process, of embracing this change was a stark awakening for us and showed us how dependent we were – are – as an industry to the basic platforms of websites and third party providers.
We embarked on a quest for knowledge. But that quest was the responsibility of our senior leadership team. We didn’t delegate this to anyone else.
So the journey began – we spent hours and days on the road attending meetings with progressive companies along with attending conferences like the Digital Dealer conferences. We wanted to learn. What we found along the journey produced our understanding of Zero Moment Retail.
WHAT DID YOU LEARN?
We began by expanding our digital marketing efforts beyond simply a website and third-party providers. Initially activating a variety of vendors to provide the necessary channels of a digital marketing foundation – social media, chat, video, reputation management and targeted PPC.
What we learned, though, is that as we asked more questions, we began looking for business intelligence data. And it wasn’t there.
The fragmented systems of multiple vendor platforms didn’t integrate together, didn’t communicate. As a result, our systems weren’t able to focus on our brand in real-time.
Focusing on our brand in real-time is critical for us. But it wasn’t available to us.
Think about it this way. As the dealer, we are the investor; we are 100% responsible for the performance and ROI of our brands. As such, we reserve the right to require a return for each dollar invested. And ROI requires direct attribution. Instead of being able to track each dollar spent, we were subject to month end reports with graphs always tracking upwards but the data had no real connection to our return on investment.
We are 100% responsible and we reserve the right. You’ll hear us say that a lot. We are going to place our investments in solutions that will allow us to market our brand and no one else’s so we can provide a direct link to each of our store’s phone, email, text, chat and advertising when we want, where we want and in the frequency we choose – store direct every single time.
SO THE LEADERSHIP TEAM INVESTED IN LEARNING AND DETERMINING WHICH STRATEGY TO EMPLOY. HOW DID YOU IMPLEMENT WHAT YOU LEARNED?
We experienced increased momentum providing us with the necessary capital to continue our investments in transforming the organization.
ERICH, YOU MENTIONED THE NECESSARY CAPITAL. I THINK THIS IS A BIG PART OF THE STORY. HOW DID THE CARDINALE GROUP OBTAIN THE NECESSARY CAPITAL TO TRANSFORM INTO A LEADING DIGITAL ENTERPRISE?
Much of our immediate capital availability was secured through elimination of unnecessary spends in third-party lead providers, radio, print and television advertising. We began cutting all of that spend and are now 100% digital with a onetouch direct-to-our-store requirement.
So when you ask about capital, not engaging in these unnecessary advertising channels saved us a lot of money from our continuing operations. We were then able to invest in the creation of subsidiary companies focused on our needs, goals and objectives.
As direct result, we transitioned to become a group of companies serving clients and communities as a retail dealer as well as serving other dealers throughout the U.S. and Canada as a digital partner providing our clients within increased sales velocity and profit opportunities. That’s our ZMOT (ZMOT Automotive Digital Velocity Group).
We also created CardinaleAG Vehicle Supply which provides vehicles, secured through our dealer partners, for OEM product development and engineering studies, consumer marketing activities and sales training ride and drive events in the U.S. and Canada.
Going back to our digital transformation, in one year’s time, we went from being off the grid, so to speak, in terms of digital retail sales to the seventh, fifth and now fourth highest sales volume eDealer in North America. We possess a focused intention to improve upon that. We’re not content with being fourth.
YOU’VE MENTIONED REAL-TIME BUSINESS INTELLIGENCE.
As we studied digital retail elements such as SEM-PPC, display, in-market buyer targeting, retargeting, buyer conquest, search, social, reputation, video, blog content and chat – we saw the integration as its own science of tremendous power.
But we also saw that it is a science which can be ignited by real-time business intelligence. So we invested over two years and well in excess of a million dollars in development resources to build our own multilayer consumer analytics platform now powered by ZMOT Auto.
Each of our company’s carry our CW trust mark as our brand promise, the Cardinale way is the defining commitment of who we are in service to our clients, customers, communities and associates.
That solution provides us as well as our ZMOT Auto clients with the ability to integrate the entire digital selling strategy in real-time with a focus on in market buyers. Every element of a defined strategy communicates together producing a powerful single pathway direct to the dealership.
SO YOU HAVE THE ABILITY TO TARGET AND DIRECT IN-MARKET BUYERS WHEN THEY MAKE A VEHICLE SELECTION?
Through our ZMOT Auto brand we are doing it right now. This is why we are so focused on the operating disciplines of Zero Moment Retail within our automotive group and the client groups and stores we serve. The vast majority of our industry is fishing in the wrong pond. According to the recent NADA data, dealers spend north of $600 in advertising per unit sold.
We find that number to be atrocious. It’s too much money, invested in too many underperforming channels. Through our transformation over the years, our total advertising per unit spend has cascaded down from what was more than $600 to between $100 and $200 today – and that’s true for our ZMOT dealer clients also – in direct one-toone sales attribution per unit sold.
We often reference the term “Hope Plan” when evaluating industry marketing preferences. We’ve eliminated that. We know exactly where we want to invest our marketing dollars and what ROI we will generate as a result.
Industry data tells us that the average number of days from first contact to a unit sale is 51.3, our internal stores and external ZMOT dealer stores run at or less than 12 days, with some averaging 4.6 days from contact to sale.
ERICH, GREAT CONTENT WITH SEVERAL GOOD IDEAS FOR OTHER DEALERS TO IMPLEMENT. THANK YOU FOR TAKING THE TIME TO TALK WITH US TODAY.