Zach Klempf: All right. Well, hello, Zach here. And we have a legend on the podcast today, Chip Perry, the CEO of A2Z Sync. And in two previous lives, the founder and CEO of auto trader and the CEO of true car, and basically the Michael Jordan of marketplaces. Chip. Thanks so much for joining me today,
Chip Perry: Thank you very much that is very kind of you. I don't deserve those kinds of words. But thank you.
Zach Klempf: So let's get started. And for those listening today, talk about what brought you out to Colorado to be a startup CEO at A2Z Sync.
Chip Perry: Well, I had the great opportunity to be serving car dealers across America for the last 25 years. My earlier chapters were in third-party world. And that role, I was able to see and observe dealers evolving, changing their sales process, the way they go to market, I also had a chance to put an ear to the rail of how consumers perceive the car buying process. And one of the big themes over the years that honestly hasn't changed very much is the general unfortunate negative perception despite the great work of many dealers across America, the great the general negative perception that consumers have about the car buying experience that hasn't gone away, despite all the improvements that have been made across our industry. And so I consider it one of the major unsolved problems. There's lots of issues flying around and automotive right now it's a time of change. But I felt like this one is one that if I could find a way of being a catalyst, to help dealers improves, modernize, streamline, make more customer pleasing, car buying experience, it'd be a worthwhile exercise at this point in my career. So I discovered this company called a disease sink in Denver, Colorado, that had been pioneered and started by a dealer group here. It's now a spin off of that group. It's called the shop group, where they built a platform that enables a much more frictionless customer flee pleasing, and also, interestingly, very profitable for the dealer sales process and customer experience. So I joined to help scale the company about almost two years ago. So it's been fun so far, and we're starting to take off in a meaningful way. So it's exciting to see what we're doing start to capture the attention of the industry.
Zach Klempf: That's awesome. And what an interesting change as well for you. So in a lot of the major news outlets, they're talking about the high inventory prices, they're talking about the inventory shortage, the rising price of gasoline rental cars at an all time high. What has been your view of these economic challenges for dealers from your lens in A2Z Sync?
Chip Perry: Well, you know, all of us, you know, we go to the conferences, we read the press, and we hear about the operational challenges that dealers are facing the many issues they're dealing with. Now. A lot of them are inventory related. The pandemic brought on a lot of challenges around how consumers wanted to work with retailers and the availability of cars, both new and used the new and used car markets that have been turned upside down with the chip shortages and the effect on supply and prices. So while all these challenges are surrounding dealers, at the same time, they are making more money than they've ever made before. So, you know, it's a great time to be in the car business. Even though it's requiring adaptation and change to deal with the operational challenges. I think that it would be a much different situation if the bottom line was getting squeezed right now, the ORS are making two to three times the profits that ever made before, high water marks two or 3x. So I think that the with the industry, swimming and profits, at the same time dealing with operational challenges, there tends to be kind of a focus on the short term. The short term, there some a lot of high fiving going on about the bottom line, deservedly so, at the same time, there's a lot of worry about where the where the car is going to come from the supply coming back. And for franchise dealers, what's going to happen with their business model that OEM encroachment in that model over time independent dealers, you know, feel the effects of changes in the new car market directly and And so I think both sectors, the independent used car dealers of America and the franchise dealers, you know, are feeling some good times. But I think it's also a time of needed, you know, introspection around how we get ready for the future. When market conditions normalize. That's what I think is most interesting is what's the thought process around maintaining the success holding the bottom line keeping it strong, my marketing and take conditions normalized, likely in 2023?
Zach Klempf: Very well put. And this kind of leads me into my next question. So in several of your recent speaking engagements, podcasts you've done, I've heard you talk about the one person sales model. Why does this make sense for the modern car buying experience?
Chip Perry: I think it makes sense because it, it gives the customer what they want in terms of a time saving, efficient, transparent process, and it helps the dealer deliver a better experience, grow market share through better word of mouth and reputation in terms of the experience and also improve financial results through f&i product sales as well as sales process efficiency. You know, it makes sense for the future to really be thinking this way, because when market conditions normalize, front end margins are going to start to compress. And when they start to compress, becoming more efficient will come the imperative before the pandemic, when you ask the horse what their main priority was, given margin compression is to become more operationally efficient, that's that's tended to kind of fall lower on the priority list in the last couple of years, as they struggle with, you know, remote sales, or selling preorder, or in cars of your franchise dealer struggling for inventory, wondering about the prices where they're gonna go, given the volatility and the used car market. Am I holding cars at the right price? That kind of those, those are important questions. But I think that the one person sales model addresses this fundamental unmet need, which consumers have been voicing for many years, you know, when people talk about likening the car by experience to go into the dentist, that's not a good thing. And so, we live in a capitalistic society where any provider of a good or service, if they can do it better than their competitors, they're going to get more business from their customers. So the buying experience is the real differentiating opportunity that dealers have, other than having good cars competitively priced, and good supply from them on their on their on their dealership facility. You know, it's the experience that really distinguishes them. So I think the time has come to address this fundamental consumer pain point. And do it in a way that also improves the bottom line of the dealership. And the big concern about one person selling is the worry about if you let the frontline handle the transaction and some independent dealers, many independent dealers have one person sales models already, because, you know, they're relatively lower volume businesses. They don't have the staff and specialization that the larger dealers have. Even those dealers could benefit from a tool that enables the customer to have a unified software experience and having the deal presented explained and then transacted. Even they could benefit. But if an independent dealer has a f&i business office, and and there's a busy Saturday, there's waiting times, all dealers have an opportunity to improve the customer experience. I think the conventional wisdom in our industry has been if you hand it to the front line, you know, you're gonna you're gonna lose this f&i talent number one and number two, your profits are going to drop because they're not going to the frontline won't sell the products the way the finance specialists do. And that's the conventional wisdom that I think is now being disproven
Chip Perry: by the successful dealers who are adopted a one person sales model, both with our system as well as with others and on their own, across the country. It's a it's a movement an early it's we're in the early stages of a movement in this direction, I believe. And when when we step back and we look at at the challenges that the challengers the the intruders that I call barbarians at the gate for the quote unquote, online car sellers, you know, they position themselves as being you know, we're not dealers. Don't buy a car from a regular dealer, don't go through all those, those those hoops and friction points will make it easy for you. So that they're all they're doing is is, is kind of poaching into the industry with a superficial message that that attacks the negative image of traditional auto retailers, both in independent and franchise. So why not take that that arrow out of their quiver, beat them at their own punch, by using your local presence to serve the local market better and capture market share. So I think that we're at a time at a juncture in our industry where, you know, with all these challenges, it's time to retool, it's time to rethink, revamp. reengineer restructure the sales process, let's go for it and make it better for the customer and make more money at the same time.
Zach Klempf: So with A2Z Sync with your product, you've basically taken the one person sales model some of the f&i technology credit functionality, basically several different like standalone products and put it into a single tool to streamline this process talk to me about developing a to z sync and working with their early dealership customers and kind of their early iterations on that product.
Chip Perry: So I arrived on the scene almost two years ago, the system was built by then, and installed in about 20 dealerships across the country. Obviously the founding dealer group, the shop group, and here in Denver was using it and a few other groups had used it started using it. It was developed by a former f&i, manager, director, Compliance Manager at the shop group, a former red meat eating finance person. And even though she was skeptical that it could be done, she started with a menu and built it forward. And what she discovered was her expertise and understanding of the nuances of how car deals get constructed and modified during a conversation with a customer, you need to build in a bunch of settings. And, and, and a sequence of presentation that enables the deal to be set up properly in the front, through first pencil before credit app, and then leave room on the back after credit is approved for finance products to be presented and sold. So the technology very much supports a customer-friendly, transparent, but also dealer-centric presentation of the deal and negotiation of the deal. And so it's the balancing act between simplicity to the customer, and transparency and streamlined Ness, and balancing that between that and that needs to customize and create settings and nuances that allow the dealer to wrap their personnel and talent around the system and implement in a way that produces great results. So the early dealers who adopted this, were all very passionate about removing time from the customer experience, making it smoother and more pleasing. And they were willing to take the leap of faith that they could hold f&i results. Now that we proven through we now have over 40 dealerships working with us that all of the customers all the dealers who embrace this actually do improve their f&i results with this system. So the early dealers were taking more of a risk than the ones who are adopting the system now. And we're excited to be able to share those kinds of case studies with the interested dealers and explain the moving parts both above the line that touch front and back end gross profits, as well as below the line. How sales and f&i compensation expense efficiency can be improved with the one person model. And we have case studies now that show very clearly that there's hundreds of dollars of improvement per car in front and back end gross mostly on the back, mostly on the back. And then there's also sales process efficiency through the RE redeployment. f&i people to sales manager roles and the reduction in overall sales and f&i staff needed because when the time to come to create a car deal is reduced, there's more capacity in the sales operation. Also, there's some people that just don't adopt this new method and they move on to back to when they go to traditional dealerships to do their business. So we're seeing really great financial results, which is very exciting. That's why one of the reasons why I felt so excited about joining this company was, it's one thing to want to improve the customer experience. Another thing to help dealers improve their bottom line, there's traditionally been kind of a zero sum game view of that, you know, the more transparency and the more customer-friendly it is, you know, there's less gross profit in the deal for the dealer. What we've learned is that employing a system like A2Z Sync with the training that we provide the experience results in the customer being more receptive at the end to purchasing f&i products, there's report that's built.
Chip Perry: There's a different kind of conversation at the end, it's not compressed, it's not contrived. You got to know the person, the customer a bit along the way. And the transparency of the experience, basically causes the guard to come down. And without having to cook and wait in f&i office for an f&i office experience. They're just at the end, they're more receptive to buying product. So they're happier when they leave, and they spent more money. That's, in my mind, the pure definition of a win-win. And the other the other constituent that's very important here, besides the customer, and the dealer is the salesperson and the sales manager. This approach improves the life of a salesperson improves the life of a sales manager, f&i person, because they get a chance to control the whole deal. Salespeople, like the fact that they're not passing the customer off to an unknown experience, depending on who they get how much time it's going to take that day. I've heard a lot of salespeople work with our system say, Well, I will never go back to the old way. If I have the opportunity. I want to keep doing this. And sales managers and former f&i managers who often become sales managers, they get a chance to see the whole deal sales managers would pass it off. f&i managers would would only see the back end. So now they get to see it all and they get to orchestrate it from behind the scenes and they get to coach their, their salespeople. So the talent and the experience and the knowledge of complete car deals is growing on the team all the time. Because it's not it's not siloed and chopped up and specialized in sub-segments. So it really works for the salespeople and the managers. That's what also a sight that excites me to be able to bring a solution to the industry that salespeople like. And it's really fun when you can help them sell cars in a way that that they know that they know is better for the customer and better for them and better for the dealership.
Zach Klempf: Yeah, and I remember you once telling me disk does it sell cars, it definitely sounds like a disease sink is you know, filling that goal.
Chip Perry: Well, and this is different than digital retailing, digital retailing, constructs a deal from the outside, and then it ends up colliding with whatever happens in the store. You know, our system goes all the way through contracting and paperwork, and seamless push into the DMS and we make sure that the payment calculations that are happening inside our system are matching exactly what the DMS requires. So there's no need to, you know, rebook or rekey, into a DMS or have payment numbers not match. Very important. So we've had one of our clients tell us you actually have the only system that quote sells cars, meaning that matches everything through our throughout on one screen, one tool, one tab without having to jump around and deal with the friction technically that many, many kinds of tech environments inside dealerships creates today.
Zach Klempf: So if you took a step back, and you're thinking about giving advice to like a smaller used car dealer in this environment where you have fierce competition the car Max is of the world. Caravelle Ana's larger franchise dealer groups, what advice would you give to them?
Chip Perry: Well, I think that the independent dealer is the heart is the heart and soul and the lifeblood of the automotive industry. I've had the wonderful opportunity to work with him for many years. And I heard an implant dealer once say that we have the privilege of selling the remaining useful life to have a vehicle to people so they have the basic transportation they need to conduct their lives. And I think it's a high calling. And independent dealers are among the most innovative and resourceful people on the planet. Single entrepreneurs, they don't have factories behind them, they don't have private equity behind them. They take a risk every day on the car they're gonna buy and then I find a market for that car in their local community, or outside the local community nowadays given, you know, the transparent visibility of vehicles around the country through third parties and through search. So I think that independent dealers are continuing to evolve with technology. picking the best tools that they can, I think that the vendor community is, is is different in the independent world, largely than the franchise world. And there's a whole group of very, I think, aggressive and innovative providers have different kinds of solutions, whether it's a website, a CRM desking f&i presentation DMS social media. So I think that that ended independent dealers will continue to invest very carefully surgically in technology that helps them streamline the process. And I think for them to be able have a marketing message in their local communities. That says, We give you a very personal care and service and treatment when you come to our dealership to buy a vehicle. You know, we don't have the big fancy factory sign above our store. So we're here to serve our local communities. And we're working on creating a great experience for you to buy a car. So I think that that, that every individual use vehicle is a different, that's not a pure commodity. But the, the, the visibility of inventory and the comparability of inventory over the last 20 years has changed. So that, you know, people do have more choices, they can find similar cars, although conditions vary, and the condition varies and a lot of nuances vary, that they feel they can get close to comparability now. And then that leaves the experience as the next big opportunity to differentiate. So I think that I would advise indepent dealers to look for ways to to, to address the pain points that people have in the car buying process, and look at the research around and customers perceptions around car buying as an opportunity. One things we can share with any dealers that I'd like to share with you Zack, because we've done some research recently, where we asked car buyers, you know, what they what, what they how they feel about the car buying process, what they don't like about it. And if they could design the ideal experience what that would look like.
Chip Perry: Turns out most people have a negative sentiment about car buying, not a positive one. When you ask people what one word describes car buying for you 85% of time, it's not a positive word. That's what that creates opportunity. Because if that's the general perception, you know, we are truly different if we have a better experience and as an independent, you're next when you ask them what their main pain points were. It's about time spent at the dealership, the way in which they get turned over and and upsold f&i products at the end. And the way there's the back and forth into time consumption around negotiating the price. And then when you ask people, if you could design an ideal experience, what would it be? Look? What would it look like? I'm happy to share this and you can share it with your with your, with your audience. We then ask them, How did you get design ideal experience? The number one is a simple and transparent presentation of the price and monthly payment. Number two is a fast and efficient process. Number three is a low pressure sales experience. So I think the hallmark of really great companies that have great experiences for the customer is they're obsessed about the customer experience. And that obsession about customer experience can lead to curiosity about what people don't like, and what they would like to see happen when they buy a car. So we've done the research to try to help the dealer community know this, I think they instinctively know it but it's helpful to have a mirror put up. And we did this through a large national survey, talking to car buyers through a research company called YouGov, which is like the modern Gallup poll. Oh, um, I think that that the results of this will will spur the note the curiosity on how can we as a dealer stand out from the crowd with a better experience and marketed accordingly so that's what I'm hoping that the ended independent dealer community takes from my, my, my conversation with you today. And and and why not be the common industry perception Why not be the big used car lot down the street or the big franchise D or who hasn't addressed the pain points? Why not. So there are many great dealers in America, on the independent side quality dealers all over the place, I had the fortunate opportunity to present quality dealer awards and nada for 15 years and hear their stories and the passion they have for for being great employers and serving their local communities. There are many great independent dealers all across the country. And I think that, that as busy as they are curiosity around how to how to address the pain points that consumers feel in the car buying and, and having demonstrable fixes to those problems that their stores working on, whether it's with our technology or somebody else's. It's the thought process behind innovating the customer experience driven by customer obsession, that I think will lead to great success in the independent world over the next five to 10 years.
Zach Klempf: Yeah, no, I definitely agree, especially on the importance of customer buying experience. And lastly, chip for the dealers interested in learning more about a to z sync, where can they go to get more information about your product,
Chip Perry: it's nice of you to ask that, by the way, I want to compliment you on as a young company that is helping dealers with technology, spending some time not selling your own stuff. But creating an environment where people around the industry can give their views and advice and, and it's a it's a high-minded and very positive thing you're doing. So any independent in America can learn about us by going to a2zsync.com. We have some independent dealers we're working with today. And we look forward to working for more and serving them as passionately as, as every company I've ever worked for. Has has worked with dealers, I believe strongly in helping dealers win and succeed. And, and the only way that a provider can have a place in the world in the busy world of challenging world of auto dealers is to is to help them win. And that's what I'm trying to do here at A2Z Sync.
Zach Klempf: Wow. It's been a great episode absolute legend on the podcast Chip. Thanks so much for joining me today.