Comment

Comment by Arnold Tijerina on December 15, 2011 at 8:11pm

No problem, Tommy. I appreciate the Q&A.

Comment by Tommy McClung on December 15, 2011 at 8:04pm

@Steve... no offense taken.  You are right, fraud detection is tricky.  We're not perfect, but we're committed to making our marketplace as fair as possible.  We have a few unique things going for us that make fraud detection different than other places.  But I hear you and all I can say is we'll continue to invest in making it fair.  We're open to the idea of pulling out dealers that bait & switch.  Again, we're not hard set in any of our approaches.  If it becomes clear to us that dealers are misusing the system, we will adjust our policies to make sure we keep an extremely high customer satisfaction rating.

@Arnold - I think the easiest way to answer your question is that we don't have to get involved in that part of the equation (financing, trade).  We let the car buyer disclose a self-reported score up front and describe their trade and then we let the buyer and dealer communicate through our platform about the details.  It's not perfect and you are right there is an opportunity for things to go sideways there.  That's why we let the dealers handle this instead of us getting involved.  It also then helps the buyer gravitate toward the dealer that's willing to go the extra mile to work with them through the process.

The car selling business is competitive... no doubt, online or offline.  The buyers that are going to buy a car from a dealer 100 miles away for an extra $100 in savings is likely going to do that regardless of whether they're using CarWoo! or not.  Within the CarWoo! marketplace you'll know as you engage with the buyer that's happening and focus your time and energy elsewhere.  

Thanks for the feedback guys, it's awesome to have an open dialogue here.

Comment by Steve Stauning on December 15, 2011 at 7:18pm

Tommy,

No offense, but Google employs a couple of pretty smart people with some great fraud-detection algorithms in place. I don't think I have to tell you that there are dealers routinely gaming Google's review system...

In my opinion, the more dishonest a dealer is, the more likely they are to hire companies to game your systems. Personally, I cannot think of a better way to police this than to punish the cheaters and reward the honest car dealers. Relying solely on consumer ratings is flawed - even without potential dealer gaming - as consumers can and will crush an honest dealer that bent over backwards to lose $1,500 on a deal. I've witnessed that scenario far too often to think the reviewers on your site will be any different.

Short of personally interviewing all reviewers (via phone); matching reviews to purchases (self-reported by dealers not a DMS pull), and having a strong policy against bait-and-switch tactics that eventually includes ejection from the site is the only way I see (today) to ensure "the best overall experience." 

That said, I will certainly wait and see, and give you a chance to prove me wrong. Best wishes. 

Comment by Arnold Tijerina on December 15, 2011 at 7:13pm

Tommy, You said: "The other factors that come in to play in a car deal matter as well.  The finance terms, the value of the trade and how leases work, etc... Because CarWoo! is a communications platform, each dealer can have a conversation with the car buyer online, work out these elements of the deal and the buyer gets the benefit of coming into the store comfortable that things are not going to change on them at the last minute."

How does the store determine a solid financing without credit information and, even then, it's still subject to approval. How does give a solid trade figure on a car that've never seen in person? We both know dealers can't read crystal balls in regards to banks. Ive seen people with low credit scores get approved where a person with a higher credit score does not. Ive also seen people who "think" they have bad credit who do not. Dealers can rely on their hunches and relationships with banks but they can't finance a car. Only banks can. Do you start including banks in these financing discussions? As for trade value, that's completely subjective and varies by many things. KBB can say one thing but if a dealer is saturated with pre-owned trucks, he/she may not give a premium on theirs. 

As you said, there's so many factors to consider in this that just can't be done online. Ive HAVE seen deals go down smooth as silk, where everything went according to plan and nothing at all changed, but these were not in the majority. 

As for differentiation like speed of response, etc. Sure those play a factor... to an impatient buyer. In the end, at least in SoCal, you can lose deals over $100 where the customer will drive 100 miles to get the car. In fact, I know dealers who will not only undercut your price by $100, but then they'll drive the car 100 miles to deliver it in person... and this was a CarWoo dealer. (dont know if it was a CarWoo customer, just saying its hyper-competitive out here). 

I'm not trying to talk bad about your company. In fact, I've heard dealers (and know of one in particular) that is extremely happy with you. There are also dealers who, despite everything being said, are happy with their involvement with TrueCar. Car buying programs have been around awhile. They arent going away.

I'm waiting for a car to get Groupon'ed. That would be interesting.

Comment by Tommy McClung on December 15, 2011 at 6:52pm

Good questions and things we're working on... we know we're not perfect.  Here's how it works today.

Right now the way it works is buyers written comments are included in ratings.  I'm assuming the definition of a buyer or non-buyer is someone who actually purchased a car using CarWoo!  If that's the case, then my answer is we allow non-buyers, but CarWoo! users rate dealers, but we have a set of proprietary fraud algorithms at play.  It's actually pretty straight-forward for us to detect people who are actually serious about buying a car and those that are just in the product for other reasons (we also use this for quality control to keep our close rates high).  So we let the fraud algorithm (which we're constantly working on) police the bogus ratings by people trying to game the system.

Comment by Steve Stauning on December 15, 2011 at 6:48pm

Interesting approach, though I know a lot of marginal eBay sellers with 95%+ ratings...

Will a buyer's written comments be included in good or bad ratings? Can non-buyers rate dealers? If you allow someone who doesn't buy to rate dealers, then how will you police dealers gaming the system (submitting phony leads and then crushing their competitors rankings while puffing their own)? 

Comment by Tommy McClung on December 15, 2011 at 6:41pm

We don't have to do anything... when the customer reports that behavior, the dealer's DealerRank is affected.  I didn't touch on this below, but we have an algorithm that's calculating how well a dealer is responding to buyers requests.  When we get a report of a low-ball/bait & switch the buyer can report it and it will affect their DealerRank.  Think about eBay's seller rating as a good parallel to what we're doing.

We also have a feature in our Dealer Plus package that let's dealers "flag a suspicious offer".  This lets a dealer's peers police the offers.  CarWoo! then verifies the offer, discusses it with the dealer who has been flagged and we make a decision to either let the offer stand, or to take it down.  If it's taken down for good reason it affects the dealer's DealerRank.

The DealerRank is shown to every CarWoo! buyer before they start their engagement with dealers.  Buyers then have a choice to work with a dealer based on their previous experiences they've given CarWoo! buyers.  If you are a three or lower star dealer, buyers just tend to avoid you.  So the marketplace works itself out.

Comment by Steve Stauning on December 15, 2011 at 6:35pm

Hi Tommy, 

Very glad to see you respond to this so quickly and clearly.

A few quick questions: If a consumer complains about a dealer using a bait-and-switch tactic on a deal they negotiated on CarWoo, what will CarWoo do to the dealer? How many of these complaints will it take before you ban a dealer from CarWoo (if ever)? Finally, is this policy in writing anywhere?

I think honest dealers have a real concern about losing deals to a low-ball, bait-and-switch competitor who doesn't care about their reputation - only getting the deal. In order to be a real resource to both consumers and dealers, sites like yours simply cannot allow dishonest dealers to have access to consumers.

Comment by Tommy McClung on December 15, 2011 at 6:29pm

My post got cut off... here's the end of what I was saying.  Read my post below first.

***

There is a balanced solution to providing an exceptional online car buying experience that's a win for everyone.  

We also want to be a very open company with what we're doing.  I would love to hear feedback on what we're doing and I invite all of you to contribute.  We are putting together our dealer advisory council and if you're interested we'd love to talk to you.    

If you have more questions, please feel free to fire away.

Thanks everyone.

Comment by Tommy McClung on December 15, 2011 at 6:22pm

Again, I think a few clarifications are in order.  Thanks for the opportunity to explain.

CarWoo! is a much more in-depth platform than simply an up-front pricing game. It is true that a dealer needs to put a price offer out to the customer up-front and the other dealers working with that customer get to see the price (not the dealer who made it), but that's just where the CarWoo! platform starts.  From that point the differentiation between dealers and the experience they provide the car buyer is the most critical factor.  Things like how professional the dealer is in their communications with the buyer, answering questions, making subsequent offers that more closely match the buyers request are extremely important.  How quickly a dealer responds to the buyers requests is also extremely important... if one dealer responds to a buyer's question in 5 minutes and another dealer takes two days, the more responsive dealer shines.

I know there is a ton of concern about price compression and we are extremely concerned about that as well.  So our platform focuses on the personalized nature of each individual car deal, not simply the price of the vehicle. We do not require a dealer to make the lowest bid to win.  Dealers need to make a competitive offers, but that is extremely subjective to each individual buyer and deal.  I can not stress this enough, every car deal is different and a "set it low for all of my inventory and keep going lower" policy just does not work.  A constant reminder that you are not the lowest price dealer in the market is counter to our philosophy.  Personalized customer service by a dealer is key and we are working extremely hard to make that a reality.  Yes, dealers are competing on CarWoo!, but they are competing as much on their customer service ability as they are on price. 

We are determined to connect the car buyer with the car dealer that is going to give the buyer the best overall experience.

The other factors that come in to play in a car deal matter as well.  The finance terms, the value of the trade and how leases work, etc... Because CarWoo! is a communications platform, each dealer can have a conversation with the car buyer online, work out these elements of the deal and the buyer gets the benefit of coming into the store comfortable that things are not going to change on them at the last minute.  We have learned that when a buyer gets surprised when they get to the dealership, no one wins.  

Other extremely important factors in a car buyer's CarWoo! experience is that the offers that buyers get from dealers on CarWoo! are specific to an exact VIN level piece of inventory.  This again lets dealers further differentiate as their available inventory is a key advantage in the deal.  It also helps avoid another set of unwanted surprises when a buyer comes to the store only to find out the vehicle doesn't exist.

We do have a feature that lets dealers see each others prices (without revealing who the dealers are).  Which is where I think a lot of the worry comes from, but this is just transparency.  Buyers have transparency and now with CarWoo! they have transparency into the market pricing for that deal. And since every CarWoo! deal is different, the dealer has the choice to price their inventory where they are comfortable on that deal and that deal only.  Because the engagement of the dealer is so extremely important, if you are good with customer service, price is a factor, but not the only factor.  You do need to have a competitive price, but if you provide great customer service you do not need to be the lowest priced dealer.  

I 100% agree that dealers playing the low-ball price game is not in anyone's best interest.  Too many bad things result in this and it's not a win for CarWoo!, our car buyers, or our dealers.  We are working towards having a platform that car buyers and car dealers love.  There is a balanced solution to providing an except

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