What is the role of the CIO in helping businesses navigate potential disruption? In my conversation with Rafael Maldonado, CIO at the National Automobile Dealers Association (NADA), we discuss this and how he is working with NADA to positively guide this association moving forward. Listening to this will give you a peek into how a Mid-Market business – that has a lot of influence in a very dynamic, risk-averse industry is handing issues with exponential change.

We all know the auto industry is changing with autonomous cars, Uber’ization and Lift’ization of ride sharing, parking in cities, and purchasing habits of the newest generation.

Rafael is helping NADA avoid being disrupted.

In this 6-minute conversation we discuss:

• The Importance of being proactive and thinking about offense
• As a CIO, thinking frequently about how you can bring value to your customers
• Developing standards
• Development of ‘Lead’ attribution
• What the real research is saying about trends with driving and younger automotive consumers.
• The experience buyers want moving forward and what is directly impacting the consumers’ expectations.
• Potential new revenue sources that are emerging
• Development of tools and resources to educate dealers
• Helping dealers identify key indicators of dealership health

The full transcript of this conversation can be found below:

Bill:          Rafael, who are your members?

Rafael:    Our members are the dealer owners.

Bill:          So, not the manufactures of the cars, but the dealership owners?

Rafael:    We sit somewhere in the middle because we deal with the OEMs (Original Equipment Manufacturers). We have a group called Industry Relations and they deal with our OEM relations. We also deal with vendors and with our dealership members as well. So our main goal is to provide education, training, help with legislation and regulatory issues and then OEM relations or industry relations.

Bill:          Can you tell me what you’re trying to do with data as far as your members are concerned?

Rafael:    You made a point earlier about being proactive, not reactive. This is the first thing we’re trying to do. By providing our dealers with data that gives them leading indicators, they can start taking action on their own businesses.

We have a special membership category called 20 Groups. It’s basically a group of 20 non-competing peers that come together and they discuss best practices around our retailing. This works because they are not competitors. The rule is that they must be, I believe, about 50 miles away. And we check.

I’m part of the groups being anti-trust, regulations and all that. We have to ensure that they’re not in the same markets. That frees them to contribute to the group freely, without any hesitation because you don’t have a competitor across the table. So they really share knowledge.

Rafael:    So what we’re trying to do is develop a tool set that basically impacts your experience with NADA education and 20. We have multiple offerings, we have webinars, we have our NADA Academy where you can actually come and become an expert on how to run an auto retailing operation, end-to-end. We also have the 20 Groups, we also have in-dealership consulting. So there’s multiple products and or services that you can engage us on. What we’re trying to come up with is a platform that will stay with you.

Let me give you an example. One of the biggest challenges that I have with some training is that you learn so many things, but then you go back home to your office and you don’t have the tool set that you need to actually implement some of these lessons learned.

Bill:          Oh, you mean coming from a physical training versus deploying that back home?

Rafael:    That’s exactly right.

Rafael:    So what we’re trying to do is, we have a ‘set of best practices’. We’re trying to build a tool set that any engagement that you have with NADA, you’ll have that tool with you. And, it will follow you through your development as a leader in the auto retailing space with NADA. So whether you participate in a seminar or a course (a professional series, as we call them), you come to the NADA Academy, or you become part of the 20 Group, you’ll be able to use those tool sets not only in the classroom, but also to operate your business in real life. That is sort of the goal.

Rafael:    I think if we are able to do that, and we embed our knowledge and our best practices that are ‘best in the industry’ into the tool set, then I’ll be able to give you what I’m calling the ‘Dealership Pulse’.

I want to do it in a way that you can have it any time on any device, from anywhere. You can be enjoying your time by the beach, having a nice piña colada, and being able to pull up on an iPhone or an Android phone, the pulse of your dealership and know whether something needs your attention or not.

Bill:          Is the content all geared for the CEO? Or do you have like, sales and marketing, operations, parts, labor, etc.?

Rafael:    We do. It’s basically going to be geared to all the managers from the different departments in a dealership: FNIs, sales, services, parts, and the general manager and or the owner.

Bill:          Now, are you also trying to embrace change? With autonomous vehicles, scooters (not that that’s autonomous, but it’s certainly on demand), and Uber-type services. Do you try to measure the impact and try to help the dealership invent new opportunities where they can achieve new revenue streams from this level of disruption?

Rafael:    Yes. We have conducted some studies around the ‘dealership of the future’ and ‘the autonomous vehicles’. We are educating our members based on those studies and the results of those studies.

Rafael:    One of the myths out there that we’ve heard is that this new generation does not want cars. Well, our studies are telling us otherwise. It’s basically telling us that we just don’t want them right now. Because, think about it, some of the kids that are coming out of college, they have unbelievable payments on student loans that they have to take care of. They’re delaying some of these decisions. but they still like the new, shiny car. If you think about the cars nowadays, they’re actually computers that provide transportation services. They have all the bells and whistles that this young generation actually grew up with. And, frankly, what they expect in a vehicle today.

We are looking at multiple angles. We’re looking at the telematics angle and the data that is going to be generated by this autonomous vehicles. How can we be part of that as well? How can we harness that information to provide a new…..

Bill:       …Because you can provide an API to the industry if you could dominate some of the data … if you can collapse the data from certain interest points.

Rafael:    There are multiple things we could do. I mean, one of the things that is lacking in this industry is a good set of standards, data standards. So we’re working on that front as well. We’re trying to develop some standards for the industry so that this exchange of information happens more freely and more effectively. I think once that happens, then I’ll believe that it is impacting – or the lack of those standards and free flow of information is  impacting our dealers’ ability to provide the consumer experience that people are actually demanding these days.

Because your consumer expectations are no longer set by one transaction, that’s another important change. Now, the consumer experience that you have when you buy something at Amazon or you buy something on any other platform, it’s actually permeating or impacting your expectations on any other transaction. Whether it’s buying a car or buying a home.

Bill:          Right. They’re setting that.

Rafael:    The consumer is setting that. Those expectations are changing based on transactions that are not necessarily happening in your industry. So you have to be aware, as a business, you have to be aware of that. We, as the association for dealers, are working with our dealers to actually make them aware of the fact that now the consumer has a totally different set of expectations that they must meet.

I think that’s important – and it’s a danger. Because if we’re not able to provide the consumer expectation, that could be a potential threat to us.

Bill:         Yes.  It’s interesting. I know the word gets used, overused, the word platform. But, is there a way for you to become essentially a gateway for the industry from the data that is now provided from multiple sources? I don’t know if the automotive industry has essentially public data sources, but being able to pull that data into Azure or AWS and building your own applications and then that data can be subscribed to by the industry, seems to be interesting.

One thing popped into my head too, is from a marketing and sales perspective. I don’t know how many dealers really have high-quality CMOs on staff. Can you imagine with the reach of Facebook and Instagram how pretty some of these cars are from a picture, look and feel perspective? Some of the dealers could actually, geographically, market to their user base now that there’s so much context around users on age and demographics and such. Since there’s no CMO, typically who is providing that service right now?

Rafael:    There are a lot of companies that provide the digital marketing services to our dealership community. What we’re doing from a NADA perspective, is through our 20 Groups. We are actually … one of our dashboards is actually a digital sales dashboard. So we’re evaluating all these leads and digital marketing information and providing feed-back, based on best practices, how are you doing. So you can make adjustments. One challenge that we have is lead attribution. Where is that lead coming from? Because our dealers pay a significant amount of money for a highly-qualified lead.

But what happens if you, Bill, went to, let’s use a local dealer here, Sheehy Ford. Let’s say that they’re paying for someone for your lead. You went to that side, but you have been to Sheehy Ford before, the day before. Should the dealership be paying for that lead?

Bill:          Right, right.

Rafael:    But there’s no way to actually attribute that. So we’re working, as part of these initiatives, on trying to resolve that issue, where the lead is actually attributed and we’re able to track that lead and actually tell the dealer that, “Yes, Bill was here a day before. You got this lead from your main provider.”

Bill:          Almost like a lead registration source?

Rafael:    It’s really a lead attribution system so you can attribute the lead to the proper source. It’s not easy, but we’re working On it.

Bill:          But also, how do you know who is adding value to that source too?

Rafael:    Correct.

Bill:          I mean, because technically, is it just a transaction, a binary transaction? Or is there some reason that someone wants to do business with that dealership? Either because – ever since their great- grandfather has been buying, they’ve been buying at that dealership and they just want to do price shopping somewhere else? Or, they really do like the mechanic on staff or the unique ability that dealer has to take care of the Prius Electric versus the other dealer that just is reselling it as a used car.

Rafael:    Correct.

Rafael:    What we’re trying to do is help our dealers be able to solve some of these issues that are impacting that consumer experience. We’re starting internally first, working with folks that are part of, for example, our 20 Groups. Then we’re going to extend some of these to actually, hopefully, be able to create certain platforms that will potentially be products that we can offer our membership.

Bill:         This is great. This is great stuff.