PODCAST EP 17
Simon chats with Rachel Service, CEO of the Happiness Concierge.Listen Now
The Motorama Group is a family owned car dealership which began in 1960 as a BP service station on the Gold Coast and has now expanded to be one of Queensland’s largest automotive retailers, with multi-franchise dealerships spread across the Southside of Brisbane.
You can contact Simon here: https://www.linkedin.com/in/simonclarke77/
Simon Dell: Welcome to the show, Simon Clarke. How are you?
Simon Clarke: Fantastic. How are you, Simon?
Simon Dell: Not too bad at all. You and I have crossed each other’s paths. As I mentioned in the intro, you guys are clients. We’ve crossed each other’s paths a few times in the past. But currently, you’re working for Motorama. For those people who are outside of Southeast Queensland or haven’t bought a car for a long time, give us an overview as to who Motorama actually are.
Simon Clarke: Motorama is a family-owned business, been in operation since 1960. It’s been a growing business in the last few years. We’ve diversified a lot. The core business is automotive retail and servicing cars. We’ve got a couple of mainstream brands: Toyota, Holden, Ford, Mitsubishi, Kia, Nissan, HSV. That keeps us relatively busy. We’ve spread over three geographic locations on the south side of Brisbane: Moorooka, Browns Plains, and Springwood.
In the last few years, we’ve diversified the business by expanding into a finance brokerage, building another used car warehouse, and just been experimenting as the automotive market disrupts and evolves. The business has been challenged quite well in the last few years, and we’ve been trying to evolve with it.
Simon Dell: A couple question out of that. I’ve had a couple of family-owned business people on here. I spoke to the chairman of Coopers in an earlier episode, which is a very famous family-owned business. What generation are they into now? You’re saying it started in the 1960s. Are there a lot of the family still involved in the business, or is it one or two?
Simon Clarke: We’ve still got third generation, the son of the grandfather, Jan, his son John, and then his son, Mark, is now the CEO. He’s worked through the business. He started the business and worked his way through all different roles and is now managing director.
His brother, Damien, is our group training manager. They’re still quite involved, and John is still involved at a board level, as well. There’s still a strong family connection and a family direction that goes into what the business does. It’s quite interesting, having worked in different industries, to work at a family-owned business. It’s been quite different.
Simon Dell: The other thing I wanted to pick up in your intro there was that diversification bit. We might as well talk about it now, but the car industry is an industry, to me, that was one of the first ones to go through that disruption and challenging space where there was new concepts, new ideas.
It’s also one of the industries that I feel is continually going through disruption. It’s continually being hammered by new concepts, new ideas, left, right, and centre. Is that the core reason for you guys looking for diversification opportunities?
Simon Clarke: Absolutely. The automotive world is continuing to evolve, particularly in Australia. The volume of cars that are being sold has been increasing for the last few years, probably the last six months has been the toughest trading that we’ve seen in quite a while. We also see within the automotives landscape a lot more large players. We’ve seen the A.P. Eagers, the AHGs of the world that are continuing to buy up other small dealerships.
The idea of just having a single franchise on the side of the road and trying to make a good business out of it, those days are going, because now, you really need scale. You need to be buying up other businesses to create the scale or you need to be looking internally at your own business to look at how you can scale to evolve yourself.
We’ve been spending a lot of time as the senior management team looking at how we can continually be more efficient as a group and how we can generate that scale and efficiency over time. We’ve also just been looking as well at how we can get a better utilization of our assets. Assets for us are cars. We own cars. We have lots of cars.
But traditionally, I’ll see them on the lot for 40 days, to 60 days, to 90 days depending on what the model is. We’re also playing for play in at that point. We’re trying to look at how we can get a return on those cars and work through the systems, and the processes that manufacturers put in place, and play the game to have asset utilization at all times.
One of the concepts we’ve developed and been working on, started over in the US. It’s not by any means our own idea but it was certainly one of the first moves in that space is around car subscription and looking at how we could set up pools of cars that people could access for short-term, by a month at a time, to help them out a problem at a time, and offer them choice and flexibility that they wouldn’t traditionally have.
And what I mean by that is, I think, when you go to buy a car, you’re always having a trade-off around something. You and your wife probably have a different idea on what you think is a family car.
You probably think, “I’d love a ute for those wicked trips and visits.” And your wife goes, “Yeah, and I’d want a seven seater for all those times when we need to have seven seats occupied by taking kids to school, in soccer trips, and what have you.” What we’re seeing with motor pool is that you can overcome that by rather than just buying one car, you’re actually subscribed to a pool of cars.
You have six different cars in a pool. We’re always driving one of the cars, but when your need arises, or your weekend trip, or you need to go to that soccer game, you can essentially swap out of a car and swap into a different car that will fit your need for that point in time
Simon Dell: It strikes me that from a subscription point of view, it should’ve happened earlier. Spotify’s been around for a long time. Netflix has been around and there’s a lot of other subscription services that have been around for a while. It seems strange that the car industry has only just started to embrace the idea. Do you think it was so hard for the traditional car industry to understand that concept, or do you think it’s quite hard doing a car subscription?
I don’t know how easy you guys have found, and obviously, I’ve been involved in it to a degree with you guys, but has it been hard for you to work it all out from a number’s point of view?
Simon Clarke: There’s been a few challenges. First of all, car ownership is something that’s very near and dear to a lot of Australians. We’ve got a lot of geography here, so for you to go anywhere, you essentially need a car. Certainly, for our generation and generations either side, owning a car has always been aspirational and that ticket to freedom.
With the rise of other mobility solutions, Uber’s making transportation a lot cheaper than other short-term driving packages being available. I don’t know the car ownership is at desirable as it used to be, especially, for the younger generation, which is where a car subscription seems to have a space.
We’ve been struggling a little bit with trying to understand who the market is. As we’ve gone out there, we’ve gone with a very broad approach and identified different areas. It’s been an interesting journey, because within Motorpool, we have also started to segment different pools.
We’ve got the customer that likes to show off to the neighbours with a different car every week and it’s a high end car. We’ve got a premium pool which talks to that highly aspirational and person that likes to show pony their car, so to speak, but also, it’s probably more that car advocate that likes to change cars and have the latest and greatest.
From our research and from talking with people, we’ve also started to evolve into a pool that’s more around a value pool. That’s not a fancy car, but it just hones back in on those people that just need a car to get from AB, and for whatever reason, don’t have the upfront money to go and buy a car. They actually like the flexibility that they don’t have to lock in on particular model, or they just need something for a short-term time period, or use it even as a test drive to test drive a car for three months, to then decide if that’s actually a car they want to buy.
Simon Dell: You talk about that car ownership being part of the Australian psyche. Geography is a major issue as well. I think it’s something that I think the car manufacturers have done over the years, is to make people believe that owning a car was a natural part of growing up. As soon as you turn 17 in the UK, you go out and you buy your car and those kind of things. I think, really, that psychological breakthrough, you’re completely right.
Uber has done a fair job in breaking that, and there’s now stories coming out of places like LA where teenagers aren’t learning to drive anymore. They’re just getting an Uber subscription that’s paid for by their parents and that’s how they get about now. I think it’s starting to break. But I also think that the older generation never had any alternative.
I think as Uber arrives and as car subscriptions arrives, and later on, maybe autonomous vehicles arrive, suddenly, we’ll all sit there and go, “Yeah. You know what? That kind of concept of actually owning a car wasn’t a very good idea.”
But it was natural because it was the only idea out there. So, you didn’t really have any other alternatives but to own a car if you wanted to get from A to B.
Simon Clarke: I remember back when I was at uni, and if I wanted to catch the bus or rely on public transport — because there wasn’t Uber, and as a uni student, you couldn’t exactly afford to get a taxi. It used to take me an hour and a half to catch a bus that would basically take me 20 minutes to go for in a car. Suddenly, your whole needs and wants to get a car is completely rational because it’s going to save me so much time all the time. But yes, no other alternative back then.
Simon Dell: And as much as people would like to say we should rely more on public transport, you hit the nail on the head there. It’s a time issue. For me to catch a bus, it’s a 10-15 minute walk to the closest bus stop, and then it’s probably going to take me anywhere near where I actually need to go. You start thinking about buses and trains, and you’re almost doubling journey time, if not tripling journey time sometimes. People just won’t buy into that.
There was actually one other question I wanted to ask you, something you said earlier on about the last six months being the hardest trading period that you guys have ever experienced. And having spoken to other people where I’ve done test drives of other cars and stuff for the last six months, they all say the same thing when you read the newspapers.
Why do you think that’s the case? Why has it been in the last six months that it’s been such a challenge? Is it an economy thing? Is it the consumer is just looking for alternatives now? What do you think is behind that?
Simon Clarke: I think there’s been a few things. There’s a few factors affecting it. Certainly, from an economic perspective, we’ve seen house prices softening, which often goes hand in hand, I think, with a car purchase. If your house goes up, people feel rich. What do rich people do? “Oh, it’s a good time to upgrade the car or invest.” That whole confidence thing goes hand in hand. And as house prices get in the media and they talk up the, “Oh, the market’s sort of been flattening.” Certainly at Brisbane anyway, but they still tend to reference Sydney and Melbourne market’s more so.”
I think consumer confidence has been a struggle. I think evident from the business side of things, we’ve had a lot of restrictions around what we can do from a finance perspective. Our finance income as a business has been quite heavily impacted just by changes that have been happening from ASIC in terms of reduction and tightening up of lending. We’ve had some struggles there.
I also see that wage growth is also being quite stagnant. I don’t know that people have that disposable income to spend as well at this point. It’s just been a tough time, I think, and the manufacturers have also sort of… Everyone increases their expectation of where they want to go in terms of volume, and when the market’s not there, they get more desperate to encourage you to put demos on or do different things to try and manufacture a result.
Those cars still have to go somewhere. It’s one thing to turn a car from a stock into a demonstrator, but then the demonstrator still lives somewhere and they still have to be sold. You can only sell a car once, really, to record a number within vFax or from a market share perspective.
Simon Dell: I just want to touch on a couple of your brands. Obviously, you spent some time working for Toyota, and we talk about that from both the franchise and a franchisee perspective. But I wanted to touch on Holden, because Holden’s a big brand for you guys.
Holden has undergone a massive change, evolution, whatever you want to call it, in the past three or four years. Again, for people that don’t know and don’t know the Australian marketplace, Holden was once very proudly built in Australia or at least put together in Australia, and then they closed their last manufacturing plant a couple of years ago. It made a lot of people redundant and took the manufacturing overseas. Where do they manufacture them now?
Simon Clarke: They come from a few different spots. They have some cars coming or made from America, as I understand it. They’re going through an interesting time, Holden.
Simon Dell: I’m going to guess this is a really obvious question, but did that impact their brand and their brand value in the face of the Australian marketplace?
Simon Clarke: Massively, yeah. They’ve been in a world of hurt for a number of years now just from a volume perspective. They’re selling less cars, but the model lineup has changed. Back in the last 10-15 years, Holden and Toyota, for a number of years, were neck and neck as number one and two.
As products change and consumers change, the Holden product has really fallen away. Toyota’s maintained its lead and Holden now is about six. So they have kind of been in free fall, so the decision to back away from the Australian manufacturing, and particularly some of the really popular name plates like Commodore you used to see racing at Bathurst every weekend, with really predator, really strong brand advocate for Holden.
As that’s moved away, the core supporter base has fragmented a little bit from what Holden actually had. They’re not making cars here, they’re actually importing a lot of cars from General Motors in the US. It’s just taken a little while for those brands and those name plates to really have any traction in the Australian market.
Simon Dell: Do you think the decline in the brand was a consequence of shutting the plants, or was shutting the plants a consequence of the declining brand?
Simon Clarke: I think shutting the factory and the subsequent change of models has been what’s impacted Holden, mostly. The traditional model mix that people liked and loved about Holden has been changed, the fact that it’s now not made in Australia… The Holden brand doesn’t exist anywhere else in the world other than Australia. Essentially, it’s General Motors having the Holden brand in Australia.
Simon Dell: It’s Vauxhall in the UK, isn’t it?
Simon Clarke: Yes, I think so. Now, everything, basically, is a GM car that’s imported, rebadged as a Holden, and on it goes.
Simon Dell: The other thing is a lot of the manufacturers stepped up their game. It might not necessarily be that Holden was doing anything wrong for that decline, but perhaps they didn’t adjust to the marketplace quickly enough and there’s a lot of other brands that stepped up and started producing good quality, maybe cheaper, maybe more features and all that kind of thing. You guys deal with Kia as well?
Simon Clarke: Yes. The number of manufacturers in the Australian market is actually the highest in the world. We, annually, would sell about 1.1 million cars. I believe there’s about 60 different manufacturers here. The reason that Australia is so attractive is because it is that smaller market. 1.1 isn’t huge in the context of the world, but it’s a great place. A lot of brands come here. They test things out and use it as a bit of a pilot place to come.
It creates this massively competitive environment, and yet, as you’ve said, we’ve seen other brands that are continually evolving, and changing products, and becoming stronger, and increasing their value propositions, and really stealing share off of everyone else.
I think now that the switching… And I think that brand loyalty is something that we’ve seen decline over time. A few years back, there was a real point of difference in quality between different brands, but now, it is very hard to tell the difference.
Simon Dell: Absolutely. I was talking to someone yesterday about Skodas, and they were going on about how great they thought a Skoda was. Essentially, Skoda used to be the joke car 15 years ago, not long ago from car terms. Now, it’s built on the platform of Volkswagen, and everyone’s talking about how good and robust it is.
When I first came to Australia in early-2000s, I bought a Kia and it was terrible. Now, everyone who has ever driven a Kia Sportage just goes on about how great they are. It’s changed quite dramatically. It’s taken time, but it’s perhaps a very different marketplace than it was 10 years ago.
Simon Clarke: Speaking of Kia, Kia is probably one of the most underrated brands out there. It’s alright because we have the luxury of dealing with six different brands and most people come to us, like, “Oh, we’re thinking about buying this or this.”
A lot of time, internally, with myself, we would say, “Oh, have you actually thought about the equivalent Kia model?” The Kia brand, they lead the market with a seven-year warranty, which most of the manufacturers have now caught up with a 5-year unlimited common warranty. Kia has always been at seven, and they moved to that a number of years ago.
As soon as they did that, it just gave so much more confidence to the consumer that, “Oh, wow. Seven-year warranty? How good is this?” And then they actually get in there, and they start driving the car, and they value add it with so many features that it becomes a compelling proposition to go, “Well, I get all this value. I get a seven-year warranty versus the competitor’s set.” It’s really changed perception, and they’ve come a long way in the last 10 to 15 years.
The sponsorship with the Australian Open as well for them has been really strong. I think they took off Ford who had it for many years. It’s one of those, you look at those sponsorships, and then it goes for two weeks in a year, but it’s in a clear space. It sort of runs in that January period where a lot of people outside of their normal routine, kids aren’t at school, a lot of people have a bit more time in their hands to watch TV and watch sport. They now leverage it quite well to bring in new models and push different marketing genders through there.
They’ve picked up the sponsorship of Rafael Nadal as well, created a few good limited editions models around that. They really used that as a good leap frog as well for the dealer networks. Most of the manufacturers now use these sponsorship events as a way to get all the dealers together for a reason.
Plus, they can go off and wine and dine with the tenants, but also use it to release new models and to then showcase that to a huge number of people that they get through at the Australian Open as well. They’ve been having on ground activations to really get their Kia brand out there and push it more into the mainstream.
Simon Dell: That’s an interesting point that you make about sponsorship with the Australian Open. I think a lot of people don’t really think of sponsorship like that. They go, a sponsorship with the Australian Open is about getting a logo in front of the general public, and getting your brand exposed to those eyeballs on TV.
It’s also an opportunity for you to engage with partners, and suppliers, and franchisees, anybody that might be part of your business network that help sell your product. It doesn’t necessarily need to be all about the end user. It can be about building a relationship with those people who are working with your brand day in, day out.
That’s a really important point. A couple of other things I want to talk about disruption since we’re on that subject. Subscription cars, I think most people — certainly, people I’ve spoken to go, “Well, that makes a lot of sense.” And you sort of go, everything’s included, except your petrol and your tolls.
You’re just paying one flat fee. You can cancel at any time. I think people who are scared that they’re going to get stuck with a lemon that they owe $40,000 and it’s worth $25 at the end of a five-year term, this is a safety net, something less that you need to worry about.
I think subscription cars makes complete sense and I think anybody that is looking at buying a car today needs to go, “I’ve now got two options: buy one or subscribe to one.” People would be stupid not to even just look at that as a possibility.
Simon Clarke: That’s what we have seen. When we talk to people, everyone I’ve spoken to around car subscription can see that it’s a great idea. You can see them doing the sums in their head going, “Yeah.” They all ask the same couple of questions. It’s sort of like you were saying before. It’s one of those things where people got to get the vibe of it and get the understanding of how it works. Everyone can see and everyone understands that car ownership is one thing, but there are the costs that are involved with it.
RFCQ came out recently and said that the average cost to own and maintain a medium-sized passenger car was around $850 a month, which includes fuel. And then when you look at car subscription, we offer car subscription that starts at $990 a month. That’s putting you into a brand new car that’s got very limited number of kilometres on it that has the latest safety and features. It does make for a compelling thought discussion as well, and around the flexibility that it gives you as well.
Simon Dell: I want to touch on a couple of other disruption things. This is kind of looking further into the future as opposed to right now. I think the two things that are obviously on everyone else’s front of mind is electric cars and autonomous cars. Let’s take the electric cars first, because I test drove a Hyundai.
From a drive perspective, an amazing drive and the sort of car that when you put your foot down at 90 kilometres an hour, it accelerates like you were putting your foot down at 20 kilometres an hour. You guys are in that industry. You’re up to date, finger on the pulse with everything that’s happening there. What do you see as the impact with electric cars in the Australian marketplace?
Simon Clarke: I think it’s going to be interesting. Tesla is probably the most widely known car brand out there from an electric car perspective. In the recent weeks, they’ve made some very interesting decisions and backflips on what their model looks like. They’re very unique, just the distribution model outside of just the car because they’re predominantly by online.
I’ve actually got a mate who owns a Tesla and he’s very active in recruiting and trying to find new Tesla owners. They actually had a really cool product referral program where you would refer customers, and when they’d buy the car, they would put your code on. Based on the number of times that you actually generated sales in the quarter, you earn different levels of rewards within the Tesla program.
It’s a completely new way of actually selling cars versus the traditional dealership model where we make the cars, we flick them out to you as the dealership, and then you will all sell them. The Tesla model does away with dealers and does it all direct. That whole model itself is quite interesting to look at how that works. From the brands that we own, a lot of them have probably gone more down the hybrid path, hybrid being a combination of a petrol engine and an electric engine.
Certainly, some of our brands, probably Toyota is the leader in that space in terms of hybrid technology. I think they have a plan where pretty much all their cars, as they roll out new models, will become a petrol and a hybrid variant. We’re now starting to see more fleets and business are now starting to look at that, going, “Actually, the hybrid model actually stacks up better.” Because of the fuel efficiency saving that you get by driving a hybrid can actually, based on a certain number of kilometres, be better than actually just buying straight petrol.
I guess that technology has also improved. Hybrid technology has probably been out there for 15 to 20 years. Started with Prius, as most people would recognize that name. That technology has obviously improved, got cheaper. The battery life has got better. One of the things that you always see as a first mover, is that a lot of mobility, Uber taxis out there, they’re all hybrids.
The big issue that hybrids had originally was around the battery reliability. But having a petrol and an electric gives you the best of both worlds. It’s the best technology solution at the moment. I think electric cars are also going to be found out to actually be quite not that good for the environment.
Just in producing them, there’s a lot of work that goes into actually producing the battery that is actually counterintuitive to people that actually want to do good for the environment and drive a car that doesn’t emit fuels. But actually, the cost and stuff that goes into making it is a little detrimental to that.
Simon Dell: The other thing for electric cars that I’ve seen is that they are generally not particularly attractive cars for some reason. I don’t know whether that’s the manufacturer trying to put people off or whatever it is. But certainly, the Hyundai that I drove wasn’t a good looking car. The Tesla are attractive cars, without a doubt.
And I think the Audi E-Tron is a very nice car that’s smashing some records in the US in terms of sales. I think the hybrids are a great option. It’s interesting that you say that Toyota are starting to bring out current models with hybrid engines, because I think that’s the way forward. I think rather than creating these individual brands with hybrid.
Simon Clarke: Absolutely. The Prius has been a very polarizing car. Some people love it and a lot of people don’t like the look of it, but it was traditionally — and that’s where Toyota started, “That’s our hybrid.” Their big move was getting it into the Camry.
So, you had a Camry that was a petrol Camry and then you had a hybrid Camry, and everyone who drove a hybrid Camry, which looked exactly the same other than, in the car, there’s a little hybrid battery that you could kind of tell. “Oh my god, this is just amazing.” Because it is actually a better drive. There’s actually two engines.
In a hybrid, you actually have two engines. You have a petrol and an electric engine. You actually get a little bit more kick out of the car than you would traditionally. I think moving into mainstream and making hybrid as just another version has been a really good move.
They’ve also produced that price premium looking new technology when it comes out, it’s like, “Oh, if you want to get a hybrid, it’s going to cost you so much more.” I think now, the new Carolla, which just came out last year, comes in a petrol and a hybrid. I think for the hybrid version, it’s only $1,500 more than the petrol. That price disparity is fantastic.
Simon Dell: You should save that on petrol within a year, I’m guessing, given the price of petrol these days.
Simon Clarke: And to my other point, what you’re also seeing is that the mobility sector, so the Uber drivers, the taxi drivers, that market all want to own a hybrid. When you go to resell your car, if you’re reselling a hybrid versus a petrol, you’re probably going to attract a bit more of a premium because there’s just going to be more demand for that Uber driver to go buy a hybrid.
Rather than just being all push, it’s now a bit of push and pull so that the used car market is now sort of pulling and looking for the hybrid stuff. It makes it a bit easier to sell that whole of life value.
Simon Dell: We’re gradually running out of time, and there’s about 20 other things that I want to ask you. I’m going to try and pick three key things. Number one is, autonomous cars are a very, very polarizing conversation. For those that know me, I have various online arguments with other people about whether they will happen, or they won’t happen, to what level they will happen.
What’s your opinion? Is it going to happen? What level is it going to happen? And are we talking about 2 or 3 years or are we talking about 20 years here?
Simon Clarke: I think it’s still a little while. There’s so much legislative issues that they need to sort out. If you’ve got two autonomous cars driving and one crashed into the other, who’s at fault from an insurance perspective? Is it the manufacturer? Is it the software? I think there’s a lot of legalities to come out. I think it’s a nice notion, and we’ll probably get there eventually, but I think there’s a long way to go with that at this point. It’s probably not something really on the radar at this point. I think it’s a little while.
Simon Dell: The other question I have is the whole concept of selling second-hand cars. When people talk about selling second-hand cars, there’s that typical vision of a second-hand car salesman trying to con you or make you pay more for something that is worth something less.
Even today, in 2019, there’s still that kind of apprehension that when you go into a second-hand lot, or yard, or warehouse, that it’s going to be some sort of battle. How do you guys, from a marketing perspective, deal with that kind of consumer attitude? I guess my first question is, does that consumer attitude still exist? And the second thing, if it does, how do you guys tackle it?
Simon Clarke: It’s a good question. We certainly have seen that within the used car market. We’ve been looking at the market for the last couple of years in just understanding where it’s been moving, and really look, I suppose, a lot to the US market. The used car market in there is absolutely massive. We’ve actually taken a few points from that.
Just recently, we have rebranded all our Motorama used car businesses to what we now call as Motorama Pre-Owned. Part of that is we’re trying to improve and increase the transparency to the customer. A couple of value propositions we’ve now moved to is that to a haggle-free purchase experience, we’ve really noticed that providing a haggle-free purchase experience just makes everything so much smoother.
Obviously, you still need to have some ability to explain to the customer how you’ve arrived at that price. So, we’re now working a lot more and looking at all of the third-party lead providers that we use: Gumtree, Carsales, et cetera, and looking at where that car sits relative to the market and making sure that when we price the car, we actually price the car relative to the actual market.
I think the traditional model has been, “Oh, we think the car’s worth this. We’ll just add a couple of grand to it, and then when the customer comes in, we’ll see how much we can negotiate and keep in. We’ll see how much they can negotiate to get the price down.” But now, moving across to a haggle-free model has been really good from a customer experience perspective. It speeds up the time because there’s no back and forth, there’s no argy bargy. And even just looking at our own reviews and customer experience metrics, it’s been really positive.
Simon Dell: Has it increased sales or has it made a difference for you guys from a bottom line perspective?
Simon Clarke: We’ve only been doing it to date for about six weeks. But just looking at the February data, we actually grossed more money out of the cars, and we actually generated as many if not more leads than we had in January, which is generally traditionally a very strong month from the used car perspective.
But because you’re now pricing cars to market, so the car then goes onto the third-party lead provider price to market, so i.e. it’s now relative to the other cars and it’s more attractive. It’s not priced out of the market with a margin on top.
You actually generate more leads naturally, anyway. So, we’re actually generating more leads, making more money, and having a better customer experience. So, it’s actually going hand-in-hand and working quite well today.
Simon Dell: My last question before we get into the final run is: I’m going to take you back all the way to 1998 and 1999, your first job or one of your first jobs was working for what I’d probably class as one of the iconic vehicle brands out there or… I don’t know where they sit in terms of that commercial space, but John Deere.
Most people would know John Deere, tractors and those kind of things. Tell us a little bit about that brand. Was there anything that that brand did that you thought was unique that you still see today that makes them stand out above everybody else?
Simon Clarke: John Deere was an interesting time. They were actually making a foray back then into Asia. John Deere is a big American company. All the production was in America, and they were just eyeing off trying to get into the whole Asian sphere. They actually set up an office in Australia, because of the time zones, just start working with a couple of John Deere dealers there.
From a branding perspective, it was interesting even back then. I guess I don’t follow them as closely now as I did, but they were always very innovative just in what they were doing, and products they were offering, to the point where some of the technology that they had, even back then, which was looking at the amount of yield that you could get on certain parts of your crop, and mapping that data back into looking at how much yields you get from your whole crop, and then whether or not there’s certain sections of a crop that actually generate more yield than others or it’s more productive than other areas.
They were just very innovative. And at the forefront… And that sort of stuff now, I would assume, is a lot more mainstream, but this was 20 years ago and that was a pretty awesome product.
Simon Dell: That seems to go beyond their remit of making tractors, analysing crop yields and those kind of things. That seems to be a step beyond what they were actually there to do. Does that sound right?
Simon Clarke: Absolutely. I think it just becomes a value add. The tractor does one thing. It does the grunt work, but where’s the science behind it? I think by building that ecosystem, and building the science behind it, and overlaying that into the brand, I think that really helped to set them apart. It was interesting, because they’re a very traditional company.
They’ve been building tractors and products for a number of years. For them to be evolving, even back then, I think was really good. And they had just such an awesome reputation as well from a supply chain and distribution perspective. I think it gave customers a lot of confidence that if something did happen to your product, that someone would be able to fix it or find the part for it as well just because of their sheer size.
Simon Dell: We’ll jump into the last three questions. We won’t get a chance to talk about the whole franchise / franchisee experience with Toyota, which is a bit of a shame. My third to last question for you: I normally talk to people about brands that they like or brands that they admire, but I’m going to make the question slightly different for you. If money was no object, and you were going out to buy a car tomorrow, and you’ve got a pocket full of cash, what would you be driving?
Simon Clarke: Interesting question. I’m probably more an A to B car driver. You see bad people and you go, “These people like to have the latest and greatest fancy car, and then there’s other people that are just like, “I just need a car to get from A to B.” I’d probably say I’d drive a Land Cruiser 200 Series or something, just something big that can go anywhere, can tow anything. It’s probably a little bit boring, but there’s so much choice.
Simon Dell: But you can have it all blinged up, maybe with the big alloys and that kind of thing.
Simon Clarke: Oh, of course. Yeah. You have a few bits and pieces hang off and it would kind of make it look pretty definitive and pretty cool.
Simon Dell: What’s the worst feature that you’ve ever seen people… And you must’ve seen a few, but the worst feature that you’ve ever seen people put on their cars, if that makes sense, as an addition?
Simon Clarke: I think people like to put funny colours or they put decals that look like tattoos on their car, which kind of look really weird. It’s kind of like the stickers you see on the back of the car, My Family Car ones, but these are really big ones that they put on the front. Some people have some strange ideas about what looks good in their mind.
Simon Dell: Years ago, I drove a 3 Series BMW which someone had decided… I bought it second-hand, but someone had decided to put this massive spoiler on the back, which was just… And I never thought about it at the time, and I look back on it now and I just go, “God, that was just terrible.” And I had a friend with the underbody UVs so that when they drive the car, there was the UV lights underneath them. People do some strange things with cars.
Simon Clarke: Especially people that lower them as well. I never understand the people that lower their car so close to the ground. It’s like, how do you get into a car park, and speed bumps? Surely, that’s the worst sound, is to hear your car scraping over something as you drive in.
Simon Dell: Yeah, that’s not a good sound. Second to last question: What’s your big focus on for 2019? Where are you spending your time from a marketing perspective?
Simon Clarke: There’s probably a couple areas for us. At the moment, customer reviews. We’ve really been playing hard in the Google / Facebook review space and really trying to focus on, first and foremost, having a really good customer experience.
Part of moving a business to that pre-owned model, haggle-free, really strong value propositions, has really helped to improve the whole review perspective. We’re also actually using a product called Podient which is a really good way to amplify your reviews but also look at your competitors to sort of understand where your reviews sit relative to your competition.
For example, we pull up all IKEA did, We look at all their brands, but with IKEA, for example, look at IKEA dealership and we look at the number of reviews generated, and what’s their score, what’s their most recent score, and how does that actually sit relative to the market in Brisbane that we’re comparing ourselves against. We really want to get to the point where we are the number one dealer of choice for the brands that we have in all locations, so in Brisbane.
Because I think the way that consumer behaviour is going is everyone now just Googles and looks at a Google review before they do business. So, if I’m deciding where I’m going to have a donut today, I’m going to go and Google ‘best donut places in Brisbane.’ Just to spend $3 and a donut.
Simon Dell: Is that what you do every morning?
Simon Clarke: Yeah. When I’m spending $30,000 on a car, it gives you that piece of mind that you look and go, “Oh my god, look at this. They’ve got 200 reviews and they’re at 4.7/5? Jeez, that looks like a pretty good place to go and buy my car.” Funnily enough, being a marketing guy, my wife and I just built a house recently, and I reckon every trading that I use had to have a Google star rating of above 4.
Simon Dell: I bet 90% of the traders out there don’t even realize that that’s how it works now.
Simon Clarke: It was fascinating. Just talking to them saying, “What do you guys do for customer reviews?” None of them actually have any sort of active strategy around generating more reviews. One of the bigger companies was like, “Yeah, I really should do more of that but I just don’t have time.”
And so, “Mate, seriously? The best thing you could do as a business, I think, is to be generating reviews and then using social media to be pushing the products that you’ve done. From a housing perspective, it’s like, mate, just talk before and after. Inspire me about what my landscaping could look like. Because I don’t know what I don’t know, and you’ve probably done some awesome stuff. But Facebook’s the perfect medium to actually get it out.
Simon Dell: I could probably count one tradie that has ever asked me to put a review somewhere. Maybe two in all the work I ever have done. The guy who built my fence recently didn’t even have a website, so I’m like… I can’t even remember how I found him, but that’s beside the point. I can’t imagine he’s got… Or maybe he has. Maybe he has just got a shit load of work rolling in from recommendations.
Simon Clarke: Yeah. Look, it’s great. Imagine how much more you’d have, though.
Simon Dell: Yeah. And the thing is, then I have these conversation with tradies and they say to me, “Yeah, but I’m busy already.” And you go, “Right.” But two things. There will come a day when you’re not busy. You can’t possibly say to me that you are fully booked, in massive demand, 52 weeks of the year. It’s just not possible. So, what will happen is, one day, all of a sudden, you won’t get any inquiries for a couple of weeks and then you’ll start to panic. That’s one thing.
The second thing I’d go, is if you get even more inquiries than the ones you’re already getting at the moment, you’ve got the option of then sending those jobs out to third parties, to contractors that you can trust, which means you make more money, or you put your prices up. If you’re in that much demand, start putting your prices up by 10%.
It doesn’t necessarily mean getting good reviews doesn’t necessarily mean to people that you’re going to get more business. It can also mean good reviews can actually translate to charging more money. A lot of them do not realize that at all.
Simon Clarke: It just gives you so much more confidence in using that trade in. You can see either that they’re active and think about it, but they’ve just generated such a good number of reviews and goodwill that people are willing to recommend them. It does my head a bit when you start talking to tradies and they just have no concept of it.
Simon Dell: There’s a business out there helping tradies understand this, but then the problem is, you have to deal with tradies all the time, that itself is a challenge. Apologies to any tradies listening to this. We know how wonderful you are. It’s just, sometimes, your communication isn’t great. That’s all I’m going to say on that one. Last question: If anybody wants to contact you, what’s the best way of getting a hold of you? I know you’re on LinkedIn, but anything else that you’re active on?
Simon Clarke: LinkedIn or they could just shoot me an email.
Simon Dell: Cool. I’ll put your email in the show notes as well. Mate, thank you very much for that. No doubt we will catch up very soon. In fact, I’m even catching up with you later on today, which is kind of weird having this conversation and then seeing you later on. It’ll be like awkward after a first date. But thank you very much for your time, mate. It’s been great and I really appreciate you being on the show.
Simon Clarke: Of course. Thanks, Simon. Much appreciated.
Simon Dell: That’s pretty much it for today. Thank you very much for joining us on Episode 59. We hope you will be able to stick around and listen to us for Episode #60. Otherwise, have the fantastic rest of your day and we really appreciate you tuning in. Thank you again.