As anyone who’s met me can attest, I am a very product-focused person. I’m also very passionate about what we at String do and how we can continue to push the envelope with our little slice of the state of affairs in the auto industry.
Part of our mission at String is to put the power of enterprise-class software, data and insights in the hands of as many dealers and agencies as possible. This concept is crystallized in our Dealer Positioning System (DPS).
Let’s compare reality in the auto industry with theory in market economics: Traditional models that look at the economy assume perfect information, i.e. that all parties / businesses have access to the same information, and are therefore trading on a level playing field.
Hmmm…does that sound a little simplistic? Well, guess what? As anyone who’s spent a little time in the real world knows, things don’t exactly work like that in practice.
This divorce between the “real world” and theory is something that always irked me. It’s great for simplifying concepts and working out supply and demand equations, but it leaves something wanting when it comes to reality.
As we all know, people don’t always act rationally, and information is not perfect; nor is the access to said information. That said, I believe that the world operates on information asymmetry. In other words, if I know something that you don’t, and I can take advantage of it for profit [ethically and within the bounds of the law], I will.
Information asymmetry at work in the real world
The Asymmetry Opportunity
From an economic or market-based standpoint, asymmetry creates opportunities for competition in established markets, including new products, services, and associated industries, and even creates opportunities for new markets themselves. Asymmetry is part of what helps keep us from stagnation and from equilibrium…dare I go so far as to say that this de facto friction is even a contributor to creating a robust / antifragile system?
So, if it’s a good thing to have asymmetry, doesn’t the idea of putting relevant insights in the hands of every dealer go against this concept? If everyone has the same key insights, that will mean that we’re all on the same playing field and that there won’t be any opportunity for competition, right?
Well, the way I see it, right now most dealers don’t have reliable access to accurate, quality data in a way that’s easy for them to consume. So we’re not in a state of information asymmetry, let alone perfect information…we’re in a state of information confusion by virtue of the fact that everyone’s using all sorts of different systems, looking at different data, and trying to piece it all together without really knowing which path to follow.
Where are you on this graph...?
That’s not to say that dealers don’t have access to “good” data or that they don’t constantly look at metrics that are relative to their business: The issue is that dealers have too much data that doesn’t interrelate and that isn’t easy to digest. Worse, some of this data, in my experience, is either obfuscated, is incomplete, or is misleading.
Freedom of Information
So, that warm and fuzzy feeling you might get when looking at month-end numbers is counter-balanced by the uneasiness in your stomach that something’s not quite right…but you can’t quite put your finger on it. But the month didn’t turn out so badly, and now the clock’s resetting, so you focus on getting things started off on the right foot rather than fixing the root cause of the problem, especially in the face of a constantly-shifting market…and you rinse and repeat.
Are dealers channeling Sisyphus?
Our contention is that the more dealers who are using the right tools and applying data-driven insights to run their business, the more efficient the entire market will be. The dealers who are stocking the right cars, pricing them properly, advertising with the right message to the right people in the right areas, and so on, will be more efficient with their inventory and their ad spend, will attract more relevant shoppers and service customers, and will run more efficient and profitable businesses.
In addition to the logic above, it’s a sure bet that, even if every dealer were handed an envelope with these sorts of data-driven insights, only a certain percentage of dealers would apply those insights. Look at the market for pricing / stocking tools like vAuto, First Look, AAX, etc…in theory, shouldn’t every dealer be using one of these apps? Perhaps, but humans run dealerships, and humans have their own preferences and priorities that don’t always fit into a neat and tidy equation.
When it comes down to it, we’re looking to help decrease information asymmetry via the DPS for our clients and, relatively speaking, increase the asymmetry for our clients' competitors. We want to help give our clients at least a level strategic playing field vs. their competitors, but strive to give them a competitive advantage through information and insight.
The more dealers that have this information, the more efficiently those dealers will operate, which helps them become more profitable, and then they can re-invest those profits to continue to grow. The whole system then becomes more efficient, shoppers get closer to what they want, faster, and the smart dealers reap the benefits.That’s why we do what we do.