August 13, 2019 | Portfolio

Disrupting an industry from the inside out

Costanoa Team

Written by

Costanoa Team

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Andy Moss, Michelle Denogean, Rudi Thun

When startups approach a category, their goal is often to replace existing processes with something entirely new, digital, and better. But for some industries, this take-no-prisoners approach doesn’t work. When trying to disrupt the automotive retail industry, Roadster found a way to partner with car dealerships to improve the buying and selling experience — and evolve the industry into the modern world. Roadster CEO Andy Moss and CMO Michelle Denogean share their approach:

Replacement isn’t always the answer. 

When seeking to disrupt an industry, Roadster developed technology to simplify the existing business model, making people more productive, reducing transaction times, and improving customer satisfaction.

Empower both sides of the sales divide. 

Roadster used technology to bring transparency and convenience to a process that was complex not merely for customers, but sales staff too.

Transparency is the modern CX. 

Roadster technology doesn’t eliminate the dealership or change its relationship to OEMs. But it delights customers by giving them insight and control over purchasing options — putting them at the center of the experience.

At Roadster, they refer to it as the “pivot.” While many startups pivot, few do it as dramatically as the company did in 2016 when it suddenly joined forces with an industry it had previously tried to bypass.

Before 2016, Roadster had been working to improve an obvious pain point in consumers’ lives: buying a car. In a world in which people have become used to the ease and convenience of buying from Amazon and other digitally-empowered brands, auto purchasing remained a long, drawn-out process.

Customers today, of course, want none of that. They expect everything to be as convenient as possible, with shopping done whenever and wherever they want. They demand ready access to information and full transparency, and are disappointed when they don’t get it. As a result, auto dealers were seeing their businesses challenged by the likes of Tesla and Carvana.

Originally, Roadster was similar to others trying to disintermediate the existing retailers. They were a standalone, online car brokerage, unaffiliated with any brand or dealer. It enabled customers to shop for any new car digitally and compare their real options for service plans and financing, just as they could in any other category. Once they made a buying decision, Roadster would deliver the car to their doors.

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The company quickly achieved a near-perfect Net Promoter Score, but the situation wasn’t ideal. At best, dealers and Roadster saw each other as frenemies. Dealers liked the incremental sales that Roadster delivered, but didn’t want a middle man between them and their customers. On the flip side, they were under pressure to provide a modern customer experience but lacked the infrastructure, know-how, and culture to bring themselves into the digital age.

“Car dealers know they need better ways to connect with consumers and let them shop where, when and how they want,” says founder and CEO Andy Moss. “And, for the first time, they have the data available to enable digital transactions while significantly reducing costs. All of this at a time when margins are decreasing, and sales are trending downward.”

Roadster faced challenges as well. While customers liked the convenience of the service, most of them still wanted to see, feel, and test drive a vehicle before taking the plunge. Dealerships provided a value that Roadster could not replace.

Turning away from complete disruption

In 2015, dealers and Roadster began discussing ways to white-label the service and bring the digital magic of Roadster together with the showrooming, test driving, and other amenities provided by a physical location.

“The dealers told us they loved everything we were doing but the broker part,” says Moss. “So we moved to a model that largely stayed the same, but is promoted through the dealer website with their unique inventory and leveraging their people to respond to customer inquiries.”

In 2016, Roadster began a partnership with Price Simms Auto Group, which operates seven dealerships in the Bay Area. It created a new SaaS service that allowed Price Simms to onboard its data and make it available to customers. The newly empowered model was an immediate hit — to the point that three years later, more than 650 dealerships are using the product, which has resulted in massive growth for the company.

Empowering both sides of the divide

Roadster learned that rebates, incentives, build options, service plans, and trade values are not only complicated for consumers but dealership sales staff too. By consolidating this information into a single-view SaaS system, buyers could conveniently mull over their choices side by side with a salesperson or from the comfort of their homes. And data that had once been the domain of separate departments was now more transparent and available to everyone at the dealership.

Increasing transparency drives a better CX

The auto industry is distinct from most other sectors in its dealership model, where sales integration between automakers and dealers is typically weak. Even within auto groups, dealerships tend to have a great deal of autonomy. This has benefits, as dealers can flexibly personalize service, but customers also want to have better visibility into the process as they move through the buying journey.

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Express Storefront enables a complete omni-channel, end-to-end customer journey.

Roadster allows both of these to exist at the same time. It takes data generated across disparate dealership systems and presents it in a modern, consumer-friendly experience for both customers and salespeople. As a result, the purchasing journey is greatly simplified and becomes similar to what people might get from Amazon or Uber.

Of course, as with any business, there have been bumps in the road. Car dealerships are among the most traditional of companies, with high touch salesmanship foremost and little tech know-how. While dealerships face tremendous external pressure to come into the digital world, they also have to make monthly numbers, which sometimes slows the real adoption of the technology.

“If you ask us what our competition is,” says Michelle Denogean, CMO of Roadster, “It’s the status quo. This is an industry that’s been doing what it’s doing for a long time. It takes real buy-in and leadership from the top for our customers to realize the true potential of the product.”

Still, Roadster is experiencing rapid adoption and significant growth by hitting a sweet spot in the market, just when it’s needed. While five years ago, dealerships might have successfully resisted digital change, customer expectations have shifted to the point where solutions like Roadster are no longer a nice-to-have. Rather, they will be an essential part of dealers maintaining competitive relevance moving forward.