The 88% Problem with David Steinberg

Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Paul J Daly (00:00):
Have you ever been friends with a note taker?

Unknown (00:09):
This is Auto Collabs, like someone who takes notes a
lot crazy people, people,Michael.

Michael, you are one of the biggest note takers
I've ever known.

Unknown (00:23):
It's unbelievable.

Oh, there comes another one full of notes and
another note pad. I gotta saythere's notes about where you
take notes. Like, you know,we're a good place to he's like,
dear note. I'm

Michael Cirillo (00:36):
not kidding you, if we pulled up my YouTube
right now, there would be videosabout how to organize notes
better, like that

Kyle Mountsier (00:43):
little thing that records your whole life

Unknown (00:46):
is also taking notes for me. Guys, unbelievable.

Oh, do you ever have time to go back and listen
to your notes so you can take toyour notes to

extract all the action items for me, then they
make their way into our

projects, though I, you know, I there's been
times in my life where I take alot more notes, and it is like
the tactile memory that you getfrom, like, actually writing
down. You don't actually have togo back to it, because it
connects something your brainto, like my body, connecting the
words and the things that I'mtrying to translate way

back this, this goes way back in it, and it ties
into like data collection. Butone of my mentors early on,
because I was big note takerlike this, I don't remember the
number, so don't fact check meon it, but you'll get the point.
He's like, when you do this, youare firing 10 neurons in the
brain to retain information.
When you do this, and youconsider the movement of every

(01:40):
muscle and ligament andeverything, you're actually
connecting 10,000 plus neuronsin the brain nuts, which is why
so and it just

Unknown (01:51):
Yeah, find my remarkable

Well, my retention. I notice when I take
handwritten notes, my retentionis through the roof when it's
retain nothing. Dude, you're

so right, because you can type literally
thoughtlessly, yeah, like this.
I have to people usually seethat as a benefit. I could type
notes without even thinkingabout it fun,

Unknown (02:11):
cycles like, ah, that's the problem. Somebody

tried to talk me out of this once. You
probably can't see these, but Iwrite in cursive too. I did

notice that. Wow,

Unknown (02:21):
yeah,

just so the person next to him can't read it, yeah,
he doesn't need a

screen. And their jaw goes like

this. There's going to be a day when I pass
away and my kids are going topick up whatever collection,
data, collection, okay,

this is your dream.
Yeah, you're like, and

Unknown (02:38):
delete.
They're like, AI, summarize thisin five words. Michael, dad,
cupcake. Good. Dad, lovecupcake.

Feed this to AI, make a summary, and it's
gonna be like your father wasalways enraged.

Okay, go. One more sentence you never knew.

You never knew.
Well, we don't, never knew DavidSteinberg, who's who is joining
us again for Auto Collabs today.
We'd love having conversationswith him, because he's dialed
in. He's smart cat, and he'sbeen building stuff in auto for
a while, so he knows what's up.
We hope you enjoy thisconversation, and we promise
Michael Michael will take notes.

All right, here we are another episode of Auto
Collabs. We all know DaveSteinberg from four eyes. Thanks
so much for joining us today,pal. Hey, thank you for having
me. Great to be here again. Wewere just chatting pre show, and
I just got to get this out ofthe way, because now I'm
flattered that you have been youmight be the only person I've
talked to, except for thepeople, of course, that I grew

(03:45):
up with, that lived in thisarea, who know where I come
from. You have been to theplace,

David Steinberg (03:51):
the Vernon, Kelowna, that whole uh, region,
interior. BC, it's amazing upthere.

This is just an injection from the side. You
answered a questionnaire thatsaid you were in a like, scary
movie, zombie thriller. Thingwas that a mess? Were you
messing with us?

Buddy of mine, a buddy of mine, just filmed a
thriller. Filmed a it was a realdeal. It was a real budget.
Movie was shooting in LA, NewOrleans, and he was trying to
get me. He wrote a part for me.
I was a child actor. Went wayback when he wrote a part for
me, like, I want you to be thedad. Like, I don't have time to
be the dad. It was too many daysin LA shooting. I was like, I
don't have time to do that. Andso then he called me. He's like,

(04:31):
I got this part for you. Youcan, we need to do a reshoot of
the origin story of the killer,and we want, I want you to play
it. Oh, so nice. I did that.
Yeah, it was, it was great.
You're the

killer. Before he realized he was a killer, yeah,
things on fire, staring atpeople too long, yeah. So

I came out of my acting retirement 30 years
later, and got

to play the when, when? When can we see this movie
in theaters? You know, I

don't know.
They just, they just sold abunch of right? I've learned how
movie rights get sold, but theysold rights. They're selling
rights to other countries rightnow, all over the world. Okay,
kind of sell it, you distributeit, you sell the rights
different places. And so do you

have, do you have a profile on IMDb right now? I
have a profile,

maybe under my stage name, which I'm not going
to tell you today,

Unknown (05:18):
yeah, because I would be looking it up
while, yeah, okay, I had

to have a different name, because

deep research tell me,

in the Screen Actors Guild, you can't have two
people with the same name. Andwhen I was a kid and I got cast
in a show and got into sag you,they had, they were like, you
either have to be David LSteinberg or change your name.
And my agent was, like, yourname's really Jewish. Like, you
need to change your name. You'regonna get typecast as the Jewish
kid on every everything you dochange my name. Okay,

so this is actually all super relevant,
because, like, origin storiestypecast, like the data around
what you've been working onsince your early days in auto
without appearance, and thenbringing four eyes to the market
is a lot about, like fishing outthe deeper thing, like figuring
out where, what makes peopletick, what's going on, how to

(06:24):
ingest that data and then relateit to, like, what needs to
happen in the showroom or in theBDC or things like that. I'd
love for you to, like, go to theorigin story of why you began
creating tools. Yeah. See datain a

different way.
Yeah. I mean, I think at itscore, like, you know, my
background before at parents andbefore four eyes, I had a I had
a software company. I was a camefrom the software field, and we
built a software package for thelumber industry that's still in
business 25 years later today.
And I left that company to startmy own Lumber Company, and I

(07:00):
started my own Lumber Company,and I

built, okay, you went from lumber software to
actual lumber, yeah, because Iwanted

to see if I could do the things that I was
telling people to do. So I waslike, right package. I'm telling
people to do this. I should tryit myself. And so I built my own
Lumber Company. Didn't use mysoftware at all. Ironically,
realize, but, but ended upbuilding what is, what became

(07:27):
the first prototype before us,which was, like the idea of,
like, using the data that wasshoppers were doing on my
website to sell better. And astime has gone on, you know, I'm
really into the idea of salesenablement, which is, how do you
make sales people moreefficient, more effective? What
are you doing? I think that,like in the in the sale, auto

(07:49):
sales is inventory, marketing,sales process. There's no such
thing as a great dealer with badsales process, right? So, so
sales process is a universalthing that you have to have to
be a great dealership, and it'swhere people spend the least
amount of time, because it's thehardest. So

Unknown (08:03):
it's probably, you know what, but they can have bad
marketing. You

can be a great dealer with that marketing.
Truth, you can absolutely be agreat dealer with that
marketing.

I wonder if.
Okay, so you said inventory,marketing, sales process. Let's
just like, inspect this realquick. Bad marketing. Seen it?
Bad website, great dealer, largevolume. Dealer, bad website,
terrible marketing, right? No,I've bad inventory. I think at
some level you could argue maybebad inventory, right over,
bloated, a little bit too muchinventory, low turn, things like

(08:35):
that. But have figured outvolume, right? Have figured out
this, but sales process, I thinkyou're actually right. Yes, I
don't think, I don't think youcan overcome bad sales process
with great marketing and greatinventory, exactly,

and I think, and we'll talk about this a
little bit more, but the autoindustry is completely over
served on marketing. And thereason primarily is because
marketing is a thing whereyou're a vendor and I can take
your money, and I don't need toask anything of you, very little
of you, right? So I get just togo here, give me your money. I'm
marketing for you. I'm doing allthe marketing well. It's a great

(09:10):
arrangement, right? Well, whenyou go into the sales process,
you there starts to be more of ahandshake, there starts to be
more of a dance. You have to dowith the with the dealership.

I have a question, because I wanted to
get your opinion. I'm going tobe a little bit controversial. I
won't call out who it was, but Isaw this post on LinkedIn, and
basically this dealer waslooking for a marketing vendor.
And basically the post waswritten as like, all I want to
do is send it was basicallythat. I'll take care of the
sales process. Don't getinvolved. Don't worry about it.

(09:42):
We've got it. Your whole job isto get us more traffic. That's
all you that's all you get todo, go get more traffic, release
great campaigns. Don't talk tome about sales process, because
I got that. But what I'm hearingyou say, and maybe, maybe you,
maybe you'd actually agree withthat, because it's like, Yo, if.
Manage sales process. Well, itdoesn't really matter what's
coming in, but I feel like thethe marriage is, the is the is

(10:06):
the like gold nugget in the sky.

Well, yeah, I think one of the epiphanies I
had in having that parents, andthen getting rid of that
appearance, and just havingfocusing on four eyes and
starting to look and get moreand more data collection and
really understanding what'sgoing on underneath the hood. I
always had the question, so inthat parents, we had a million
times where dealer was having abad month, and it's halfway
through the month, or having abad month, and you're like,

(10:28):
Okay, we're gonna turn upmarketing. We're gonna turn it
up. We're gonna get you moremarketing. We're gonna turn up
your marketing. We're gonnasolve the help. Help you fix
this bad month. I don't remembera time it ever worked. Honestly,
I don't remember a time it everreally worked. And now what I've
had the epiphany, and having allthis data that I realize is part
of what happens is that when adealer needs more leads, and

(10:50):
they tell their marketingproviders, I need more leads,
what happens is, there's certainleads that are easy to get.
There are certain leads that thedealer doesn't actually need.
They have plenty of inventory.
They're going to sell through itno matter what they don't need
their paid search provider. Butall of the providers go out in
and even the endemics go out andgenerate more leads on the stuff
they don't need, because thoseare the easy leads to get. And

(11:10):
so it's not that they neededmore leads. Is that they need
more leads on certain things,and they're the container they
have of data, their data,systems that hold their data,
their CRMs, they don't tell themthat well enough. They're not
good enough. Those systemsaren't good enough to give them
good access to that information.

(11:31):
And so that's part of theproblem. And I think too, like,
you know, like going on thispodcast, talking with you guys,
I think like, part of our job islike, how do we give your
listeners a different way tolook at something, or see the
underside or something theythey're doing. And like one of
the big exciting, it's bothexciting and terrifying. Where I
think we are right now with withautomotive is that if you look

(11:53):
at the automotive business, it'sbeen it's a lead generation
business, right? Similar to lotsof other industries, you
generate leads. You close thoseleads. So the auto industry
generates leads, and on average,they close 12% and they throw
out the other 88% and that'sbeen enough to work really well
for years and years and years.
But that model is sort of, isthere's water in the basement,

(12:16):
and it's sort of rising on thatmodel, and it's no longer
finance. You know, part of thereason why it works to throw out
the other 88% look this. It's ait's an online to offline sale.
And the staff you have, eventhough, even if it's a BDC staff
who's relatively low paid, isstill high paid by world
standards, you're paying a highpaid staff to go and do all this

(12:37):
follow up. You know, we seeafter day four, after day four,
leads close at like 2.3% Wow. Somost 65 70% of a dealer sales
coming within the first threedays of a lead. So it doesn't
really,

don't. What could, can you walk us down? Like,
generally speaking, thatpercentage from day one to four?
Yeah,

so day four is 2.3 so, so day four to day 30.
So if a dealer closes 12%They're close. They're closing
9.7% in that first zero to threedays, and their other 2.3% come
in days four to 30.

So 25% or just under 20 23% or whatever, come
the next like, you know, Xnumber of

days. Yeah, but, but. But part of that is
also endemic to the fact thatwhat dealers have done with
their businesses, they've,they've developed a cherry
picking model. So the cherrypicking model is, how do we pick
the low hanging fruit? Lowhanging fruit, low hanging
fruit. The there's all sorts ofstructural reasons now why
that's starting to break down,right? So, so one of the

(13:46):
problems with that model is yousend away 88% of the consumers
with a relatively badexperience. And so you create a,
you create a mood of disruption,right? You create like, it's
really interesting to see whatAmazon autos is doing. You know,
Tesla has eroded the franchiseagreements. You see Amazon
autos, you see eBay, you seeWalmart. You see these, all of

(14:07):
these people kind of chomping atthe bits. They're sort of like
zombies coming up to the gate,looking at this business model
of of cars. And there's a lot ofmovement there. I mean, God, I
challenge you to go into anyOEM, if you can ever see on an
any OEM, the the access logs ofwho's coming into the OEM you'll
be terrified, like the peoplethat are meeting with the OEMs

(14:29):
and having more, there's a lotmore meetings with the OEMs.
Interesting by people liketrying to go direct than we we
care to. And you

then we realize, I mean, so this, there's this
cherry picking model that'salways been a part of the sales
process. You're telling us aboutthe water in the basement in
this old way. We talked so muchabout AI and technology
disrupting the BDC. SteveGreenfield, on one of our
programs about a month ago,said, you know, or a couple
months ago, one of hispredictions is that the BDC is

(14:57):
going to be obsolete in 24months. Or maybe it was even
sooner that, what is yourperspective on AI in the sales
process, and as far as itintegrates with, you know, the
BDC, as we currently see it. So

I think AI in the sales process is really
exciting. Obviously veryexciting, because it's there's
an efficiency model, right? Youcan have. So for example, like
we have AI tools that go afterleads in the day four to 30,
look at all the CRM activity,and you can have a lot of
engagement at scale with thoseleads that aren't effective to
send your staff after. And youcan sort of hand hold, how do

(15:28):
you bring those back to yourstaff? And it's

you go chase that 2.4% or whatever it is, and let
me know if you find something.
It's

super exciting.
But I actually think that thebigger problem in automotive is
different than what we'retalking about, because ai, ai
works, is only as good as thedata you give it. And there's
still a there's still a dataproblem in automotive and and
the biggest problem is that theinfrastructure we have, which is
your CRM, your DMS, right, themain containers of customer data

(15:56):
are horrible containers of data.
So for let me give you anexample, a CRM

not event stream based. They are, they are,
they're not trigger based eventstream based, right? They are
based on limited injections,very limited.

And they don't, they don't store the customer
preferences, nor. Part of thereason why the close rate is so
high within zero or so low afterday four is because what happens
is think about it. Think aboutthis. When we see a good sales
person so like we have it brokendown by sales person who their
close rate in these leadbuckets, they 00, to three, four

(16:39):
to seven, eight to 14, we seesome sales people that do not
have the atrophy of sales ratein day four and they close.
They're closing 5% day four toseven, they're closing 3% day
seven to 14, what those salespeople are doing differently is
they're understanding why Kylewants to buy a car. What is it
you're looking for? Right? Thecherry picking model is, Kyle

(17:01):
wants a Jeep Grand Cherokee. Ihave Jeep Grand Cherokee. Kyle,
come in for an appointment. Comein for an appointment. Come in
for an appointment. Kyle's movedon from Jeep Grand Cherokee and
is looking at other things. Idon't pick that up. I have no
understanding of Kyle, right?
So, so where I'm looking at AI,what we're looking at AI, is
like to help build theunderstanding of Kyle, to say,
well, Kyle, why? Why is it youwanted the Jeep, Grand Cherokee,

(17:21):
and if you don't want it. Now,what is it that change? What is
it that you can what conclusiondid you come to that made you
not want it? Oh, I wanted athird row seat. Oh, I wanted
towing capacity of this. Oh, Iwanted this. Those are the
features that make you so youyou're gonna buy or not buy.
That's what you need to know inorder to sell you in day eight
and day 14. That's what thedealership doesn't know. The

(17:44):
CRMs are horrible containers ofthat information. They don't
store that information well,

well, because they don't have pre lead
information and post leadinformation, they have single,
single, single data points,right? And typically, those data
points are pretty poor, becauseour forms aren't actually
looking for great form data fromlike, you know, I mean, like, I
just looked it up just whilewe're on the call, average click
to conversion to purchase onAmazon is 9.84% if a logged in

(18:14):
user clicks, 74% conversion ratethat means to the purchase. Now,
granted, we're looking atwidgets compared to, like, large
$30,000 purchases, but the factthat we're comfortable in auto
with 12% conversion rates onpeople that have sent their
information to us is still mindboggling,

mind boggling.
And the fact, and, you know, andI think back to, like, back to
my Lumber Company, like, in myLumber Company, when I first
started doing PPC pay per clickin 2003 it was, I was paying
seven cents a click, 12 cents aclick. I was generating a lead
for four bucks, and then I wasselling a lead for 40 bucks, and
I was selling them $40,000 inmaterial I could throw out every

(18:53):
other lead I didn't want all daylong, right? But as leads start
to get more expensive, suddenlyyou start to have, you have to
go, oh, shoot, I got to get morevalue out of these 88 leads that
I'm throwing out. And by theway, those 88 leads are your
future customers. Those 88leads, you know, like the other
thing I think has changed inautomotive underneath our fee is

(19:13):
sort of the rise of theconsumer. The consumer has
significantly more value todaythan they've ever had, right? We
sort of, what do you

mean when you say has more value? Why?

Well, because you know you the the easy
anecdote is, oh, social mediaand bad online review. They they
have more power to put moreleverage, right? Leverage,
right? But, but that's just oneset. That's just the extreme
example. Just think about this,if you're at dinner with
somebody now and they tell youthey had a horrible experience

(19:47):
at a store, we now have moreaccess to information because
we're getting Instagram feeds.
We're going to remarket it.
We're getting all of thesecompeting products selling to
us. So if, if you tell me ahorrible experience about a a. A
place that you just boughtsomething at, I can just cut
that out the consumer. Now, thefriends of the consumer go, Oh,
yeah. So we're not doingbusiness. We're done. We have,

(20:10):
we have enough choice, rightwhere? Before choice was
proximity. Choice was, well,this is, you know, you go to
Dick's Sporting Goods, becausethe only place to buy a soccer
ball around here, well, now Ican buy a soccer ball from
Amazon. I can buy a soccer ballfrom anywhere. I can do

it, yeah, anywhere, Costco, online, have it shipped.
So if someone

says, I hate Dick's Sporting Goods, and they
tell you why you're like, Yeah,I'm making it up. But just as
just to like, so the consumerhas way more power now. So now
the cost of throwing out theother 88 is higher than what you
mean. I

understand what you mean. I mean, David, I feel like
this conversation could easilybe an hour long. Sure, I have a
feeling that you and Kyle couldbreak off and nerd out over some
some real nerdery over thecourse of an hour or two and
some coffee or a drink. Michael,I forgot Michael was here
because he's taking so manynotes and not talking. Look,

(21:03):
show him your notepad. Michaelis always writing down like
voracious notes.

Unknown (21:09):
Yeah, that's just a prop. That's not

a prop. That's real

legit. Isn't a prop. I guarantee I've seen it
in person, but David, as always,thank you for sharing your
insight. And like, I love howyou framed it up in the
beginning. Like, our job on thispodcast is to help people see
things and think through thingsin a different way. And I think
we accomplished that. I knowwe're gonna be making some more
content together. And, man, Ijust can't help help but need

(21:41):
to, like, leave this podcast andthink for another five minutes
after we're done, just about,like, Oh my gosh. Like, what?
How? What does that mean toeverybody? And you'll probably
hear drippings of this podcaston our show tomorrow morning,
because we're going to bechewing it around. So, as
always, thank you for sharingyour insights. Yeah, great to
meet

with you guys again. So you guys keep doing,
keep doing what you do. It'sawesome. You're getting out
there. I can't

wait until the next time. We'll

Unknown (22:03):
talk to you soon. All right, thanks, guys.

All right. Michael, what your notes say? Oh, he took
so many notes that that Daviddidn't believe him. David's, I
guess, a prop.

There's like, little things that I pick up on,
right? I feel like, you, I feellike the three of us were just
talking about this the otherday, the amount of leads that
are going to waste 88% you thinkabout 88% compounded month after
month. I'm gonna say it again.
We were talking about it theother day. You're paid in
California, right? Yeah. Yeah.

(22:40):
Like, can you imagine, if youlook back over 20 years and
averaged out and took that 88%of all the leads you received,
it is it's like the

person in your market, it's Nazi seven times
over. And

then you think of the impact that that has on
marketing, and the bestmarketing being the relationship
and human to human contact andpresence and how we're playing
in the community. It's no wonderwhy there are high achiever,
high performers in our industrywho are all about making sure
there is throughput toeverything they do. Yeah. And
then there's, well, I think

about, okay, let's just say, let's just say
that we say 20% is a goodclosing rate, is a great closing

ratio, and it is 80%

of those people are making judgment calls on
your business, not just for now,but for the next time, right? So
you're not just right for areason. You're telling them,
don't buy from me now and don'tbuy from me ever. Actually,
yeah, if you're not, if you'renot considering every
interaction that you have withthem, from day one day 30,

I turn into the Hulk because angry, because now
think about that. Think aboutthe compounding ripple effect of
that. Dealers today who arelike, I don't get it. We used to
be so strong. I know that'sreally pointed. You guys know I
love you. You are experiencingtoday the back end of really
easy car selling in the past,where you didn't even have to

(24:10):
think about this stuff. Youdidn't have the you didn't have
to think about the impact onreputation alone through those
time periods and now thestruggling GM, the you know, we
see this all the time. A newGSM, or new GM, comes in to save
the store, because they were agreat operator over here, and
then they can't get it to turnover here. And it's like, yeah,

(24:33):
because you don't realize Youtorched. You're in a town of
15,000 people, and for the last26 and a half years, you've been
torching 88% of your populationwith a bad experience, yeah,

so recovering from that is in one month and
done. Oh man, see, we're gonnahave to talk about that was

a big one. But then I also write down things
like 9% are closing within zeroto three days. And then just I
write down little short formthings like this. That I think
are so intriguing.

Well, I appreciate your notes. Michael,
I do too. I hope the peopleappreciate you

when they one day, we'll publish them and they'll
be like, you know, theFederalist Papers back in the
day,

there you go.
Well, if you're looking for theFederalist Papers, you found
them here. Maybe you should justcome back for the next Auto
Collabs, because we, we'rehaving a lot of fun with these,
and I think, yeah, we're diggingdeep into the things that are
making this industry tick. So onbehalf of Paul J Daly, Michael
Cirillo and myself, myself. KyleMountsier, see you next time
here on Auto Collabs,

Unknown (25:33):
sign up for our free and fun to read daily email for
a free shot of relevant news andautomotive retail media and pop
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if you love this podcast, pleaseleave us a review and share it
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time youwelcome to Annika. We recording.

(26:04):
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