Episode 12 – Dealers Compressed: Leaving a Legacy (with special guest Dale Pollak)

Episode 12 – Dealers Compressed: Leaving a Legacy (with special guest Dale Pollak)


I’ve been waiting to release this interview
for a long time. Welcome to the Dealers Compressed Podcast. My name is Paul J Daly and I will be your
guide today through this margin compressed environment that we’re all living in. Today, I get to air an interview that I recorded
almost a year ago at Dale Pollak’s home in suburban Chicago. So I know it’s terrible, terrible, terrible
practice to record content and then release it a year later…actually, almost a year
to the day. This interview was originally recorded on
May 15 of 2017 and initially, we were going to do a podcast called ‘The ReInvention Podcast’
and we have a bunch of episodes recorded. We will probably still release that and have
guests like Gary Vaynerchuk, and Scott Stratten, Glenn Pasch from PCG Consulting, Peter Leto
from Google, Dr. Nicole Lipkin, and Dale Pollak is one of the guests. I was going to Chicago to record the interview
and we were going to do it at the vAuto headquarters and his assistant Susan emailed me the day
before and said “Dale is not going to be coming into the office today. Would it be ok if we did the interview at
his home?” YEAH! That would be really ok. So, I ended up going to Dale Pollak’s home
and he was a gracious host. We actually recorded two podcasts. One was an interview about just what makes
Dale, Dale; talked about his journey, what happened and how he reacted to the onset of
the blindness, and really, how he began to navigate through life and make decisions and
really come out victorious. And the second podcast we did was automotive
focused. That’s what you’re about to hear. It’s about 10 minutes long and it has Dale
about the industry, and margin compression, and what he wants his legacy to be in the
automotive industry. I think that’s my favorite part. You know, we all work in the industry and
work hard to make a difference and introduce products and serve customers, but in the end,
somebody’s going to tell a story about our life and that’s our legacy. So I asked Dale, what he wants his legacy
in the automotive industry to be. I hope you get something out of that answer;
it’s a great answer. So, as we get into this interview, one of
the interesting things is that when we recorded this episode, nobody knew about ‘Like I See
It’. ‘Like I See It’ was released in October of
2017, so if this is in May of 2017, that means the book was being written at the time we
recorded the interview…or at least conceptualized; they were probably working on it. So, you’re going to hear a lot of the principals
that Dale talks about in the book, in this interview that is prior to the book release. It’s kind of neat to go back in time, you
know, use the time machine to hear what his mindset was and you’re going to hear a lot
of consistency. He talked about margin compression and the
fact that it’s not going to stop. He talked about the fact that dealers are
curious about “How am I going to make more money?”. It’s not about selling more cars, it’s actually
about making more money, you know, so all the operational efficiency imperatives and
the human capital advice, all of that stuff really just trickles down to the bottom line. So I hope you enjoy this interview…it’s
me and Dale Pollak in his home in suburban Chicago in May of 2017. I think you’re going to be impressed by how
consistent it still is a year later. Dale is just a forward-thinker, so he was
thinking way out on the edge, and ‘Like I See It’ came out, but he had already been
mulling over and processing that, those ideas, those thoughts, and that content. So I hope you enjoy this interview. I’m here with Dale Pollak and we’re just going
to spend a few minutes getting his take on some current trends in the industry and basically,
gain from his insight, wisdom, and experience. So you understand dealers because you were
a dealer… Not only was I a dealer, I believe that I
am a dealer even though I don’t own a dealership. I can’t help but think like a dealer, so I
sort of pride myself as even being a dealer today, just because it’s every bit of who
I am. So, what role do you currently play in the
automotive industry? [laughs] That’s a fun question. That is a fun question. I suppose that in a certain respect, I’m a
teacher. I’m out there constantly prophesying the wisdom
of Velocity Management. I’m also a solutions creator helping create
new solutions for dealers to help them meet the needs of this very margin compressed environment. With your insight and from the teacher’s heart,
what do you think the greatest challenge facing auto dealers today is? No question, it’s the margin compression in
the industry. The market’s becoming evermore efficient. It’s just a reality of the internet. That’s what the internet does in every industry
that it touches. When you distribute information and knowledge
more equally between buyers and sellers, fewer mistakes are made and margins are compressed. Will it cease? Absolutely not. I mean, it’s taken and reformed and, in some
cases even, eliminated certain industries. Our industry is really also subject to the
same phenomenon so, our proper response to it is to have to become evermore efficient. If you could have a dealer just teed up, ready
for you to walk in and help them, what is the question they’re going to be looking for
an answer to but not realize it? Well, “How do I make more money?” is what
they’re all trying to do. I mean, they all want to sell more cars, but
at the end of the day, they want to make more money. Today, I think that making more money has
less to do with selling more cars and it has more to do with more operation efficiency
and when dealers think about operational efficiency, they naturally think about their expenses,
which for sure is part of that, but certainly not all of it. Operational efficiency also has very much
to do with those things that we do in the dealership every day, over and over; how well
we’re doing them, how efficiently we’re doing them, or maybe some things that we’re not
doing that we ought to be doing, so a lot of that stuff that we call ‘efficiency’ is
not on your financial statement, but adds up to the bottom line every bit as much as
those expenses that are on the statement. What is the usual, like I’ll call it the ‘low-hanging
fruit’, so some of the listeners are probably vAuto customers, some of them aren’t vAuto
customers…what are the usual areas that you go in first and you say “Here’s the low-hanging
fruit that we can make a change and a difference right out of the gate.” Well today, every dealer is on a journey of
understanding. They will all eventually arrive at the enlightened
understanding that they have to price vehicles rationally in order to see enough shoppers
to sell enough cars to make it worthwhile and when they do arrive at that enlightened
destination, they cannot avoid the conclusion that they can’t negotiate or negotiate as
much. So, dealerships definitely need to begin to
measure and manage the amount of discount that’s going on in the sales process. Another really big area of inefficiency is
in the reconditioning process. We could spend a whole lot of time talking
about where those inefficiencies are but, they are in multiple areas including the time
that it takes to recondition a vehicle and another area that I particularly find obvious
is their inaccurate estimates of reconditioning amounts. So, for dealers to start to appreciate or
at least address those situations knowing that there is some efficiency to be gained
just by looking at those areas in general. A great deal of efficiency to be gained. What do you see as the next push towards efficiency? Where I see a huge amount of opportunity and
where I am spending a lot of my time these days is in the wholesale space because it
frustrates me greatly when I hear dealers say as I often do that they can’t find the
cars that they would need. I hear it all the time. Yeah, they can’t find them for the amount
of money they want to pay and my response to that is “If you’re doing it the old way,
I certainly understand that frustration.” But today, we have developed technology. Two years I developed Stockwave which really
eliminates every excuse that any buyer would have who says I can’t find the cars. I can’t the ones that I need for the right
amount of money. Technology can do that today, but it definitely
requires a buyer to let loose of their personal need to make those decisions without data,
put their ego aside to a certain extent, and learn to use technology (although it’s pretty
darn easy to do). So, what do you think about- I heard a lot
at NADA this year about this is going to be the year that digital retailing finally clicks
into place. What do you think about that? Well that’s another initiative I’m spending
a great deal of time on. You know, digital retailing has a lot of aspects
to it. When you say digital retailing, people interpret
that as meaning different things. But one thing, or two things, that I can say
with a high degree of certainty is Number 1: Dealers need to find a way to sell and
deliver vehicles to consumers at a lower expense and doing a lot of the transaction, if not
all of it, online before the shopper/customer gets to the dealership is definitely a way
to reduce the amount of labor involved in selling a vehicle. I know that for sure and I understand that
very clearly; the need for dealers to obtain that sort of sales operational efficiency. The second thing I know for sure is that Gen.
Y buyers are not so interested in coming to the dealership or, at least, not coming to
the dealership to do the hard stuff like the negotiation. I do believe they like to come to the dealership
for the fun part, you know, have that in-dealership experience of finding the car they want and
test driving the car they want and learning about dealership services, but the hard part? Negotiating the sale, the price, the payments,
the trade-in…they’d prefer to do that in a non-physical environment, at least, a growing
number of them would. There is a lot of opportunity to meet the
needs of both those consumers and dealers. So you’ve been paying a lot of attention to
that…do you feel like vAuto will have a contribution to that? Well, more than paying attention to it. I’m actually the executive responsible for
bringing the solution to market at Cox Automotive, so I’m working with a team of really bright
and talented people today who are creating that solution. And that’s going to be something that, again,
is widely available to your customer base? Yes. Ok, so, I’ve seen a lot of independent and
privately held companies working on their own individual solutions and this is going
to be something that is more widely available. Well, there are a lot of companies out there
claiming to work on digital solutions, but the reality is, is that there are a lot of
pieces to that. You have to be able to engage a customer,
you have to be able to agree, you have to be able to transact so there’s a lot of technology
and a lot of moving parts to that. One of the reasons I feel very confident that
we have an advantage in this venue is because we literally have more of all of those pieces
than anyone else does. I think that unless you are able to put it
together end to end, you’re going to have really a solution that is not likely to meet
too many people’s needs. You have a very big sandbox. We have a very big sandbox and it’s a big
obligation, it’s a big responsibility. And listen, having a big sandbox isn’t always
an advantage because there’s certainly aspects to working in a small start-up company that’s
quick and nimble. You know, there’s advantages there, but we’re
learning how to do that sort of lean, rapid deployment in the big environment. But it’s work, it’s challenge. One of my favorite entrepreneurs, Gary Vaynerchuk,
he says “Goliath should have never, ever, ever lose to David. If he loses, it’s because of poor execution.” That’s true, but I can tell you as an entrepreneur,
having done it outside the big giant, it’s challenging to do it inside, but it’s doable
and there’s a lot of advantages to scale, but I guess on either side of the equation,
being a small company or being a large company, there’s always going to be challenges. Sure. Absolutely. Well, I’m going to ask you one more question. I kind of tend to be legacy-minded, just in
general, what do you want your legacy in the auto industry to be? When you hang up the vAuto spurs and you decide
“Ok, I’m out” or whenever that time comes, what do you want the industry to remember
you as? I owe everything that I have to the dealership
model. My father was a car dealer, it provided me
an excellent upbringing, it gave me all of the professional opportunity that I ever would
have hoped for and I have a place in my heart and always will for the viability of the dealership
and particularly the family-owned dealership. I really have a sense of family when I look
into many of these dealerships and I understand the hardships, I understand the struggles,
I understand the privilege of having a family-owned dealership. I also respect how much dealerships mean to
their communities and to the families of the people who work in those dealerships, so I
would like my legacy to be one that is recognized as helping dealerships survive and thrive
in a very challenged environment. Well said. I’m looking forward to that as well. Dale, thank you so much for spending a few
minutes with us and our dealers today. Wish you all the best in this next year. Looking forward to some great releases. Thank you, it’s been my privilege. So thanks again for listening to the Dealers
Compressed Podcast. If you like what you heard, please subscribe
to the podcast or leave us a review and let us know how we’re doing. Also, go to DealersCompressed.com where we
have a ton of resources. We’ve actually created an entire video series
around Dale Pollak’s book ‘Like I See It’. Use it as a resource to train your team, to
get up to speed on what’s going on with millennial buyers and employee culture and manufacturer
incentive programs and a whole list of other things. Pass it up to the owner of the group. If you’re the owner, pass it down to your
management team so you can be aligned and on the same page. We have an email list. Please subscribe to it on the website. We have fresh content every Tuesday and we’ll
send it right to your inbox. Also, my name is Paul J Daly. I would love it if you followed along with
my journey. I do a lot in automotive and the creative
worlds. You can go to PaulJDaly.com or you
can follow along on Instagram or LinkedIn or Facebook or Twitter and we can just walk
the journey together and hopefully inspire one-another. Get better together. So again, thanks for listening. I hope you have a great week.

About the Author: Michael Flood

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