You won’t find newspaper ads, radio spots or TV commercials promoting Cardinale Automotive Group.
The 19-store group, headquartered on the Monterey Peninsula in California, ditched traditional advertising in 2010 as it began its transformation to become an all-digital retailer.
Since then, the group has made incredible progress. This year, Cardinale ranks 2nd on the Ward’s e-Dealer 100 list, retailing a combined 14,182 new/used vehicles via the internet. In 2013, the group ranked 7th with a combined 5,431 new/used internet sales.
I caught up recently with Erich K. Gail, COO of the Cardinale Group of Companies, to better understand the how’s and why’s behind their automotive group’s impressive achievement. The conversation revealed an organization that left no stone unturned as it climbed from near-bankruptcy in 2009 to become one of our industry’s top digitally focused dealer groups.
“The bottom line is when we looked at ourselves financially back then, we should not have survived,” Gail says. “It is truly by the grace of God that we are here today.”
Cardinale’s rebirth included several strategic initiatives:
Brand promise: Cardinale companies center on a singular commitment, known as the CardinaleWay: “We Develop Outstanding Relationships Where Everybody Wins.” This brand promise “guides every single decision we make, in everything we do, every single day,” Gail says. The organization-wide commitment to the CardinaleWay translates to daily expectations for leaders, managers and associates to coach, mentor and train to provide consistently positive experiences for their guests, communities, manufacturer partners as well as each other.
Management- vs. market-driven culture. “Throughout the entirety of this organization, which was founded in 1979, up and through 2009, we were market-driven,” Gail says. “If the market was up, we needed more people. We needed more stuff. We needed more locations. Life is great, the market is up and we need to grow.”
“Yet management-driven is the complete opposite,” he continues. “It says, ‘We don’t care what the market is doing, and whether it’s up or down.’ We will determine our goals and objectives. We define our growth and performance goals every month, every quarter and every year based upon specific objectives. If you are disciplined enough to do it, you will remove the condition of market subjectivity. You will not chase market share at a future cost or erosion of disciplines. You will not bloat your operation to an unsustainable level if the market turns. And you will manage around your worst month.”
Non-negotiables: Cardinale Automotive Group has established a minimum water-line of 20 percent net to gross profit ratio across all rooftops. To achieve this goal, Gail and other leaders established what they term as “non-negotiables” for performance in five key areas: CRM (the “center-nucleus of retail operations,” as Gail calls it); inventory management (with specific Cost to Market, inventory turn and merchandising disciplines); phone skill mastery (with real-time monitoring by managers); daily training (including three daily, one-on-one meetings between in-store managers and department associates), and a strict commitment to ZERO MOMENT Retail (where the emphasis is targeting in-Market vehicle buyers as opposed to just shoppers).
I asked Gail to dive in a little deeper on their commitment to the ZERO MOMENT Retail philosophy. It’s born, he says, from science that details specific shopper behaviors that signal shifts from initial stimulus, consideration and product research to an ‘I want it now’ buyer mindset.
“Our truth, from both an operational and investment standpoint, is that we target in-Market buyers who are 12 days or less from purchasing a vehicle. We’re not on the ‘hope-plan’ that chases someone who is 30 days, 60 days or 90 days out. They’re not at their ZERO MOMENT,” Gail says. “The ZERO MOMENT, or in-Market buyers, have done their research. They know what they want, and why they want it. As a direct result, they select their dealer of choice with every emotional trigger and intention to make a purchase provided they receive an Xperiential retail moment.”
Extending the reach of this ZERO MOMENT Retail science, the Cardinale-Group developed a dealer to dealer investment management and retail performance company, ZMOT Auto. The company, which serves dealers in the United States, Canada and Mexico with regional exclusivity, combines business intelligence and Cardinale retail process disciplines to integrate a dealer’s digital retail strategy to target, identify and serve in-Market buyers.
“With proper integration, all of our digital retail environments communicate together,” Gail says. “We can see that someone is looking at a specific pre-owned Accord at one of our dealerships. Further, we can see specific behavior within our digital footprint, such as reading our reviews. We can see they watched 46 seconds of a video in either English or Spanish and, four hours later, watched the entire video and forwarded it to someone. Based upon these and many other actions undertaken by in-Market buyers, should they not have engaged our stores or brands in what we consider an attributable direct-action (telephone call, chat, sms text or form-fill), we initiate a dealer-branded call to action to drive the needed direct-action engagement.”
Gail says this in Market-buyer-focused digital retail strategy and process yields several positives for their automotive group. The average duration from initial contact-to-sold is 9.7 days, compared to a 50.3 day average for the industry. Additionally, the average direct-investment for advertising or marketing per unit sold runs less than $200 for Cardinale, compared to $600-plus for other dealers, according to National Automobile Dealers Association data.
“The Xperiential shift in our culture is that we don’t just sell cars, we help people buy cars,” Gail says. “We know exactly what our in-Market buyers want, and we serve them to fulfill their specific intentions. It’s just a shift in focus. But that’s the world we now live in. If we’re serving you as a guest in our home as opposed to just ‘one-and-done’ selling, we need to be gracious, convincing and ensure our entire culture and the experience you receive is persuasive about why our family-team represents great value for you.”
This precision-focused approach also advances Gail’s responsibility to efficiently and wisely manage not only the Cardinale investments, but those of the external dealers served through ZMOT Auto. “As dealers, we have finite resources, and we are 100 percent responsible for determining how to invest these resources every month to produce the best return,” he says. “We have chosen to invest all of our resources into what we know we can measure with attribution, as opposed to the old adage that says, ‘I know half my marketing is working I just can’t tell you which half.’”
In our conversation, Gail referred to Cardinale as a “laser-focused digital retailer.” The term seems fitting, both as a description for the way they operate and as an explanation for their rapid rise as a formidable e-focused dealer group.