How we built a business out of recession - chapter 20 - Germany calling
The story of CitNOW*
This is the 20th chapter about CitNOW, the company started from a kitchen table in Winnersh, Berkshire. If you’d like to read from the beginning, here’s a link to chpt 1. Each chapter is a 5-minute read. It’s an early draft of a book.
CitNOW was founded by Andrew Howells and Donna Barradale in 2005, although the company was only registered in 2008. In February 2018, we sold the company to Tenzing, a UK private equity company. It has been sold again since.
Even though Autos on Show (AoS) was our most significant UK competitor, we focused on different parts of the market, especially in the early years.
They’d arrived at the logical conclusion that the automotive sector needed a high-quality, automated process that didn’t include human interaction. Given what I’ve already said about salespeople's reluctance to participate, they had a good point.
Their system relied on a turntable. The videos produced being published on the dealer’s website, comprising a part of each vehicle’s listing. The car was positioned on the turntable before being turned 360 degrees. A video camera captured all the action, and their PC software controlled the whole operation.
Aside from quality video, their unique selling point was web optimisation, which improved the dealer’s rankings in search engines. It also came at a heavy price. The turntable cost £20,000.
With that price tag, their customers were mostly auction companies and car supermarkets, which already operated a central prepping facility for newly arrived used-car stock. With larger volumes, the capital cost was a much easier pill to swallow.
It also meant their potential market was significantly smaller, as most dealers couldn’t entertain the turntable. It was proving a lot easier for dealers to say yes to our £200 per month and less than £1,000 in outlay for kit and broadband. Despite up to half of our customers initially never making it beyond the 90-day trial period, we continued to grow, developing relationships with an increasing number of dealers.
It was a critical time in the development of both companies. Even when they pivoted and added a version of CitNOW to their product line, they continued to struggle with market share. Like us, I suspect they were also spread thin and had to decide where to focus effort and resources. It probably meant they continued to pay too much attention to the section of the market they’d already won.
It isn’t easy to put an exact time on it, but I think we had the luxury of a two to three-year window during which we effectively had the dealers to ourselves. It was enough to give us an unassailable position, not that we ever believed it to be true then.
Loyal customers kept us on our toes, telling us when AoS had been in touch. Occasionally, they succeeded in picking someone off. The solus dealers were typically attracted and always because of a lower monthly price promise.
Now, having two full-time salespeople on the road gave us a significant advantage. Alistair was soon up to speed with everything, and now there were three discussing our ongoing strategy. He’d also been a dyed-in-the-wool dealer, making him a much sharper tool than anything AoS had to offer.
Over the next five years, we made a long list of automotive hires, some more successful than others, before AoS finally felt the need to join in. Even then, it appeared to be a token gesture, only hiring several salespeople. By then, we’d wholly outgrown them, making sales in Europe and Asia with a strengthening UK position.
Understanding the car market was fundamental to our success, and we never shied away from seeking help and support from the industry we were selling to.
With our small but growing list of customers, it was helpful to reflect on who they were and whether any patterns were beginning to emerge. There had been a slowly growing trend away from individual dealers to group decisions, which was encouraging. We were also of more interest to the premium brands, especially the German ones. It wasn’t that the volume brands didn’t try us; they did. For some, we were a good investment. There just seemed to be less room for manoeuvre, excuses less acceptable, and our service more likely to be mandated the more expensive the car.
As you might expect, Alistair knew some people in the industry, none more important than Richard, a UK Director at BMW with a brief to explore retail innovation. Our timing was perfect; the relationship established during his Accident Exchange days when they’d provided plenty of replacement BMWs. Given the volume of cars involved, there might have been one or two late nights at awards dinners and the odd away day.
CitNOW piqued Richard’s interest because some BMW dealers were already using the service, and if nothing else, he wanted to understand why. Could a video be made specifically for a potential customer to swing a sale in favour of a dealer and the salesperson delivering it?
We believed we already had the answer and hoped Richard would reach the same conclusion. He did.
Our break came when he decided to take CitNOW to Portugal, where his UK Dealer Principals (DPs) gathered for their annual conference. It was the entire UK dealer network. We weren’t invited to attend (no suppliers could), so we hoped that the kit provided and the demonstration would all run smoothly in Richard’s capable but inexperienced hands.
We needn’t have worried. He devised a great way to introduce CitNOW. Every DP had to attend his innovation session, which included a demonstration using a toy BMW sitting on a small platform. The magical part - DPs were invited to come up, coerced into making a video in front of their peer group. The results were entertaining, maintaining an element of fun because the car was a foot high and made of plastic.
It was a genius move to involve each DP in a demo. A feat I’d rarely managed to achieve with the many sales meetings I’d attended.
Having a go with all those negative thoughts about trying something new, or worse, in front of colleagues and competing franchises, meant a lot of baggage was dealt with in a short, uncomfortable five minutes. The results were astonishing.
It overcame nearly every objection with lots of positive reinforcement. Knowing firsthand how simple it was to use and immediately seeing the results was a powerful lesson. Instead of a lot of noise around dealer staff having the time and capability, the question being asked was, why not? The tension must have been heightened when you knew others had already said yes.
In preparation for Portugal, we created an online order form, a simple way for dealers to sign up. After their conference, we watched and waited to see whether any would take the plunge.
*CitNOW was our company’s trade name before we sold it in 2018.