How we built a business out of recession - chapter 29 - Aston Martin?!
The story of CitNOW*
This is the 29th 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.
Unlike our original sales service, our workshop product sold well from the start. After the launch, a stream of interest quickly gathered, including plenty of manufacturers, which was really encouraging.
The standout manufacturer contract was with Nissan, who decided to mandate it, but preferred to call it Nissan eVision. It meant all of their dealers were expected to sign up as part of their franchise standard. In practice, it didn’t happen; the malaise setting in early when Glyn Hopkin, a big Nissan group, negotiated an exemption.
We weren’t complaining. It was a great piece of business with a minimum two-year contract. We also benefited from some groups extending their video capability to sales. But it was still a moment of weakness and poor negotiation on our part, which came back to haunt me, at least when I eventually took over the Nissan account.
Our original account handler, David, had already left for Volvo. He’d probably seen the writing on the wall because it wasn’t that many months later when we made the tough decision to sack our UK account managers. We replaced them with telephone-only support or board directors for manufacturers and our biggest customers, who needed and expected a hands-on relationship. The sacking was part of a bigger problem, but the reality was we could only justify the cost of managers if they brought in more business. Some did, but it was rarely enough; their new business targets always appearing to be treated as an afterthought.
This is one of the risks when a new business is growing fast. Sometimes, it needs to pivot, which might lead to casualties. With competition growing, there was no room for a price increase, so we found another way, lowering our costs while maintaining a good service.
By the time I inherited Nissan, dealer erosion was well underway—quite rightly. When other dealers found out that Glyn Hopkin didn’t have our service, they argued with their own regional Nissan directors about why they were subject to the same rule.
The loudest dealers were often the underperforming ones. When Nissan introduced the service, they also partly subsidised it, which meant the monthly fee was under £100. This difference was easily made up in less than a day, with customers signing off on the additional work when they received their personal videos.
Our original advantage had been a jump on the market of about 12-18 months before competitors started to appear. The electronic vehicle health check (eVHC) providers, who had effectively been forced into providing software integration with our video product, were now releasing their own dedicated services, trying to tease customers with their new low-cost solutions. It made perfect sense. These new competitors were already charging monthly fees for their eVHC services. Video could be tacked on as a low-cost extra, even if it wasn’t much good.
The reaction of some dealers is a great example of what was happening far too often, and not just with our products. Sales and aftersales managers, knowing that they had to conform to a franchise standard, would opt for the cheapest monthly fee they could find to comply, on the sole basis that they would never use what was on offer. To them, it was a dumb monthly overhead, complicating their already troubled lives, which they had absolutely no time for. The simple solution was to go low-cost and forget about it.
While the eVHC providers all introduced their new video-enabled products, they were mostly poor imitations that lacked functionality. Consequently, most dealers ignored them, at least at first.
One new competitor, Pinnacle, did start to make a few waves and certainly took advantage of the Nissan situation by the time I was involved.
They had an interesting story. Pinnacle was part of Pinewood, which was owned by Pendragon PLC, a top-five UK dealer group whose brands included Evans Halshaw and Stratstone**.
They had originally created their own software business to develop a dealer management system (DMS), accounting software that every dealer needs and typically pays a significant monthly fee for. By developing their own service, they could justify the investment and potentially sell their DMS to other dealers.
It was never going to prove popular with their main competitors, but smaller groups and independents were certainly using it. Around 2009, they extended their DMS and launched an eVHC, which integrated workshop processes and parts sales with the original accounts package.
Autos on Show (AoS - our original video competitor) had some early pilots with both Pendragon brands, but they never rolled out. Instead, Pinnacle developed its own video product, a variant of which was now taking some of my Nissan dealers.
I always wondered why the AoS rollout never happened. At that point in our development, it would have been a significant setback if they had taken all of the Stratstone and Evans Halshaw dealerships. Instead, in return for a discounted Aston Martin, so the story goes, Pendragon garnered enough information to brief Pinnacle on exactly what they wanted, and our biggest competitor never got any further than an early pilot.
If you believe the tale, the owners of AoS got a nice car instead. Perhaps it was another case of egomania on an even bigger scale. The deal that never happened was certainly worth a lot more than a discounted sports car.
We still found other ways to waste money, hopefully not at the expense of any deals. But still particularly annoying when we should have been focused on investment and spending less.
*CitNOW was our company’s trade name before we sold it in 2018.
**Following the sale of its dealerships in February 2024, Pendragon PLC changed its name to Pinewood Technologies.
Pleased to be back sipping coffee and reading your story Andrew, I’ve missed it over the last couple of weeks.
Our starting XI will look very different in the second leg, so I'm hopeful...like all disillusioned Spurs fans!