How we built a business out of recession - chapter 36 - ciao Italia
The story of CitNOW*
This is the 36th 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.
With the successful launch of two CitNOW automotive apps in the UK, there was a sense that much of the hard work might have been done. It was difficult to ignore that many dealer groups, especially those with German brands on their forecourts, were using both apps. Nissan had mandated Workshop, and plenty of other groups without German support were now using CitNOW across their sites as well.
Volvo was the only significant manufacturer where we struggled to establish a presence. They eventually endorsed Autos on Show, which didn’t mean very much. Honda, ironically, had become another laggard, with little interest and certainly no manufacturer engagement**.
Once we reached this position in the UK, which reminds me of a climbing Everest graphic we used one year, to depict our forecasted annual growth to the company from base camp upwards, there were really only two routes to go.
We could continue to focus on our home market and consolidate our position as the leading automotive video solution. Sales from the two existing apps would continue to come in, as we had people on the ground now, and the phone did ring more often, providing a steady stream of leads.
Typically, they wouldn’t necessarily be the most exciting enquiries. Often, it would be an independent dealer who had heard about the service through a conversation. It’s a surprisingly tight-knit industry, with dealers frequently sharing their experiences, good and bad. I want to think we treated every enquiry with the same respect and interest that would have been given to a bigger entity.
Our proactive selling efforts were always focused on Automotive Management’s (AMs)*** top 100 dealer groups, which are updated annually based on turnover and the definitive prospect list for most third-party suppliers.
It was clear that there were still many unfulfilled opportunities in the UK, whether it was groups we hadn’t reached with our existing services or potentially new applications yet to be tested.
One completely untouched market was body shops, for instance. Repairing damaged vehicles was crying out for quality diagnostic videos to help communication within the industry—body shop to the insurer and back—plus progress and upselling videos for customers.
If your vehicle needed bodywork repair after an accident, a smart process was to point out any other dents and scratches and offer to repair those at the same time as the insurance work for a discounted additional cost.
After two fantastic years of selling Workshop almost unchallenged, we began to lose sales and renewals to the eVHC**** providers who had by now developed their own video solutions. Even though we had integrations with these providers, we didn’t have our own eVHC solution. We would have needed to create our own software or buy one of the existing companies, which we couldn’t afford. (That finally happened after CitNOW was sold. Tenzing, the PE house, had much deeper pockets).
I want to stop writing a list to avoid this starting to read like a boring old business plan. The point is, the list of UK opportunities was extensive, and a perfectly sensible approach would have been to realise some of them at the expense of doing anything else.
One wise decision we finally made was to stop chasing business that wasn’t from the automotive sector.
During our short history, we had already sold to boatyards, campsites selling holiday homes, and even engineering services that needed a visual record of work undertaken. It wasn’t that we couldn’t obtain a monthly licence fee, but there were nearly always new requests to change the software to better suit the new use. Enhancements were already a bottleneck for our core business. The cash was never significant enough, so we simply stopped doing it.
It was a tough lesson, saying no to a sale. A decision we’d put off many times. But it was also part of growing up and embracing the fact that we were an automotive software business and only that. The market was more than big enough to accommodate everyone’s aspirations.
Our second choice was to export, and you’ve already read about the initial disasters we had with Germany and Japan.
The reality was we lacked any real strategic direction. There were plenty of boardroom opinions, none louder than the CEOs’, and we were blessed with too many opportunities. It was easier not to make a defining decision. Instead, we chose both routes, greedy for more success. The result was we didn’t do any of it particularly well, leaping headlong into half-baked hunches, investing more cash we could ill afford to lose.
In the end, though, it would have been almost impossible to ignore the opportunity in mainland Europe, although that might be the salesman in me talking.
Part of our UK success was definitely because we’d effectively been first and used that advantage to the best effect. While Autos on Show focused on an expensive turntable solution, with a camera and cables for car listings on websites, CitNOW was selling two easy-to-use apps unopposed. This led to manufacturer buy-in and significant exposure to many of the big franchised groups in that long AM list.
I don’t remember BMW, via Alistair, ever saying you need to be in our home market, although you might easily have reached that conclusion because of the UK success story. But one manufacturer definitely did put their hand up, and that was Volkswagen in Italy.
Dealers talk, and so do manufacturers. Volkswagen UK had done a fantastic job of embracing and supporting CitNOW. Their UK dealers had all seen what we had to offer and many signed up to a Volkswagen specific offer. But our high coverage wasn’t just about price. It was also achieved through the regional support of their managers, who reminded and cajoled any laggards.
With such an endorsement, it wasn’t surprising that other markets, aware of what Volkswagen UK was doing, started to enquire.
How do you say no to that? I don’t think you can. The only strategy we really knew was to be first, and now Volkswagen wanted talks in Italy where we could be first all over again.
We’d also learnt some expensive lessons from Japan and Germany, so this time, we put an adult in charge and changed the country to Italy.
*CitNOW was our company’s trade name before we sold it in 2018.
**The irony with Honda is that the ex-Marketing Director had been the inspiration years earlier. All the early experimentation had been with Honda Holdcroft in Stoke-on-Trent.
***Automotive Management, owned by Bauer Media, is an essential read for the automotive retail industry. Much of our marketing spend went to this publication, which organised many industry forums, attracting the dealers and groups we wanted to meet.
****eVHC, electronic vehicle health check - software developed to integrate the process of servicing and repairing a vehicle with a dealership's parts and accounts department. Customer reports were also generated, which started to include video.