Transcript

Adam Honig: Hello and welcome to Make it. Move it. Sell it. On this podcast, I talk with company leaders about how they’re monetizing the business of making, moving and selling products, and of course having fun along the way. I’m your host, Adam Honig, the CEO of Spiro.ai. We make amazing AI software for companies in the supply chain, but we are not talking about that today. Instead, we’re gonna be talking with Danielle Cumbee, the director of sales integration at Spectrum Automotive Holdings. Danielle, welcome to the podcast.

Danielle Cumbee: Thanks for having me Adam.

Adam Honig: You betcha. Now I know that a lot of people probably already know what Spectrum Automotive Holdings is all about, but for the few people who don’t, maybe you could just give us a quick overview.

Danielle Cumbee: Absolutely. I’m happy to do that. So Spectrum Automotive, we are a holding company and we have a portfolio of over 20 different businesses growing every single day that service primarily automotive dealerships. And so our businesses do a variety of different types of consulting and product providing for automotive dealerships all across the country. Everything from when a dealership sells a vehicle, we help provide them with products and service them and train their people in the dealership and consult with them so that they can get maximum profitability when they do sell vehicles out of their dealership all the way through post-sale. We have companies that help dealerships market to their customers throughout that life cycle of the customer all the way after they’ve taken their vehicle home. So we do a lot of different things in the automotive space but all of it is designed to support and consult for car dealers.

Adam Honig: Gotcha. Now car dealers in my mind’s eye, they’re probably like the most successful example of a class of distributors in the country, maybe in the world. Sometime back in the past, the car dealer said we don’t wanna sell our cars directly to customers. Maybe in the 1930s, they set up these distribution networks and it worked out great for them. But what’s really interesting, Danielle, is having a chance to talk with you. I get the sense that auto dealers are not always what people think they are, they’re more like coral reefs than like a solid house or something like that. They’ve got all these different parts and things that they offer, all these additional services. Tell us a little bit about what it’s like to be an auto dealer?

Danielle Cumbee: So I, myself haven’t obviously had experience as an automotive dealer, but you’re exactly right, they have all these different moving pieces under their roof. You know, a lot of times consumers think that they’re just going there, and the only thing that a car dealer’s purpose is is to provide them with a vehicle option to buy and take home and drive for the next three to seven years. And in actuality, they offer all these different services. They are helping them service and keep that vehicle going. Anytime they need accessories for that vehicle, if they need something done to that vehicle, they’re providing them with various services, helping them get to and from work or to and from their house so that they can drop that vehicle off. And so there’s all these different components to what dealers do and dealers that are looking at and offering more unique services and products to their customers. Sometimes even have things like concierge services and things that they’re providing to their customers as well.

Adam Honig: Right. So it’s like a whole business empire in a way with all this other stuff. I had this terrible situation happen to me, I got a flat tire and I had to go to the dealer because I couldn’t unlock the lug nut off of my car. Who knew that three years ago when I bought the car, there was a key to take the lug nut off because where I live, which is obviously a very high crime area, people are likely to steal my tires, I guess. 

Danielle Cumbee: I also recently learned that that was a thing too.

Adam Honig: Yeah exactly, so this is another add-value service that they sold me, which was unlocking my own tire. But when I was there, I was talking with the dealer about ceramic coating for the car and all kinds of other things I never even had heard of, but there I was getting the sales pitch. So yeah, it’s super interesting. So there’s a lot of talk about cars in the news today Danielle, because there are a lot of shortages, and I know a lot of people who are trying to buy cars that have long waits right now for cars. So I imagine that’s putting a lot of pressure on the car dealerships, they can’t sell as many vehicles as they’d like to.

Danielle Cumbee: It absolutely is. They’re trying to find inventory anyway that they can because of all the supply chain issues that they’re dealing with that are a chain reaction of everything that’s happened with COVID. So I’m sure a lot of people listening have probably gotten letters more frequently than they ever have before from dealers asking them if they wanna come in and trade in their vehicle or they’ll help them pay off their payments to get another vehicle. So there are all kinds of different things happening in the automotive space than we’ve ever seen before at an exponential level than we’ve ever seen.

Adam Honig: I’m really curious, do you get any sense as to how this has impacted the sale price of cars? Is it up, is it the same?

Danielle Cumbee: It is certainly up, they’re not selling as many vehicles and so dealers are trying to maintain as much of their profits as they can with the limited inventory that they have to work with. And so they’re doing everything that they can to find ways to add other services and add other value to what they’re offering to their customers which is where we try to come in a spectrum to help and support the dealers that we do business with.

Adam Honig: So let’s just dig into one of those examples. Can you tell us a little bit about one of the best-selling things that you work with dealers on? 

Danielle Cumbee: Yeah, absolutely. So something that we increased our business on when the pandemic happened was from one of our company’s APC [Automotive Product Consultants], they offer a post-sale marketing service to dealers. And so what happens is dealers now have this limited inventory, they’re not selling as many vehicles, but they still wanna maintain their F&I profitability. 

Adam Honig: Just tell us what F&I is for people who are not in the industry.

Danielle Cumbee: Sure, absolutely. So that means finance and insurance, and it’s basically the protection products that a dealership is offering to their consumers either at the time when that consumer purchases a vehicle or after the fact. The dealers have a number of different ways to do that, but a lot of dealers don’t always take advantage of those other ways post-sale, right, after the point of a customer sitting in the dealership, buying their vehicle. So what APC offers to a dealer is actually a free service which oftentimes dealers are silly not to take advantage of. And they help that dealer market to all of their customers that didn’t purchase a service contract at the time that they purchase their vehicle. And so those customers are driving in that vehicle, they’re having repairs done, and probably the majority of them at some point or another throughout their life cycle are going to have a need for a service contract or to have a repair done. And a service contract helps to mitigate the cost that they’re spending out of pocket. 

So what APC does is they help dealers market to that database of their own customers to make sure that they’re sending them a letter when they’re most likely to purchase a service contract. Or when they probably are most likely to need that service contract to try and sell them one on behalf of the dealer after the fact of that sale. And so that’s something that we offer as one of our portfolio companies, as a service to dealers, where they don’t have to sell another vehicle to increase the profitability of their dealership. And so that’s just one example of a solution that dealers can look at when they’re kind of in this unique market and they’re having challenges getting ahold of more inventory.

Adam Honig: Yeah, I can see this type of service being very applicable to other types of distributors. I was talking with a large HVAC distributor mostly for commercial, but some residential as well. And they’re facing the same situation, anytime they wanna go and do an install, they’re like three or four months out at this point just because of the supply chain issues. And so while their sales are fine, their profits are a little bit pressured because they don’t have the product to do things. So if they were offering different types of post-sale warranty or different things like that, it could really help them boost their bottom line as well.

Danielle Cumbee: Absolutely. Milestone is another company that we have under our portfolio at Spectrum. They are primarily a data company, and so they work in the automotive space, but they also deal in the home warranty space, healthcare and different things like that.

Adam Honig: Well, I bet it all comes from a customer’s need. Like at some point, there’s somebody at the dealership who’s saying, wow, I really wish I had bought that extended warranty, or I really wish that I had a key to the lug nut on my tire or whatever the thing is that people need. So it’s probably the kind of situation that when distributors are trying to figure out what other sorts of things they could be offering, probably just asking is a really good way to start.

Danielle Cumbee: Absolutely. I’m sure you’ve watched shark tank before. It’s the guy that’s sitting at his home going I wish I had this thing, and so he sits there and he comes up with it and it’s a mouse trap that works. You know, it happens all the time with independent inventors and then it’s also happening within businesses. They’re trying to be innovative and say, what do we have our customers asking about or surveying them and trying to find out what are they looking for? What are we not providing that we can add to our list of services?  

Adam Honig: Let’s shift gears for a minute. So one of the cool things about Spectrum and your role is that you guys are constantly buying new companies to help service these dealerships. And I know that that’s gotta be pretty challenging, especially to integrate all kinds of different sales teams together.

Danielle Cumbee: No, it is a huge challenge. And it’s something that we work to try to get better at every single time that we do it. But I think we’ve finally gotten into a great groove of it. And we leverage our partners like you guys for our CRM. We try to use a consistent system across all of our different businesses as much as we’re able to, but it’s definitely a challenge. There are a lot of personalities, depending on the types of businesses we’re acquiring. You know, some people have owned those businesses for 20- plus years and that’s their baby. And so we really have to work hard to integrate all of those cultures together and make sure that we’re presenting them with the value that we offer as a holding company and what we’re bringing to the table and making sure that everybody feels comfortable and knows that they made the right decision at the end of the day.

Adam Honig: How much of the thought about what to do with the company when you buy it starts during the acquisition process. Like right up front, you’re like I don’t know if these guys are gonna fit. Is that part of the process?

Danielle Cumbee: I think that we typically feel like we have fine-tuned our process to make sure that we’re making the right decisions on the companies so that we feel like they’re the right fit for us if we’re proceeding with that purchase. On the flip side, sometimes we have a lot more work in some situations versus others to make sure that those companies feel like they made the right decision to come on board with us. So it’s a lot of hand-holding and reiterating the value that we’re bringing to them, and why this was a great decision for them. We wanna make sure that their people feel comfortable because sometimes they’re not involved in the process until we actually complete that transaction. And so we have to wrap our arms around them a little bit and make sure that they know that this is okay, here’s the expectations, but we’re here to help you through it. It seems a little bit overwhelming, but we want to make sure that it’s as smooth a process as possible.

Adam Honig: Well, it can be super tricky. I mean I know I’ve sold two businesses that I’ve started and one was a complete disaster I have to say, and then the other was fine. And the one that was a disaster, so we were a 300 person company, we sold the business and one year later there were two employees still working for the company that bought us and being able to retain the people. I mean that’s the most important thing when you buy a business. And the first company was such a disaster because the company that bought us really didn’t know why they were buying us. It was like the CEO’s idea, and he was gone within three months after buying the company and everything just went to heck after that. The second time I sold the business, we were very well aligned, everybody knew what was in it for them. We had sort of the advantage for selling my company, we could plug into a bigger company with more opportunities for the team, and really give them the ability to make more money and be more successful in their careers. 

Danielle Cumbee: Absolutely. We try to tell them from the get-go, as we start those conversations, it’s as much us deciding if it’s the right fit as it is them also deciding. There are a lot of businesses out there that are starting to acquire other companies in the automotive space. And so they have to decide what they’re looking for. We’re really looking for people who are going to remain on with the company and continue to run their businesses just with our support and additional resources that we’re providing to them so that they could be even more successful. So we encourage them to go out and ask those tough questions if they are talking to Spectrum as well as other companies that may be looking to acquire them and make sure that they really feel comfortable too. Because we want everybody bought into the process when they come on board, that makes it 10 times easier for us to integrate them across our organization.

Adam Honig: So it sounds like a big takeaway is really making sure that the benefits of the acquisition are understood by the people that are going to be coming over and focusing on really communicating with them. And you said something like wrapping your arms around them and over-communicating, making sure they really understand that. We kind of have a rule here at Spiro which is like the first six times we say something to somebody, they probably don’t pay any attention. And so we have to say it’s seven times and it sounds like that kind of situation for you.

Danielle Cumbee: It absolutely is. We implement things where we have weekly calls with our new businesses and we rely heavily on data and using our Spiro CRM and our other systems that we put into place and get access to certain things so that we’re all on the same page. And we’re all looking at the same information, but it is that constant over-communication, making sure that everybody understands. And knowing that they do forget sometimes when we tell them the things that they now have access to, we have to keep reminding them until they start to take advantage of those things. And that’s when they truly become part of the spectrum family. And they go “We’re so happy that we made this decision. Now we know why we made this decision.” So that’s what we try to do all across our entire integration team.

Adam Honig: For any other companies out there that are thinking about buying other companies and figuring out how to integrate their sales teams, is there anything you’d recommend that they don’t do? Like what would you just say, “Yeah, don’t do that, whatever you do?”

Danielle Cumbee: They should not expect a culture change overnight. Like I mentioned earlier, we acquire businesses, sometimes we bring them into our portfolio. They’ve had their own company and their own business for 20 years and it takes time and patience and understanding and perspective to really make sure that they get integrated properly into our culture. And so we can’t expect that they are going to feel a hundred percent comfortable with the decision overnight. It’s a huge decision and it’s life-changing for a lot of them. And we have to understand that it’s gonna take them a little time to get comfortable and acclimated and get their people comfortable. So we try to just make sure that nobody’s rushing to expectations of what it’s gonna look like once the deal is done. And that they have patience and they just take their time to communicate and work through the challenges. There’s always gonna be growing pain, so if you go into it thinking there won’t be, you’re just kidding yourself. 

Adam Honig: That’s so on the money, Danielle. And I feel like it’s the same lesson from technology implementations, right? It’s like we want everything, boom, to be going on day one, and there’s an adoption process and you can’t just on day one, get everything set. So it’s the same thing with bringing on a new company or sales team and stuff like that it sounds like.

Danielle Cumbee: Absolutely. We experienced the same thing in our organization when we started utilizing Spiro. We had to get everybody on board, get them comfortable and build that adoption over our team and that comfortability with that program on our team over time. And it doesn’t happen overnight. I’m not a very patient person innately,  and so it’s very challenging to channel that within myself. But the more that I do that, and the more that our team does that, as we do integrate new companies, the more success we tend to have.

Adam Honig: Yeah, that’s great advice, Danielle. I really appreciate your coming on the show, sharing with us your perspective on distributors and car dealerships and how they can find profitability in new areas, which is super awesome. And then talking about how do we deal with the human element of bringing on new sales teams as we’re buying companies? That’s such a big topic these days, what a great conversation it’s been. So for listeners out there, as a reminder, you can find every episode of the ‘Make it. Move it. Sell it.’ podcast at spiro.ai/podcast. And if you thought Danielle was as smart as I am, maybe give the show a like, or a good review or something like that. Danielle people should definitely do that, don’t you think?

Danielle Cumbee: Absolutely. I’m so appreciative to be here, and if you enjoyed the episode, please like, and subscribe.

Adam Honig: There we go. And until next time, look forward to speaking to you all on the ‘Make it. Move it. Sell it’ podcast.