REALIGNING PEOPLE, PROCESSES, AND TECHNOLOGY TO SOLVE ACQUISITION
Led by President Rob Ruth, managed by Director of Operations Jeremy Zarfos, and supported by an incredibly talented team of marketers and buying agents, Bob Ruth Ford has invested in a private-party acquisition strategy that has made them virtually auction-independent in less than a year – buying over 200 cars a month from the public.
Even before a global pandemic, international supply chain issues, and a national shortage of new vehicle inventory created an actual inventory crisis in the United States, savvy used car managers were reevaluating the way they sourced inventory.
Competition and costs at the auction have been rising for the last decade, meanwhile national chains like CarMax were literally consuming inventory from local markets. As a result, margins have shrunk, turn has slowed, and it’s harder than ever to make a healthy profit selling used cars.
So, while some dealers had already been thinking about inventory sourcing for, the events of the last 18 months turned opportunity into a necessity. From franchise dealers to independent used car lots, dealerships have been forced to adapt and look beyond the auction to keep cars on the lot and take the most advantage of historically high retail values.
One of those dealers Bob Ruth Ford. Led by President Rob Ruth, managed by Director of Operations Jeremy Zarfos, and supported by an incredibly talented team of marketers and buying agents, Bob Ruth Ford has invested in a private-party acquisition strategy that has made them virtually auction-independent in less than a year – buying over 200 cars a month from the public. Their team includes Stacy Turner, Matt Bynum, Matt Freeman, Devin McKenzie, Tyler Hammer, Mark Odom, Amy Davis, Darian Castillo, Zoe Alexander, Jason Hlavaty, and Michael Nelson
ROB RUTH
BOB RUTH FORD
JEREMY ZARFOS
BOB RUTH FORD
AN OPPORTUNITY BECOMES NECESSITY
Bob Ruth Ford is located in Dillsburg, a small town of no more than 3,000 people in a mostly rural area of Pennsylvania. Following the first couple months of COVID, the Bob Ruth Ford team knew that they needed a better plan for inventory acquisition, for that period of time and for the future.
“For us, it was like, ‘Hey, we’re not going to survive, we don’t have any new cars,’” explains Jeremy Zarfos who was interviewed for this article, “we’re a Ford store and I think I had five new cars on the ground with every one that comes in being pre-sold – so really there are no cars coming so we don’t even have any trades.” Looking at the auction, there wasn’t a great solution. “I also couldn’t go buy into an auction because I couldn’t price those cars in this market and still make a couple bucks.”
One day, President Rob Ruth decided he was going to sit down and buy cars. Simple as that. He started calling customers and private-listings – and in the first day he bought five cars. The next day Ruth called together his sales managers and said “Look how I bought these cars, and if they go through recon like we want, make it through the shop, we’re going to own these cars way better than if we had bought them at auction.”
Turns out Ruth was right. Quickly, the team realized these vehicles actually had lower cost to market, lower market day, and were just generally more rare. “We compared all the data and realized the huge potential,” says Zarfos, “that’s where we needed to go.”
USING NEW PROCESSES TO CHANGE BEHAVIORS
Working with their Inventory Management Service Provider, LotPop, they found that trades and street purchases accounted for less than 10% of their inventory. Zarfos says the focus became increasing that percentage. They looked first at what they could do inside the store, and then started looking outside the store for more help.
“Historically, as a Ford store, we weren’t very aggressive about keeping trades for retail,” says Zarfos, “so first thing we did was to commit to keeping as many as possible.” With LotPop’s help, Zarfos says they were able to understand which trades to keep and how best to position them in the market. They started keeping – and selling – trades across nearly every make, model, and price range.
Additionally, the Bob Ruth team started targeting vehicles in the service lane, providing service customers with real offers for their vehicles – an attractive option for a customer spending money on expensive repairs and a low risk for the dealership having essentially serviced and reconned the car.
“With just those internal process changes in place our percentage of retail inventory from trade and buying off the street increased – and just organically we found that our team was just buying more cars organically,” explains Zarfos, “but we were still really dependent on the auction.” As inventory at the auctions continued to dwindle and costs continued to rise, the team at Bob Ruth Ford knew they had to invest resources to build on their success.
INVESTING IN PEOPLE TO DRIVE PROGRESS
By the end of 2020, Bob Ruth Ford had also become a KBB Buying Center, receiving inbound leads from customers in their market that requested an Instant Cash Offer. This brought in a huge number of private-party opportunities which required an investment in people dedicated to buying cars from the public.
What Bob Ruth Ford also realized, and most dealers that try to start buying from the pubic also realize, is that you also can’t just dedicate someone who is trained to sell to start talking to potential private-party sellers. Salespeople are trained to advocate on behalf of the car or the dealership, but when you’re buying cars off the street it’s a different conversation.
The seller has the commodity, and you need to give them the best reason to sell to you at the price you’re offering. Bob Ruth Ford built a team of vehicle buying agents that are educators at heart, wanting to understand the motivations of the seller – reduce payments, unneeded car, need cash now – to make the best case for the dealership. They also need to be able to communicate the data behind the offer to help sellers understand exactly how much their car is worth – at Bob Ruth Ford or anywhere else.
ENABLING SCALE THROUGH TECHNOLOGY
While Bob Ruth Ford was now buying cars off the street regularly, they still weren’t scaling the way they wanted to – and no matter how many KBB leads they got, they couldn’t push up the conversion rate.
“The number of leads that came in [through KBB] versus the amount of success is so low,” says Zarfos, “you put in a lot of work just to find out that most people really were just curious and had no intention of selling their car.” And the people that actually do want to sell their car get contacted by multiple dealers all fighting over the same KBB leads. “We just didn’t find that to be very efficient, so we transitioned,” explain Zarfos.
Rob Ruth reached out to one of his friends, Danny Zaslavsky, General Manager of Country Hill Motors, an independent dealership in Kansas City, MO, who was buying more than 100 cars a month from the public through a dedicated Vehicle Buying Center with four dedicated buying agents.
Danny had been through all the same process changes and people investments s Ruth, but the difference was that Danny had also invested in technology to scale his efforts – literally, Danny had invested in VINCUE, an emerging leader in automotive retail inventory management, and was building a software solution dedicated to private-party acquisition.
“We were already partnering with VINCUE, and Rob and Danny have very similar values and personalities,” says Zarfos, “so when we found out about their Vehicle Buying Center (VBC) solution, we just went all in.”
Bob Ruth Ford’s talented team of marketers started advertising their vehicle buying center, using VINCUE’s valuation tool embedded on their website. The inbound leads routed into VINCUE’s VBC platform where Bob Ruth Ford’s vehicle buying agents can update the offer and appraisal, communicate directly with the seller, and schedule appointments for final inspection and payout.
“Doing our own Vehicle Buying Center with VINCUE has a much higher conversion rate than KBB,” says Zarfos, “mainly because we know that all inbound leads are serious sellers and we’re the only dealership working that opportunity.” But inbound is only part of the story.
“What really, really helped us with what VINCUE did to take all the third-party listings from Facebook, Craigslist, AutoTrader, and CarGurus, where people have essentially said ‘I want to sell my car,’ and put them on one place.”
VINCUE aggregates private-party listings from multiple third-party marketplaces and offers a single interface to view, filter, search, and communicate directly with sellers – all without leaving the VINCUE VBC. Dealerships can target specific segments based on a buying plan and buying agents are held accountable to number of messages, appointments, and conversions.
Zarfos explains, “Now we can work outbound opportunities from one tab, one system, instead of having our buyers constantly scrolling through Facebook or Craigslist with tens of tabs open on their computer.” Zarfos says this hasn’t just made them more efficient, it’s let them scale beyond anything they thought they could do.
“Starting with VINCUE in March 2021, we bought 27 cars from the public,” says Zarfos, “in April we bought 74, by November we bought 151, and in December we bought more than 200.” True to Zarfos’ personality he added “we’re excited about our success, but we’ve got more work to do.”
SOLVING ACQUISITION IS A JOURNEY NEVER QUITE COMPLETE
There is no magic bullet for solving acquisition – the industry is going to continue to change, evolve, and require dealers to adapt. Bob Ruth Ford bet on using private-party acquisition to fill inventory gaps and be less dependent on institutional sources, be it new inventory or used car auctions – and they’re winning. But that doesn’t mean their journey was or continues to be easy.
“If you think you’re going to wake up tomorrow and buy a hundred cars, you’re fooling yourself. A vehicle buying center is only going to give what you put into it, it take commitment,” says Zarfos. “We had to change how we do things, we had to change the way our people thought, we had to invest in people – and we have to keep investing in people to continue growing.”
And Zarfos says you need to find the right solutions, “VINCUE can not only help from a software solution, but they can also help from experience and what they’re seeing around the country to help these other dealers like.” But that’s not the whole story, either.
“VINCUE has been great, but they’re not going to do the paperwork for us, they’re not going to go get the car or have the car come in, they’re not going to greet the customer at your door. If you don’t have a team of people committed to doing this, it will not work. Our team is committed to that mission and it’s the biggest reason we’re successful.”
Solving acquisition is a journey, one that’s not really ever complete, but one that dealers need to commit to nonetheless. The market is changing, consumer behaviors are changing, national chains are learning how to beat us at our own game. To survive and thrive, the dealer body needs to change too – realigning processes, people, and technology to improve everything we do from point-of-acquisition to point-of-sale.
Because, as Zarfos points out, “if we had not done this, I don’t know where we would be today.”
