InformationWeek

September 13, 1999

AutoNation: A Different Style Of Sales Pitch

Illustration by Matsu ew industries trigger images of traditional American business more than automobile retailing, with car lots full of sun-burnished windshields and plastic flags flapping in the breeze. Yet auto retailing exemplifies the transformation power of the Internet that's playing out in other industries. The largest auto dealership network, AutoNation Inc., has fully embraced the new online channel in less than two years.

"We set out to reinvent a process that hadn't changed for 78 years," says Mike McFall, who as VP of Internet marketing for $17 billion AutoNation, in Fort Lauderdale, Fla., also heads marketing for AutoNation Direct, the company's online-business unit. "Our goal is to make every step of the purchase process available online--everything but the test drive and handing over the keys."

AutoNation launched AutoNation Direct in June 1998. The business unit was charged with building an online infrastructure, marketing on the Web, and channeling online leads to the company's 376 dealerships and 37 used-vehicle megastores. The unit has 22 employees and expects to generate $750 million in online sales this year--12% of the company's revenue.

McFall and his team faced a challenge in bringing a new channel to a business built on handshakes and in-person sales pitches. Newcomers such as Auto-by-Tel Inc. and Microsoft's CarPoint service were redefining the car-buying process for Internet consumers, and AutoNation knew it needed to participate. The key to transformation was delivering IT-based business tools with benefits for the existing channel--even 40-year-old dealerships with longstanding sales cultures. "We're really building a channel within a channel," says McFall.

One year ago, AutoNation rolled out Compass, a dealer extranet built with tools and services from Fusive.com and an Oracle8 database, which delivers and manages online sales leads. It's now used by an average of 2.8 sales reps per dealership. "Instead of sitting there waiting to pounce on the next customer who walks in, the sales rep is on the computer, E-mailing interested customers with information or setting up appointments," says McFall. Compass manages leads that come from AutoNation's AutoUSA.com Web site as well as prospects shared by Auto-by-Tel and CarPoint--AutoNation has marketing agreements with both.

The unit reports to AutoNation CIO Scott Barrett because this is, at its core, a technology-based business transformation. "The best way to nurture it was to make sure it wasn't technology-starved," says McFall. "It's IT-dependent--that's what gives us the competitive advantage."

More significant than AutoNation Direct's organizational structure is top management's support of an initiative that changes the way business is done, says McFall: "The key is total, unwavering personal commitment from the people who run the company."

Return to main story, "E-Transformation."

Illustration by Matsu

Back to This Week's Issue