Issue: Sep 2008


Auto shopping made easy - Zag



Auto shopping made easy - Zag

by Malcolm Babbin

Buying a car should be easier than it is – that is the thinking behind Zag, which connects dealers with a combined total audience of more than 60 million members. 
Automotive Industries (AI) asked Zag founder Scott Painter (SP) what will be the next wave in car buying.
Painter: It will be upfront and transparent pricing. This transformation is already underway – all dealers that work with Zag agree to provide these things. When people research a car purchase online today, they get reams of detailed product data, and they can request to be connected with a dealer by submitting an email address or phone number. But buyers are still left to negotiate at the dealership.
This situation isn’t ideal for dealers, either. Online marketing channels that function as lead generators are not aligned with the dealer’s goals. Because they sell leads, they are not motivated to opt for quality over quantity. So dealers end up buying a lot of worthless leads. Zag charges dealers per sale rather than per lead.
For buyers, Zag takes the informational advantage to the next level by giving them an upfront price – guaranteed in writing with a printable certificate – in real time online. The consumer doesn’t have to provide personal information or wait for an email response. Consumers are empowered to either take that price to the dealer (and Zag only works with pre-qualified, premier dealers) and buy the car with no haggle, or they can use it as a negotiating point and continue their research. Soon, consumers will start demanding this from all dealers.
AI: What do consumers want when buying a car?
Painter:
Consumers want to know they’re getting a fair deal. A car is a big purchase, and the only way to know if you’re getting a good deal is to know what other people in your area have paid for the same car over the past month. Zag collects that data and requires that its dealers offer an upfront price that does not exceed the market average.
AI: How close are you to meeting your targets?
Painter:
We’ve met our targets and we’re pleased with our success so far. We’ve raised almost $50 million in equity capital. We’ve met our internal goals, and we’ve exceeded customer satisfaction based on our commitment to providing a better car buying experience. But we’re always pushing for more.
AI: What are problems do you face in attracting buyers?
Painter:
In car buying, the biggest consumer challenge is removing suspicion at the dealer level. This is Zag’s mission, and one that we’re uniquely suited to overcome. Our philosophy is: by the time a consumer gets to the dealership, he or she should be ready to buy, and the transaction should be quick and hassle-free.
AI: Are you looking for more affiliates?
Painter:
The power of a platform like Zag’s is that it scales incredibly well – we can scale without having to invest in infrastructure. In choosing our affinity group partners, we love any organization that’s already in an automotive dialogue with its members – insurance companies, direct lenders, etc. They carry the credibility that comes from a relevant relationship, and their members are likely to want to buy, enabling us to provide more sales to our dealer partners.
We also like organizations with members who are so loyal that they highly regard the recommendations of those affinity groups. When consumers already trust a brand, and that brand gives them a way to research a car, find an upfront price and connect with a dealer, the issue of “suspicion” is already overcome. Dealers benefit from trust-by-association.
AI: Will Zag ever offer its services internationally?
Painter:
The opportunity to improve the car buying experience here in the United States will likely keep us busy for a while, so we’re not thinking international at this point. That said, the platform and the approach are certainly scalable to any environment.
AI: What new services does Zag hope to offer in the future?
Painter:
Our overriding prime directive is to make buying a car better and easier – empower buyers, remove the hassle and haggle, and bring greater joy to consumers. Our goal is to help sell 250,000 cars per year and to direct 2.4 million buyers to dealers within five years.

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