The Silicon Review
“LotLinx provides the automotive industry with AI that connects interested shoppers to every VIN.”
The advertising, holding, and merchandising cost of moving cars off a dealer’s lot is increasing by the day. According to NADA, the average dealer spent $628 in advertising alone per sold vehicle in 2019 - up from $580 six years ago. Ever-changing consumer and market trends, intensifying market competition, and outdated practices are complicating the inventory marketing process. LotLinx research has found that the majority of a dealer’s advertising spend is often wasted on less than 25% of inventory, leaving the rest of their available cars drastically under promoted. What’s worse, the cars that do take up a dealer’s ad spend are usually the type of vehicle that attract shoppers organically. Neglecting to promote the majority of vehicles online leads to aging inventory, unnecessary price reductions, and declining profitability.
In light of the foregoing, we’re thrilled to present LotLinx.
Incorporated in 2012 and headquartered in Chicago, Illinois, LotLinx is a VIN Demand Platform™ that enables precision retailing via patented data science and /AI/ technologies.
Len Short, LotLinx Founding Chairman and CEO, spoke exclusively to The Silicon Review. Below is an excerpt.
What was the motivation to start the company and how did it all come together?
Back in 2010, we noticed a gap in the automotive industry. There was an intermediary between the consumer and the dealer. Dealers needed the ability to cut out the middleman and connect directly with people who were looking to purchase the cars they had on their lot, leading us to create Chug.net.
It was a Vehicle Display Network that enabled shoppers to easily search dealer inventory. But we realized the automotive world didn’t need another portal site. So we did something that hadn’t been done before connect the cars dealers wanted to sell directly to the people who were looking to buy them, unrestricted by channel.
Just one year after our official inception, there were hundreds of dealers actively using our platform to target car buyers at the VIN-level and move their struggling inventory faster. Today, we’ve grown to serve thousands of dealers, including hundreds of rooftops under the ‘Nation’s Top 100 Auto Groups.’
How is your company positioned in the current market scenario?
At LotLinx, we believe that a price drop does not always buy incremental demand. Instead of focusing on the price elasticity of demand, which fails to boost sales more often than not, we’ve shifted gears to control the demand elasticity of price. We know there are shoppers willing to engage at higher advertised price, and we have the technology to find them. Our AI-driven strategies are focused solely on promoting inventory to a willing audience without sacrificing the dealer’s pocketbook. And, we’re the only tool that can identify and suggest effective solutions for promoting even the most under engaged and struggling inventory.
We are a technology partner of Google and the only company that has both a technology and platform badge with Facebook. We’ve been awarded the #1 spot on Crain’s Chicago Business’ 2018 Fast 50 list, annually recognized on the Auto Remarketing Power 300 list, several Automotive Website Awards (AWAs), and a spot on 2019’s Most Promising Automotive Technology Solutions list by CIO Review.
In addition to being approved for co-op programs by 21 OEM brands, manufacturers are using LotLinx to activate and support incentives at Tier I and Tier II levels, as well as supporting their dealers at Tier III.
What are the pain points of the industry addressed by the company?
One of the largest pain points in the automotive industry is the declining margins dealerships experience per vehicle sold. This comes from various rising expenses, especially advertising and floorplan (inventory holding) costs. Our /AI/ helps increase dealership gross margins by helping dealers control Variable Operating Expenses, more specifically by maximizing profit, avoiding calendar-based markdowns, and accelerating inventory turn.
LotLinx strategies address inventory concerns and sales objectives on a case by case basis and combat risk by properly promoting aging, under-engaged, and problem inventory. LotLinx precision retailing can lower the cost of selling a vehicle from over $600 to less than $100.
Dealers using LotLinx regain control over inventory exposure by avoiding third-party listing sites and delivering audiences directly to their dealership website. This reduces cost per engaged shopping session by more than 50 percent, helping eliminate wasted marketing budget.
We also increase inventory turn rate by 6-10 days. We look at VDP engagement and can identify in market consumers by their shopping behavior. If a customer bookmarks the page or comes back for another look, that’s considered a deeper level of engagement than, for example, a customer who never makes it past the homepage. By using /AI/ to recognize serious shoppers, you deliver the right message to the right buyer at the right time – which leads to higher shopping activity and prevents inventory from piling up.
What are the differentiating factors that set your company apart from its competitors?
Unlike most other automotive solutions today that focus on the audience, we flip things by focusing on individual VINs. We deliver AI-vetted shoppers directly to the dealer’s website, using unbiased Google Analytics data to prove results.
We took years to build our proprietary omni-channel vehicle demand platform. LotLinx enables dealership inventory ads to span across Search, Social, YouTube, Display and Native Proprietary Integrations into Automotive Web Publications across 70+ publishers, with a combined reach of 65+million shoppers - more than any other single source in the automotive industry.
With AI and ML technology at its core, the LotLinx platform performs millions of adjustments in minutes in order to drive the highest demand for each specific VIN on the dealer site, making a massive difference to the seller’s bottom line.
LotLinx is the first-of-its-kind to enable precision retailing, which is defined as: ‘Selling a unique vehicle, in a unique way, to a unique customer, in real-time.’ Instead of deploying a broad-based promotional strategy, dealers who use LotLinx patented data systems act on precise market information.
Dealers are able to access this information thanks to LotLinx /AI/ combing through nearly 400 billion points of proprietary data, data feeds from Dealer Management Systems (DMS), and a growing collection of nearly 500 million vehicle records every month. AI unlocks the data which opens the door to selling a specific product to a specific buyer with absolute efficiency.
Brief us about the products and services offered by your company.
The LotLinx TURN platform enables dealers to pre-emptively target specific problem vehicles and drive incremental customer engagement on them to avoid costly aging cycles.
The platform analyses a number of elements to determine which units are in need of assistance, including competitive stocking or pricing, turn rates, market demand, in-market shoppers, online activity, or even the weather. It then channels demand toward these units before they pile up or sell at reduced prices.
Some other product benefits include:
LotLinx campaigns are broken into monthly VIN promotion packages. Our customers are only charged when a qualified person lands on a VDP for the first time, and never for cost per click, impressions, support, or platform fees.
For many dealers, LotLinx budget can be covered by co-op dollars. Currently, LotLinx is considered “co-op approved” by the following OEMs: Alfa Romeo, Audi, Buick, Cadillac, Chevrolet, Chrysler, Dodge, Fiat, Ford, GMC, Hyundai, Jaguar, Jeep, Kia, Land Rover, Maserati, Mazda, Ram, and Subaru.
According to NADA data, the average U.S. dealer spends over $600 in advertising per new vehicle sold. LotLinx campaigns reduce investment per sold VIN by over 85 percent. On average, 35 percent of vehicles that receive direct LotLinx Shoppers to their VDP sell within 30 days, for an investment of $100/unit or less.
We get several questions from dealers wondering about the costs involved with artificial intelligence. There is no additional cost to using the AI built into the LotLinx product itself, but the cost to develop an AI platform of your own is quite different.
LotLinx /AI/ is a platform built upon dozens of technologies such as machine learning, image recognition, data crawlers, security, data storage, cloud services, third-party data enhancements, and a dozen other proprietary software tools.
If you really want to determine the value of AI, think about the time your team spends on search, social media, classified websites, and other marketing channels. What are the costs? What is the return? Are there enough hours in the day to make the thousands of micro-adjustments required to make sure your promotional campaigns produce ready buyers at the lowest possible cost? Probably not. In which case, the real question is: what are the costs of not using AI?
Who are some of your biggest clients?
A Case Study to Highlight the Story:
“The LotLinx technology is fantastic. The speed at which you can build out VIN specific campaigns to in market shoppers is hard to match. Really though, what has made a difference is the service from the LotLinx team.” – Jamie Suid, Marketing Director, Florida Fine Cars
Len Short: A Formidable Leader
Len Short, Founding Chairman and CEO of LotLinx. Prior to founding LotLinx, Len was the founding CMO of product(RED), the charitable organization created by Bono with support from The Bill and Melinda Gates Foundation. Len has also held numerous other high-profile positions including Executive Vice President, Brand Marketing at AOL/Time Warner, and Chief Marketing Officer for Charles Schwab & Co. Len is a well-respected leader in the auto industry and has been recognized by the likes of the American Marketing Association, the Effie Awards, the DMA Echo Awards, the Francis Hatch Awards, and the International Advertising Festival at Cannes. He is also currently a member of the Forbes Chicago Business Council. Before securing any of these impressive roles, Len received his Bachelor of Science degree in Broadcasting and Film from Boston University.
LotLinx /AI/ is able to combat risk by identifying and properly promoting aging, under-engaged, and problem inventory.