May 2013, Auto Dealer Today - WebXclusive
Mike Esposito is a bit of a Renaissance man. To the more than 900 dealers he does business with, he’s known as the president and CEO of Auto/Mate. His education is rooted in mechanical engineering, but he also holds a master’s degree in business. In his free time, Esposito builds fine furniture. It’s a hobby that relieves stress, but it’s also a diversion that requires extreme focus — the same type of focus he’s had since taking over the technology company in 2005.
ADM: You’re into fine furniture, correct?
Esposito: That’s right. It allows me to forget about everything else that’s going on in the world. But you’d better be focused on that saw or they’ll start calling you “Lefty” if you’re not careful.
ADM: So, how did you wind up at Auto/Mate?
Esposito: I started with General Electric and was with them for about 10 years. Then I was with Schlumberger Limited, which is an oil services company, for about another 10 years. I worked in the company’s Fairchild Semiconductor division. After leaving Schlumberger, I wound up running a car dealership through sheer happenstance in the early to mid-’90s. I did that for about five years before meeting the gentlemen who owned Auto/Mate.
ADM: George Hearst, the great-grandson of newspaper titan William Randolph Hearst, was the one who introduced you, right?
Esposito: I knew George through the dealer I worked for as general manager. The dealer was big into polo ponies and George was a big polo player. Through that acquaintance we’d go to polo matches and that is where I met George. It sounds more impressive than it was.
George asked me to direct his technical guys on how to develop a used-car website for the Times Union back in ’95 or ’96. A couple of years later he asked me to meet with these two guys who had this little computer company. That’s how I met Steve and Paul Fullum. Steve was Auto/Mate’s chief software architect.
ADM: I read that the company was doing 20 deals per year before you came in. You stepped in back in late 1998 and did 14 deals in six months.
Esposito: I remember telling them during our first meeting how much I disliked ADP, which my dealership was using. Well, they never acted on that. You really had to want to buy from them. So, what I did was help the company get more proactive about selling.
ADM: You took over as president and CEO in 2005, correct?
Esposito: That’s right. We had 200 dealers at that point. We’re now closing in on 1,000 dealers, which is right where we want to be.
ADM: Auto/Mate prides itself on its customer service. How do you maintain that while also growing your company’s footprint?
Esposito: What I say to dealers when they ask me that is, “My father taught me you leave the dance with the girl you brought to the dance.” That is analogous to my dealers; the dealers I have are the ones that have made us successful. For me to leave my date for a 50-store blonde floozy, I won’t do that.
ADM: How did the Great Recession impact your business?
Esposito: I think dealers got religious about their expenses during the downturn. Like that old adage, “Gross hides all problems.” Well, when sales started to go away, dealers started paying attention to expenses. That’s when they started wondering why they were paying so much money to our competitors.
ADM: They also started questioning those long-term contracts. You operate monthly. Did that help your cause?
Esposito: That’s part of it, but we also got involved with Toyota back in 2010. We were one of the two DMS vendors who helped Toyota redo its entire dealer communications system. Historically, if you were a Toyota dealer, you could only use ADP and Reynolds. You have to take your hat off to Toyota. The knee-jerk decision would be to use ADP and Reynolds because they have 98 percent of dealers. But they didn’t and decided to use non-legacy system vendors. And when Toyota announced that we were one of two companies to integrate with them, people started to take notice.
ADM: With the Driving Sales Award you earned this year, I guess people did.
Esposito: The thing I was really proud about was not only were we voted the No. 1 DMS in customer satisfaction, the other DMS vendors weren’t even close.
ADM: Last June, you launched a third-party integration platform. Had you previously not been open to third-party integration?
Esposito: We’ve always been open. What we announced was a new technology we’re utilizing. It’s a real-time bidirectional process, which is what you need with the level of technology available today.
ADM: I noticed you recently released a new service tool. Is that where your focus is this year?
Esposito: We recognize that a lot of dealers leaned on their fixed operations to get them through the downturn. Our interest in fixed ops also is being driven by the market. A lot of the stuff dealers are looking for has to do with service. They want to be able to retain customers through service. So now they’re talking about mobile advisors, conducting multi-point inspections on the service lane, and using [radio-frequency] ID tags when the car comes in so they can service the customer faster.
ADM: Your newest service tool connects a Windows-based tablet to your DMS service module. Will you be doing more in mobile?
Esposito: My take on mobile is it makes a lot of sense on the service lane. Historically, you’ve always wanted your service writers to go to the car, talk to the customer, and then inspect the vehicle and write up a repair order in front of the customer. We did that 15 years ago on a clipboard; the technology just caught up.
ADM: What is your outlook for this year?
Esposito: As long as the credit stays cheap, it’ll probably hit 15 to 16 million units.
ADM: Are there any issues that concern you?
Esposito: Dealers need to be paying attention to this data issue. The problem is they aren’t. In a lot of cases, they can’t really know what’s going on because they have data aggregators who are pulling data and doing other things with it. But the bottom line is the dealer is going to be liable for it.