How Dealers Can Meet Customer Expectations to Drive Loyalty Without Compromising Data Security with Steve Schmith

Welcome to Inside Auto Podcast, where we feature everyone and anyone you'd want to talk to in and out of the automotive industry. Ilana Shabtay here, host of Inside Auto Podcast, where we interview top dealers, GMs, marketers, entrepreneurs, and thought leaders in and out of the automotive industry. Before we introduce today's guests, this episode is sponsored by FullPath.com.

FullPath is automotive industry's leading customer data and experience platform, CDXP. FullPath enables dealers to turn their first-party data into lifelong customers by unifying siloed data sources and leveraging that data to create exceptional, hyper-personalized customer experiences. To learn more, visit FullPath.com.

Today we have a special guest, a fellow dealer marketing expert, someone who I've been in touch with over email and over LinkedIn message for quite some time, so I'm very happy to have him here on the podcast. We have Steve Schmidt. Nailed it. Nailed it.

There you go. Hey, Schmidt and Schmidt together. Welcome. How are you doing?

I'm doing great. Really excited about today. Like you said, we've been running in similar circles on Dealer Marketing Magazine and our expert roles in contributing to that. And really excited to sort of bring those two worlds together and have today's conversation.

Appreciate the opportunity. Yeah, I'm excited for this. This is a long time. We were supposed to have you on quite a bit ago, so I'm happy we're doing this.

And for those of you actually watching, I know most people listen to the podcast, but Steve has a really cool Kamsa in the background, which is kind of like a good luck Middle Eastern symbol. Very into that. Yeah, for sure. Pretty cool to see a part of my home in your background.

I love it. I've been lucky enough to spend a couple of weeks in Israel and Tel Aviv, and it was a trip of a lifetime. And that's a present from some of my fellow former colleagues in there. Yeah, I cherish it.

Thank you. Thank you. So really quickly, just to introduce you to the crowd here, whoever is listening, Steve is an automotive client partner responsible for the services Axiom delivers to a portfolio of automotive clients. He previously led automotive strategy for the company.

He has approximately 25 years of automotive experience, including prior roles, leading the Automotive News Research and Data Center, hosting the Daily Drive podcast, and leading marketing globally for Deloitte's automotive practice. So lead teams, lead research, expert in automotive consumer trends. We'll hit on all of that. Very excited to have you and also learn from a fellow podcaster.

So welcome again. Oh, absolutely. This will be interesting, being on the guests. Yes, I love it.

So let's start with just how you got into automotive. And I know approximately 25 years, you've probably seen the evolution of automotive, which is exciting, and the adoption of technology and how consumer trends are changing, which I know is kind of your specialty. So how did you get into the industry? Well, this will be an interesting story, and I'll sum it up in one sentence.

I followed a girl to Detroit, and next year we celebrate 25 years of marriage. So it was a good decision. Well, thank you. But ultimately, that's what brought me to Detroit right after college.

I actually left. Yeah, I was going to say, those years are matching up. Yes, for sure, for sure. I left where I went to school at on graduation day and was lucky enough to land with an automotive supplier shortly after that.

Spent five years there, then went to Deloitte, spent 17 years there, as you mentioned, Automotive News, and now with Axiom. And so it's been a really interesting journey. I think I've been blessed enough to operate in the industry from a number of different perspectives, certainly from the supply base, from a consulting professional services point of view and strategy point of view, the news piece of it, and now doing client service and strategy for Axiom in the auto space. So I've really enjoyed it.

And I got to tell you, it is right now, I think, at a very exciting time for OEMs, for dealers, mobility companies. It is really exciting time for those of us in this business. Yeah, I agree with that. And can you tell us a little bit at what Axiom does for those who aren't familiar?

Sure. We are essentially a customer intelligence company. We've been around for 50 years working with consumer data. We actually hired the first chief privacy officer in the United States ever.

And we've been working with data about people and how to use it ethically and how to use it in a way that protects their privacy, et cetera, for a very long time. So today we sit on about 260 million marketable consumer records in the United States. We've got strategic partnerships with Salesforce and Polk and Adobe and so forth. And really, we are at the center of helping brands understand data about customers and prospects and helping them really create some personalized customer experiences using that intelligence we know about or we're able to glean from people.

That's cool. Is the data layered onto their CRM or it's a completely system and they kind of have to be side by side? It is actually very flexible. The data does stand alone.

We have our own identity graph that we can incorporate into a number of different platforms. Right now some of our identity solutions are actually native inside of Adobe They are native inside of platforms like Snowflake And so we do offer solutions that are integrated native inside of these platforms but we also provide solutions that just focus on the data primarily. And I have to say that particularly about when the conversations we've had with dealers, we've run into this sort of yin and yang, right?

Where do I start confusion? And for us, what we found is there's a lot of value in demonstrating, first off, what kind of insight, what kind of opportunities come from better, cleaner, more enriched data. And the sense is that as dealers start to see that and understand that, certainly that's similar to some of the trends that we're seeing overall in this industry. For us, we have found that's the place to start because it's easy to understand.

It generally doesn't take a massive investment like IT systems certainly take that big revenue sort of investment as well. We have found that focusing first on the data has been pretty, I think, eye-opening to the folks that we've spoken with. Yeah. And, I mean, you focus on data and trends, you know, quite often.

And I know you recently released the CX Trends for 2025. It's a report that you guys work on where you're reporting on where consumers are going. And it's, you know, how we should be marketing to consumers and what's going to change or what are we seeing in the patterns that are going to stay. Can you talk a little bit about that report?

I know it was recently released, so it's fresh. What are some of the things we're seeing? What should we look out for? Me as a marketer, I'm very interested, and obviously I'll try to get my hands on this, but if you can share some of the secrets with us here on the podcast.

Yeah, absolutely. So really five trends emerged from this year's study. One was the power of luxury and loyalty and what everyday brands can learn about that. I want to dive a little bit more into that one.

Others that prevailed of the five trends, balancing technology with that human interaction, certainly something very important as a lot of different brands and companies begin to experiment and scale their investments in AI. A trend around fandom and community, this sense of belonging, which was interesting. That was a theme that came up in a conversation I recently had for Dealer Marketing Magazine with Karma Automotive's president and CEO. And so talk a little bit more about that.

He also talked a little bit about those lessons learned from luxury. Trend number four was this inclusive product and service design. So being able to create experiences wrapped around the product, but also the services associated with that project. And finally, in an area that I think is extremely important in the business of moving people from one place to another, and that's his notion of having transparent data exchanges.

So five themes, balancing technology and human touch, this importance of fandom and communities, lessons learned from loyalty and luxury, inclusive product and service design, and then transparent data exchanges. And I think there are a few of those themes that we can talk about in our conversation today. Yeah. Yeah.

And I think it's interesting the transfer and data exchanges, just given our year and the focus that Automotive will now have on security and data. And it's kind of interesting to hear. I know, again, this survey, if I understand correctly, you're speaking both to business owners and to consumers. So you're kind of getting the full picture on what we're experiencing from running the business side, but also as a shopper, as a consumer.

So on the security side, I'd be interested in understanding a little bit more what you guys explored. Again, mostly because I feel like this is a topic that Automotive is going to work through for the next year. They're going to make sure that they have everything in place, but also how can they do that while also keeping the highest targeting capabilities, et cetera. For sure.

Can you give, I mean, obviously you don't want to give everything away, but what were some of the conversations or topics that were coming up around that? Well, really, it is the importance, right? To your point, we've seen a lot of good tries, maybe some missteps when it comes around not only the privacy and the security, but we've also seen some missteps around consent and consumers sort of being surprised in terms of what they're sharing and what they're consenting to share, right?

And so I think from the report perspective as well, from an overall trends perspective, this notion of transparency in a data exchange, I think is important for the sense of creating that trust, creating that transparency, et cetera. And I think that's especially important for automotive dealers for a number of reasons, certainly when it comes to the sales side, certainly when it comes to the service side as well. What I think is an interesting sort of area as well is this notion of connected vehicle technologies that are also coming embedded in the vehicles that are showing up on these dealers' lots every day, right?

And so when you think about the sales perspective and this notion of transparency and consent, one of the themes in the report was this sort of gap between what brands feel their level of maturity is relative to consumer protection, data protection, consent, versus what consumers feel. There a bit of a gap there right Anywhere from a 10 to 15 gap between statements like do you feel we are doing enough to protect our consumers data Do you feel we are doing enough to be transparent in how we using the data in our privacy settings et cetera right And there's generally on trend a 15% to 20% gap between how businesses respond to that survey question and how consumers have responded to that survey question, right?

And so businesses tend to rank that a little bit more highly. Consumers tend to rank that, at least in our trends report in the survey, we did as part of the trends report a little lower. Ultimately, though, I think there is certainly from a data and a privacy perspective a need to do that to avoid the missteps and the consequences that come with those missteps. But there's also a consumer purchase and intent upside to that.

So about a year ago, we did a separate survey of about 1,500 vehicle owners in the United States. And we asked them various questions about the last time they purchased a vehicle. And one of the things we asked them are, what are those things when it comes to personalization that would most likely influence your intent to buy? And what are those things that would most negatively impact your intent to buy?

The one thing that did more than anything was allow consumers to set their own communication preferences. This is what I want to opt into, right? And that was the one factor that had the most upside in terms of positively influencing an individual's intent to buy from that brand. Now, when we talk about personalization and we're talking about making those sticky things, other things that we ask them were, what would happen if you got served up ads that spoke to your life's problems?

Or what would happen if you got served up ads that talked about the size and complexity and the size and the makeup of your family? Perfect real-world example. Hey, are you expecting a child? As an automotive marketer, that would, I think, naturally result in serving up ads on, hey, you're driving a coupe now, do you want a minivan, et cetera, something very natural to us, right?

And there are a whole bunch of signals for companies to look at those and serve up ads like that. Our research would show that if something like that, serving up ads that reflected the makeup or changing makeup of your family, number one, have the most downside in terms of I don't want to buy from that brand now that I've gotten an ad like that. It's that creepy factor. But on top of that, they have the least upside.

And so I think this notion of transparency. That's surprising to me. Yeah, it is. But is it because they feel like there was a breach of privacy or because of something else?

Like, is that where it's coming from? It's coming from, oh, like, they know too much or this is too creepy. This isn't a brand that I want to associate with. That's how we would interpret it, right?

And so I think as marketers, and we're looking at how you take data first, third party, how you take that premium fuel, right, and run it through a powerful marketing engine like the one that you have, the CXD or the CDXP that you have. Right. And that sort of harmonious relationship between the data, the fuel and the engine that powers the fuel. Yeah.

And even so, though, the sensitive messaging around it, which is, you know, to your point. Yep. For sure. For sure.

And so I think there's there are certainly that that was I found that interesting as well. I'm just surprised that in 2024 or this was last year or so, 2023 leading into 2024, that was the type of response that you were getting. I would imagine that that would be the response in 2017, 2016. I'm surprised that we're still there.

I get it. I understand the connotation or the association you would have with a brand like that, but I also would think that we would be in a different place as consumers. So that's really interesting. There is actually right now.

So you think about loyalty. Now you turn the page because what we also asked both in that survey back then and the report that we're talking about now that came out, this notion of loyalty. Consumers not only in the CX Trends study that was released, they are very clear. that says they will spend more time, more money with brands that offer them loyalty.

It's about 60%. About 80%, it's 78% of those consumers then further say, not only would I shop there, I deserve a loyalty program as your customer. And if you give me a loyalty program, 78% would also say that I will stick with your brand. Going to the transparency piece, et cetera, what do they want for sort of that stuff?

Are they willing to share their data? Are they willing to share different things about them? Our automotive consumer study suggests and shows that they will, but what they want for that are discounts. They want discounts for service.

They want access to exclusive events, et cetera, et cetera. And so I think there is a large community of consumers that are willing to give up data and be provided that they feel that they can control what they share. They have a voice in that consent. And I think that offers then brands an opportunity to lead with loyalty programs that will keep these folks coming back for more and more.

And I think in a dealer space there a lot of opportunity there Yeah and I also think with loyalty going down and I don know if this was actually proven in your study but with over time I would say we see loyalty going down to a specific brand. And with that, this can lure people back in. This is what I think auto brands need to do. They basically need to treat their customers as if they're influencers.

Absolutely. Treat your customers as if they're influencers representing your brand and you will keep them very close to you. Yep, absolutely. And, you know, you think about it now.

I've been like, you know, I've been in this industry for a long time, but I recall back to, you know, Ford's Fiesta movement where they actually gave the time camcorders, right, but video cameras to about 100 young people, gave them a car and essentially said, you know, record your experiences. Right. And the marketing team at Ford at the time, a guy led by an amazing marketer named John Felice, I recall him very clearly saying, we have given the brand over to the consumers. And at the time, that was a bit of an interesting notion.

But exactly what you're describing here, make them the influencers. What a pioneer move, honestly. I mean, let's look at marketing today. Yep.

Okay. Well, before we sign off here, and this is such an interesting conversation, thank you for joining. And I mean, really insightful. I want to hear a little bit about your predictions for 2025, not necessarily the CX predictions just because we spent some time on that, but for automotive in general, whether that's interest rates or EVs or inventory, where do you see the industry going?

What should we expect? What should dealers expect? What should software companies that work with dealers expect so that we can have a successful year together? So overall, I'm pretty optimistic on the year to come, right?

I think we're seeing interest rates start to come down. I believe consumer confidence continues to be high. Unemployment continues to be low. Certainly, there is some uncertainty heading into the early and the new administration taking over here in the United States.

But overall, I've got a sense of optimism that there has been a bit of pent up demand. And with the lowering rates, I think we're going to see a lot of people in the showrooms. I think that's going to continue to decrease. Do I, the rates will continue to decrease?

I mean, until they stabilize to pre- Yeah, maybe another, you know, another quarter percent or half a percent. I'm being so optimistic. Another percent? Like, can we?

But mortgage rates are already starting to come down. Housing prices, right, et cetera. And so these are going to be the continual signals that we see. I'm pretty optimistic also on electric vehicles.

A lot of people have talked about the notion of stagnation of electric vehicles, the cost, etc., etc. I think there's a number of different strategies that if you're a current hybrid owner, are there pathways to get them into an electric vehicle? Right.

Are they luxury buyers with multiple high value luxury gas powered vehicles in their garage, but now interested in perhaps adding a round round grocery go-order electric vehicles? And does that offer opportunities for some mass brands to put one of their brands in a garage that is crowded with luxury brands? I think there are a number of different opportunities from a sales perspective. But the other side that I think really a lot of people don't talk about are the investments that electric vehicles are making in terms of manufacturing facilities and infrastructure, et cetera, et cetera.

Because all of that translates into very high paying advanced manufacturing jobs, which puts more money in people's pockets. And so I think there is a piece of this as these manufacturing facilities that have come online. As we think about LA Auto Show last week and a couple of and a lot of the real reveals talking about those machines being made in the USA. I think those are all good economic signals that, you know, on the side of not only pent-up demand and lowering interest rate, also seems to me that there are some very good high-paying advanced manufacturing jobs, continued job growth in that area.

And I think that's going to put a little bit more money in consumers' pockets as well. So overall, I'm pretty optimistic about all of this. That's great. Well, we'll see how the year goes.

Yeah, absolutely. Let's talk again. Yeah, we'll talk again. We're right.

Yeah, we could do like a joint expert panel article. I'm sure Simone would love that. Yeah. Anyway, thank you so much for joining.

I'm so glad I got to finally get to know you. And I'm sure we'll continue to keep in touch. And I would love to see these predictions come alive. So again, thank you so much.

A great guest, Steve. And for our listeners here, if you enjoyed this episode, Inside Auto Podcast, you can find us on all your favorite streaming channels, InsideAutoPodcast.com. Thank you again, Steve.

Thanks for having me. Thanks for listening to Inside Auto Podcast. Check out our other episodes with top entrepreneurs and industry leaders.