People sell cars differently in Germany than they do in the United States.
Johannes Gnauck recognized some of those differences soon after arriving in Florida in 2005 to complete his Bachelor’s degree at Northwood’s campus there. He understood the differences more fully when he returned to his native land to begin his sales career at a German dealership. And he capitalized on that understanding in 2012 when he and a partner launched a start-up company that uses big data technology to boost vehicle sales.
That company, automotiveMastermind, was ranked by Inc. magazine as the seventh-fastest-growing company in America in 2017, and the second-fastest-growing software company. The company’s clients include more than 1,300 dealerships across the country. Income in 2016 was $23 million.
Gnauck doesn’t claim Germans do it better. He doesn’t claim Americans do it better. And he doesn’t claim computers do it better. But it seems that combining the strengths of all three, along with a healthy dose of ingenuity, can produce outstanding results.
“What I decided to do was take a step back. Think outside of the box. Understand what the sales process was all about,” Gnauck explained. “While the vehicles might be engineered in a very sophisticated way, the sales process isn’t. You could walk into 350 dealerships, and every single one will have a different sales process.”
Gnauck’s quest to understand that process began back in his college days. After earning his Bachelor of Business Administration in Automotive Marketing and Management at Northwood, he spent several years working in sales for Mercedes-Benz in Stuttgart, Germany.
“I decided to take the toolkit I had and become a master of selling cars,” he said. “Selling cars is actually a career in Germany. You don’t just walk in off the street and start selling cars like they do in the U.S. They take it a bit more seriously over there. You have to get certification. You’ve got to study law and finance and taxation.”
Looking to expand his advancement opportunities, Gnauck applied for a job at the company’s American flagship dealership in New York, striking up a relationship with the sales manager, Marco Schnabl, also a native of Germany. Among their many common interests was a fascination with the sales process, as well as a thirst for developing ways to improve it.
“I was inspired by the passion and the culture and the entrepreneurial spirit in the U.S.,” Gnauck said. “People in the U.S. are more risk-takers by nature. Sometimes I think people here want to fail, and they want to fail as quickly as possible so they can learn from it. With that kind of attitude, you always are set up for success.”
Another thing Gnauck observed was that automotive salespeople had access to an increasingly massive pool of data about potential buyers, but they had neither the time to gather it all nor the expertise to interpret it. So Gnauck and Schnabl decided to do it for them, developing a sophisticated algorithm that produces information that helps automotiveMastermind’s clients sell more effectively.
“Marco and I run the company as co-CEOs. I lead our product, engineering, and data science teams; Marco focuses on the commercial and business side – a big part is focused on helping our dealer partners to fully leverage the platform,” Gnauck said. “A year and a half ago, we had 70 employees. One year later, we had 250 employees. We are in a hyper-growth stage. It’s a great problem to have, but it’s not easy.”
The success of automotiveMastermind led to the company being acquired in 2017 by IHS Markit, a Britain-based company whose holdings include CarFax and the Jane’s family of military information publishers. Now, automotiveMastermind is a subsidiary of a global enterprise with $21 billion in market capitalization.
“It was kind of a too-good-to-be-true, strategic market fit,” Gnauck said. “Our behavior prediction technology will be exponentially richer by leveraging the wealth of IHS Markit data assets.”
Here’s how it Works
The products offered by automotiveMastermind are based on a proprietary algorithm that uses more than 1,000 data points to generate a ranking between 1 and 100 for each potential customer. The higher the ranking, the more likely that customer is to buy a vehicle soon. It also forecasts what will motivate each customer, which helps salespeople to steer their efforts in productive directions. Clients who use the technology report average advertising costs per sale of $128, compared to an industry average of $632.