Based on an interview with Paul Smith, Director of new dealership key management market leader Traka Automotive
Q1: When did you establish eTag Solutions?
A1: I created eTag in 2001 having spent over seven years at Ford Credit.
Q2: How did you spot this market opportunity?
A2: I had worked at the captive finance house Ford Credit and my co-founders also had an intimate knowledge of the dealership world. We saw a need for key management systems at dealers, originally to help the finance company track the vehicles they were funding rather than sending out expensive auditors to count stock! We realised that it was far easier to track keys than cars and that the benefits of a key system were actually greater to the dealership itself and so eTag was born.
Q3: What was the trigger/stimulus to go it alone?
A3: Interestingly the stimulus to go out on our own was following a meeting with Traka in which they understood our objectives and were very supportive about us becoming a distributor for their key cabinets: which were streets ahead of the competition then, as now. They also agreed to give us an ability to integrate our software with their cabinets so the two could work together seamlessly. We then knew we could offer a complete solution to dealers that could afford the combined systems
Q4: What growth were you able to achieve during this time? What size did you reach?
A4: Almost immediately after we struck this partnership agreement with Traka, we won a contract to supply nearly 40 Mercedes-Benz (then Daimler-Chrysler) dealerships with eTag and Traka systems. That took us over 18-months to complete and took our sales over £200,000. We grew at a rate of 15-20% year on year after that. Last year our sales exceeded £500,000.
Q5: How many dealerships and what percentage of the dealer market in the UK did you grab?
A5: We were able to take a 40% share of the Mercedes-Benz dealerships, nearly 30% of BMW group dealerships, just over 20% of Porsche dealers as well as some others including Essex Auto Group.
Q6: Why were sales limited to prestige dealerships in the main?
A6: The dealerships that tended to invest very quickly were those that saw the most obvious ROI and these were naturally those with lots of high value stock, operating large sites, big workshops, complex locations with multiple buildings or locations and managing large car parcs where a single loss through theft could cost the business far more than the capital expenditure of a large key management system
Q7: What are the key advantages of bringing Traka and eTag Solutions together from the customer’s point of view?
A7: Principally dealers now know they have a one stop shop for the very best all in one key management system for automotive. We have the best hardware, best software, best support and domain knowledge of this market. We can offer flexibility around terms of business including leasing of hardware and subscription-based software licensing and IT support. We are quite simply the only viable key management solution for the whole UK dealership market now.
Q8: What does eTag’s know-how and software bring to Traka?
A8: Collectively we have over 100 years of automotive experience within the management team and senior level contacts with more than 2,000 senior decision-makers in the UK dealership world. We have spent more than 14 years understanding dealers, how they work, what their problems are and developing, enhancing and fine-tuning our software accordingly to make it easier to use and give it increased functionality to guarantee multiple benefits to dealers and deliver ROI in as little as three months.
Q9: Why has a separate division called Traka Automotive had to be established?
A9 Setting up Traka Automotive is a strong statement from Traka that, for the first time, it has a dedicated division led by me which is solely focused on this market. This focus is valuable and Traka knows that it is important not to dilute this domain knowledge but instead concentrate it in Traka Automotive. Automotive is a very complex market sector.
The key management problems experienced by dealers are very different and more difficult to resolve than in other industries. The responsibility for managing keys is cascaded to everyone in the business and it’s impossible to manage these at a transactional level.
Any system therefore has to fit the path of least resistance wherever that may be in the dealership whilst being compliant with management objectives. This is a very difficult target to achieve. We do not believe this can be achieved by any other solution which is why we call Traka Automotive’s key management solution ‘The only viable key management solution for automotive dealerships.’
Q10: What are the advantages of this for existing and future customers?
A10: For existing eTag customers they will see no immediate change. Traka hardware customers will get an opportunity to very easily upgrade to eTag software to help them optimise legacy investment in Traka hardware. All will gain the benefit of an enlarged technical and sales support that remains wholly focused on helping them grow their business through better management of keys. We can get you in a position where you are making money from keys – not losing it.
Q11: Will it mean a larger investment in R&D by Traka?
A11: In time, we will get access to additional R&D as we plan global expansion as changes will inevitably have to be made in the underlying IT architecture of eTag to enable us to take it globally.
Q12: If so, what development(s) are in the pipeline?
A12: In addition to redevelopment for global deployment we will also be adapting the system to meet the needs of non-dealership businesses which are processing lots of vehicles and would benefit from better key management. We also have a smartphone and tablet front end coming later this year which will be particularly helpful to those businesses running with Car Park Attendants or Logistics staff working outside.
Q13: What is average cost of a system post-acquisition?
A13: It is possible to use our leasing and monthly subscription models to run a new 100-key system for as little as £32 per week which would give instant payback in terms of improved customer experience, security and productivity.
Q14: How can eTag interact with other systems such as Dealer Management Systems and is this likely to be valuable?
A14: eTag already integrates with most major DMSs. This is of particular value during system set up and day to day usage because we can pull vehicle inventory information through to the key management system without to avoid manual data entry when creating key records.
Q15: Why did Assa Abloy decide to purchase eTag – a small company relative to its own size and acquisition history?
A15: eTag works! It is proven, well-loved and delivers value to our customers. We had a strong and growing share of the prestige sector. From focus comes dominance: our domain expertise, reputation and contact book give Traka a significant springboard for dominance of this market in the UK in the next few years and globally given a few more years.
Q16: What is the predicted growth percentages in the next 12-month and beyond?
A16: We should achieve more than 100% growth in 2015 and close to the same percentage in 2016. But what is more important than explosive sales growth longer term is having a happy client-base that will come back to us for expansion and enhancement of their key management system once it is showing positive benefits for them.
Q17: How has the transition from running your own small software business to being part of a global multi-million pound operation been?
A17: To some extent it’s been ‘back to the future’ for me as I started my career in one of the largest companies in the world - Ford. The key is that we are both laser-guided in our focus on the UK dealership world and being the best key management provider for this market. It’s great to have a larger team around me now to make that vision attainable.