An Interview with Larry Dorfman

For Larry Dorfman, chairman and CEO of EasyCare, everything started in the 1980s, with the desire to help people have a better automobile ownership experience. The company was created because Dorfman hated getting his car serviced – he hated the process of it, and thought a third party could help. So service contracts just made sense to him. The EasyCare brand was purchased in 1987, and they began using the name nationally in the early 1990s.

“A consumer buying a car is spending a lot of money,” noted Dorfman. “It’s one of the biggest purchases they make, and it ought to be fun, and something they enjoy doing. We want to change the perception and reality of interaction between the customer and dealer.”

That desire to create a better experience is what still drives EasyCare today. The company places an emphasis on training its dealers on how to create the kind of atmosphere customers want to participate in. “The person buying the car should have a great time, and help the dealer make money,” Dorfman said. “Any other item you can buy anywhere is marked up – the dealer is entitled to make money, and customers understand that. So if they love the car, and they feel like they were treated well, then they feel like they got a great deal, and they’re happy.”

Dorfman sees agents as a key element in that strategy. The company currently works with 14 agencies around the country, with the “youngest” working with the company since 1999. However, in the near future, he noted, EasyCare is planning to open up new territories where their products aren’t currently represented. His strategy was, and remains, to find a single agent in each territory, offering them exclusivity. He prefers to build the company slowly over time with those relationships, rather than flood the market.

“In my opinion when two agents have the same product and are calling on a dealer, it lowers the value and integrity of the product,” Dorfman said. “So we stayed reasonably sized and are doing pretty well. Could we have been bigger by putting multiple agents in the same territory? Yeah, sure we could, but I was the ‘traffic light’ on that one. From a branding image perspective, we want to have one person in an area offering it at a high value.”

What is he looking for when it comes to new agents and new territories? “We look for people who are interested in developing the business while remaining focused on the dealer and consumer experience,” he explained. “We take a structured, holistic approach to the dealer. Most dealers have six product/volume centers, and we try to generate profit for them in every one of those, and the agents participate with us.”

Dorfman has focused on one area in particular, where both his dealers and agents are seeing benefits – the service drive. “That’s a tool most providers don’t offer,” he said. “We spent hours in service drives when we started, offering service contracts to customers. We faced challenges in the beginning, but our processes are working extremely well today because it's a win for the dealer and the consumer. And agents are participating, and getting paid for it.”

Video is a big part of that strategy to help build the service drive as well. Covideo by EasyCare is used by dealerships to do more than just call a consumer and tell them “we found a problem.” Dorfman noted that using the service to connect with that customer, and then show them the problem, has done wonders for all aspects of the dealerships he works with.

“In that ‘we found a problem’ call to the consumer, the first thing they ask is ‘are you sure’ and the second is ‘what does it mean?’ Now a service manager can even use their cell phone to create a personalized Covideo showing the customer what needs to be repaired via e-mail or video text, then follows up with a call after that. The average closing on the call jumped from 44% to 81% just using Covideo. It’s believable, and builds trust,” Dorfman noted. And that trust, he has found, extends beyond the service department. His agents have reported that offering this service has gotten their foot in the door with new dealers, which then leads to the “what else do you have” conversation.

“What if you can go in and increase their service business by $20,000 per month at the average dealer?” asked Dorfman. “What if you can then help them close more Internet sales? We believe you can’t ask for more from a relationship than the time and effort you put into it, so we have developed a lot of value-added options we can bring to dealers and agents. We’re not trying to just get their business; we want to bring something different and unique to the relationship.”

Another area he believes is key is compliance, especially around finance plans. He believes that reserves are going to start to decline – they won’t disappear, and it won’t happen overnight, but he does believe they will flatten out, and stay that way. The key, he noted, and what agents need to be helping educate dealers about, is to make financing through the dealership the method that makes the most financial sense for the consumer.

“But when we try to make our money on reserve, we lose all the confidence when the bank calls [the consumer] and says they could have financed for two points less. We’re not making them trust us,” said Dorfman. “Now compare that to a customer who buys products such as key replacement, GAP, service contract, etc., and sees the value propositions. I see no value in reserve other than to pump up the bottom line; making a half point or a point on finance is fair, but making $400-$800 on a reserve did not add value to a customer’s purchase and leaves us open to possible discrimination. Even though tiered rates and pricing is not an issue related to race, sexual preference, etc., and has to do with their credit rating, the variable makes us look bad. This is why it’s going to go away, and anyone working with dealers needs to teach them to focus on value-added benefits.”

At the end of the day, it’s all about the customer experience. Dorfman believes that technology and changing consumer needs will have a strong impact on dealers, with those who find ways to balance the new with the traditional are setting themselves up for success far into the future.

“I think there will always be traditional dealers, and that’s not bad,” Dorfman said. “But as more new customers come to the market, they want to get in and out; part of doing business will be how smoothly you can make the transaction. It has to feel like going to an Apple store, where anyone can take care of you. It is a totally different experience than car buying, and those dealers who are able to create a personal connection while rolling out new technologies will have an advantage. In the next 2-3 years, I believe the whole finance department is going to change. There are consumers who want to spend dollars in the finance office, but we need to get better about building the value and letting them select the products.”