Carcode’s Prize-Winning App Allows Customers to Text Car Dealerships

3/25/14Follow @XconomyDET

It’s an auto industry pain point that might seem simple: How do car dealerships communicate with potential customers through text messaging? A startup called Carcode based in Seattle and Ann Arbor, MI, thinks it has the answer, and its solution won the grand prize last month at a hackathon sponsored by car-shopping website Edmunds.com.

For younger car buyers, “our research shows a lot of them prefer to text dealers with questions,” says Carcode co-founder Steve Schwartz. “Most dealerships don’t have that ability. Do they buy a cell phone and leave it in the sales office? Give out the sales manager’s cell phone number? What happens when that sales manager leaves for a new job?”

What Carcode has created is an app called Carcode SMS. It gives dealerships a local number to use for texting. When texts come in, they are read by the Carcode software and assigned to salespeople, who can then respond through the app while the customer is sending and receiving texts normally. The calls can be assigned to specific salespeople in order, or round-robin style. Carcode software also detects key words and integrates them into the dealership’s CRM system.

“From a customer’s point of view, they don’t think about it,” Schwartz says. “What we hear all the time is, ‘I can’t already do that?’ But when you’re in the industry and you see a study that says a significant number of people want to be texting instead, it’s a really obvious thing.”

Carcode is a niche startup in the emerging texts-for-businesses sector. There are companies like HeyWire and Seattle-based Zipwhip, which allow businesses to send and receive texts from a landline, making a similar play to Carcode—though Carcode’s industry specialization and CRM integration could increase its chances for success. Interestingly, Carcode’s auto industry-specific app is gaining traction as some online car sales platforms—the recently shuttered CarWoo comes to mind—seem to be struggling. Perhaps customers want face-to-face interaction with car dealerships early on, but then want to manage the relationship through texting.

Despite industry uncertainties, Carcode is pressing forward. Schwartz found out about Edmund’s Hackamotive event through his father, who is an automotive consultant. The three-year-old company participated in the three-day event in California and walked away with the top prize.

At the time of the Edmunds competition, Carcode was already making revenue thanks to an earlier product it created called Carcode.me, which puts QR codes on new and used cars that customers can scan to find out all of the car’s pertinent information, such as cost, options, and Carfax report.

While Carcode.me was originally intended to help customers shop after hours or without pressure, it has evolved into a tool that car salespeople use just as often to get information when they’re standing next to a car with a customer. That got Schwartz and his co-founders thinking of other ways they could help dealerships.

The Carcode team is now up to more than 15 people; the three co-founders met because they all collaborated on past software development projects. The company’s ultimate goal, Schwartz says, is to change the way customers interact with dealerships on the phone.

“I think we have a huge competitive advantage being based in Seattle and Michigan,” adds co-founder Nick Gorton. “It helps us stay on the pulse of the industry.”

Sarah Schmid is the editor of Xconomy Detroit. You can reach her at 313-570-9823 or sschmid@xconomy.com. Follow @XconomyDET

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