Internet Insider Series: Why Trade Me Partnered Up With AA (and How It Will Change The Way You Do Business)?

Imagine building a business with more than 1.2 million members (or customers) paying $89 a year. Imagine that same business being seen as the ‘people’s champ’ or authority within your industry.

Well, if you’ve ever considered creating an exceptional company but always wondered what the secret sauce was, you need to read this and see how a fledgling car club grew to become one of the most recognised brands in New Zealand.

From small beginnings as the Auckland Automobile Association, first motoring association established in New Zealand in 1903, to an incorporated society that as of 2008 had more than 1.2 million members nationwide, the New Zealand Automobile Association has done pretty well for itself.

One reason why the New Zealand Automobile Association (also known as the AA) has been so successful is its move to add more Motoring services to its existing offering, following its merge in the ‘80s. This was done through joint ventures, business partnerships and franchises in the ‘90s and saw the proliferation of several well known services:

  • 24/7 Road-Side Assistance
  • Vehicle Testing
  • Driver Training

Product and service expansion wasn’t just within Road and Motoring Services either. The AA also fingers in the Tourism, Insurance and Finance pies. This included offering everything from comprehensive car insurance to AA branded street and tourist signs across New Zealand. The benefits for the AA were that it helped to not only increase brand awareness to future members but also its service offering to current members. This made it harder for competition to enter the market with similar products.

If that wasn’t enough, the AA is also a major contributor to the Bi-Annual ENERGYWISE Rally and the mastermind behind the Annual AA Motoring Excellence Awards. This has seen the AA become an Authority figure or spokesperson for the average motorist and a weighty one at that when it comes to Motoring affairs, respective to both government and industry.

As history tells us, this is why the AA was such a key strategic partner for Internet giant Trade Me and its Motoring Division. But brand strength alone was never going to be enough. The offering of a relevant complimentary product or service to its online auctions, however, was and that product was the AA Pre-Purchase Vehicle Inspection Report.

What Is A Pre-Purchase Vehicle Inspection Report?

According to Stella Stocks, General Manager of Motoring Services, the AA Pre-Purchase Vehicle Inspection is a mechanical inspection for people looking to buy vehicles. Some of the differences between this inspection report and other products available on the market are that it is:

  • Electronically completed and delivered instantly via email
  • Accompanied by a phone call from the qualified mechanic who completed the report.
  • Inspected either on-location or at an AA Station

Stocks believes that completing every report on a digital platform ensures both consistency and efficiency. This doesn’t, however, detract from the need for a customer to speak one-on-one with the mechanic and raise any further queries not addressed within the report itself. Coupling these two benefits with the fact that an inspection can be carried out on-site without the need to go into a service station and you have a very strong USP or Unique Selling Proposition.

Stocks had this to add when asked about other factors that benefit AA customers, “Other factors include our brand integrity and only hiring fully qualified mechanics. They are regularly trained and must have industry experience.”

Automobile Authority partners up with Web Authority

Now Stocks, herself, is no stranger to a little ‘industry experience’. As General Manager of Motoring Services, her portfolio includes Vehicle Inspection, Servicing, Repair and Testing, in addition to Technical Advice, and the AA Driving School. In fact, Stella negotiated the AA/Trade Me partnership, first with Sam Morgan in mid 2000 before dealing mainly with Mike O’Donnell, then Head of Operations at Trade Me.

These negotiations took place from 2000-2002 and, for AA at least, were a direct response to a market change where more people were prepared to buy vehicles ‘sight unseen’. This means buying a vehicle online without actually viewing it themselves. Stella is of no delusions that Trade Me was a direct proponent of this shift, effectively turning average car owners into ‘Online Dealers’. This made it crucial that AA get in early to solidify its position for Trade Me members.

This had a profound impact on the Car Dealer industry as well with owners now seeing greater convenience in selling their own vehicles on a platform that was simple to use and easy on the wallet. As a result, Trade Me would deal a significant blow to the Car Dealer market dropping its market share of Annual Used Car Sales from 70% in the early 2000’s to 23% at the time of this article.

What Is The Next Trend Just Over The Horizon?

A new trend that has developed in recent years is that vehicle inspection report customers are now requesting more information. While AA endeavours to provide a greater amount of detail, there is visible demand for more. “The bottom line with customers is that they want you to tell them whether they should buy the car or not. Now that’s not our job so it’s how we can structure our reports to give them as much information as possible”, says Stocks.

This shows us that people are more willing to rely on the reports as a key indicator on whether a vehicle should be purchased. This provides added opportunity if AA can increase awareness of its Pre-Purchase Vehicle Inspection Report product, nationwide.

How This Changes The Way You Do Business?

I’ve spent a great deal time talking about AA and why it was a great choice for Trade Me in finding an Automotive Authority who could increase the value of Trade Me’s own service offering. When you boil it all down though, it comes down to two important points:

  1. AA is an, if not the, Authority in its industry.
  2. AA had an open-minded approach to Joint Ventures and Business Partnerships.

If either one of these truths were lacking, its certain that AA would’ve lost big time, adding themselves to the Trade Me ‘Shame On You’ List. The most well known of these companies was Telecom. In the early years after being told by Trade Me’s Director that its value was ‘$10 million’, the Xtra head laughed Sam Morgan out of the room. Only a few years later, Telecom’s chief financial officer, Marko Bogievski, would offer $50 million for the company. Sam recalls “I laughed them out of the room. That felt good. Damn good.”

AA could’ve looked at Trade Me as something to be feared but they knew the market was changing and saw the value in partnering up early on. The rest is well, history. The moral of the story is that there are better opportunities for those who bring value to the market place. This should act as a measuring stick for companies struggling to compete in today’s market where most businesses only know how to compete on price. Becoming an authority and forging powerful partnerships will be the difference between your business struggling, day to day, in never-ending price wars and enjoying the freedom offered in a market that always favours those who work smarter, not harder.

The only question left to answer is whether you are prepared to do the work necessary to become an authority in your market and build powerful business relationships. Leave a comment to say what industry you’re in and how you’ve positioned your business to be different from the rest.

If you think you’re business is the exception to this rule then why, in 1-2 sentences, would such a focus never work for you?

Over the next two weeks, I’ll drill deeper into these two keys for building a stronger business, so subscribe to my feed to be notified as soon as it’s live.