CarGurus, Inc. (NASDAQ:CARG) Q4 2022 Earnings Call Transcript

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But to give them the opportunity to buy their way into higher-value programs. And if not, put them into a program where they may see less volume or less activity and then give that opportunity for next dealer to take their slot at a higher value program. So, we’ve developed these new packages and it allows us to get that flexibility to grow QARSD and help our dealers see the value and if they’re willing to pay for performance go there. We’re doing this in our early stage in December and have added capabilities. We’ve got a product called Lead AI, we call. It’s one that allows dealers to focus on the most engaged shoppers on their platform and hit those first, so helping dealers convert more of their consumers coming in to close sales. And so by doing so, we’re finding more and more features and capabilities to drive the dealers into upper level and higher paying premium packages.

We’ve always had great success with our featured sponsored listings. And so that’s an opportunity, again, for dealers to take advantage of getting to the top slots and paying more. So, we’re doing this more deliberately. We’ll be more aggressive as we head into 2023. And we’re also selling new customers at a higher price point. Now that’s something that’s been important to our overall effort in the marketplace business. If we know, as Jason said, we have the highest ROI program in the market, and now we’re adding Digital Deal to that. We have the opportunity to raise Digital Deal pricing, which we’ve done in 2023. And so, these are opportunities where we are going to be more aggressive, to your question on strategy, going forward.

Operator: Our next question comes from the line of Ron Josey with Citi.

Ron Josey: Maybe two quick ones. And Sam, this is more of a follow-up on what you were just asked and talking about with Digital Deals. Now that we’re pricing, call it, more in line with greater conversion rates, are you — talk about just the go-to-market strategy on Digital Deals. In other words, are these included in those packages for renewals or Digital Deals front and center? How are you thinking about marketing them specifically now that we do have firm conversion rates and more insights on pricing would be helpful. And then Jason, just on process here, any update on CFO progress would be helpful. Thanks, guys.

Sam Zales: Thanks, Ron. You’re asking a great go-to-market question Digital Deal. We’re really proud of those results. We mentioned in the opening remarks of 2 times and 3 times and even more close rates and for our dealers that we’re seeing the results within using IHS data to get us there. That will compel us to be more aggressive. We’re selling it on a standalone basis in some respects. So you go to a dealer and you say, you have an opportunity as Jason just said, to get X percent of your leads now closing at a much higher rate or already at a market high. Here’s the price point. So we’ve raised that price point from what was and $250 and $200 depending on the market segment and inventory size to $500, $400, $300, a much higher price point on their way in.

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