How we came up with the idea for our pioneering online car sales business

Key and men shaking hands

The CarHerd website was launched in May 2012 to give car buyers better prices on new vehicles. Oliver Todd and Mark Heptonstall operate the business from an office in Horsforth in Leeds. Oliver explains how they came up with their business idea and got their latest venture off the ground 

"Mark and I had been business partners in numerous ventures for a few years and then in late 2011 we decided to look at the group-discount buying of vehicles.

"Basically, our business enables buyers of new cars to get the best discount on their purchases. Because we have a large number of buyers always looking for each model of vehicle we offer, we can negotiate discounts that are much better than someone can negotiate themselves.

"We were aware that the group-buying concept had been successful in many markets, so we started to look at which high-value assets this business model could be applied to and we arrived at prestige vehicles. We had potential customers who were willing to use us, but we thought the larger market of volume vehicles would bring better returns.

Testing business ideas

"We tested our concept in many ways before launching and we're still testing as the business continues to develop. We both believe testing your ideas is essential, because you shouldn't base your business on assumptions. You must be sure that your business concept and the ideas that follow are focused on meeting your customers' actual needs, not what you believe they require.

"As regards an online business, I believe the value of an idea can only really be measured once some sort of 'beta' site has been launched, so a sample of potential customers can actually see it and use it.

"Without firm proof of interest in your idea from actual potential customers, it's difficult to be certain about the value of your business idea. A valuable idea for a business is one that provides the customer with unique benefits, whether that's saving time or money or solving a problem for them. What you supply, whether that's a product or service, must be perceived as being worth more to customers than the actual cost of purchase and they must believe that they can only get those benefits by buying from you. 

Unique selling proposition

"Our key USP is we're able to secure never previously seen discounts for the new car buyer through the power of collective bargaining. We've positioned ourselves as the first business to exploit this concept in the new car market. Perception is very important and our consistent marketing message backs up this position. 

"We tested our idea with a minimal viable product, which enabled us to build up some customer interest. Then we began to talk to those customers about their specific requirements, which meant we were then in a position to get our website created. A platform was built to allow customers to join specific groups for the vehicle they required, which we then started to negotiate with dealers on.

"We used a web agency to build our website and paid slightly less than £4,000. It took about two months to get to a stage where we were happy to launch to an initial set of customers. The site has quite a complex back-end, which we thought was worth investing in from the start. Since then it has been developed each week, as we learn what can add to the customer experience.

Motoring ahead

"Since launching we've been bowled over by how well the business has been received by customers. In the first month, more than 200 people registered their request for a new car discount. We're constantly testing and tweaking our website and how we market it, including analysing results so we can get better. Saying that, we regularly achieve conversion rates that are way better than the industry standard.

"CarHerd is still fresh within the new car market and we're still testing and tweaking our service. We're growing our customer base and network of partners naturally, but plan to invest in expanding our offline marketing activity within the next few months to see if that can also help us to attract customers. You have to explore all viable options."

Oliver's three key pieces of advice

  • "If your goal is to create a company that can grow significantly – as opposed to simply generate a wage for you – you must look at markets that are large enough. Study the size of the market and find out how much competition you will face."
  • "Once you've found a large enough market, work on how you will set yourself apart. Aim to be unique. You must be special."
  • "If you are looking to create a successful business that can one day run without your input, your business idea must be scalable and sustainable."