CarMax aims to up its customer experience under new CEO

CarMax CEO Keith Barr has a simple mission: Get consumers to purchase a car with fewer clicks.

Barr, who recently joined the auto retailer from IHG Hotels & Resorts as CEO, laid out CarMax's early plans for removing friction from its omnichannel approach.

"On the surface, hotels and used cars may seem different, but at their core, both businesses succeed by delivering the right product at the right price in the right way for the customer," said Barr, who noted that CarMax's recent fourth quarter earnings didn't reflect the company's potential. CarMax said it sold 303,969 vehicles in the fourth quarter with a net loss of $120.7 million on revenue of $5.95 billion. Omnichannel sales were 70% of revenue with online-only sales representing 13% of the total in the fourth quarter.

Barr outlined three key themes. First, CarMax will offer competitive prices for used vehicles, provide access to a broad range of vehicles and provide a differentiated customer experience. CarMax will also optimize its processes behind reconditioning, inventory, pricing and marketing because they all play into omnichannel sales.

"We will use technology to drive more differentiated experiences and efficiencies. We'll use software, data and AI in practical ways that make it even easier for customers to buy and sell cars and easier for our associates to serve them. That means reducing friction across the journey, personalizing the experience, improving how we match inventory and pricing to meet customer demand and ensuring a great experience both in our stores and online," said Barr.

Barr said at IHG his rallying cry revolved around reducing friction. CarMax needs to do the same thing.

"If it takes us 6 clicks to do something, how can we make it 3? What are the things that really matter most to customers and really understanding that end-to-end customer journey, both online and in-store and how we can streamline those processes. So that's going to be one of my main focuses in the omnichannel experience. It is just streamlining the experience and really making it easier for our customers," said Barr.

The trick for CarMax is to offer affordable vehicles, improve the experience and make up margin on efficiency. "Becoming a more efficient business and lowering SG&A doesn't come at the expense of a great customer experience. You can actually improve quality, leverage technology and become a more efficient business at the same time. And I think that's what we're going to be very focused on," said Barr.

CarMax has restructured to cut $200 million in expenses by the end of fiscal 2027.

He added:

"The team right now is incredibly focused on the customer experience, particularly in digital and understanding how we can more efficiently move customers through the funnel, reduce friction. If it's taking us 10 clicks to do something, how can we do it in 7 or 5, really understand what are the features and benefits that matter most. And so really making sure that we're driving customer acquisition, but then also more effectively moving customers through this experience, both online and in the stores."

To improve that experience, CarMax is going to rely on core vendors UserTesting and Figma. CarMax is using UserTesting's portfolio to test the website, landing pages, mobile apps and user journey. CarMax's use of Figma has also been documented. CarMax is also a Salesforce customer.