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Wednesday, June 3, 2009

New AAA Arizona CEO Foucuses On 'Peace Of Mind'

Here's the story from

Michael Tully's new job has him selling "peace of mind" to 800,000 Arizonans.

The former financial officer for AAA Arizona took over as chief executive officer in April, assuming the job that his predecessor held for 12 years.

Tully said his goal is to preserve the non-profit auto club's positive reputation, which he says is the reason it has been able to maintain its rankings, earn more money and increase the number of services it offers people for their $53 annual membership, such as remote windshield repair and battery replacements.

"It's not like any company I've worked for," said Tully, who ran his own export-financing company and was a finance officer for a data firm and motor-sports products company before joining AAA.

His diverse finance experience comes in handy with the club, which offers roadside towing and auto repair, travel planning, auto-repair shops, driver education and insurance, and which lobbies for safer transportation laws.

New initiatives include an application for Apple iPhone owners using the phone's global-positioning system to direct members to the nearest retail store, restaurant or hotel where they can get a discount with their AAA card.

Tully has been with the company 11 years, hired initially as the financial officer and most recently serving as president.

Former CEO Jim McDowell, who Tully replaced, said Tully's financial acumen helped the state organization earn more money. Because AAA is a non-profit, that helped the organization launch new services for its members.

"We've been able to add new insurance products, new financial services, we have our third auto-repair facility," McDowell said. "We never could have done those things 12 years ago (before Tully was hired)."

AAA's assets increased from $22.4 million when Tully was hired in 1998 to more than $62.6 million last year, according to the latest report from the Arizona Corporation Commission. AAA Arizona reported $3.76 million in profit last year, according to the report.

A few years ago, the Arizona club was the fastest-growing in the nation. That has tapered off amid the recession, which has Arizona memberships essentially flat, McDowell said.

But maintaining its memberships is a testament to the club's strength, considering that earlier economic slowdowns have brought membership losses to the national club, McDowell said.

"We keep our contractors on their tippy toes because they know if they don't do the job well, we will do it ourselves," said McDowell, who remains on the board of directors.

McDowell said he had no reservations about placing a finance expert at the helm of a company geared toward customer service.

"(Tully) knows the most important thing we do is serve our members," he said. "He knows that is our focus. I think that is one of the things he likes.

"One of the nice things about AAA is that, while we have to make a profit and we do make a profit, we are not chasing quarterly dividends."

Tully said the club's biggest challenge in recruitment is educating people about what benefits they get with a membership besides a free tow when their car breaks down.

Many members don't even use the free travel services that once were the club's bread and butter, he said, let alone those perks totally unrelated to autos, such as the 30 percent discount on paint at Dunn Edwards, Tully said.

"Our challenge is how to get people to really get the value of our membership," Tully said.

The club is expanding into services where it can leverage the company's strength, which Tully described as "peace of mind."

That's the idea behind the auto-purchase program, where members who want to buy a car can have AAA negotiate the price of a new car, purchase it and then resell and transfer the title to the AAA customer.

The club also runs a used-car lot near Phoenix Sky Harbor International Airport.

"We basically go after businesses where there is a mistrust of service," he said. "Most people feel underequipped in the car-buying process. The same for auto repair."

AAA will act as an arbitrator for participating auto shops in the event that members feel the shop is trying to sell unnecessary repairs, he said.

The 800,000 members in Arizona represent about 33 percent of the eligible, driving population, and is a little better than average for AAA penetration in a state, he said.

Nine in 10 members renew annually, he said.

AAA also uses some of its revenues to pay lobbyists and promote safer-driving laws.

For example, AAA is trying to get a "move-over law" expanded to include tow trucks, he said.

Drivers in Arizona must move left a lane, if it is safe, when there are emergency vehicles stopped on the right side of the road, and AAA is advocating that rule be expanded to include tow vehicles. Last year, a member of AAA and a tow-truck driver both were killed on Loop 202 by a large truck that rear-ended the tow vehicle.

Tully said a law change would make it safer for the drivers and AAA-affiliated tow-truck operators who respond to 450,000 calls for help a year in Arizona.

He said he thinks that once the legislators are finished with the budget, the law has a good chance. A booster-seat provision AAA is seeking may be more difficult, he said.

"But we tried for years to pass a graduated driver's license, and that finally went through," he said, referring to a law that became effective in 2008 that restricts driving privileges for young licensees.

AAA supports speed cameras, one of the most controversial transportation issues in the state, but Tully said AAA wants the cameras only in places with high accident rates, where they will improve safety the most.

"We're not actually sure that is happening now," he said.

AAA spokeswoman Linda Gorman said the club opposed the way former Gov. Janet Napolitano initiated the freeway speed-camera program.

"We have been critical of the freeway program from the beginning due to the way in which Governor Napolitano focused on the revenue-generating aspects of the program," Gorman said.

Driver education is a major concern for the club. AAA has been expanding beyond teaching young drivers good habits to helping elderly drivers stay sharp on the road with free "Keep the Keys" seminars to help them keep their licenses and drive safely.

"The anxiety associated with losing the ability to drive ranks up there with a death in the family," Tully said.

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