August 2013 Success Story

Success Story

Brandon Honda Adds $4 Million to Bottom Line with New Loyalty Marketing Strategy

Increasing gross profits and market share is not easy, especially in a market like Tampa where 10 Honda dealerships compete for the same customers. Yet, in just 20 months, Owner and General Manager, John Marazzi and his team have transformed Brandon Honda, a store that was comfortably in “the middle of the pack,” into the number one Honda store on the entire west coast of Florida for both new car volume and certified pre-owned sales.

Perhaps even more impressive is that their significant increase in sales volume is accompanied by record-breaking profitability in both fixed and variable operations. Over the last 20 months service revenue has doubled, certified pre-owned sales have doubled, and sales from the service lane have doubled. On top of all of this, their new Quality Assurance Department, a division whose sole responsibility is making sure customers enjoy “The Brandon Honda Experience” is increasing CSI while consistently delivering 120 vehicles a month with average grosses that are 30% higher than their regular showroom sales. All together, the dealership’s net profits are up 200% and continue to climb.

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Success Story Ä CONTINUED FROM THE COVER

Obviously, acquiring new customers is an essential part of Brandon Honda’s transformation. However, one of the biggest drivers of Brandon Honda’s ongoing success is the new marketing strategy that is allowing them to service and sell more cars to the customers they already have.

Before implementing their new strategy, Brandon Honda, like many dealerships, was using an equity-mining tool to engage their in-equity customers. This was selling a few cars each month but the results were very inconsistent. The success or failure of the tool each month was ultimately dependent on the consistency and effort of their sales team. As a result, opportunities were being missed, customers were receiving inconsistent messages and the dealership ended every month knowing they had left money on the table.

To solve these problems, John Marazzi cancelled his equity mining tool, that was largely dependent on the consistency of his sales team and implemented a loyalty marketing strategy that automatically identifies in-market customers and markets to these customers on behalf of his sales team via email, mail, phone and in the service lane every month for as long as the customer owns their vehicle.

“We saw what this program was doing at other dealerships and knew it had the potential to make a big impact on

our business”, says John Marazzi. “This strategy allows us to upgrade customers into newer vehicles before they begin shopping. As a result, we are selling more cars and making more money. Our customers love it because they get a better car for a better payment and our salesmen love it because grosses are higher and approximately 70% of these deals close.

It’s as close as it gets to a sure thing.”

customer is scheduled to arrive along with a copy of the most recent offer that was sent to each customer.

HERE’S HOW BRANDON HONDA’S NEW LOYALTY MARKETING STRATEGY WORKS

Customers that choose not to upgrade during their visit continue to receive personal vehicle statements that include all the vehicles they can upgrade into for a lower payment. These statements are delivered every month via email and mail for as long as they own their vehicle.

Every month, Brandon Honda’s loyalty marketing company identifies in-market shoppers who have equity or who can upgrade into a better car for a better payment and creates a personal website for every qualifying customer. These personal websites allow customers to see the calculated value of the vehicle they are currently driving as well as every vehicle in the Brandon Honda inventory that they can upgrade into with little or no money out of pocket.

Next, all eligible customers are notified via email, mail, phone and in the service lane.

Customers receive a personalized message that invites them to upgrade to a newer Honda that offers more and costs less to drive.

Each morning, the Brandon Honda management team receives a list of every qualifying customer who is scheduled to visit the dealership that day. This list includes the time each

Print Out

Mobile

Personal Website

Mail

Email

When the customer visits the dealership they are shown a vehicle upgrade analysis on an iPad or printout that reviews all of the advantages of upgrading into a newer vehicle along with a personalized, side-by-side comparison that includes a cost-of-driving analysis.

Brandon Honda uses this program to create a bridge between their service department and their sales department. Although the program routinely delivers 35 to 40 deals a month via their showroom, the majority of the program’s sales are generated in the service lane. In both cases, the average gross profit on these deals is $700 to $800 higher than their other showroom sales.

“Ironically, the key to our success was taking the selling out of the service lane,” says Marazzi. “Instead of sticking a salesperson in the service drive, we created a Quality Assurance Manager position that can assess each situation and make sure we are consistently looking out for the best interest of each customer. This role solved two problems. First, it put our customers at ease because they no longer had a person trying to sell them in the service drive. Second, it removed the tension between our service department and our sales department.

When a service vehicle is taken in on trade, the salesmen gets a commission, the service writer gets a bird dog and the service manager gets a small bonus. Everybody wins.”

“What I like most about this strategy is that the consistency and quality of our communications are not dependent upon the efforts of our sales team,” says Grant Hocking, the Quality Assurance Manager responsible for administering the Brandon Honda Loyalty Program. “The customer sees the picture and contact information of the salesperson when they receive their emails

Brandon Honda RESULTS USING LOYALTY MARKETING STRATEGY

$800

CLOSING RATE on loyalty deals

and direct mail pieces but the salesman doesn’t have to do the work. Also, it should be noted that the system we use gives us a completely integrated solution. All the offers the customer receives in their email, mailbox, and personal website as well as the tools the sales team uses to make their follow-up calls and to engage customers in the dealership, whether on an iPad in the showroom or the printed side-by-side comparisons in the service lane, are all generated by the same platform. This keeps everyone in the dealership in sync and delivers consistent information to the customer.”

Brandon Honda has integrated their loyalty marketing strategy into a “one dealership” culture that provides one of the most compelling value propositions in the area. In addition to the upgrade analysis mentioned above, every customer receives a $1,000 price protection guarantee, a lifetime warranty on all new vehicles, a 10 year / 100,000 mile warranty on all preowned vehicles and a copy of “The Brandon Honda Promise,” which includes a number of high value extras each customer receives when they buy from Brandon Honda.

“Customers aren’t afraid of buying a car.

They are just afraid of making a mistake,” says Marazzi. “To overcome this fear, we built our processes around making it easy for our customers to buy a car. We dominate digital

showroom

70%

loyalty sales

higher

GROSS PROFIT per vehicle sold

“Amazing stories happen every day with this program” in our market and we put a lot of effort into educating customers about the advantages of doing business with Brandon Honda. We don’t just sell Hondas, we sell an experience and this program is a big part of that.”

When asked to give specific examples of how customers are responding to their loyalty marketing strategy, both Marazzi and Hocking gave enthusiastic responses.

“Amazing stories happen every day with this program,” says Hocking.“ “Customers respond very well to the way the upgrade opportunity is presented and the way we can compare the ownership costs of their current vehicle to any vehicle in our inventory directly from our iPads. For example, I was speaking to a lady who came in to service her Honda Accord. After showing her how she could save money by upgrading into a newer vehicle, she began sharing with me that her daughter also needed a car. Long story short, we sold 3 cars to the same family on the same day.

The mother upgraded into a new Accord, the

31% SALES VOLUME

generated by loyalty program

daughter bought a Civic and the father traded his Hyundai for a new Accord.”

“When dealers first hear about the success Brandon Honda and other dealerships are having with this strategy they have a hard time believing the results are real,” says Scott Davis, President of DrivingLoyalty. com, the company that Brandon Honda uses for its loyalty marketing strategy. “Some wonder if the numbers are inflated or argue that these stores may have sold these cars without us. However, the results speak for themselves. When a dealer, like John Marazzi replaces their equity mining tool with a loyalty marketing strategy and puts a person like Grant Hocking in place to run it, great things happen.”

“This program has had a positive impact on virtually every department in our dealership,” says Marazzi. “In addition to selling more new vehicles, this program has allowed us to acquire more high quality, low mileage, oneowner vehicles. Paying less for these vehicles has increased our used car grosses and reconditioning these vehicles has increased service revenue. Altogether, this produces nearly $400,000 every month. If our success with this program continues, and we expect it will, this will contribute over four million dollars a year to our business.”

Success Story

Success Story

Brandon Honda

“Customers aren’t afraid of buying a car. They are just afraid of making a mistake. To overcome this fear, we built our processes around making it easy for our customers to buy a car.”

JOHN MARAZZI OWNER BRANDON HONDA

IN A NUTSHELL

Brandon Honda Adds $4 Million to Bottom Line with New Loyalty Marketing Strategy

• Increased market share by aligning the efforts of sales and service to increase the number of customers that engage and close within 24 hours.

• Increased sales gross by $800 a copy by implementing a loyalty marketing strategy that upgrades customers before they begin.

• Increased used car profits by increasing the number of 2-3 year-old trade-ins and lowering the cost of CPO vehicles and locally-owned, low mileage inventory.

• Increased the consistency and performance of sales team by implementing a loyalty marketing system that automatically delivers personalized upgrade quotes via direct mail and email on behalf of each individual sales person and automatically reassigns “orphan owners” if a sales person is terminated or leaves the dealership.

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