March 2013 Success Story

Success Story

Paragon Honda & Acura Reached No. 1 in Sales by Converting their Service Lane into a Sales Lane Idling nationally at 17th for Honda and 36th for Acura, Paragon Honda and Acura soared to the No. 1 position by converting their service lanes into sales lanes with a new marketing strategy that included a service marketing program that transformed their fixed ops bottom line and aided the dealerships in capturing the No. 1 sales spot in the world for Honda and Acura. Paragon now averages 75-100 sales out of its service lane every month, more than many dealers sell out of their entire operation, and is the No. 1 CPO dealer for all makes and all brands.

Converting their service lane not only increased service retention, average spend per RO, and frequency in which customers use their service department, it also stimulated sales of up to 100 cars a month from their service lanes. These additional sales further fueled Paragon’s CPO vehicle sales which helped them become the No. 1 CPO Honda and Acura dealer – they sell twice as many CPO Hondas & Acuras than the No. 2 Honda and Acura CPO dealers.

“This new approach began during the recession, when we focused more on our fixed operations. We knew customers may not be able to buy a car but they still needed service. As a result we decided that we not only wanted to service all the Hondas that we sold but we wanted to make sure we serviced every Honda in our market whether they bought from us or not,” said Brian Benstock, VP and General Manager for Paragon Honda and Acura. “In sales we try to sell as many conquest Honda buyers as possible and now we are using that same strategy in our service marketing.”

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Paragon’s success is a result of a new service marketing strategy that began with identifying their perfect market and perfect prospects – those customers with the highest statistical probability of purchasing or servicing with their dealership. Then they reach out to those perfect prospects with the perfect campaign, bringing those customers into their showrooms and service bays, and keep them coming back again and again.

This more aggressive strategy targets both their customers and conquest customers who didn’t buy from their dealership but currently service with them.

PERFECT MARKET

Paragon realized that New York metropolitan area has over 17 million people, but not all 17 million want to buy or service a Honda, and not all are probable to buy or service at their dealership. To identify their perfect market, Paragon began with a comprehensive fiveyear historical analysis of their sales and service transactions to determine customer trends. They then compared those findings to leading third-party and industry data to establish consumer patterns within the local market. “We identified the perfect prospects for Paragon, which we identify as the consumers that have the highest statistical probability of buying and servicing with them now and in the future, and thus give them the highest return on their advertising investment,” said Sean Wolfington, owner of Tier10Marketing. com, the company that manages all of Paragon’s marketing. “Our target includes every consumer driving a Honda that lives in Paragon’s perfect market and consumers who are driving a model that has a high historical pattern of crossing over to Honda or Acura.

The best customer that Paragon could ever find is the one they already have, so retention was our primary objective.”

Unfortunately, over 75 percent of customers don’t service their vehicles with the dealer they bought from, largely due to a lack of consistent communication with their customers throughout their ownership cycle.

Paragon began communicating with their customers via email, text, mail and targeted phone calls to thank their customers for buying, remind them when their vehicle is due for service and by alerting customers when they can get a new vehicle for the same or lower payment as their old vehicle, dramatically increasing their loyalty and frequency.

Paragon also aggressively markets to conquest service customers within their perfect marketing area who own Hondas and Acuras but didn’t buy from them.

This is unique because most dealers use their manufacturer’s service marketing programs which often limit a dealer to only communicate with customers that purchased directly from them, also limiting the dealer from contacting numerous conquest opportunities within their market.

“This creates a lot of missed opportunities if a store that has 30 percent market share can only communicate with 30 percent of the customers that are driving the vehicles they service and are locked out of the remaining 70 percent,” added Wolfington.

Paragon saw that this was a big opportunity to broaden their service marketing efforts to communicate with the majority of the customers driving a Honda and Acura in their market that didn’t buy it from them.

“Unlike regular showroom traffic, the customers in the service lane have something that we want.

They’re driving a Honda that’s going to give us a CPO car to sell and recondition in our service department.”

- BRIAN BENSTOCK

PERFECT PROSPECT

After identifying their perfect market, Paragon identified the Perfect Prospects in that market. These are Honda owners that live in the zip codes that have generated 80 percent of their profitable revenue in their service department over the last 5 years. They contact 100 percent of these customers every month with aggressive offers that attract conquest customers, and standard offers that attract active customers so they don’t cannibalize their current

margins. They make targeted phone calls to high-quality customers who both need major maintenance and are in an equity position and have the ability to upgrade into a new vehicle for the same or lower payment.

“Paragon doesn’t wait and hope that their customers buy from them when they are ready, they proactively try to sell customers in their service lanes before they enter the market and shop their competition,” said David Boice, co-owner of Team Velocity Marketing, the company Paragon uses to implement their sales and service marketing strategy. “Paragon’s successful service marketing program has increased their retention and ROs but also helped their sales because customers who have an active service relationship with a dealership are seven times more likely to purchase with that dealership.”

“In addition to notifying the customer that they are eligible to upgrade into a new vehicle for the same or lower payment via email and mail,” added Boice. “The caller center also asks the customer if they would like to see a Vehicle Exchange Analysis that explains the program and the benefits of getting a new vehicle.”

By implementing a more aggressive marketing strategy Paragon completely transformed how they were marketing their service department by communicating with every single consumer that owns a Honda or Acura in their market, whether they bought from them or not, on a monthly basis via email, text, mail and live calls. “The strategy was so successful that a lot of customers that didn’t even buy a car from us actually felt that they did because we communicated with them more often than the dealership they bought from originally,” Benstock explained.

Paragon consistently communicates with all Honda/Acura owners every month starting with a Thank You for buying, Introduction to Service, minor and major service reminders, CSI calls, Warranty offers, Equity Alerts and Recall notices.

PERFECT CAMPAIGN

Paragon implements an integrated marketing campaign through email, text, direct mail, live targeted calls, as well as search engine and social media marketing that delivers custom offers based on the customer’s activity level

Paragon Honda & Acura with the dealership and where they are in the ownership cycle. “It’s about sending the right message to the right customer at the right time,” said Benstock. “It sounds cliché but technology now allows us to do that.”

The campaign drives consumers to their service website, www.ParagonHondaOffers.com, where customers can view hundreds of offers that they can print out or save on their phone. Last year over 19,000 coupons were printed from their website – bringing those customers into their service department. The website also allows customers to schedule their service appointment online, or call and email the dealership if they prefer. Once an appointment is scheduled, the call center makes confirmation calls to increase the show ratio.

During the confirmation call, the representative notifies customers that they are eligible for the Vehicle Exchange Program which entitles them to get a newer vehicle for the same or lower monthly payment.

“It’s about a really simple proposition, ‘I can get you a better version of what you are driving now for the same or lower monthly payment,’” said Brian Benstock. “It’s a simple presentation that takes about 45 seconds.

We ask the customer if they would like to view a Vehicle Exchange Analysis that will explain how the program works and all the benefits of upgrading from the old to new car,” added Benstock. The call sets the stage so the consumer is familiar with the program prior to arriving for their appointment.

When the customer visits the dealership they see the point of sale merchandising for the Vehicle Exchange Program which validates the program’s credibility. When the customer upgrades the dealership sources a Certified Pre-Owned car at a lower rate than they would be able to purchase at auction, which allows them to feed the pre-owned department and also delivers revenue to service because the average RO to certify a used vehicle is $1,000 more than Paragon’s average RO. “Unlike regular showroom traffic, the customers in the service lane have something that we want. They’re driving a Honda that’s going to give us a CPO car to sell and recondition in our service department.

The average customer buys a car every 6-8 years, but with our Vehicle Exchange Program strategy our customers are buying every 2-3

“We’re selling 75-125 cars a month out of our service lane through the Vehicle Exchange Program.”

- BRIAN BENSTOCK VP and General Manager of Paragon Honda and Acura which grew from No. 17 to No. 1 in total Honda sales and No. 36 to No. 1 in total Acura sales years – this way we’re selling 3 cars in 6 years as opposed to 1,” explained Benstock.

“A key element to our success has been how we appraise and price all of the CPO units sold by Paragon. Having a Gen Y manager who is able to understand the expectations of today’s fast-paced, transparent customer has been instrumental when it comes to retailing CPO units in the competitive New York Metro market.”

As a result, Paragon has had record profits by growing their revenues in their new car sales, CPO and service profit centers. After the customer takes delivery, Paragon’s marketing strategy communicates from the point the customer takes delivery with messages that thanks them for buying and introduces them to service via email, mail and live calls. Their marketing program also promotes accessories, delivers minor and major service reminders, service and CSI calls, recall notices and promotions that bring

costumers back and increases the frequency that customers by a car.

Paragon’s Service marketing strategy helped grow their sales as much as their sales marketing strategy. “The best customer that any dealer can find is one they already have because they have the highest statistical probability of doing business with them and they have a higher average gross profit per vehicle because these customers have not shopped around. In addition, Paragon is sourcing more CPO vehicles for less cost than the auction and they trade a $200 RO for a $1,500 RO when they recondition the used vehicle for resale. In the end, they sell a new car, a used car and generate more revenue for service, it’s a winning strategy,” said Sean Wolfington, owner of Tier10Marketing.com, the company that has architected Paragon’s entire marketing strategy that has helped them become No. 1 in both their Honda and Acura dealerships.

Success Story

Success Story “The average customer buys a car every 6-8 years, but with our Vehicle Exchange Program strategy our customers are buying every 2-3 years – this way we’re selling 3 cars in 6 years as opposed to 1.”

BRIAN BENSTOCK VICE PRESIDENT AND GENERAL MANAGER OF PARAGON HONDA AND PARAGON ACURA

Paragon Honda & Acura

PARAGON SELLS TWICE AS MANY CPO HONDAS & ACURAS THAN THE NO. 2 HONDA & ACURA CPO DEALER

#1

CPO HONDA & ACURA DEALER

#2

CPO HONDA & ACURA DEALER

IN A NUTSHELL Reached No. 1 in Sales by Converting their Service Lane into a Sales Lane • Conduct comprehensive market research to clearly define their local market.

• Identify the perfect customers and prospects with the highest statistical probability of buying and/or servicing with their dealership.

• Implement a cohesive marketing strategy across multiple mediums to build brand awareness.

• Speak consistently to their customers throughout the 60-month lifecycle of their vehicle using targeted direct email, text messaging and mail.

• Drive consumer traffic to their custom campaign conversion site that promotes all their sales and service offers.

• Establish a sales-in-service program to sell vehicles from their own service bays for your in-equity customers before they shop the competition. Å READ FULL STORY