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Paragon Honda/Acura Sells 214 Extra Cars Online

2004 was quite a year for Paragon Honda/Acura and partners Brian Benstock and Paul Singer. Not only did the dealership increase their Internet sales from 20 to 214, but they also increased their overall sales by over 200 percent year to date over last year. They were even named the number one certified used car dealer in New York and 3rd overall in the nation. Results like these have earned the Golden Web Award and the 2005 e-Dealer of the year. Not bad for a dealership that had never cracked the top ten. What’s the key to their dramatic turn around? In the latter part of 2003, Benstock and Singer decided to completely revamp their marketing strategy to leverage the power of the web and CRM to drive traffic and take the dealership to the next level. “After the first four months, we actually left the newspaper and saved over $100,000 in advertising. The best part is that while our advertising expense decreased our sales increased by almost 200 percent,” said Benstock.
Benstock and Singer learned some valuable lessons along the road to success. Here are their top ten tips for building an unbeatable e-commerce and CRM strategy.
#1 Rethink Traditional Marketing:
There are two components to think about when you're reevaluating your TV, print and radio advertising. First, no matter what you're doing, you need to slap your URL on all of your traditional marketing. The right Web site is a marketing center and lead generator so you want to make sure that all of your advertising mediums are driving customers to your virtual dealership. Secondly, you need to think about the smartest way to spend your ad budget. We used to think that putting your URL everywhere was the key to driving traffic to our Web site, but we forgot one simple fact: most customers do there research online, and traditional ads are in the paper, TV and radio where only 10-30 percent of shoppers look. We quickly learned that we needed to "fish where the fish are" so we shifted some of our ad budget to marketing online. The good news is that it's a lot less expensive than mass media and we can track and measure everything to work at lowering our cost per sale.
#2 Use E-mail Marketing; it’s Faster, Cheaper & More Effective:
Once we realized the power of online marketing to lower our cost per sale and increase our traffic and leads, e-mail marketing quickly became a critical component to our success. After we ran our first e-mail marketing campaign we were sold on the potential of this new marketing tool because we would sell 30-40 extra cars with out spending any extra money on advertising. Of course, this only works if you have a database of e-mails. We have found that one of our most successful methods for gathering e-mail addresses is also the simplest: we offer every prospect who calls or walks in a “FREE VIRTUAL TEST DRIVE.” Our Web site provider includes a full suite of multimedia e-mails.
The beauty of our current lead management system is we can point, click and send any one of these mini-movies in a bulk email to communicate with massive amounts of people. We recently sent out an e-mail promotion to 80,000 addresses in our database. It took our Internet Manager 25 minutes to create. Think about how much money you’d spend to send out 15,000 direct mail pieces. Compare the cost and effectiveness of the two. It’s not just a piece of mail. It’s a piece of interactive e-mail that engages the customer. The best part is that we can measure how many were sent, viewed, and clicked through. We also measure how many result in set appointments and sales and all these metrics are automatically calculated and sent to us with our lead management tools.
#3 Tap into the Power of Search Engine Marketing
In addition to e-mail marketing, we learned to rely on Search Engine Marketing to get more prospects to our virtual dealership because we know that our Web site makes it easy to get them to our showroom and to follow up. Seventy percent of the people looking to buy a vehicle start by shopping online and most of them start by going to their favorite Search Engine. Therefore, our goal is to appear at the top of the list when they use a search engine to look for a Honda or an Acura in our market. Our Web site provide helped us make this happen because we felt it was important to make sure that anyone who was using a search engine was going to find us.
#4 Shop Your Dealership
You can learn a lot by mystery shopping your own Web site. When we were using other providers, we were surprised to find that when we searched our inventory, the Web site often indicated that we did not have anything in stock that matched the search. The old site was hard to use, and when we submitted a lead (using an e-mail address that would not be recognizable by anyone in our sales department) we measured the response time and the quality of the response. Then we called the dealership to see how good our people were at setting appointments. At the end of the research, we decided something had to change. It became obvious that we needed new tools, a new process and we needed to train our people. This is a great place to start so you can get a realistic assessment of what your customers are seeing and experiencing at your dealership. You need to get a handle on the metrics to determine how you are doing and where you can improve. You can use any analysis tool to measure the traffic you have visiting your Web site, what percent of the Web site traffic converts into leads, the number of leads from your site, other lead sources and your phones and your appt. and closing ratio for all of the above. It is also important to measure the cost per sale and all of the above metrics by lead source and salesperson.
# 5 Choose a Provider and Listen to Their Expertise:
The programs we were originally using for our Web site & CRM looked great up front, but they didn’t get the result we were looking for. We started with templated Web sites but none sold us more than 20 cars a month. We researched what some of the best dealers were doing in the market and we found another company that had a system that included both the tools and the training. One of the dealers we learned from was Herb Chambers, who was selling over 600 vehicles a month online. We mystery shopped Herb Chambers’ site and when we discovered what they were doing, we decided to contact Herb Chambers’ e-commerce provider, BZ, and made the switch. Once we signed up with the new system, we went from selling 20 cars a month to 106 cars a month in our first month.
#6 Ramp up Your Internet Staff:
Once you’ve developed metrics and chosen a technology partner, it’s important to build the team capable of implementing your action plan. A lot of dealers make the mistake of thinking they’re going to get some new tools and set the world on fire. But without the right people, you’ll have an uphill battle. We learned that once we had the right tools, we needed to determine how many leads one person can handle. Our staffing needs are determined by lead volume.
The good news and the bad news is that in the first month, our system generated more leads than one person could handle. At Paragon Honda, we want every lead contacted no less than five times. If we’re getting 2,000 leads a month and follow up with each lead five times, we’re handling 10,000 leads a month. A single person can not do that but the best part about our new system is that it automates much of the lead management process so that we can accomplish more with fewer people.
#7 Train, Train, Train:
We have also found that training is the key to accomplishing more with fewer people. Our technology partner suggested that before they trained the CRC staff on the process, we needed to get our leadership team on the same page. We began with a planning meeting where all of our key people were involved in making the important decisions regarding our marketing, people, processes, pricing and so on.
#8 Follow-Up with Every Lead, Quickly:
Once you’re receiving leads, it’s important to follow up with customers as quickly as possible. Our CRC specialists focus their time and effort on the people who respond to our e-mail campaigns. We can tell if someone has opened the e-mail and if they’ve gone to after opening it. By looking at these actions based on our e-mail promotion, we can really see who is interested and focus our attention on them. Our electronic communication system will also automate a lot of the long-term follow up for customers who are one to four months away from buying a vehicle so our team can focus on prospects that are ready to buy now.
#9 Online Pricing Strategy:
Trust is critical to building a relationship with the customer and we believe that it is important to stand behind the integrity of our pricing. We’ve learned that we need to have a smart pricing strategy that is competitive while allowing us to hold a fair gross profit. This begins by not just “Selling Price” but by “Selling the Appointment” and building value in the dealership and the experience. As a result, the gross profit for our CRC department is similar to our showroom gross profit.
Next, we established a pricing strategy to define what prices we show on the Web site and when and how we quote prices via e-mail, phone and/or the showroom. We also determined how to present price to the customer in a way that ensures price is not the focal point. For example, when giving a price we emphasize the other advantages a customer gets through the Paragon Purchase experience and we remind them how easy and convenient our buying process is.
# 10 Measure Success:
And lastly, but most important of all, measure your success. Here’s a clear example of before and after results from Paragon’s own site: We switched Web providers on January 1, 2004. In the last quarter of ‘03 we were selling nine percent of the valid leads from our site. Honda’s national average was ten percent. So we were doing an average job. First quarter of ’04, after we set up our new system, we were closing 25 percent of the leads. Our increase was two-and-a-half times the national average. What really makes it striking is the fact that we had a lot more leads in the first quarter of 2004. Ordinarily if you have an increase in lead traffic, your closing ratio is going to decrease. But we not only had an increase in volume, we had an increase in effectiveness – a 300 percent increase.
The Web site has also helped our pre-owned business. Our used car side was always good, but by adding our “Virtual Pre-Owned Center”, we’ve become the third top certified used car dealers in the US and we’re first in the state of New York. These are great results but we did not wait to measure them at the end of the year. We have daily, weekly and monthly reports that help us keep growing and improving.
Vol 2, Issue 7


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