Games and prizes might be an integral part of the marketing and advertising strategy at Charlotte Honda Volkswagen in Port Charlotte, Fla., but when it comes to driving traffic and sales, General Manager Josh Nacht is all business.
When he arrived at the dealership in January 2010, there was no question he had his work cut out for him. Both new and used vehicle sales were very low, with the store selling an average of 46 new and 40 used vehicles per month, and the dealership was in danger of losing its Honda franchise. “Port Charlotte was a pretty depressed market,” said Nacht. Situated between Fort Myers and Sarasota, he said, “It’s kind of in the middle of two markets.” He knew the store would need to undergo some drastic changes in order to be competitive.
Nacht’s first order of business was to do “a full restructure.” He said, “I overhauled the entire sales force, manager force, service, accounting—everybody got changed.” Radical changes can be risky, but they can also yield a big payoff. In Nacht’s first month as GM, the dealership sold a total of 236 vehicles, 132 of them used. Today, Charlotte Honda VW averages between 275 and 300 vehicle sales per month and consistently ranks in the top 1 percent among Florida dealerships for used vehicle sales.
While Nacht made sweeping changes throughout every department of the dealership, the changes that have made the biggest difference in the store’s sales performance are those he made to the dealership’s advertising and marketing. He recalled, “When I got here, they were not doing much of anything—a little bit of TV, a little bit of radio once in a while, but it was very limited.” Today the dealership does absolutely no television, radio or print advertising. Nacht’s strategy includes only direct mail and the Internet.
Although some dealers and general managers these days believe direct mail does not provide a substantial return on investment and have eliminated it from their advertising budgets, Nacht had a completely different view. He said while direct mail “kind of went away in the last two or three years based on the economy, I felt that it was time for a revival of it, and I was right. I started out doing some sales and we had huge, huge results.” He believes television and radio are primarily brand awareness tools and are simply too imprecise for measurable advertising return on investment. “If you do $40,000 [of advertising] on television, how do you really know what you made? There’s no way to really know,” he said.
Nacht estimated the dealership sends out about 100,000 pieces of mail a month. “We target our own customer database in sales and service, and then we target by credit score and by … other makes and models.” The mailers also go to Honda and Volkswagen owners who did not purchase from Charlotte Honda VW. He said ROI is much easier to determine using direct mail, adding that he could spend $14,000 on mailers to advertise a sale on the lot and move 15 vehicles at over $3,000 profit each, for example, or he might spend $30,000 on direct mailers for an off-site sale and make $115,000 on the event.
“We do one off-site sale a month out of our area,” he stated. The dealership has a couple of recreational vehicles emblazoned with “Florida Auto Liquidators Sale,” and Nacht has made use of them by sending them out to surrounding areas up to 90 minutes away with a manager and a team of salespeople he hired specifically to handle only the off-site sales. “Most stores just send out the managers and the salesmen and you lose business at the store because you have a focus away from the store,” he said. “Our store continues here with all my managers and all my salesmen … We have the same focus here that we always have and just take that [off-site sale] as incremental business.” These off-site sales, he said, bring in over $100,000 of additional profit each month.
While direct mail has been extremely successful for the dealership, especially when combined with the off-site sales, the bulk of the dealership’s advertising and marketing efforts are online. One of the first things Nacht did upon arriving at Charlotte Honda VW was replacing the store’s old website with a customized site, PCAutomall.com. In addition to the new site, Nacht also purchased 240 subdomains, or microsites, covering new cars, used cars and bad credit—URLs such as PortCharlotteUsedCars.com, NaplesAutoFinancing.com and VeniceHonda.net. They then started optimizing all their online properties to ensure that one way or another, Charlotte Honda VW lands on page one of Google search results.
That change alone, said Nacht, took the store’s website from 3,000 to 4,000 hits each month to between 12,000 and 15,000. However, Nacht still wasn’t satisfied. As he saw it, increased site traffic is pointless if it does not result in tangible leads. He said he learned “that 98 percent of the people who come to your site don’t contact you, but almost 40 percent of them will buy a car within 30 days … With 12,000-plus hits a month, how do we convert more people that are visiting the site to leads?”
Nacht found a somewhat unconventional approach to addressing this need in VegasFlyTrap, a conversion tool in the form of interactive games which site visitors can play to win prizes. The games are featured prominently on the PCAutomall.com home page and visitors can choose from several different games to play. Once they win, an information box appears asking customers to enter their names, email addresses, phone numbers and zip codes to find out what they’ve won, which could be something as simple as a scratch-off game ticket or as grand as a vacation package.
Once customers have entered their information, the leads go straight into the dealership’s CRM system, just as a lead would from a third-party source. Customers then receive automatically-generated emails, letting them know they must come to the dealership within three days to claim their prizes. When they arrive at the dealership, they see a manager, who will give them their prizes and then turn them over to salespeople. “Once you give them the gifts, they [feel] kind of obligated a little bit to spend time with you,” said Nacht.
He said the website also has a customized peel-down on the corner of every page of the site where customers can easily get to the games. Additionally, “We have a customized pop-up-like piece on the website as well, so if the customer is going to leave the site and be a part of that 98 percent that don’t contact you, the game prompts them again to play,” he said. “One of the great things about [it] is that it’s not a pop-up, because obviously a lot of folks have blockers, it is actually part of the [page’s] script ... so it’s not blockable.”
He reported seeing an almost-immediate increase in lead conversions after putting the VegasFlyTrap games on the website in November 2010. “In the first two hours we had 12 players,” he recalled. “We converted about 235 leads [through VegasFlyTrap] that month. So, it was virtually immediate.”
In addition to featuring the games on the PCAutomall.com site and many of the dealership’s microsites, Nacht is also able to utilize the VegasFlyTrap tool on the dealership’s Facebook page and in its Craigslist listings, which he said provides a way to see when potential customers are shopping on Craigslist, something he had no way of knowing before.
The dealership currently gets between 250 and 270 leads each month through VegasFlyTrap, which he said makes it much more cost-effective than third-party leads. He said that he is essentially getting 250 extra leads each month for about half of what he would pay one third-party lead provider. In fact, he has since stopped purchasing leads from one of those providers.
Leads, both organic and third-party, as well as incoming sales calls are worked by Nacht’s business development center (BDC), which he established very soon after coming to Charlotte Honda VW. The BDC consists of four Internet sales managers and four business development representatives, who work in teams of two. “We also have a dedicated sales manager that spends the first two hours of his day in the BDC calling back every customer of the prior day who called or emailed us,” he said. “I want to have my sales manager touch every customer who calls or emails as they would [if the customer were] on the showroom floor, because why is the person that calls or emails not as important as the guy who walks in your door?” He added, “We treat the person who calls or emails more importantly because that guy can call anybody. The one who contacts them fast enough and gets them in wins the battle.”
Nacht also features fun events at the dealership to bring in foot traffic. In addition to the prizes customers win playing the website games, they are also entered into a weekly drawing the dealership holds every Saturday afternoon. On Friday night, the BDC calls the people who’ve won on the website over the previous three weeks to remind them of the Saturday event. “We have a money machine in the showroom … We choose one winner and they get 15 seconds in the cash machine. There’s $1,000 in cash in the machine,” he said. “We get between 20 and 30 people every Saturday that come down.” They record the events on video to use on their blog and other social media sites, which helps with SEO.
He also incorporates the game-related giveaways into the dealership’s direct mail to bring people to the dealership. “We utilize a slot machine, we have a $5,000 dice roll and we have a spin wheel,” he said. He also described a four-day event with daily drawings. “We give away $250 on Thursday, a television on Friday. We give away either a used car or cash … on Saturday, and an Android tablet on Sunday,” he said. “We draw a crowd with these giveaways … and then, once again, we tape them for our website for social media purposes.”
When it’s all said and done, Nacht said he doesn’t spend any more than other franchise dealerships might spend on more traditional advertising and marketing efforts. “We probably spend between $85,000 and $110,000 a month in advertising, including service, subprime, everything. So it’s not exaggerated or overly expensive; it’s just [spent on] a different medium.” That’s not to say that his strategy won’t change at some point; Nacht believes it’s imperative to be flexible and willing to adapt to what he described as a “new, volatile market.” He stated, “We’re constantly evolving, changing and adapting to the market,” he said. “It seems like the market is changing … almost on a monthly basis.”
Vol. 8, Issue 12