JUNE 3, 2013
Paragon Honda and Acura had been consistently ranking in the top 50, 17th for Honda and 36th for Acura, but launched itself to the top position after transforming their service lane into a sales lane. Implementing a new marketing strategy that included a service marketing program converted their fixed ops bottom line and contributed to the dealerships taking over the No. 1 sales spot in the world for Honda and Acura. Now averaging 75-100 sales out of its service lane every month, Paragon is soaring to the top of the dealers, including the title of the No. 1 CPO dealer for all makes and all brands.
Brian Benstock, VP and General Manager for Paragon Honda and Acura, gives insight into the strategy of Paragon, “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, 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.”
The conversion of the service lane increased service retention, average spend per RO and stimulated sales of up to 100 a month as a direct result of the sales strategy in the service lane. 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. The success of Paragon is a result of a new service marketing strategy that identifies their perfect market and perfect prospects – tailored to the customers with the highest probability of purchasing or servicing with the dealership. By reaching out to the perfect prospects, Paragon is able to bring those customers directly into their showrooms and service bays and give them an incentive to return.
To identify their perfect market, Paragon began with a comprehensive five-year 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.
Sean Wolfington, owner of Tier10Marketing.com, the company that manages all of Paragon’s marketing said, “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.”
Paragon overcame the challenge of consistent communication during the ownership cycle with a variety of marketing strategies, including 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.
Who are the perfect prospects in the market? Paragon identified the Honda owners that live within specific zip codes that have generated 80 percent of their profitable revenue in their service department over the last 5 years. One hundred percent of these customers are reached out to with attractive offers and incentives to visit the dealership, including information on the programs available.
“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.” 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. Benstock explained, “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.”
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 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.”
By creating a custom service website, customers are able to view available offers in the service department. Additionally, they are able to schedule service appointments right from the site. Once an appointment is scheduled, the call center makes confirmation calls to increase the show ratio and the customers are notified of their eligibility to participate in the Vehicle Exchange Program. This program 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. The call sets the stage so the consumer is familiar with the program prior to arriving for their appointment.
From the first arrival into the service lane, the customer will see the credibility of the program through the point of sale merchandising. “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,” 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 personalized messages 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 customers back and increase the frequency that customers buy a car.
Paragon’s Service marketing strategy not only helped them in service but also in sales. 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.
The Bottom Line:
Paragon Honda and Acura Launch to No. 1 in Sales by Transforming the Service Lane
What They Do:
1. Conduct comprehensive market research to clearly define their local market.
2. Deliver a cohesive marketing message across all marketing mediums.
3. Aggressively target conquest service customers within their primary marketing area who own Honda and Acura models but did not buy from them.
4. Speak consistently to their customers throughout the 60-month lifecycle of their vehicle.
5. Drive consumer traffic to their custom campaign site that promotes all their sales and service offers.
6. Monitor all in-bound calls to assure the highest level of customer service, and act quickly when CSI concerns arise.
Resources they Use:
1. DMS: ADP www.ADP.com
2. Call Monitoring: CallRevu www.CallRevu.com
3. Targeted Marketing Company: Team Velocity Marketing www.TeamVelocityMarketing.com
4. Ad Agency: Tier10 Marketing, www.Tier10Marketing.com
1. Define your ideal local market by finding the perfect customers and prospects with the highest statistical probability of buying and/or servicing with your dealership now and in the future.
2. Identify and talk to off-brand vehicle owners who have a historical pattern of crossing over to your brand.
3. Target same-brand conquest service customers within your primary marketing area who did not buy from your dealership.
4. Create dynamic, cohesive campaigns that consistently speak to your customers throughout the 60-month lifecycle of their vehicle.
5. Drive consumer traffic to a custom campaign conversion site that promotes all your sales and service offers to help increase your internet sales and service leads.
6. Monitor inbound calls to not only ensure customers receive the best service, but also track which ads generate the most interest – so you know where to best spend your marketing budget.