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Paragon Honda Automotive Customer Centricity Summit Case Study

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Paragon Honda Automotive Success Marketing Case Study

Paragon Honda Automotive Success Marketing Case Study

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  • 1. Paragon Honda and Acura #1 This Is How They Did It. Paragon Honda & Acura away, Edith has infused the culture of the dealership Paragon Honda and Acura grew from #17 to the #1 with her passion and tireless work ethic but also has New & Certified Pre-Owned Honda & Acura Dealer in added the heart that is essential to premium customer the U.S. in a short 6 month period. This document pro- care,” said Benstock. vides an overview of what they did in that time period. Consolidation “Overall, it was our best year in business despite being “In the past our in-house ad agency worked with 12 differ- the worst year in the industry,” said Brian Benstock, ent companies to execute every part of our strategy and GM and partner of Paragon Honda and Acura. “We the vendors didn’t work together so the campaigns were had a record year for volume and profitability during not integrated. It was confusing for our customers because a record low year for the our TV and radio com- car business.” The big- mercials had one mes- gest thing that impacted sage, direct mail had Paragon’s growth was another, my internet changing their market- manager was sending ing, sales and service emails with different strategy last June. “We offers and none of it had an in-house ad was on my website agency but decided to or point of purchase bring on an outside com- materials in the deal- pany to help us build ership. Our advertis- and implement a new ing strategy improved plan to grow our busi- dramatically because ness,” said Benstock. we consolidated our Below is a summary of marketing vendors the strategies that had and hired one compa- the biggest impact on Paragon’s business over the ny to develop and implement one integrated marketing last year according to Brian Benstock himself. strategy that is completely connected and consistent.”PARAGON CASE STUDy Leadership Market Research Paragon’s mission-driven leadership team is passion- “Paragon uses extensive market research to identify ate about astonishing their customers by delivering consumers that have the highest statistical probabil- a Ritz-level customer experience in all their depart- ity of doing business with their dealerships in the fu- ments. The leadership of Paragon is known for its ture,” said Sean Wolfington, Owner of Tier10Market- commitment to customer service and extraordinary ing.com, the marketing company Paragon hired to work ethic. “Paul and Edith Singer founded the deal- help them create their strategy. “We use the manu- erships years ago and they set the bar high by their facturer’s research, Polk Market data and the dealer’s example and extraordinary work. Since Paul passed historic sales and service trends to plan which cus-
  • 2. tomers to target in the future,” said David Boice, Co- include QR technology, a barcode that links consumers’founder of Tier10Marketing.com. mobile phones to Paragon’s website where they can learn more about the offer and contact the dealership. “We re-“In the past we spent more money on mass marketing cently did a radio buy that promoted a film premiere wethrough TV, radio and print, but the research showed sponsored in Queens,” said Benstock. “We invited peoplethat over 90% of our business came from less than to our website and Facebook pages to enter to win tick-10% of the city, so we targeted our marketing to the ets to the premier and provided additional entries forconsumers that live in those areas and that are in the people who shared the promotion with others on Face-market to buy or service their vehicle in the near fu- book and Twitter.” Paragon has integrated technologyture,” said Benstock. “This saved us a lot of money into their traditional advertising to build their databasethat we used to waste on advertising to people who and to multiply the reach of their promotions throughwere either not in the market for what we offer or who viral strategies that incentivize consumers to share theirwere not in our geographical market and therefore promotions with their friends.had a low probability of coming in for sales or ser-vice,” added Benstock. “There are over 11 million Online Marketingpeople in New york City but there are only 87,500 Over 90% of Honda consumers use the web to shopconsumers that have a high probability of doing busi- so Paragon has an in-depth strategy for search en-ness with Paragon so they are the primary target of gine optimization and marketing, email marketing,their marketing plan,” said Boice. banner ads on popular websites like Facebook, so- cial media marketing, online reputation management“With intelligence and boldness, Brian thrives in an ur- and mobile marketing. “We have a lot of friends andban environment where few could survive,” said Dale followers on the top social media platforms includ-Pollak, chairman and founder of vAuto. Paragon uses ing Facebook, MySpace, Twitter and Bebo,” saidvAuto to get accurate used vehicle market pricing to Benstock. “As a result of our digital marketing cam-implement an intelligent strategy for buying, market- paigns, we increased the size of our database by ap-ing and selling used vehicles. “Before we would price proximately 50,000 in the last 6 months and we are“Overall, it was our best year in business despite beingthe worst year in the industry.”our cars very high in the hope of making a very large sending out professionally designed emails that havegross profit and we would slowly reduce the price as credible themes and clear offers that generate leadstime went on,” said Benstock. “Now we market price from consumers who will buy and others who needour pre-owned vehicles to move them fast so we can service.”increase the frequency of our sales and get a betterinternal rate of return on our capital. In short, we make Lead Providersa lot more money by making less money more often.” “Our best source of leads are our own websites be-When a customer wants to shop, Paragon shows them cause the closing ratios and average gross profitssimilar vehicles in the market that cost more money so are much higher than the typical lead providers, asthey can see they are getting a good deal without leav- most 3rd party lead generators sell the same lead toing Paragon’s showroom to prove it. multiple dealers,” said Benstock. “We only work with lead providers that generate a good return and haveTraditional Advertising a lower cost per sale compared to our other market-Traditional advertising on TV, radio and print is expensive ing. We use AutoTrader.com, Cars.com and Automo-in New york, like other major metro markets. As a result, tiveAdvertisingNetwork.com because all three of themParagon shifted a lot of their traditional ad budget to deliver exclusive leads which means they don’t resellmore targeted marketing that generates better returns. the same leads to all of our competitors.”However, since Latinos make up half of Paragon’s market,they have leveraged some good buys on Spanish radio, AutoTrader and Cars.com have long done a good job withas well as, print ads in the New york Times where they pre-owned and they give dealers exposure to clients they PAGE 2
  • 3. may not otherwise reach. The Automotive Advertising Video SEO Network promotes Paragon’s vehicles on the most popu- Television advertising has worked well for dealers in lar search engines and social networks and sends them the past because consumers can experience the sight, unlimited leads for a flat membership fee of $995. Auto- sound and motion that other mediums don’t deliver. Trader and Cars.com are more expensive but often gener- Now Paragon is using video to promote their dealership ate more leads. but they are optimizing the videos to appear on top of the search engines for the most popular search phras- “Now that AutoTrader.com has bought vAuto we are es their consumers use to find an Acura or Honda. “We eager to see what Dale Pollak and Chip Perry will do hired a VSEO company, to produce and position hun- together, I am sure it will be big,” Benstock said. Search Engines Since the majority of consumers use search engines to find their next new vehicle, Paragon uses organic Search Engine Optimization (SEO), Video Search Engine Optimiza- tion (VSEO) and targeted pay-per-click search marketing campaigns to attract in-market consumers their websites and dealerships. As a result, Paragon appears on top of the search engines for the most popular search phrases in their market “New york Honda” and “New york Acura”. Paragon tracks what con- sumers are searching for on Google and they implement search strategies to appear on top of the results for popu- lar search phrases. For example, during cash for clunkers Paragon generated over 5,000 leads in less than a month through Paragon’s website, www.CashForClunkersNy.com, which was the #1 result when customers typed in “Ny Cash for Clunkers”. When Toyota’s recall was announced, Paragon received leads from the Automotive Advertising Network which optimized a website called www.ToyotaRecall.org “As a result of our digital marketing campaigns, we dreds of positive videos about our dealership on top of the search. They also post comparison videos for con- increased the size sumers who are searching for competitive brands like Toyota and Nissan, so they can see the advantages of of our database by the Honda and visit our website to get an instant price quote,” said Benstock. “Google gives advantage to video approximately 50,000 results over text results and consumers like video morePARAGON CASE STUDy than text,” said Karry Moore, Owner of Car-Mercial.com, in the last 6 months...” the company Paragon uses for their VSEO strategy. Pay-Per-Click Search Marketing “Our primary strategy for pay-per-click is to improve that appears on top of the results when consumers search our organic search results so we don’t have to pay a for information about Toyota’s Recall. “The Automotive Ad lot of money on our pay-per-click strategy. So far this Network also provides thousands of inbound links to our year we have generated 10 leads organically for every website, which increases search authority and position on 1 lead from pay-per-click, and that has dramatically the search engines,” noted Benstock. reduced our cost per lead and sale. We only use tar-
  • 4. geted pay-per-click search marketing campaigns for dia marketing strategy through Facebook, Twitter andthe search phrases where we don’t appear for free on their dealership blog www.ParagonHondaInfo.com.the search engines and that have the highest closing Paragon takes pictures of all their customers with theirratios at the dealership,” explained Benstock. new car, sends them the photo and asks them to post it on Facebook and share their positive experience onMicro Sites the review sites. To increase the chances, Paragon alsoAll of Paragon’s digital marketing efforts drive consum- gives customers step-by-step instructions on “how to”ers to a campaign micro site where the message, of- post their review on Google, Dealer Rater and the oth-fers, look and feel are consistent with every other part er popular review sites.of the campaign. The campaign micro site is designedto convert the maximum number of visitors into email, Targeted Marketingphone and showroom leads. Here are some examples Paragon communicates with all in-market Honda andof micro sites we currently use: Acura consumers by sending custom offers based on their vehicle, miles and position in their ownership cycle. www.ParagonHondaInfo.com Paragon sends custom campaigns via mail and email to www.ParagonExpressService.com promote all their profit centers, New, Used, Finance, Ser- vice and Parts. “We dial into Paragon’s DMS to target in-Public Relations equity customers and we use variable printers to sendParagon realizes that a free five minute story on a ma- a custom message to each consumer that shows themjor TV network that appears online forever has a big- how they can get a newer vehicle for a lower payment,”ger impact than an expensive 30 or 60 second TV ad said Budd Blackburn from www.TeamVelocityMarket-that runs out when the budget expires. “Our marketing ing.com, “we also include offers that promote the ser-company creates and distributes relevant press thatgenerates interviews with local press and we have re-ceived exposure in the Wall Street Journal, New yorkTimes, Ny Post and hundreds of stories on nationaloutlets, including CNN, ABC, NBC, CBS, FOX andMSN,” said Benstock. As a result of his public expo-sure, Benstock was recently invited to host an Auto-motive Advice call-in show on the top radio station inNew york every Saturday at 4pm and he is piloting asimilar car show on Fox TV to give consumers adviceon shopping and servicing their vehicles. When yougoogle “Brian Benstock” and search for “Videos”, twopages of video interviews on national TV shows appearas a result of Paragon’s effective publicity campaign.Reputation ManagementToday’s consumers rely more on other consumers’ re-views than advertising, so Online Reputation Manage-ment is a top priority for Paragon. “When consumersgoogle our dealership or my name they will find outabout all the things we are doing in the communityand they will be able to read positive reviews from sat-isfied customers,” said Benstock. vice the customer needs, extended service agreements and accessories.““Our marketing company automates a process to askall our satisfied customers to share their experience on Niche Marketingpopular consumer sites like Google Reviews, Dealer Paragon’s marketing company promotes a corporate pur-Rater and many others. By asking our satisfied cus- chase program to employees of large organizations intomers to share their experience on the internet, our their market that gives them special pricing and serviceonline reputation dramatically improved in a few short when they do business at Paragon. “Our marketing com-months and we are always working to make it better,” pany sends an information package to the HR departmentsaid Benstock. Paragon also has an active social me- of the largest organizations in our area to ask them if they PAGE 4
  • 5. want to give this free benefit to their employees,” said Ben- everything in between,” said Benstock. Paragon uses stock. If a company wants to join the program they receive email, phone, voicemails and direct mail to communi- a communication kit from Paragon that explains the pro- cate with their customers when they need service, ac- gram to their employees. Companies have the option of cessories, an extended warranty or a new vehicle. having brochures customized with their logo and sent to their employees directly so they don’t even need to stuff “According to our ad tracking phone numbers, we their payroll envelopes. have had the most success with the variable mail cam- paigns because the response rates and closing ratios Merchandising are higher than other mediums,” said Benstock. When you walk into Paragon Honda and Acura, it is obvi- ous something is going on. Even if consumers don’t know “Most dealers will send multiple campaigns to promote about their sale the merchandising quickly reminds them all their profit centers,” said Budd Blackburn, Owner of that they are lucky they stopped by at the right time. “We TeamVelocityMarketing.com, “Paragon’s custom mail- want our customers to see a consistent message through ers promote all their profit centers in one campaign that our advertising and our in-store posters, tri-folds, balloons, has multiple offers for sales, service and finance,” added hang tags and brochures,” said Benstock. The dealership Blackburn. “While most advertising is a lot more expen-PARAGON CASE STUDy has extensive POS Merchandising that promotes the Para- sive in New york, the cost of mailers and postage is the gon Guarantee and Paragon’s Certified Pre-Owned Vehi- same here as it is in Nebraska so direct mail has proven to cles. be our best return on investment,” said Benstock. Retention Paragon Certified Pre-Owned Paragon implements a detailed loyalty strategy to Paragon is the #1 Certified Pre-Owned Honda and Acura bring back customers for service and to re-sell their dealers in the world. Actually, Paragon Honda sells more customer base more often. “We have a 360° customer than twice the certified pre-owned vehicles of the 2nd communication process from the moment a customer place Honda Certified retailer and broke Honda and Acu- buys to the time they renew into a new vehicle and ra’s all-time record by selling over 300 Certified Hondas
  • 6. “We have a 360° customer communication process from the moment a customer buys to the time they renew into a new vehicle and everything in between.”and over 100 certified Acuras in one month. “We sourcemost of our certified vehicles from trade-ins because we Tracking Advertising, Employees and Customer Carehave increased our new vehicle sales to customers who Paragon tracks their advertising, employees, and how theirtrade in 2 and 3 year old vehicles as a result of our targeted customers are treated by listening to every call that comesmarketing,” said Benstock. “Our Certified team inspects, re- into their dealership. “We use a company called www.pairs, and reconditions our vehicles to make them nearly- CallRevu.com to monitor all our calls 24/7 and they sendnew and we get them front-line ready in days so we can real-time alerts to our managers when a customer is mis-maintain a fast turnover of our inventory.” As a result, Para- handled on the phone,” said Benstock. “Our managers savegon has zero 60-day vehicles, not due to wholesale poli- a lot of deals because they contact customers immediatelycies but due to better retail marketing. Paragon promotes before it’s too late. We also review daily and weekly reportstheir Certified pre-owned vehicles with posters, brochures, that tell us what marketing the customers responded to,table tops, hang tags and window clings so it is easy for the appointment rates, show rates, and closing ratios byconsumers to learn about the value of their Certified pre- ad source. With this information we adjust our marketingowned vehicles. “We give every customer an ‘autobiog- to spend more where we get the results and less where weraphy’ that includes the vehicle’s history, lemon check, don’t.” ■service history, and pricing information on competitivevehicles so our customers have a lot of confidence whenthey buy a Certified pre-owned vehicle from our dealer-ship,” explained Benstock.Trade Cycle ManagementOver the last few difficult years, Paragon has learned thatthe loyalty and frequency of their customer activity is es-sential to survive the ups and downs of this business. Thatis why Paragon launched a loyalty management strategycentered on trade cycle management and short-term leas-ing. “We educate our customers on the benefits of a short-term lease and we are implementing a renewal processthat dramatically increases our loyalty rates at lease-end,”said Benstock. “Our goal is to build a large bank of loyallifetime customers who buy a new or used vehicle every2-3 years rather than every 6-8 years.” Paragon’s trade cyclebusiness plan forecasts the dealership being able to dou-ble their business every 6 years by increasing the loyaltyand frequency of their customer base without generatingany increase in volume from new prospects.“The best part is that this strategy will ensure we have alot of low mileage, late model pre-owned Hondas that wecan sell through our Certified pre-owned program whichis always in need of these hard to find vehicles,” said Ben-stock. PAGE 6

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