This Is How They Did It In Just 6 Months.
By Cliff Banks
Special Edition Magazine
Paragon Honda & Acura
Paragon Honda and Acura grew from #17 to the #1 New & Certified Pre-Owned Honda & Acura Dealer in the U.S. in a short 6 month period. This document provides an overview of what they did in that time period.
“Overall, it was our best year in business despite being the worst year in the industry,” said Brian Benstock, GM and partner of Paragon Honda and Acura. “We had a record year for volume and profitability during a record low year for the car business.” The biggest thing that impacted Paragon’s growth was changing their marketing, sales and service strategy last June. “We had an in-house ad agency but decided to bring on an outside company to help us build and implement a new plan to grow our business,” said Benstock. Below is a summary of the strategies that had the biggest impact on Paragon’s business over the last year according to Brian Benstock himself.
Paragon’s mission-driven leadership team is passionate about astonishing their customers by delivering a Ritz-level customer experience in all their departments. The leadership of Paragon is known for its commitment to customer service and extraordinary work ethic. “Paul and Edith Singer founded the dealerships years ago and they set the bar high by their example and extraordinary work. Since Paul passed away, Edith has infused the culture of the dealership with her passion and tireless work ethic but also has added the heart that is essential to premium customer care,” said Benstock.
“In the past our in-house ad agency worked with 12 different companies to execute every part of our strategy and the vendors didn’t work together so the campaigns were not integrated. It was confusing for our customers because our TV and radio commercials had one message, direct mail had another, my internet manager was sending emails with different offers and none of it was on my website or point of purchase materials in the dealership. Our advertising strategy improved dramatically because we consolidated our marketing vendors and hired one company to develop and implement one integrated marketing strategy that is completely connected and consistent.”
“Paragon uses extensive market research to identify consumers that have the highest statistical probability of doing business with their dealerships in the future,” said Sean Wolfington, Owner of Tier10Marketing.com, the marketing company Paragon hired to help them create their strategy. “We use the manufacturer’s Paragon search, Polk Market data and the dealer’s historic sales and service trends to plan which customers to target in the future,” said David Boice, Co-founder of Tier10Marketing.com.
“In the past we spent more money on mass marketing through TV, radio and print, but the research showed that over 90% of our business came from less than 10% of the city, so we targeted our marketing to the consumers that live in those areas and that are in the market to buy or service their vehicle in the near future,” said Benstock. “This saved us a lot of money that we used to waste on advertising to people who were either not in the market for what we offer or who were not in our geographical market and therefore had a low probability of coming in for sales or service,” added Benstock. “There are over 11 million people in New York City but there are only 87,500 consumers that have a high probability of doing business with Paragon so they are the primary target of their marketing plan,” said Boice.
“With intelligence and boldness, Brian thrives in an urban environment where few could survive,” said Dale Pollak, chairman and founder of vAuto. Paragon uses vAuto to get accurate used vehicle market pricing to implement an intelligent strategy for buying, marketing and selling used vehicles. “Before we would price our cars very high in the hope of making a very large gross profit and we would slowly reduce the price as time went on,” said Benstock. “Now we market price our pre-owned vehicles to move them fast so we can increase the frequency of our sales and get a better internal rate of return on our capital. In short, we make a lot more money by making less money more often.” When a customer wants to shop, Paragon shows them similar vehicles in the market that cost more money so they can see they are getting a good deal without leaving Paragon’s showroom to prove it.
Traditional advertising on TV, radio and print is expensive in New York, like other major metro markets. As a result, Paragon shifted a lot of their traditional ad budget to more targeted marketing that generates better returns. However, since Latinos make up half of Paragon’s market, they have leveraged some good buys on Spanish radio, as well as, print ads in the New York Times where they include QR technology, a barcode that links consumers’ mobile phones to Paragon’s website where they can learn more about the offer and contact the dealership. “We recently did a radio buy that promoted a film premiere we sponsored in Queens,” said Benstock. “We invited people to our website and Facebook pages to enter to win tickets to the premier and provided additional entries for people who shared the promotion with others on Facebook and Twitter.” Paragon has integrated technology into their traditional advertising to build their database and to multiply the reach of their promotions through viral strategies that incentivize consumers to share their promotions with their friends.
Over 90% of Honda consumers use the web to shop so Paragon has an in-depth strategy for search engine optimization and marketing, email marketing, banner ads on popular websites like Facebook, social media marketing, online reputation management and mobile marketing. “We have a lot of friends and followers on the top social media platforms including Facebook, MySpace, Twitter and Bebo,” said Benstock. “As a result of our digital marketing campaigns, we increased the size of our database by approximately 50,000 in the last 6 months and we are sending out professionally designed emails that have credible themes and clear offers that generate leads from consumers who will buy and others who need service.”
“Our best source of leads are our own websites because the closing ratios and average gross profits are much higher than the typical lead providers, as most 3rd party lead generators sell the same lead to multiple dealers,” said Benstock. “We only work with lead providers that generate a good return and have a lower cost per sale compared to our other marketing. We use AutoTrader.com, Cars.com and AutomotiveAdvertisingNetwork.com because all three of them deliver exclusive leads which means they don’t resell the same leads to all of our competitors.”
AutoTrader and Cars.com have long done a good job with pre-owned and they give dealers exposure to clients they may not otherwise reach. The Automotive Advertising Network promotes Paragon’s vehicles on the most popular search engines and social networks and sends them unlimited leads for a flat membership fee of $995. AutoTrader and Cars.com are more expensive but often generate more leads.
“Now that AutoTrader.com has bought vAuto we are eager to see what Dale Pollak and Chip Perry will do together, I am sure it will be big,” Benstock said.
Since the majority of consumers use search engines to find their next new vehicle, Paragon uses organic Search Engine Optimization (SEO), Video Search Engine Optimization (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 consumers are searching for on Google and they implement search strategies to appear on top of the results for popular search phrases. For example, during cash for clunkers Paragon generated over 5,000 leads in less than a month through Paragon’s website, 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 ToyotaRecall.org that appears on top of the results when consumers search for information about Toyota’s Recall. “The Automotive Ad Network also provides thousands of inbound links to our website, which increases search authority and position on the search engines,” noted Benstock.
Television advertising has worked well for dealers in the past because consumers can experience the sight, sound and motion that other mediums don’t deliver. Now Paragon is using video to promote their dealership but they are optimizing the videos to appear on top of the search engines for the most popular search phrases their consumers use to find an Acura or Honda. “We hired a VSEO company, to produce and position hundreds of positive videos about our dealership on top of the search. They also post comparison videos for consumers who are searching for competitive brands like Toyota and Nissan, so they can see the advantages of the Honda and visit our website to get an instant price quote,” said Benstock. “Google gives advantage to video results over text results and consumers like video more than text,” said Karry Moore, Owner of Car-Mercial.com, the company Paragon uses for their VSEO strategy.
Pay-Per-Click Search Marketing
“Our primary strategy for pay-per-click is to improve our organic search results so we don’t have to pay a lot of money on our pay-per-click strategy. So far this year we have generated 10 leads organically for every 1 lead from pay-per-click, and that has dramatically reduced our cost per lead and sale. We only use targeted pay-per-click search marketing campaigns for the search phrases where we don’t appear for free on the search engines and that have the highest closing ratios at the dealership,” explained Benstock.
All of Paragon’s digital marketing efforts drive consumers to a campaign micro site where the message, offers, look and feel are consistent with every other part of the campaign. The campaign micro site is designed to convert the maximum number of visitors into email, phone and showroom leads. Some examples of micro sites we currently use are ParagonHondaInfo.com and ParagonExpressService.com.
Paragon realizes that a free five minute story on a major TV network that appears online forever has a bigger impact than an expensive 30 or 60 second TV ad that runs out when the budget expires. “Our marketing company creates and distributes relevant press that generates interviews with local press and we have received exposure in the Wall Street Journal, New York Times, NY Post and hundreds of stories on national outlets, including CNN, ABC, NBC, CBS, FOX and MSN,” said Benstock. As a result of his public exposure, Benstock was recently invited to host an Automotive Advice call-in show on the top radio station in New York every Saturday at 4pm and he is piloting a similar car show on Fox TV to give consumers advice on shopping and servicing their vehicles. When you google “Brian Benstock” and search for “Videos”, two pages of video interviews on national TV shows appear as a result of Paragon’s effective publicity campaign.
Today’s consumers rely more on other consumers’ reviews than advertising, so Online Reputation Management is a top priority for Paragon. “When consumers google our dealership or my name they will find out about all the things we are doing in the community and they will be able to read positive reviews from satisfied customers,” said Benstock.
“Our marketing company automates a process to ask all our satisfied customers to share their experience on popular consumer sites like Google Reviews, Dealer Rater and many others. By asking our satisfied customers to share their experience on the internet, our online reputation dramatically improved in a few short months and we are always working to make it better,” said Benstock. Paragon also has an active social media marketing strategy through Facebook, Twitter and their dealership blog ParagonHondaInfo.com. Paragon takes pictures of all their customers with their new car, sends them the photo and asks them to post it on Facebook and share their positive experience on the review sites. To increase the chances, Paragon also gives customers step-by-step instructions on “how to” post their review on Google, Dealer Rater and the other popular review sites.
Paragon communicates with all in-market Honda and Acura consumers by sending custom offers based on their vehicle, miles and position in their ownership cycle. Paragon sends custom campaigns via mail and email to promote all their profit centers, New, Used, Finance, Service and Parts. “We dial into Paragon’s DMS to target in-equity customers and we use variable printers to send a custom message to each consumer that shows them how they can get a newer vehicle for a lower payment,” said Budd Blackburn from TeamVelocityMarketing.com, “we also include offers that promote the service the customer needs, extended service agreements and accessories.“
Paragon’s marketing company promotes a corporate purchase program to employees of large organizations in their market that gives them special pricing and service when they do business at Paragon. “Our marketing company sends an information package to the HR department of the largest organizations in our area to ask them if they want to give this free benefit to their employees,” said Benstock. If a company wants to join the program they receive a communication kit from Paragon that explains the program to their employees. Companies have the option of having brochures customized with their logo and sent to their employees directly so they don’t even need to stuff their payroll envelopes.
When you walk into Paragon Honda and Acura, it is obvious something is going on. Even if consumers don’t know about their sale the merchandising quickly reminds them that they are lucky they stopped by at the right time. “We want our customers to see a consistent message through our advertising and our in-store posters, tri-folds, balloons, hang tags and brochures,” said Benstock. The dealership has extensive POS Merchandising that promotes the Paragon Guarantee and Paragon’s Certified Pre-Owned Vehicles.
Paragon implements a detailed loyalty strategy to bring back customers for service and to re-sell their customer base more often. “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,” said Benstock. Paragon uses email, phone, voicemails and direct mail to communicate with their customers when they need service, accessories, an extended warranty or a new vehicle.
“According to our ad tracking phone numbers, we have had the most success with the variable mail campaigns because the response rates and closing ratios are higher than other mediums,” said Benstock.
“Most dealers will send multiple campaigns to promote all their profit centers,” said Budd Blackburn, Owner of TeamVelocityMarketing.com, “Paragon’s custom mailers promote all their profit centers in one campaign that has multiple offers for sales, service and finance,” added Blackburn. “While most advertising is a lot more expensive in New York, the cost of mailers and postage is the same here as it is in Nebraska so direct mail has proven to be our best return on investment,” said Benstock.
Paragon Certified Pre-Owned
Paragon is the #1 Certified Pre-Owned Honda and Acura dealers in the world. Actually, Paragon Honda sells more than twice the certified pre-owned vehicles of the 2nd place Honda Certified retailer and broke Honda and Acura’s all-time record by selling over 300 Certified Hondas and over 100 certified Acuras in one month. “We source most of our certified vehicles from trade-ins because we have increased our new vehicle sales to customers who trade in 2 and 3 year old vehicles as a result of our targeted marketing,” said Benstock. “Our Certified team inspects, repairs, and reconditions our vehicles to make them nearly-new and we get them front-line ready in days so we can maintain a fast turnover of our inventory.” As a result, Paragon has zero 60-day vehicles, not due to wholesale policies but due to better retail marketing. Paragon promotes their Certified pre-owned vehicles with posters, brochures, table tops, hang tags and window clings so it is easy for consumers to learn about the value of their Certified pre-owned vehicles. “We give every customer an ‘autobiography’ that includes the vehicle’s history, lemon check, service history, and pricing information on competitive vehicles so our customers have a lot of confidence when they buy a Certified pre-owned vehicle from our dealership,” explained Benstock.
Trade Cycle Management
Over the last few difficult years, Paragon has learned that the loyalty and frequency of their customer activity is essential to survive the ups and downs of this business. That is why Paragon launched a loyalty management strategy centered on trade cycle management and short-term leasing. “We educate our customers on the benefits of a short-term lease and we are implementing a renewal process that dramatically increases our loyalty rates at lease-end,” said Benstock. “Our goal is to build a large bank of loyal lifetime customers who buy a new or used vehicle every 2-3 years rather than every 6-8 years.” Paragon’s trade cycle business plan forecasts the dealership being able to double their business every 6 years by increasing the loyalty and frequency of their customer base without generating any increase in volume from new prospects. “The best part is that this strategy will ensure we have a lot of low mileage, late model pre-owned Hondas that we can sell through our Certified pre-owned program which is always in need of these hard to find vehicles,” said Benstock.
Tracking Advertising, Employees & Customer Care
Paragon tracks their advertising, employees, and how their customers are treated by listening to every call that comes into their dealership. “We use a company called CallRevu.com to monitor all our calls 24/7 and they send real-time alerts to our managers when a customer is mishandled on the phone,” said Benstock. “Our managers save a lot of deals because they contact customers immediately before it’s too late. We also review daily and weekly reports that tell us what marketing the customers responded to, the appointment rates, show rates, and closing ratios by ad source. With this information we adjust our marketing to spend more where we get the results and less where we don’t.”
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