Article

Honda North's Power Duo BDC And CRM Break The Status Quo

January 2007, Auto Dealer Today - WebXclusive

by John Carroll - Also by this author

Edward Naczi doesn’t think of himself as a car guy.

Ten years ago, he was wrapping up his job as senior vice president of sponsorship marketing for AT&T with the Atlanta Olympics when he took the golden parachute ride out of telecommunications. Then, there was a stint running his own marketing and consulting firm before he got bought out, and he devoted a couple years to perfecting his golf game.

It was just two years ago that he got his first taste of creating a Business Development Center (BDC) at a dealership, and he was hooked. A year ago, Naczi took over as e-commerce director of Honda North, a dealership just off the beaten track in Danvers, Mass.

He wasn’t brought in to maintain the status quo; he was brought in to surpass it.

“When I came in, they didn’t have a centralized CRM (customer relationship management system), a Business Development Center or a BDC manager,” said Naczi. There was one person who had been on the sales floor and was tapped to run the Internet sales side along with a half a position designated to cover the overflow work. 

Short on structure and light on effective marketing tools, they were handling about 35 to 40 sales a month, about 20 percent of the dealership’s business.

In quite a few dealerships, that kind of performance would have merited a pat on the back and little meddling from above. But like Naczi, the owners of Honda North aren’t car guys either.

“Here’s how I describe existing management,” said Naczi. “These are business people who happen to be in the auto industry, not car guys. They wanted to cut back on the expenses for the traditional ways to bring in traffic.” Devin Sullivan, general manager at Honda North, wanted to see just how far a really savvy business development group with cutting-edge e-commerce tools could take sales.

So they brought Naczi in to shake things up and offer up a brand new strategy to drive more sales while cutting the per unit cost of advertising. It was the sort of job that required a fresh outlook on the marketing world. Naczi must have seemed perfect.

“The print ad is a dinosaur,” offered Naczi. “It’s extinct. We needed to do more interactive marketing.”

For all of its size, tradition and once-enormous marketing clout, AT&T was always a process-oriented place to work, said Naczi. Before he ever got a green light to go nationwide with a big sponsorship marketing effort, he had to prove that what he was advocating translated positively to the bottom line.

He’s taken the same disciplined, results-oriented approach to marketing cars.

“I just think that the basic thing is to develop a process, develop people, develop a buy-in and make it happen. It’s not rocket science, or I wouldn’t be here.”

To find Naczi, you drive north out of Boston on Route 1 to Danvers. But there are some tricky turns to make before you get to the lot. Naczi knew upfront that the right kind of BDC was critical for attracting buyers who otherwise would never get a glimpse of the operation.

“We don’t have one of the greatest locations,” he noted. “There’s no line of sight. We’re more of a destination location.”

That meant more work developing and qualifying leads and then getting them onto the lot.

“The first thing I did was tell the owners we needed a very strong CRM system – vibrant, intuitive, automated – that gave customers an experience like no other. We needed to get customers into a Web site to answer most of the questions online – a 360 degree virtual tour with directions to get there, a list with every make and model on the lot with full specs, where you could send in your service appointment online, with a coupon for a discount if they wanted it. It had to be something attractive that captured the attention of people.”

BZ Results provided the CRM system that Naczi wanted to use. But that was just the beginning.

“We set up all the procedures, policies and so on,” recalled Naczi. “It was always my thought that if they were going to give me the job, we needed to make a dedicated Business Development Center, with inbound and outbound calling processes, with the intent to inform and educate people. You couldn’t do this without a dedicated staff of true professionals, who understood computers and knew how to take inbound and make outbound calls.”

These days, every lead goes up on the BDC’s big board, with an update on each contact, the vehicle they’re interested in, what was shown and whether they ended up doing a deal. Every morning the crew goes over the board to review their progress and lay out their plan of action.

Since Naczi joined the staff, customers are now qualified before they come in, with a credit check and a sensible review of the numbers to see if they can afford the vehicle they’ve expressed an interest in – or need to have a different kind of “switch” car ready for them to look at. 

“We show them how to change colors on the car and the options that are available,” said Naczi, whose dealership averages 70 percent new and 30 percent used vehicles. “We talk to them about their current financial situation, trade-ins and what it’s worth.”

What they don’t do is handle the sale itself. 

Said Naczi: “All I want them to do is drive traffic into the showroom.”  Each qualified Internet lead is assigned to an elite salesperson, known as an eagle.  They have earned the right to work the leads most likely to turn in to sales appointments. They confirm the appointment, get the car ready a half-hour in advance, and be ready with a back-up vehicle to consider, trade-in information and financing options before a customer ever steps foot on the lot.

Out of 15 to 20 sales people, there are always six or seven doing 20 sales or more a month, explained Naczi. To qualify as an eagle, you also need a customer satisfaction rating of 95 percent or better. Giving them the qualified leads, he said, just makes good business sense.

“It costs three times as much to acquire as retain people,” said Naczi. “That’s why you retain and reward for loyalty. In this business, with the churn and turn, give me an employee who’s dedicated and understands the business.”

In turn, they get a package of deals that are “60 to 70 percent done before they even get in.”

The eagles approach can cause some grumbling among the sales people who aren’t in the club, said Naczi. But then again, he isn’t heartless about leads.

“When we have an unusually large number of leads, we will try to help the other people out,” he said. “I’ll go down onto the floor during the last two or three days of the month and see who’s short of their bonus and how we can help them get there.”

Bottom line: “People are making more money as a result of the lead process.”

“We try not to negotiate the price,” said Naczi. “We’re known as a value-priced company; we compete against some of the biggest Honda dealers in the industry. There’s one price, which is easy and convenient. Customers get plenty of add-ons, free inspection stickers, free oil changes, a guaranteed $500 trade-in for loyalty when they come back, maintenance schedule commitment increases, a warranty to 100,000 miles on the power train.”

“Customers seem to gravitate to it for the most part,” said Naczi. “They’re sick of the push/pull.

“It’s not an easy effort,” he cautioned. “Everybody’s undercutting us by quite a bit. There are 30, 40, 50 templates that talk to why customers should do business with us.” There are also plenty of ways in the system to keep up a dialogue. “With BZ, you can use buzz mail, with audio and video clips. A customer sends a lead through the Web site or a third party provider, and they get an immediate auto responder. A bell rings on a computer, they write back to the customer with the MSRP and the value-price deal get these add-ons, and out it goes.”

“I have a dedicated guy at BZ that does training.” But there’s a lot more to it as well. The sales manager takes new hires downstairs to go through the entire sales process. They spend a week on the sales floor learning how the company works, looking over the different makes and models, and sitting through sales presentations.

Later, there’s time for one-on-one role playing in Naczi’s department. Sometimes they’ll do a few secret shopping expeditions to see how others handle the work and what they can learn from it. That helps his people learn how to handle objections and work through price objections.

And it’s effective.

In a matter of four months, said Naczi, his department went from 35 to 40 sales a month to 150 to 170.

“I think the turning point was when I finally convinced everybody here to drink the Kool-Aid,” said Naczi, “to see the processes and procedures and to give me the dedicated people, to get rid of lead providers that were here that weren’t performing.”

But there’s also plenty of more work to be done. Honda North is part of a five-dealership automotive group.  Each one has a different GM with a different way of looking at the lead-generation business and a different set of contracts for BDCs and CRMs. At the end of this year, as those contracts expire, Naczi’s method is likely to get a lot more buy-ins.

But Naczi is never really satisfied that he’s doing everything he can to generate all the business possible.

Looking at the five or six zip codes the dealership draws from, Naczi has to ask himself if “we are using the right algorithms. We’re looking at traffic over the last 12 months to figure out where we should be spending our dollars.”

Naczi, who still considers himself something of a newcomer to the business, has never understood exactly why dealerships focus the bulk of their lead-generation work in the last half of the month. With his background, it only makes sense to do more earlier in the month to help bring in more business just after you close one month’s books.

Vol 3, Issue 12

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