Paragon Honda and Acura in New York is a great family success story, says Vice President and Partner Brian Benstock. Paul Singer and his wife Edith acquired the Honda franchise back in 1970. At the time, Paul was an Oldsmobile dealer but fell in love with one of those Honda motorcycles. So he went out and got a franchise for the car. Singer set a portion of the showroom aside for a couple of Honda vehicles and people were laughing, but where’s Oldsmobile now? Benstock asks.
Paul was a well-respected dealer when he died in May 2006. The store has continued to be one of the country’s top dealerships under the leadership of Edith, her daughter and Brian. This year, Paragon is the top selling Honda dealership in new and certified sales combined and is one of Honda’s top CSI dealers.
Brian shares how Paragon has been able to survive the recent downturn while continuing to grow.
Brian, when did you start working at Paragon?
Paul Singer hired me in 1982. And in 1997, he made me a partner in the store in Queens, but before that he put me through the tests of good and bad markets, new and used cars – the works. It took a while for me to become a partner. I think Paul wanted to make sure I wouldn’t get dealer-itis. You know, going on all the trips and to all of the parties.
But he set the example. To call him a workaholic would be an understatement. Often, I would see his car in the parking lot when I left for the evening around 9 pm. And then when I came back into work at 9 am the next morning, his car would be there. And it was an hour and half drive home for him.
But after he died, I heard he would come into work on Sundays because he figured I would be there. And here I was, coming in because I knew he would be there, so maybe we pushed each other.
There is no doubt, though; Paul put me on the map. He was the kind of guy you wanted to learn from. He was a Holocaust survivor and had seen a lot. But he had a lot of pride in this country and the opportunities available. Paul and Edith taught me everything I know and it is their vision and wisdom that have led to Paragon’s success.
You and I have talked about this before. The transition after Paul died sounds like it has gone as well as one could hope.
Absolutely. Edith worked at the White Plains store for years, and still is in the store every day, so she knows the business. She really has long been a pioneer in the industry and has blazed trails for other women to follow.
I confer with her and her daughter on all of the major decisions. I’m responsible for the daily operations, though.
One story really shows her level of involvement. Recently we tried something different with certified. I opened up the valve a little too wide and the turn wasn’t there. It just didn’t drive the profit we were expecting. She looked at the financials and suggested we turn it down a little bit. So we backed off by about 50 units.
What advice would you give to younger folks looking to own a dealership?
First, it’s a long process so be patient. Second, learn, learn and learn some more. Don’t ever think you know it all.
Years ago, we had this general sales manager from a small town in Iowa that came out to see our operation. He was just a regular guy but he showed me a look at things I had never had before.
We tend to think in terms of selling a lot cars – you know, that’s how we determine if we’re good or not. Well, this guy was from a much smaller store with some big competitors down the street. Yet his store was one of the most profitable in the country. He changed my thinking in a lot of ways.
But, for all the guys aspiring to be a dealer, the one quality I’d say is most important is stick-to-it-iveness. You have to get back into it day in and day out. This is not a short-term thing. And you have to be able to take a punch and come right back.
You’ve had your share of mistakes.
You better believe it. I had that all makes all models leasing company in the ‘90s. Paul let me do it, but I ended up sitting on a million dollars of inventory that was depreciating right before my eyes. After we took the hit and sold the vehicles, we turned our attention to used vehicles.
Paul taught me there are so many ways to make money selling used vehicles. We can buy them right, we can price them right, we can advertise right. We just have to be creative and smart. We don’t have that opportunity with new cars.
I think we’re just now coming into our own on used cars, though. It’s taken a while to learn.
I remember that story about the Windstars you bought a few years ago.
Yeah. I thought I was being smart. I bought a dozen of them at an auction for about $12,000 a piece. Three months go by, and we still hadn’t sold any. It turns out, there were more than 400 of them in Queens. I think days supply was more than 100.
We had to keep moving them from one lot to another. I swear, they were multiplying. We eventually had to wholesale them.
You’ve said in the past that Mark Rikess has influenced your thinking.
Rikess is funny. Years ago, Honda wanted to do a study on dealership CSI and F&I and they used Mark’s company. So Rikess sends out this guy named Dan, to evaluate us.
After asking me a lot of questions, Dan starts to make some observations. I stopped him and asked if he was out to help us or to beat up on us. If it was to help us, I wanted to hire them to help us with our processes with taking care of our customers.
He said they had to ask Honda’s permission. The story I got was they said yes, but warned Rikess that we probably wouldn’t listen to them. Honda said we were only interested in the money.
At the time, we had one of the highest gross profits in F&I in the country and our CSI was around 90 – the national average was 93. So I’m thinking I’ve got an A while Honda’s thinking I’ve got an F.
Rikess’ guys came in and just getting their perspective was like having a 20 group in our store. Our CSI went up significantly.
You know, Rikess had the nerve to ask one day how it felt to be the impediment that was holding back my store. I said, “Well, Mark, I never really looked at it that way.” But he was right. I give them a lot of credit.
You seem to be willing to work with newer vendors.
I give them a hard time and make them earn our business. But you’re right. We do look for the Sean Wolfington and Dale Pollak types – those companies that have great ideas but haven’t been bought up by the ADPs and Reynolds and Reynolds of the world.
You jumped on with vAuto pretty early.
Yeah, we did fire them. The problem was our people weren’t using their tool. I saw the value in it but it was time intensive at the time, and they had not convinced our team to use it.
I’m not going to sit here and force my staff to use something they don’t believe in. The vendor has the responsibility to get the staff to believe in it.
Dale (Pollak) and I had a nice conversation. They enhanced the tool and tied it better to the sales side. So they came back in and took another crack at it and it worked.
He ended up helping you a lot, right?
Yes. At the time I’m thinking we were doing pretty good selling 100 units at $5,000 a copy. But Dale pointed to the rest of our inventory we weren’t selling and said, “What about these?”
He was right. It took us a year and a half to get out of the bad inventory we had.
Now we focus on inventory turn. We’re turning our used inventory at the Honda store over 16.7 times a year while the Acura store is at 13. We’re selling more now, although at less profit per vehicle, but we’re making more money because we’re selling more. And we’re not stuck with bad inventory as much anymore.
And, we’re the number one certified Honda dealer in the country right now.
You’re on a busy thoroughfare in Queens without a lot of real estate. Have you had to secure more land to account for selling more inventory?
The rumor I kept hearing was that we had bought a lot of land but the truth is we haven’t added one square inch of real estate. I always heard from other guys that you needed 100 vehicles to sell 50 cars a month. I think it’s the exact opposite. We need 50 cars on the lot to sell 100 – that’s if you’re managing your inventory right.
How do you find enough inventory?
I’m not going to give away all of our trade secrets. But we absolutely do have an active strategy at making sure we have the right inventory. We’ve figured it out that we need to buy 13 cars a day seven days a week. Now that’s the average of what we need to have coming in.
I look at our service department, which does about 180 ROs a day. And most of those are Honda vehicles. I’d say that’s a pretty good source for us.
Is it difficult to get people financed today?
Honda Financial has been super and has been there for us. We’re their top performing dealer year in and year out. We give them first shot at all of our business. If they reject someone, then we’ll send that application to a secondary bank. Paul always taught me to make sure we take care of the banks and the manufacturer. Those are the most important relationships we have.
You jumped all over that Cash for Clunkers program last year.
We sure did. That was the best economic program the administration has come out with. I think it added a half a point to the GDP. We were ready for it. I ordered the right inventory ahead of time and made sure everything was set up.
Last August was great. We delivered 1,000 new and used Hondas, so it was a great program for us and for everybody.
We’re through the downturn now.
I don’t know if we are through it yet. I’ve got my yellow caution flag out.
So how did you make it through 2009?
In September 2008, when it started getting bad, it was like musical chairs and we were caught. Mrs. Singer, her daughter and I put our heads together and came up with an aggressive ABC plan at getting our house in order. Making sure inventory and expenses were in line.
It took us a few months, though. We had a terrible first quarter. But then the rest of the year was one of our best years on record.
Were you nervous?
For awhile — yes. But Mrs. Singer told me, “Don’t worry. We’ll be okay.” And I can’t tell you what that meant to me. Once she said that, things started to turn around.
So we got the expense structure in place, then I called this guy, Sean Wolfington, in May of 2009. I said, “Ok, now I’ve inhaled. It’s time to exhale.”
You know him; he’s all about offense, which is what I needed at the time. He gave me a questionnaire that caused more pain than what Rikess caused me. He had me rate ourselves in every area and then helped us with solutions.
Brian, you’re going to be sharing during the 9th Digital Dealer Conference some of what’s made Paragon so successful. In fact, you’re going to part of one of the general sessions. Can you give us some highlights?
Sure. Sean will be presenting with me because he’s been such a help at putting together the plan. There’s a lot to it. We’re going to talk about Paragon became so strong in certified sales and how we increased our CSI by 45%. I’ll share what we’re doing in mobile, text and voice marketing.
Of course, we’re really focused on Internet marketing and service-related marketing so I’ll talk about some of that. But some of the fun stuff will include how we’re leveraging iPads in our processes.
It’s such a process driven and different mindset.
Paragon’s Plan of Success
- Implementing a new marketing strategy that blends traditional and digital advertising campaigns
- Implementing a new certified pre-owned marketing strategy that made Paragon the #1 Certified Honda dealer in the world
- Promoting a new brand campaign called “The Paragon Guarantee” that convinces consumers to buy more, spend more, come back more often and tell their friends
- Building new web sites and micro-sites that tripled their conversion rates and lead volume
- Appearing on top of search engines for free with new SEO, VSEO and ISEO strategies that don’t cost a lot of money
- Increasing web site traffic through low cost banner ads that have higher conversion rates
- Using new mobile marketing, text and voice campaigns to attract, sell and retain more customers
- Implementing a new social media marketing strategy that gets measurable results without a lot of expense
- Utilizing a new blend of traditional and targeted marketing to increase web, phone and showroom traffic, sales and service business
- Leveraging new online and offline publicity strategies to get free advertising on TV, radio, print and online
- Using new tools to identify in-market consumers who needed to buy or service their vehicle
- Using new showroom point of sale materials that sell the value of the dealership, people and products they sell
- Utilizing the new i-Phones and i-Pads in the marketing and in-dealership processes to improve the customer experience
- Implementing a new loyalty management strategy that increases retention, frequency, average dollars spent and referrals
- Implementing a 360-degree customer communication strategy that sends custom e-mails, text, voice and mail with unique offers that fits their unique situation.
- Using a new service marketing strategy that increases retention, traffic, ROs, average dollars per RO and frequency of visits
- Contacting customers when they are in-equity with personalized offers that are easy to say yes to
- Implementing a holistic training program that delivers a world class customer experience and dramatically increased Paragon’s profitability
- Launching a new Concern Resolution Process that helped improve Paragon’s CSI by 45%
- Using a new service that tracks every inbound call and alerts management within minutes of customers being mishandled