ONLINE EXCLUSIVE

Editor’s note: This is part two of a three-part profile of Heartland Honda in Springdale, Ark. Part one contains a history of the store, as well as details on how the staff has been downsized. Part three focuses on the plusses and minuses of being a Honda-only store.

Every dealer knows that retaining customers is a top priority, especially when floor traffic drops as much as it has lately. But what’s the best way to retain customers? Which of the various marketing systems should you use?

Greg Donahoe, general manager of Heartland Honda, has experimented with most of the systems, whether it’s something as traditional as TV and radio advertising, or something as modern as Google AdWords. He’s also used a variety of customer relationship management (CRM) software providers and website builders.

In fact, today his store uses no less than six vendors (and probably a few he didn’t mention): ADP Lightspeed, FUSS, PowerSports Network, 50 Below, Victory Solutions and V-SEPT. Donahoe has learned the strengths and weaknesses of each, and he’s not afraid to share his opinions.

So if you’re shopping for a new marketing vendor, or are just having second thoughts about your current vendors, read on to see how Donahoe’s experiences compare with your own. You may just pick up a tip that will save you customers.

Traffic Logs, Call Center, Websites (Two of Them)
Why does Donahoe need so many vendors, you ask? Well, let’s just say that’s he’s fine-tuned his marketing approach.

“We’ve got a got a door counter. We’ve got a paper log. We’ve got an electronic log,” Donahoe says. “I use Victory Solutions for our electronic log. I like them. In fact, I was with them four years; then I switched over to V-SEPT because I thought it had a better product.”

But Donahoe claims the V-SEPT marketing system was good on paper only. “It’s a nightmare,” he complains. (Click here for V-SEPT's response to his opinion.) “The problem with it is they have so many bells and whistles in it that you won’t ever get utilization. It’s hard enough to get a salesperson to log someone and get all the information, let alone use all that. So we dropped them and went back to Victory Solutions.”

Donahoe was able to negotiate with V-SEPT to keep only its loyalty program, which he loves. More on that later.

Some dealers don’t like using third-party call centers because they fear a loss of control. Donahoe doesn’t feel this way. In fact, he says Victory Solutions’ call center is the best thing about it. “That’s the selling point for Victory,” he asserts. “Their call center blows V-SEPT away. But V-SEPT sublets theirs to Alliance and Applied Concepts, and they just don’t hold a candle to what Victory has. I mean, an electronic traffic log — it is what it is. But if you’re not getting the calls, what’s the point? We get three or four hot leads a day from Victory when they contact our customers. It’s invaluable.”

Speaking of leads, the dealership gets surprisingly few of them from Honda’s consumer website. “You would think it would get a lot of leads because you get the dealer locator and all of that,” Donahoe says, “but maybe out of 30 leads that we’re getting through PSN or Cycle Trader, one might come from Honda. It’s that kind of ratio, which is ridiculous. I don’t get it.”

Donahoe hypothesizes that perhaps customers are going straight his own website, which would be counted as a PSN lead. “It’s kind of like a billboard,” he says. “The radio and TV gets play off the billboard, and you really never know the true source.”

PSN hosts the dealership’s sales-and-marketing website, but 50 Below built its site for selling parts. For e-commerce, Donahoe claims, 50 Below blows PSN away.

Does Donahoe like PSN? “Not really,” he says, “because it’s not very flexible. They’ve got these cookie-cutter templates for all the dealers, and you figure out which one you want. But it’s not user-friendly; it’s not customizable to the point — I mean, go look at all the PSN sites. They all look the same.”

I’ve known of dealers, I say, who’ve customized the look of their PSN sites by hiring a computer programmer to mess with the coding.

“We also did that,” Donahoe replies. “That’s very costly. Then we fired that company, or they quit. It was mutual. And so then I’m going in there, and I can’t touch it because he’s got all this kind of coding there I don’t know. So we had to rewrite the entire code so we can now manipulate it. That’s something we’re trying to get figured out."

Donahoe says the 50 Below e-commerce site is “rocking” even during the recession. A big reason for its success, he says, is Google AdWords.

And that’s all I can say. During my hour-long conversation with Donahoe, touching on all aspects of his business, he goes off record only once: when discussing a few details about his AdWord campaigns. “To figure out Google AdWords is a very time-consuming, laborious effort,” he says. “More and more are trying to do it, but it will cost you a lot of money.”

Loyalty Program Trumps Discounting
Many dealers today are viewing their pricing structure as a horror movie: the more slashing, the better. Unfortunately, the industry suffers as the perceived value of its products bleeds away.

Conscientious dealers avoid these deep cuts by providing incentives in other ways. At Heartland Honda, that other way is its growing loyalty program.

V-SEPT supplies the program, which integrates with LightspeedNXT and is actually powered by MoreThanRewards Inc. Customers receive points for every dollar they spend at the dealership. Customers can view online how many points they've earned and see their most recent purchases. They can then print a coupon or gift certificate to redeem at the dealership. Managers can digitally market to customers based on their buying habits.

Heartland Honda used to send customers $25 gift cards on their birthdays. Today, it gives them points. “We’ve tried to go away from gift cards,” Donahoe says. “We try to promote the rewards because the only way to get more rewards is to buy something.”

For a referral, the store gives a thousand points, worth about $70.

Heartland Honda could use V-SEPT to create and mail its loyalty-program-related coupons, but Donahoe prefers to outsource the job to FUSS Inc. He dropped FUSS when he dropped Victory Solutions, thinking he would save money using V-SEPT for everything. He returned to FUSS when he returned to Victory.

“I like FUSS because they’re like clockwork,” Donahoe says, clicking his thumb. “They’re consistent, and whether you lose a salesperson or not, you’re not losing contact with that customer.” Too many customers, Donahoe says, complained about not receiving their coupons when employees were supposed to send them.

“It costs money,” he says of FUSS, “but if you look at the amount of advertising and overall expenses — how much a customer is really worth — the 12 bucks for two years to send customers something is not very costly.”
Continued on page 2.

Donahoe reports that customers will negotiate even on PG&A prices. They sometimes cite an online retailer’s pricing. “Customers will nickel-and-dime you to death,” he says. “They’ll push if you let them push. And that’s the primary reason we implemented our loyalty rewards program: ‘I’m not going to give you a discount, but I’ll give you the awards points, which offsets it.’”

If dealers are going to have a loyalty program, Donahoe says, they must make it worth a customer’s time. “Of the research we’ve done, our loyalty program is probably the most liberal one I’ve seen. Best Buy’s Rewards Zone is pointless. Borders is a little bit better. But ours, we give some big-time dollars. There again, we want our customers coming back. We want them to get use to shopping here and only here. Like this: Instead of giving everything away for Black Friday, we’re doing a double-points day on Friday and Saturday.”

When it comes to digital marketing in general, Donahoe says it’s a constant battle to get e-mail addresses from customers. “From what I’m hearing,” he says, “we actually do better than most dealers because I’ve got like 5,000 e-mails in my database, which is nowhere near what I want. But then I talk to other dealers who have been trying, and they’ve got like 1,200.”

The store’s loyalty program requires an e-mail address, so it’s been a great help. Two times per month, Heartland Honda sends promotional e-mail blasts. But Donahoe has been disappointed with the open rates. “I just sent one out,” he says. “It went to 5,000 people. I’m up to 987 people who have opened it, 20 percent — if PSN’s statistics are right, which those are always questionable on how they get it. You go to Google Analytics, and it’s nowhere near what PSN says. So I just get lost in the Twilight Zone on what to believe.”

Complicating the matter are the preview panes with which most modern e-mail systems are equipped. “What constitutes an open?” Donahoe asks. “If it populates on the computer, does that count? It probably doesn’t. I don’t know.”

Traditional Advertising, Focusing on Current Customers
Just as Donahoe has made a few mistakes in fine-tuning his digital marketing efforts, he’s also had a misstep or two with real-world advertising.

Take last year’s partnership with the nearby University of Arkansas. At basketball games, a video board displayed a seat number, section and row, and the person in that seat qualified to win a new scooter.

“It was one of those deals where I’ll try about anything once,” Donahoe says.

The campaign put the Heartland Honda name in front of 400,000 people in four months, so how was it mistake?

First, the cost — $20,000. “We just don’t have that kind of budget for top-of-mind awareness,” Donahoe says, “and it didn’t help the fact that the Razorbacks only won one SEC basketball game.”

Donahoe says the exposure was great, but converting a significant number of people to customers would have required him to run the promotion year after year, at unacceptable cost.

“Most of my marketing right now,” he says, “has got to be for my customers who are proven. They know where I am, and they’ve spent money here.”

Assisting the store’s marketing budget is the 80/20 co-op it receives from Honda for branding. “It’s cheap money,” Donahoe says, “and I’m running a bunch of 10 o’clock news sponsorships for it with our branding spot. Does it drive traffic? No. But it’s lose-it-or-use-it money, so it makes sense.”

TV marketing in general is tough, Donahoe says. “I think too many people TiVo stuff anymore. So if you do buy a big spot, it gets run right over anyways. That’s why I run news and football. I’m Monday night football and Saturday night college football. I don’t think most people TiVo athletic sports, although probably more do than I care to know.”

Heartland Honda uses tracking 800 numbers only for its Cycle Trader ads. “I used to do more,” Donahoe says, “and it became a logistics nightmare. You need a full-time person just to monitor that.”

When Donahoe says “monitor,” he means someone actually listening to the conversations. He knows that many dealers use unique 800 numbers just to track marketing effectiveness, but he doubts doing so is worthwhile. For example, he doesn’t need any third party to confirm that Yellow Pages are quickly becoming obsolete, even though the Pages’ sales rep still tries to convince him otherwise.

“I got a Yellow Pages call last week,” he says. “It really pissed me off because of the scare tactic they were trying to use: ‘All your competitors are there. You’re going to miss out.’ I was like ‘I’m not missing shit. No one goes there. They go to Google; they don’t go to the Yellow Pages. So I’ve greatly reduced everything.’”

Other Heartland Honda marketing activities have included a Bike Night with a custom bike giveaway, as well as a 20x60 tent at the local Bikes, Blues and Barbecue event, which attracts 400,000.

The store hosts monthly Honda Rider’s Club of America rides. Four to six times per year, it also rents a motocross track to provide demo rides, free food, door prizes and giveaways.

Ironically, another real-world Heartland Honda giveaway may be ending because of Internet encroachment. The store has a Big Buck contest in which it rewards an ATV to the hunter with the biggest kill. The January event has attracted 400 people, helping sell an extra 50 ATVs.

The contest is held in conjunction with a pawn shop that’s also an official checkpoint for measuring deer. This year, however, Arkansas began allowing hunters to tag their deer online. The pawn shop’s numbers are down accordingly.

“I don’t know if we’ll be able to continue to do it or not,” Donahoe says. “We’re doing it this year because we’re committed. It’s a fun event, but I can’t afford to just keep giving stuff away.”