Brian Benstock believes in the power of social media.
He uses the presence of his Honda and Acura dealerships on Facebook, Twitter and Myspace to shoot the breeze about the brands' vehicles, chat up customers about movies, music and art and give followers, friends and fans a chance to win cool stuff every quarter -- such as a new $16,000 2011 Honda Civic he's giving away in March.
The owner of Paragon Honda and Paragon Acura in the New York borough of Queens says social media coupled with positive feedback from consumer review sites such as Yelp and DealerRater are helping him create a database of hundreds of thousands of e-mail addresses of potential customers.
That database will let him cut his advertising and marketing spending by two-thirds within three to five years, he says. Benstock declines to say how much he spends to market his stores but admits to spending at least a $1 million annually.
He says his dealerships' Facebook friends increase their chance of winning the car by sharing the contest with their friends. He says the average Facebook user has 130 friends.
"We think the cost of a car -- say it's $16,000 or $18,000 -- is a small price to pay to have a 90-day promotion that gains friends and fans that are interested in Honda," Benstock says.
"And we can communicate with them and their friends for free and that's what you want to do. And we keep those friends and fans forever."
Internet social media aren't just for socializing anymore. More and more businesses including dealerships are using the sites to build communities of friends, fans and followers they hope will become buyers of products and services.
Citing data from Social Media Today, a Web site that tracks social media, GoSo President Adam Boalt says about 84 percent of consumers research products online as part of the purchase process, and he believes the percentage is even higher among car shoppers.
As a result, it pays for dealers to build and nurture positive online reputations, Boalt says.
GoSo sells software that helps dealers manage their online reputations. The company's name stands for Go Social.
"A consumer when making a purchase is going to research your brand," Boalt says. "Whatever shows up in the listing about your brand whether it's Yelp or Citysearch or DealerRater.com or Facebook or Twitter, consumers are going to read it and they are going to make some assumptions about you.
"So it's very important that you keep up to date."
Karen Bardoff, vice president of the marketing company TBS Promotions, says social media enable dealers, who support and sponsor local causes anyway, to participate in events that show consumers that their dealerships are good stewards of the community and treat their customers well.
"It's not about big sponsorships every day," Bardoff says. "It's about individual endorsements for your business. A happy customer that tells 10 people -- what's that worth?"
Benstock says it's worth a lot. "The voice of the customer has never been more powerful than it is today," he adds.
Thomas Bies, managing partner of Q Chevrolet and Q Chrysler-Jeep-Dodge of Irving, Texas, agrees.
Bies has three unpaid bloggers who drive vehicles supplied by the dealerships. They blog and post pictures and videos about the vehicles, everyday experiences and dealership promotions on Facebook and Twitter, Bies says.
He encourages employees to blog about the dealerships' participation in local food drives and other promotions on their personal social network accounts and link their friends back to the dealership Web site.
Bies says the dealerships' social networking efforts are bearing fruit.
In December, one of his bloggers, Zane Aveton, had a birthday party at the Chevrolet dealership. In her blog she invited people to drop by the store to help her celebrate and to register for a contest in which the dealership gave away $25,000 to a lucky person and another $25,000 to the winner's favorite charity on Dec. 31.
Bies says he spent less than $100 on pizza and cupcakes for the party, which drew 52 people.
That same weekend, he says, he spent $15,000 on a half-page newspaper ad that ran on Friday and a full-page ad that ran the next day. The ads generated 23 telephone calls -- exactly, he says.
"That's what I love; it wasn't the hard sell," Bies says of the party. "It was 'hey, thank you for coming to Q Chevrolet.' It was nonintrusive. They got a chance to see the store and meet some of the people and be part of the energy. My hope is that two, three or four months down the road if they're in the market to buy a car they're going to remember that experience."
Clay Hagedorn, marketing and e-commerce director of Finish Line Ford and Green Chevrolet in Peoria, Ill., says his stores stopped buying newspaper ads about six years ago in favor of Internet marketing. In October, the stores got into social media in a big way when they hired an outside company, Digital Air Strike, to manage that business.
Hagedorn says the dealerships are active on more than 60 social sites including lesser known ones such as Delicious, a bookmarking service, StumbleUpon, which recommends sites to others based on their interests, and Tumblr, a blogging site.
About 70 percent of the stores' ad budgets are devoted to the Internet; 3 percent of that amount pays for social media, he says.
Customers are responding, he says. Some customers have indicated they would rather be contacted on Facebook than by telephone and e-mail, Hagedorn says. In January, a local person who was not a customer posted a message on Twitter about having a dead battery.
The dealership offered to send a tow truck and offered a discounted price on batteries. Turns out the person didn't need a tow but within 90 minutes was in the dealership to buy a battery.
Like Benstock and Bies, Hagedorn says he believes the real payoff is down the road.
"I don't think it's going to instantaneously help you sell cars or service appointments," he says, "but hopefully it keeps you frontline ready in the customer's mind, that they'll be a fan of your store and think of you when they're in need."