Printed in Automotive News Dec. 12, 2011
In 2005, Hurricane Katrina left Troy Duhon's Toyota and Honda stores in New Orleans under 8 feet of water. Today, the stores are surrounded by weed-choked lots and boarded-up buildings.
The two dealerships turned to Internet leads to draw customers. All salespeople now are involved in Internet sales. Before the flood, the job was handled by a small group of Internet specialists.
"If we were going to survive, we had to figure out how to do the Internet right, because nobody comes out here accidentally," said Gerry Call, Duhon's Internet manager.
The stores' primary market population fell from 205,000 before Katrina to 80,000 today. Before Katrina, walk-in traffic accounted for 80 percent of the sales at Toyota of New Orleans and Premier Honda of New Orleans. Now, at least 65 percent of their business comes from Internet leads, though Call says the number would be higher if they could document how every customer arrived there.
Both stores let customers shop for vehicles without coming to the neighborhood. Premier Honda and Toyota of New Orleans provide home delivery of vehicles. And Duhon sends out independent used-car dealers or wholesalers to homes to appraise trade-ins.
Duhon also offers store-backed lifetime warranties on powertrains of new vehicles for the original customer. "We've had to go the extra yard to survive," he says.
The dealerships hired a new Web site vendor, Dealer.com; enhanced a chat service on its sites; and targeted New Orleans' passionate football fans. Duhon, a graduate of Louisiana State University, avidly supports its football program.
The new Web sites are easy for customers to navigate, Call says. And the dealerships can follow up with customers easily, load inventory data and videos and create detailed user reports.
The stores recently hired ActivEngage to offer live chat on the dealerships' Web sites to shoppers, and about 70 percent of those people filled out a lead form, Call said. The stores have sold vehicles to about 15 percent of those leads, a higher rate than with the previous chat vendor, he said.
One innovation: Buying key words on Google and other search engines when fans search for information on the New Orleans Saints and the LSU football teams. In football-crazed New Orleans, the stores can be seen 1 million times a season on those search pages, Call said. The dealership pays about $8, but only when a viewer clicks on the ad.
By focusing the bulk of advertising on digital rather than traditional media, the stores have cut per-store advertising budgets to about $100,000 a year from about $250,000.
Even with the improvements, Duhon's Toyota and Honda dealerships probably would have succumbed to the flood had it not been for his Nissan store, which stayed dry in the New Orleans suburb of Metairie during Hurricane Katrina.
The Nissan store was a staging area in the two weeks it took for the water to recede in the New Orleans neighborhood, and the several months it took to tear down and rebuild the stores, Call said. Insurance paid for most of the losses, he said. Duhon lost about 1,200 new and used vehicles to Hurricane Katrina. With a per-car deductible of $1,000, the lost inventory cost about $1.2 million. It cost about $4 million to rebuild the two stores, and the insurance company paid most of the tab, he said.
Duhon is realistic that business may never return to pre-Katrina levels. His Toyota store sells about 180 new and used vehicles a month, compared with 275 before Katrina; the Honda store sells 130 vehicles per month today, down from 150.�c