LOS ANGELES -- American Honda is launching a program this year that will attempt to channel owners of old vehicles to Honda dealerships.
Autos on their second or third owners typically need more expensive repairs and maintenance than new ones. And many dealerships need the revenue as quality improves and warranty revenues drop.
The company plans to find owners of old Hondas by combing through registrations and other data from such companies as R.L. Polk & Co. Armed with the data, a Honda vendor will mail the owners offers for maintenance and repairs at Honda dealerships.
American Honda Motor Co. piloted the program, called the Garage Predictor Tool, with 41 dealerships in Florida and northern California last year -- with success rates much higher than typical direct mail.
"When a car is sold multiple times, the databases get a bit loose about who the owners are," said Dax DeRop, national manager of Honda service marketing.
Because the new owners likely aren't in a dealership's files with phone and e-mail contact information, the only way to reach out is with direct mail.
"Typically, 90 percent of a dealer's service business comes from 0- to 10-year-old vehicles. But with this program, we're seeing [up to 20 percent] are 10-plus-year-old vehicles. These higher-value repair orders are for cars that weren't even in our dealers' systems," DeRop said.
Initially constructed to offer express-service and oil-change offers, the Garage Predictor Tool has also brought dealerships high-dollar repair orders with repeat business. The older cars tend to need major services, such as new timing belts and water pumps.
The direct-mail offers are custom fit to each metro market, whether it's for a discounted oil change, free vehicle inspection or a deal on brakes or tires, said Lynda Sakamaki-Shepard, American Honda's senior market retention specialist.
However, for each metro market, consumers received the same mailer with the same service specials to avoid dealer competition.
The cost to dealerships, including the database work, is 66 cents per mailer, Sakamaki-Shepard said. Honda estimates it will send out 2.2 million mailings this year with the Garage Predictor Tool.
Direct-mail campaigns typically see a paltry 1.5 percent response rate. But Dave Trzesniewski, service director at Walnut Creek (Calif.) Honda, had 17 respondents from 43 mailers. Those respondents didn't come just for oil changes, either. There were brake-fluid flushes, brake and battery replacements, and even a $3,000 job to replace myriad worn-out items.
"The cars that came in were probably from a private sale. The vehicle has changed hands, so I've lost the address and there is no way under normal circumstances I can get them back," Trzesniewski said. "This program has made all the difference in the world."
Cal Piper, service director for Coggin Honda in Orlando, had similar success with Garage Predictor. He received 48 customers from 233 mailers -- a 21 percent response rate -- that generated $46,652 in parts and service revenue.
"We had an amazing response, and the people are coming back for return visits, so we're doing right with our retention programs," Piper said.
"Central Florida is theme-park alley, with an extremely transient population. If [Honda's] software can find this new owner, we get the first shot at that customer," Piper added.
Once the customer comes into Coggin Honda, which is part of Asbury Automotive Group, the rest is all about retention. That's where Coggin's 45-seat service lounge works wonders -- with extended hours all week, first-run movies showing on a big-screen TV, Starbucks coffee, and massages on Mondays and Fridays.
"Once people know about those things, they come back on those days," Piper said. "We've finished their service and come out to tell the customer the car is ready, and they say, 'Hang on, the movie's not done yet.'"