New York's Paragon sweetened Clunkers deal

September 17, 2018 01:00 AM

Brian Benstock devised new sales strategies to recover from the recession that his dealerships still use today.

hen the Great Recession hit in 2008, the impact was swift, severe and surprising, recalled Brian Benstock, vice president of Paragon Honda and Paragon Acura.

Combined sales at the two Woodside neighborhood stores in the New York City borough of Queens plunged 30 percent from August to September. Nonetheless, Benstock stayed the course through November.

"I was slow to react because it was such a quick drop. I thought it would turn around quickly," said Benstock, now 57.

He went through many sleepless nights, buffeted by feelings that bounced between guilt and remorse. Eventually, Benstock reluctantly reduced head count.

Salespeople and service technicians were spared. He needed them to "sell and service us out of this bad economy," he recalled. But a "substantial number" of managers were let go.

The rest of Benstock's management team took pay cuts. His employees understood what was going on and took it in stride. Still, the layoffs took a toll on him.

"It was so painful that I went to a psychologist" to cope with the stress, he said.

"I'm not ashamed" of doing so, he added. "If you're jeopardizing someone's livelihood, sending somebody who was a high earner to the unemployment line at a time when it might not be so easy to get a job and you don't feel the need to talk to somebody, then you have an even bigger problem."

Though he didn't see the recession coming, Benstock was warned about it. A dealership broker, during a dealer meeting he attended in summer 2008, predicted that a "tremendous slowdown was coming," Benstock recalled.

"I guess this was either July or August and I walked out of there thinking, 'I don't really get this,' " he said. He was in the midst of a 2008 that was shaping up to be a record year for the two dealerships — until the bottom fell out in September.

After the layoffs, Benstock regrouped and re-energized. By spring 2009 he was ready to go on the offensive.

He and his advertising agency slashed his advertising costs by a third by crafting a single marketing message.

The message was targeted to customers in Paragon's extensive lease portfolio who were nearing the end of their leases as well as those who had equity in their vehicles. It was conveyed through all of the dealerships' advertising platforms, including digital, websites, broadcast and direct mail.

Brian Benstock

Title then: Vice president
Dealerships: Paragon Honda and Paragon Acura
Where: New York City

Survival strategy: Reduce management head count, then advertising costs by targeting existing customers who were most likely to buy vehicles

"They were customers with the highest statistical probability of doing business now and in the [near] future," he said.

"We did early database mining. It's commonplace now, but it was cutting-edge at the time. The digital strategy is still in use now — more like hunting with a laser rather than a shotgun," he said.

The federal government's Car Allowance Rebate System initiative, also known as Cash for Clunkers, helped a lot, too, Benstock recalled. It offered $3,500 or $4,500 to consumers who traded in their cars and light trucks for more fuel-efficient ones.

To extend Paragon's reach, he created a variation of Cash for Clunkers. In June 2009, before the highly anticipated Cash for Clunkers kicked off, Paragon advertised it would pay $500 to $4,500 to customers who traded their vehicles for new, fuel-efficient ones but didn't qualify for the federal cash.

The federal Cash for Clunkers started July 1, 2009. In August, Paragon's new-unit sales soared almost 50 percent from the previous August and more than doubled compared with its average sales in the first quarter of 2009.

As bad as the recession was, some good ideas grew out of it.

Building on his data- and equity-mining strategy, Benstock later devised a plan to coax customers in Paragon's service waiting rooms into new vehicles that had monthly lease payments lower than their current payments.

He said he immediately began selling two or three new vehicles per day to customers who brought their vehicles in for service.

CPO, F&I benefits

The strategy paid off beyond the new-vehicle department.

Most of those sales brought trade-ins that helped populate his certified used-vehicle inventory. Certified-used sales became a critical pillar of his business.

The strategy generates business for his F&I department. In addition, used-vehicle certification helps keep his service and parts departments humming.

"From that day forward, I've had a sales team and an F&I team working the service lane," Benstock said. "It's an integral part of our business."