Implementing a Concierge Service
Brian Benstock considers himself somewhat of a Paul Revere figure. But instead of warning townsfolk that the British are coming, he’s warning other industry professionals of the disruptors.
“The disruptors are coming,” says Benstock, the vice president of Paragon Honda and Acura, one of the leading Honda and Acura dealerships in the country with an RO count in service of roughly 5,000 per month. “I do believe the future is frictionless.”
What does a frictionless future mean to Benstock? It means one where the customer is inconvenienced as little as possible. In fact, it might just mean that the customer never even has to step foot in the dealership.
“We’re spending millions of dollars on the facility and we want everyone to see it. Customers aren’t concerned about that. If you have a Taj Mahal facility, the customer is going to say, ‘This is going to cost a lot of money.’ The reality for me is they don’t want to drink your bad coffee, watch the wrong TV shows,” he says. “As we started to own that, we realized that our customer had better places to be.”
The problem, however, is that there’s a major profit center built right into that friction: service. How else would the service advisor be able to maximize those customers without being able to have an in-person conversation?
Well, imagine Benstock’s surprise, then, that embracing a concierge service has not only obliterated that worry, it’s also increased average repair order and bolstered the dealership’s reputation in the Manhattan area with a wider subset of customers.
A History of Innovation
Paragon Honda has always, in fact, been a paragon of innovation. It was the first dealership to develop a Honda Odyssey into a taxi.
“The Odyssey wasn’t selling, so I pitched it to turn that car into a taxi against Honda’s wishes,” Benstock says. “Now, there’s a factory that’s done that ever since.”
It also embraced the Honda certification program early on, while most dealers balked at the extra cost. Instead, Benstock says the dealership saw the opportunity, namely that the extra fixed cost is all profit.
“That was precisely the reason why so many used car managers wanted to stay away from the program,” he says. “But we thought, what’s best for the customers and dealerships?”
And in recent years, Paragon has employed a selling team that gives customers valuations on their trade-ins, which has resulted in selling more than 100 vehicles from those transactions.
The point is that Benstock and his team have always looked at the bigger picture. And in today’s thoroughly digital age, it’s impossible to ignore the disruptions made by Amazon.
Those disruptions begged a question: How could Paragon Honda follow suit?
“Jeff Bezos did not invent the Internet. Jeff Bezos did not invent FedEx. Jeff Bezos did not invent books,” Benstock says. “He’s taken all these things that were there and leveraged them. And look at the massive success there. We can learn from that.”
In studying Amazon’s business model, Benstock had a realization: What made the No. 1 online retailer so successful was that it brought the product to the customer.
“What if we started taking the product we had and started bringing it to the customer? Could we do more business?” Benstock says. “Take some of the friction out of the business model. It could reduce profitability per transaction but we would have more transactions.”
Fixed ops, in particular, seemed ripe for removing some pain points.
Weighing the Options
Benstock and his team went through numerous iterations before deciding on its final form. First they stationed employees at the location of a recently closed dealership to try to capture those customers. Then, they rented out local garages and allowed customers to drop off their vehicles at the garages, have the dealership pick them up and then bring them back. However, Benstock says he realized those four garages were only convenient to the people in that vicinity. That was the problem with all the different iterations they tried.
That’s when he realized the dealership needed to adopt a Starbucks mentality.
“There’s a Starbucks on every block,” he says. “We should be wherever the customer is. That’s what put me into search mode for a company that could pick up and deliver cars for us.
“We also looked at some data and it showed that 95 percent of the time, customers’ cars aren’t being used. They’re parked. Why not make better use of the customer’s time while the car isn’t being used?”
That’s how Benstock found RedCap Technologies. Similar to a Lyft or an Uber, RedCap Technologies is a concierge service that lets the dealership order a driver, let the customer know where the drivers is and at what time he or she will arrive, and then either pick the customer up or pick the vehicle up and leave a loaner vehicle with the customer until their vehicle is dropped back off.
“We started to play around with the concept,” Benstock says. “What if you no longer needed your car at night and we picked it up, serviced it overnight and we put it back in your driveway in the morning? We thought that convenience would be really special for customers.”
When the idea was pitched, Benstock and his service manager, sales manager, finance manager and controller got together to discuss how the concierge service would be integrated. Initially, all the managers believed the service should be offered at a cost—but not Benstock.
“I put my Apple hat on and said, ‘What would Apple or Amazon or Tesla do?’” he says. “They’d offer that service at no charge. By doing that, they’ll own the customer. One of the most profitable offerings Apple had prior to the iPhone was iPod and iTunes. When they developed the iPhone, they put that in the iPhone for free. They put it in there with a camera, video recorder—all sorts of other stuff. It becomes an insatiable drug you're hooked on.
“You can’t do without your phone. It’s your newspaper. It’s your magazine, your camera, your social portal. Thinking on a smaller scale to us, if we gave a great service to the customer, we can become the service they can’t do without.”
Implementing the Service
The way it works is simple: The customer goes online, selects that they want the dealership to pick up their car and sets an appointment and a driver from the RedCap driver network is assigned to the customer. By utilizing their driver network, the dealership avoids having to hire drivers or manage that segment of the business. The dealership is even working with Google to tie their application program interface (API) into RedCap so the appointment can be set with voice technology.
There were a few changes that Paragon had to make to accommodate this business. First, the dealership is now open 24 hours per day to accommodate all the various types of professionals who do not work 9–5.
To market it, first, Benstock reached out to all of the customers in Manhattan that were orphaned by the dealership leaving. They also created videos and signage that explains the program.
Initially, Benstock admits that he didn’t expect to get much of an ROI from offering the service. He thought of it more as an add-on service that would convince customers to remain at his dealership. But what he found was the value per RO has gone up since implementing the concierge service.
“We’ve learned that customers love when we make things easier for them. It makes sense. If you’re in the service department, you make an appointment, it takes 30 minutes, you show up at 8 a.m. and there’s a line at the dealership. You have to wait in the lobby, your car is still sitting in the parking lot,” he says.
When that happens, there’s already a level of annoyance from the customer. So when he or she finds out it’s $500 and another 1.5 hours, he or she is more inclined to say no or that he or she will get it done at a later date.
“You take away half the questions. Now it’s just, ‘how much’ not, ‘how long.’ ‘How much’ is a much easier question to answer,” Benstock says. “There’s much less resistance. We’re repairing your car, you’re not necessary. That slight nuance has enabled us to see much higher CSI scores and much higher repair orders.”
There’s also significant benefit with recalls, where customers are particularly annoyed with the OE.
Right now, roughly 16 percent of customers utilize the service and he believes 20 percent will be the tipping point.
“From the service drive, it’s very compelling. The RO growth is significant,” Benstock says. “Most Honda stores are up 1–2 percent. We’re up substantially higher than that. Those numbers speak volumes for what we provide for customers. The gross profit per month is up on top of a record month prior. That’s really encouraging.”