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For all those dealers who haven’t yet developed a full-fledged Internet strategy, Honda North is proof that it’s still possible to catch the pack - and even to pull ahead. Located about 20 miles north of Boston, Honda North got serious about the Internet side of its business less than two years ago. It’s done so well that it was ranked number 33 in the latest Ward’s e-100 - number 9 if you count only single-roof operations. We recently had the chance to speak with Edward Naczi, Honda North’s e-commerce director, to learn what has driven the dealership’s success.

Dealix Dealer Newsletter (DDN): Edward, thanks for taking the time to talk with us. You know, we’re accustomed to interviewing dealers who are getting exceptionally strong results from their Dealix leads. In fact, that’s precisely why we interview them - so we can share their insights and best practices with readers. But Honda North takes the cake. You guys have been closing leads at around a 20% rate more or less since you signed with Dealix. How are you doing it?

Edward Naczi (EN): Well, it all starts with the quality of the lead, and that’s the main reason Dealix is our top provider. But we’re obviously doing a lot of things right ourselves. When I came here a year and a half ago, I was given free reign to use everything I knew and believed about process to build an approach that would work. I don’t mean to blow my own horn. My point is that we, as a business, decided that we were going to be thoughtful and disciplined and create the best possible process from the ground up - and not cave in to all the forces that want to keep things as they were. And, believe me, there’s a lot of resistance to change in any auto dealership.

DDN: Where do your ideas about process come from?

EN: I’m pretty new to the auto business. I spent 25 years with AT&T, in sales and marketing, and that was a very process-driven business.

DDN: So you were hired as e-commerce director without an automotive background? You must’ve interviewed very well!

EN: I did a lot of research, and I brought some well-developed ideas to the table. It’s really to the credit of our management and ownership that they were serious about being successful on the Internet and yet didn’t have a lot of preconceptions about how to do it. When I met them, I felt that they were great businesspeople who just happened to be in automotive - they had the skills and outlook that would let them succeed in any industry.

DDN: Ok, so let’s talk about process. Honda North has a BusinessDevelopment Center. How does it work?

EN: Like most BDCs, it’s staffed with people whose main job is to set an appointment and get the person to visit the showroom. Truthfully, a lot of what we do is what everyone agrees a BDC should do; it’s just that we do an exceptionally good job of sticking to the program. Our BDC opens an hour earlier than the showroom, and it’s always fully staffed. Our reps are expected to work leads during their off-hours - they’re “always on,” and they’re happy to work like this because they have the financial incentive, and because this is their career, not just a job.

DDN: So the BDC reps hand their leads over to regular sales reps. It seems that lot of dealers struggle with this transition. How do you make sure no one drops the ball?

EN: This is one thing we do that’s very different. We believe that the leads that come in through our BDC are far too valuable to treat casually. That’s partly because of the initial lead quality, but our BDC reps add a ton of value by further qualifying the lead and preparing for the sale. Our solution is to assign BDC leads to our top-performing sales reps. We have a group called the “Eagles Club,” with membership based on a three-month rolling average: 15 vehicles sold a month, a 95% CSI, and a 40% close rate.

DDN: That sounds like a great way to get buy-in for the BDC from your salespeople, too.

EN: Absolutely. Our main goal is to make sure that our best people work our best leads, but assigning leads in this way sends a strong message that the business truly values the work that the BDC does. As soon as our salespeople understood this message and began to see for themselves how valuable the BDC’s leads are, they had an enormous incentive to optimize their performance.

DDN: Another difficulty some dealers associate with the BDC model is that the BDC reps don’t have enough opportunities to get to know the inventory, which makes it harder for them to answer customers’ questions. How do you handle this?

EN: I agree - nothing can kill a deal quicker than for a customer to hear that awful silence that comes when they ask about a specific vehicle and the rep isn’t familiar with it. Again, part of the solution is simply to be consistent. All of our BDC reps do a daily inventory walk - it is not optional. We also have an “Adopt-a-Car” program that requires all our BDC reps to get familiar with a certain number of used vehicles every week. They go through a detailed checklist, so they learn all about each car’s features and flaws. They test-drive the vehicles, too, which is an exceptionally useful thing when it comes time to talk to customers.

DDN: Obviously, Honda North is doing a great job using the Internet to sell cars. But what kind of impact has your success had on the business as a whole?

EN: We were making a certain number of Internet sales before we built our BDC, but the effort was pretty limited, and so were the results. In 2005, Internet sales accounted for 17.5% of overall dealership volume, and our close rate for those deals was just 7%. In 2006, 64% of overall sales came from the BDC, and our close rate skyrocketed to almost 19%.

DDN: That’s amazing. Does that leave you any room for improvement?

EN: Definitely. We’re doing very little with paid search right now, but it’s on our list. I also want us to start using websites such as MySpace and YouTube and some of the consumer ratings sites to develop a stronger online presence and reputation. There are a lot of resources we haven’t begun to tap, and when we do I fully expect to see even stronger results.

DDN: Great work, Edward. Thanks again for your time, and good luck with your upcoming projects!