Planet Honda is one of the biggest dealerships in the country and will sell a combined 7,000 new and used vehicles this year.
Located in Union, NJ, the store is in the uber-competitive New York market. While the pain of the recession in 2009 and 2010 is becoming more distant in the rear view mirror, Planet’s owner Tim Ciasulli and business partner Bill Feinstein began laying the groundwork then for what would lead to their extraordinary success today.
After nine years as a partner in an auto mall, Feinstein, who was a former mergers and acquisitions attorney, sold his stake and joined Ciasulli as a consultant in 2009. It wasn’t long before Ciasulli brought him on as a partner.
As with every successful organization, Planet Honda’s growth is driven by its leadership.
Bill recently talked with Dealer magazine about his philosophy of leadership and how Tim’s vision enabled Planet Honda’s extraordinary growth the last several years.
Bill, it’s not often we see a single point store – one that isn’t part of a larger group – have the kind of success Planet Honda has.
That’s true, I suppose. We are looking for other stores to acquire. But our secret is that we’ve been able to focus on doing one thing and doing it well.
We understand how to run a large import dealership. Certainly, Honda has made it easy for its dealers with great product along with having good people in the company.
One of the things that differentiates us is that we’re probably one of the smallest, big dealerships in the industry. We sell 7,000 vehicles with about 160 to 170 employees. Most stores our size have more than 200 employees.
You joined Planet Honda in 2009 as a consultant. What were some of the recommendations you gave to Tim Ciasulli?
I spent a lot of time observing. I would sit at the front desk in each department for a few weeks and take notes. Once I shared my observations and recommendations, he said, “Great. Let’s fix this together.” That’s when I came on board.
I saw that we needed to improve how we answered the phone and responded to emails. So one of our first decisions was to build a business development center to help us manage that process.
Secondly, I spent a significant amount of time with each department head to find out what was impeding them from doing their jobs well. My thought process was that if we could eliminate those mental obstacles that would help them do their jobs better.
Once we did that, they were off and running. Of course, there were a few that were using the “obstacles” to protect their own egos, but we worked through that and parted ways with some of them. The biggest thing I did was to rally the troops – especially the new car sales team. I had several conversations with our new car sales manager about legacy and what he wanted his legacy to be at the store.
It was about building a sustainable culture. We wanted to ingrain within the team that the store’s success was part of their personal success. Frankly, during that period, not many stores were hiring so it was an easy time to motivate people.
You mentioned obstacles for the employees.
Part of being a leader is that you have to be willing to get your hands dirty. You have to be willing to lead from the front and show your people that you’ll work as hard as they do. A big part of my job is to understand the problems our employees have and then do what we can to eliminate them. You could say, I’ve established a role for myself of being the problem solver. Bring me all the crazy and complex decisions – that lets the team focus on their jobs, selling and servicing vehicles.
Still to this day, I’ll take over for our sales manager when he’s off. I’ll sit in his desk and desk deals for six or seven hours. My previous partner would yell about how I was wasting my time.
Truth is, there is not better use of my time than that. I’m learning whether we’re training our people properly, whether our advertising is working. And I can have a much better feel for where our inventory is at. It keeps me in tune with where our dealership needs to go.
Going back to culture for a second, I believe that’s my primary job – protecting and promoting our culture. We’ve parted ways with a salesperson averaging 40 sales a month because his negativity was dragging others down. I don’t know of too many other stores that would make that call.
We did the same with someone in our F&I department who was averaging $1500 a copy. He just didn’t fit our culture. They were two of the best moves we made.
I remember talking to Tim during the downturn. When others were cutting in areas like advertising, Planet still stayed fairly aggressive.
The real credit for our success is Tim’s. He’s a great partner and an upbeat and optimistic person — in addition to being one of the most creative marketers I know. I can get caught up in the numbers but Tim’s been able to push and expand my horizons. He’s been an amazing mentor. I’ve learned from him that sometimes we have to move on faith.
So when everyone else was cutting back, we made a strategic decision to keep spending money in advertising. I’m sure people thought we were nuts, but we believed there was business out there. Sure enough, we began capturing some share and started seeing month over month increases. Before long, those became year over year increases.
Sounds like you’re competitive.
Yes, absolutely. And that was part of motivating our team. We picked targets – other dealers – and figured out ways to overtake them. We went after the “D” players first, and then the “C” players. Now, we’re going after the “A” players. I might not be the most fun person to be around when things don’t go as planned in a given month.
There are some big “A” level players out there – Dave Conant with Norm Reeves; Rick Case; Ernie Boch; Brian Benstock…
True and we try to learn from all of them. Dave Conant is my idol. Besides being one of the best operators, he’s a great person and family man. I’ve learned from him, not just about being a dealer, but about how to present and carry myself in the store.
Talking about the competitive nature of it, in some ways, it was more fun when we were smaller. It’s more fun to be doing the chasing rather being the one who is being chased. The secret really is that we were able to get everybody on board taking the business personally.
How do maintain that competitive spirit as the targets become fewer?
As long as there is someone ahead of us, that’s the store we have to figure out what they’re doing that we’re not doing. I think we have a long ways to go before we catch Conant’s store – Norm Reeves.
It’s not just about overtaking stores, though. We do have metrics that we’re constantly trying to improve, so that helps us keep that competitive mindset. Each month, we receive a scrubbed report from Honda that provides metrics on the top five most profitable Hondas stores. We don’t know who they are but can see the numbers.
That gives us very real targets to hit. We’re constantly striving to be the best in any given category.
What areas do you see as opportunities for your store?
We have a world class new car sales department along with a strong F&I department. We have strong teams in place there and that juggernaut is just starting to get rolling. We went from 30% to 50% in leasing – and give Brian Benstock of Paragon Honda his due because he pushed that hard and we’re following suit. We’re retaining more than 65% of our leasing so that gave us about 2,500 customers in the que at the beginning of the year. We have big opportunities in used cars and in service.
You mentioned having only 160 to 170 employees. Is turnover an issue for you?
It is a continuous challenge. On the recruiting side, we learned we don’t do well hiring people from other stores. We have such strict processes, it’s hard for people who have been in the business to get acclimated to our culture. We prefer to home grow our people. We have multiple recruiting channels, but we need to get better at it.
Each month, we’ll interview about 100 candidates. Of those, we’ll invite about 30 to a two-day training seminar. From that, we’ll whittle the number down to about 20 or so.
We’ll end up hiring anywhere from two to five each month. Doing it that way puts us in position to hire effectively and consistently. If you wait to find people when you have to hire someone, that’s when bad decisions are made.
I have to imagine that you have a strong training system in place.
Well, one of my projects right now is to solidify our training program, institutionalize it and make sure it’s a sustainable and systematic program. We do it in house but we do have partners that we bring in to help us train. It keeps it fresh for the employees as well as helps us stay on top of trends happening in the industry.
When we brought in the folks who handle our F&I training a few years ago, we kept asking when we would see our numbers start to go up. They told us we weren’t ready yet. We needed to get the processes – including the admin processes – right first. Until the contracts are right 100% of the time and the processes are bulletproof, you can’t worry PVR or market penetration. Build the foundation first and the results will follow.
We have about 90% of our processes written down but we’re still working on codifying all of them to put them into a guide format.
You’re known for being a progressive dealership.
I love to learn and am an advocate of using technology to help us be more efficient. Every single day I learn something new – especially about digital advertising.
But the most progressive thing I believe is that we can still make money selling cars. I know that’s heresy today but with the right process and providing superior customer service lets us ask for a fair price.
We do use a lot of technology. Some of it works and some of it doesn’t. We can afford to try different things because of Tim’s willingness to experiment. We recently changed CRM Solutions – we switched to ELead. It was a painful process but was phenomenal for our business. It forced us to look at all of our processes and rethink everything. They let us experiment so they’re a good partner for us.
Any examples of things that you tried that didn’t work?
We recently changed our inventory provider and we’re in the process of switching back. We just weren’t getting the reporting we need. Even though it didn’t work out, making that initial move forced us to rethink how we do things. And from that, we were able to eliminate some of the bottlenecks in our recon process. So it actually helped us.
Even with your reliance on technology, I get the sense you’re still car guys who understand it’s still the car business.
Absolutely. We know that technology can’t replace solid processes. Technology can create a false sense of having all the information we need. For example, I’ll still walk the lot every day because there is information I can’t get from technology. Are our vehicles placed properly? Is there an employee smoking where he shouldn’t be? I manage by walking around. I like to be out in the store with the employees.
You mentioned digital advertising.
Yes. We don’t buy third party leads but we’ll do business still with Edmunds, Cars.com, Autotrader and TrueCar. They aren’t really third party lead providers. I do believe eliminating all traditional media spend is a mistake. TV is still the way to build the brand. Meanwhile, we’ve jumped back on terrestrial radio after being on Pandora for a couple of years.
We have a campaign on Z100, New York’s largest radio station. The campaign is called Everyday Heroes. People can nominate their personal hero. At the end of the year, one of the heroes will receive a Honda Civic.
Z100 also has a strong social media presence which we like. We’ve coordinated our digital spend with the campaign also – both with messaging and timing. It’s consistent across all channels.
What does the future look like in our industry?
That’s a great question. I think we’re probably in a cycle where in 10 years we’ll see significant changes. I just don’t think we’re there yet on the innovation curve. Over the next couple of years, how consumers absorb media and messaging will continue to evolve.
Inside the dealership, we’ll see solutions that help improve the customer experience. The telematics piece will be powerful – letting the dealer see when the vehicle needs servicing.
There will be significant opportunities there.
Thank you for taking the time to talk with us today, Bill.