It’s something every dealer and manufacturer gives lip service to, but Esfahani, an Iranian immigrant, lives it. “Everything in the store pivots around the customer,” he says. He’s so committed to his philosophy, he is willing to sacrifice short term profit for long term gain at his Eastern Shore dealerships in Daphne, AL.
So far, the sales numbers at his stores support his strategy. He set a new sales record in 2009 – arguably the toughest year in the history of automotive retail.
Shawn, you have an intriguing philosophy of the business, but the story of how you got here is equally fascinating.
Esfahani: I was born and raised in Tehran in a westernized family.
Following the revolution in Iran in 1979, being a young man (16), I really felt my life could have been in danger. I pleaded with my dad to let me leave and he agreed and organized my departure at the right time — two months before the Iran and Iraq war broke out. There was a mandatory draft in Iran, in which the government could make you go to the front line or wherever they needed you. I did not believe in the Revolution or the systematic fundamentalism and theocracy that was taking place, resulting in my leaving the country.
I spent about 11 months in Spain. Then I attended Tulsa University but barely spoke any English. So I enrolled in a six month language course.
After my college years, I had to make money to pay for it, so I decided to sell cars in 1985. I found the car business fascinating, and after six months I was the top producer. I moved to south Florida and got a job at a dealership as a salesperson. Then quickly (a couple months) was promoted to sales manager and then general sales manager, eventually leading to the general manager position.
At King Toyota I put a lot of accountability into place at the time (early 1992-1993) when people didn’t really care too much about accountability. During my time at King Toyota I put a lot of value on being accountable, at the time it seemed that not many others felt the same about accountability. It wasn’t a pretty picture. I set up a system in which we counted bodies, people, really anything I could and created a process to measure and move to the next level.
Was it at King Toyota that you began to see the success your system created?
Esfahani: In a short time, we went from selling less than 200 cars to selling 600. We set some unbelievable records, we had our sales up over 300%, which was unheard of. We had the highest sales efficiency in the country at the time, close to 600%. Additionally, we also earned the top service and sales CSI in the country among the top 300 volume dealers. We were number two in the Southeast region (August 1995) with 725 sales in a month (532 new, almost 200 used). Keep in mind, we had the oldest operating dealership in the area (over 40 years old) and only a four and a half acre lot to work with.
Remember, in 1994-1995 Toyota wasn’t a powerhouse, they were like Hyundai is today. By being “customer-centric” and valuing the principles of accountability and hard work, our team was able to achieve success that was previously unfathomable.
How did you become a dealer principal?
Esfahani: A former Toyota executive asked me to become a partner in 2000 with him in Atlanta.
I accepted and helped him build the Toyota Mall of Georgia store. Immediately we were able to sell a couple hundred cars out of a used car trailer. That pretty much by itself beat everyone else in Georgia for used car sales. We also sold 700 cars (new and used) and became the number one dealer in the state of Georgia and were in the top three in five states.
We put in accountability processes and most importantly, we put value in our sales force and team members. We created an intense team concept in which everyone focused on one purpose, “How does the customer feel?”
Was that difficult to implement?
Esfahani: I have this favorite saying, “Everyone wants to go to heaven, but nobody wants to die.” It takes a huge amount of energy and effort to have daily meetings, daily discussions, daily studying of sales, reviewing complaints and thinking about customers to really get to the bottom of it.
It must have worked.
Esfahani: I had a very good five years. I opened six stores in the first three years, and very quickly, several of them became number one.
Why did you choose Daphne, AL?
Esfahani: It chose me. There was an open point and Toyota asked me if I wanted to move down here. It was my first store to have alone.
You have a Hyundai store also.
Esfahani: In 2006, I opened a Hyundai store and it quickly became number one in the region (New Orleans to Pensacola). Sales efficiency was up 350%. We implemented the same process I had previously executed. Our customers appreciated our sales process and it paid off in a big way.
You went all out with your Toyota store.
Esfahani: We opened up the Toyota dealership in 2008 where I built my dream store. The $22 million facility on 17 acres has all of the amenities.
It has a massive car wash — every car is cleaned and detailed – a piano bar, a manicurist, a shoe shiner, a tailor inside the store, a gourmet café with a 5-star chef, Italian gelatos and coffee that is as good or better than anything around.
We also have a foosball table, a pool table and stretch limo to transport customers where they need to go. People come from different cities just to come and see what the dealership is all about and to experience it.
You opened the store right as the market was collapsing.
Esfahani: We started in ‘08, and of course the economy really put a damper on it, we still managed to sell about 3,700 cars out of this location.
In ‘09 with the economy being what it was, we ended up selling 10-15 more cars than ‘08. We believe had it not been for circumstances outside of our control, both of our first two years of operation would have been significantly better. All of that is an attribute to how we have communicated our purposes and goals around customer experience. The ultimate goal really is the perfect customer experience.
Consequently, we have really beat our local competitors (Nissan and Honda), by a margin of almost 5 to 1 for Nissan and better than 2 to 1 for Honda.
You have taken the approach that you knowingly sacrifice gross in order to keep these customers returning to you for life. You understand that over the long run you are going to make more money than in the short run by enhancing your relationship with the customers.
Esfahani: The idea is to gain a customer for life; build a relationship for life. Our dealership consists of farmers, not hunters. There is a story I tell people of the Chinese bamboo. When you plant a seed, you don’t see anything growing for the first, second, third, or even the fourth year. It is really tough to go through all this hard work to take care of the seed (customer) and not see anything from it yet. From years one to four, we fertilize and take care of that seed. If we didn’t, we wouldn’t see the 90 foot bamboo that grows in year five. We understand those parallels and we act on it.
If you think about it, most dealers fight hard to gain customers through advertising, and generally lose them through lousy service.
That is not an intelligent process. Sustainable growth through customer retention is the key to success.
How does that affect your margins?
Esfahani: Our profit margins are not as high as most dealers; this is because we want to invest in the customer. At least 20% of what we make each month is utilized to enhance customer experience.
We want to create a raving fan out of each and every customer through every experience they have with us. We strive to perfect a passionate approach for every encounter we have. We create an open forum where customers can give us a feedback which allows us to act on what they want, not what is easy for us.
We don’t take our customers for granted. We have a complete process in mind that is customer friendly every time and relates to customers’ needs. With that in mind, we try to install a DNA in our dealerships that supports every behavior that is “customer-centric” to promote long term relationships. You have to really stay on top of it to make sure you embed the DNA that customers understand.
We do everything we can to help the customer. Whether it’s taking cars back after a day or two, for whatever reason the customer may have.
Our upper management team and I have a big red telephone downstairs. We want customers to know that we have an “open door policy.” If they have a problem they can call it and I will come down. I love making the customer happy, I have been called the giveaway artist.
Last year, the Toyota store sold 2,120 new cars. The Hyundai store sold 535 new cars. Combined, both stores outsold all of the local competition in my market put together. So to give you an idea, the Hyundai store beat the Nissan, Ford, Chrysler, Kia, Mazda, Lincoln/Mercury and the numbers drop down. Generally the ratio of Toyota sold to Hondas is 1 to 1, and the ratio of Nissan to Toyota is 1 to 2. These stores are right next door to our store and have been in the market at least 10 years or more. They are two great competitors, yet, I believe my team is equipped with a different way of thinking —-the customer way!
We’ve sold 1,576 used cars; the last 4-5 months we sold about 150 each month. Those are huge numbers for a small place (population around 20,000). Our grosses are lower. If we would have sold half as many cars, and made more money, it would have made life easy. However, we would have built half as many relationships. The seed planting wouldn’t apply. You get 20% repeat referral. If you sell 100 cars last month, you will get repeat sales. It is a gift. We cultivate that relationship. We know in the long run, we will win this battle.
Walk us through the sales process if I am a customer walking into your store.
Esfahani: There are samples of cars outside, but salespeople are not going to come up and hound you. There is only one front door, so customers are going to gravitate at this point. The dealership is busy, there is a hub of activity. There is a lot going on.
We have two hostesses that greet customers. We ask basic questions such as “How did you hear about us,” or if they want to purchase a new or used vehicle. The hostess then introduces the customer to the manager who then introduces the salesperson.
We want to make a good first impression. Customers are skeptical, because the last time they bought a car, it was painful, so they don’t want to spend a lot of time doing it again.
We have over 700 vehicles on the lot. We ask questions so we can narrow it down so the customer is not overwhelmed. We have 5-6 golf carts that we can take the customers to see the vehicles and provide a proper demonstration.
On the used cars there is no negotiation. It’s one price.
We understand customers might want to shop around, so we give them the price, our everyday best price, in writing and give a $5,000 guarantee that if they find a car for less then we guarantee that we’ll match it or beat it.
We also have a lifetime warranty on all of our cars. If customers like the experience we provide better, they will call us and give us another chance which is all we can ask for.
Do you make deals at the Piano Bar?
You have salespeople playing pool with customers?
Esfahani: Sometimes they do. We want our salespeople to do everything the customer wants. We want our customers to have a fun time while they are waiting on our process of appraising their trade or waiting for an F&I manager. If it means playing pool or foosball or offering a manicure, shoe shine, breakfast, lunch or dinner, our salespeople are willing to do it.
You’ve had some problems with another dealership recently, and you’ve filed a lawsuit against it for telling customers you’ve funneled money to terrorists, and calling you and your family terrorists.
Esfahani: They couldn’t beat my team, so they have resorted to other things that they shouldn’t have. We will have our day in court, and this matter will be resolved by our judicial system. It’s unfortunate, but hopefully our actions have spoken louder than others’ words; we cannot say that it has not affected sales. The customers that know us and have done business with us know better and have been extremely supportive. Regardless of where you come from, all people want to be treated with respect and have a good “car-buying experience” – I know how hard I have worked to earn the place I have today, that’s why I love this country.
Because of your focus on the customer, you seem better prepared to handle the Toyota recalls. How are you managing it? What is the reaction you are getting from customers and what will the long term affect will be?
Esfahani: I have talked to quite a few customers over the past few weeks, although they haven’t experienced any issues from the recall, they are naturally concerned. Some have expressed to me that the government should not have an interest in car manufacturers, and some of the bi-products of government interests in car manufacturers may cause a tainted approach. One of my customers told me, “The judge should recuse himself with a relative on trial.” My personal opinion is the government should have never bailed out any of the poorly run companies to begin with, at least not without a near bulletproof game plan.
Most, if not all Toyota dealers were blindsided. The no-sell order from Toyota on the eight models and halting production of automobiles of the Toyota plants was unchartered territory. It was our worst month in our two years of operation. We have to take into consideration that it will take 90 days to work through all the issues we have experienced. Toyota must act fast, as we know they always have, with a 1-2-3 punch of better warranties, better incentives, and a much higher advertising co-op for their dealers.
For the first time, Toyota must worry about the survival of its dealers and act yesterday. If there is a silver lining in this it would be that we get an opportunity to learn from our mistakes and prepare for the future. Toyota may have lost its way temporarily, but we can expect Toyota to rise to the challenge. That is the Toyota way.
How many customers have been coming in to the service center? Has it been very busy?
Esfahani: We have kept our doors open until every customer has been helped, or until we have run out of parts. If we have the parts, we’ll work until the parts are gone. They have allocated a limited number of parts, so that at this point we get equal distribution. Even if we stay open 24 hours, it doesn’t matter unless we have the parts. We measure reservations and prioritize them. There have been times we’ve worked until the late hours of the evening, but we give the customer another car to drive so we don’t inconvenience them. We believe there will be an ample number of parts in the near future so all customers’ needs can be addressed.
We detail every car, wash inside and out. We have continued to provide the same level of service and dedication that we have always strived to achieve. Our team is always going above and beyond. It has been part of our culture, recall or no recall.
How Toyota responds to the next three weeks of congressional hearings is what will determine how this thing works. They make good cars. In my opinion, this has been blown way out of proportion. We haven’t had one customer come in and say they have had this problem happen, that I am aware of.
Where do you want to be 10 years from now?
Esfahani: I would like to have opened one dealership every year. And I want to have a partner for every one of those dealerships so they can realize what I have been fortunate enough to realize.
Ten years from now I will be 56 and after that my days will be numbered. I much prefer for someone else to be in charge. I want to do what has been done for me.
I have three dealerships now — Kia, Hyundai and Toyota. I want to make sure I have one partner, and I want to devote 20-25% of our profits to community development. My passion is to have an orphanage house for 100 kids to stay in until they go to college. I cannot save everybody, but I want to save the kid who is smart, but would never get the chance to flourish. I want to save the kid who isn’t given anything to help. I would love to be alive long enough to see that happen (to see them grow up in this orphanage).
I want to give people the best place that they can work to get the best potential. I pay our people the highest I can pay them. I want to have a salesperson who can retire with $1 million to help them to not just be a salesperson for the rest of their lives, but to make something of themselves. I don’t want them to be depressed after 10 years and have nothing to look back on.
I want to try to give 50% of what I make to where it needs to go and another 50% to keep for myself if I need it. You never know what will happen, who would have thought what happened to Toyota?
I am married to the best lady; she is my best prize in life. And I hope I can keep building on my relationship with my wife so she will keep loving me years from now. She puts up with me and believe me, I’m no easy chore!
The car business is intense and challenging. It presents so many different angles. It isn’t just the selling, it is the way the people respond. If you want to be just about the numbers, it is linear, but the financial statement doesn’t have a line for the spirit and soul of the company. Also, it doesn’t have a line for customer loyalty. If you don’t create good will in the customer’s heart every time, then you have lost the game before you start. Remember, the goal is customers for life!