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An Interview with John Pappanastos


When he joined EFG Companies’ board of directors in 2006, John Pappanastos found a willing partner in his quest to drive innovation in an industry that rewards hard work and creative thinking. Today, as the company’s chief executive, he continues that mission with the help of his coworkers and partners — including a dedicated group of agents.

Tell me a little bit about your company and its place in the industry.

EFG is a 40-year-old national innovator and administrator of F&I products. Our portfolio ranges from repair and maintenance to debt protection, aftermarket, security and traffic-driving programs, with more than 2,200 accounts selling our products last month.

Our most powerful asset is EFG’s engagement model that requires uniquely qualified and motivated professionals. I truly believe it is unmatched in terms of sales and servicing support in the field, agile product innovation and customization, and a suite of technology capabilities that improve agents’ productivity and ability to service their clients.

Our professionals literally operate as an extension of our agents’ teams to target, profile and win new business, and we offer a highly collaborative contract administration model that places our agents in a position of control and importance with their clients.

We thrive on measurement, and we compete to win.

Are there any recent or future developments within your company that you would like to tell us about?

I’m especially proud of the fact that EFG has received nine national awards in 12 months, including being named to the Dallas Top 100 most recently. It is one thing for a company to talk about itself. It is entirely another when an industry recognizes them for excellence and vision. The Top 100 recognition, in particular, is meaningful because it indicates that our people understand their individual roles in creating a customer engagement model that is incredibly difficult to replicate. We operate in a “culture of initiative” that focuses entirely on the interests of our partners and their customers in a values-driven manner.

I’m also very proud of our product innovation, which is actually led by a council of our top agents who meet twice a year to discuss industry trends, dealer challenges, and building profitable businesses while keeping an eye on the horizon.

In terms of products, we offer some of the most effective powertrain contracts in the market. We recently launched the market’s first mileage-only (i.e., no monthly term) vehicle service contract. In terms of technological innovation, we’ve built highly dynamic client portals that provide our partners with access to contract production by account and allow them to review, reconcile and pay bills, to cancel contracts or simply receive a cancelation quote, to review underwriting results and reinsurance cession statements, and to review claims status 24 hours a day, 365 days a year.

How did you (personally) get started? What caused you to choose this career path?

I worked for two and a half decades in the telecom industry prior to joining EFG’s board of directors in 2006. I was asked to join the board to provide strategic and financial planning based on the changing dynamic of the retail automotive industry — and the need for dealers to increase focus and investment in business planning and analytics. After working closely with EFG’s executive team, clients and business partners for a year, I accepted the position of president and CEO.

In EFG, I found a values-driven company bringing expertise to a function within the dealership that generates about 40% of the average dealership’s gross profit. It was a company with a proven operating platform and a rich heritage of customer service. All we had to do to create something very special was invest in our people and instill process execution discipline.

What are your outside interests / what do you like to do on your days off? What activities / sports are you passionate about?

Although all of my five children are grown and out of the house, my kids remain the highest priority in my personal life. I also enjoy weightlifting and cardio workouts, personal investing, skiing and traveling. And I love football, especially Crimson Tide football.

What are the biggest issues you see facing the industry today and in the future?

Most people are concerned about continued dealership consolidation, about the potential demise of the franchise model, about increasing regulatory oversight that is disconnected from market demand, and about the challenges associated with employing and selling to Millennials.

While all of these issues are very real, I believe that the biggest challenge facing today’s auto dealer relates to building customer loyalty. While this is not a new problem, it has clearly been exacerbated by the proliferation of the Internet and the growth of the Millennial segment.

The fact is that customers do business with companies that they trust, with companies that share similar values, with companies that transact business the way they want to transact. At a minimum, the industry’s employee and customer engagement models must become more flexible and more transparent (or at least more respectful and direct). We have to learn to engage with employees and customers in the way they want to be engaged with. And the key will lie in building the right team and managing a disciplined model to build relationships with customers over the life of their vehicle ownership.

The industry is in serious need of new employee talent. The best dealers spend an inordinate amount of time identifying, hiring, developing and retaining personnel. They avoid industry “retreads” and instead focus their energy on bringing in young talent that they can develop organically into future leadership. By doing so, they create a team with shared values, especially with respect to integrity, work ethic and a customer-first mindset.

What advice would you give to someone new to this industry?

I think the auto industry provides a great place to make a living and build personal wealth. Few industries reward entrepreneurial initiative and hard work as well as our industry, and the career path to grow in terms of personal responsibility and compensation is almost codified. As employees grow and mature, they learn to manage all elements of a P&L, from employees to suppliers to inventory to customers. Few industries offer such an opportunity so quickly.

So, my advice would be fourfold: Believe in yourself, be willing to pay your dues, embrace technology and develop a thirst for learning.

Is there anything else you would like to add?

I think few business people actually take the time to calculate what an underperforming partner is costing them. While they may be able to quantify the amount of money they are literally paying their partner for service, they fail to quantify the true costs associated with the partner’s underperformance in terms of market share and margin per retail unit sold, and also in terms of employee development and morale.

Long-term relationships with people you like are wonderful things and often merit a premium price. However, I would encourage business leaders to fully understand the premium being paid as a result of long-term relationships. Strategic partners are those that engage as if they have an ownership interest in your business to help you grow your business and execute at your highest level.

 

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