That bothered the hell out of me,” says Carl Sewell. “I wanted to be number one.” Sewell’s decision to be number one marked the turning point for what had been just another family car dealership.

Today, among Dallas’ Cadillac dealerships, Sewell Village Cadillac holds a solid first in sales and profits. The dealership’s service business ranks among the largest in the country.

The success of his Cadillac dealership has allowed Sewell to expand his automotive empire to include five dealerships with 10 franchises, including Chevrolet, Lexus, Oldsmobile and Buick. The dealerships combined sell 10,000 new and used cars annually. Revenues have grown from $10 million in 1968 to an impressive $250 million in 1990. In addition, Sewell’s flagship store, Sewell Village Cadillac in Dallas, has ranked among the top 10 in General Motors’ Customer Satisfaction Index five years running. His Cadillac-Chevrolet dealership in New Orleans made the top 10 in customer satisfaction in 1987 and 1988.

Automakers court Sewell to represent their brands. Officials of Ford Motor Co., Procter & Gamble Co., Wal-Mart and others have toured the dealership to figure out how he manages to make consistent profits while satisfying customer demands for added service and extra attention.

The Sewell philosophy is simple: treat the customer as you would like to be treated. His list of ten commandments of customer service includes such rudimentary ideas as asking customers what they want, then delivering more, and not charging for a service that you’d do for a friend for free. Is this what corporate America should mean by value added? Very possibly.

Now Sewell, with Paul Brown, marketing editor for Inc. magazine, has written a book that reveals the secrets to his success. Since October, 1990 more than 100,000 copies of Customers for Life: How to Turn that One-Time Buyer into a Lifetime Customer (Doubleday, 1990, hardcover, $19.95) have been sold.

Written in Sewell’s folksy Texas style, the book is a quick how-to on top-notch customer service. And it’s a subject he knows well. Sewell figures in a lifetime a satisfied, loyal customer will spend $332,000 at his dealership. Keeping a satisfied customer, he says, is more cost-effective than trying to replace an unhappy customer with a new one. It may be a standard selling notion but it bears repeating.

Sewell gives the example of a customer who returns from out-of-town business to find his keys locked in the car. The customer calls the dealership, and the dealership sends out a truck. The dealership waives the typical $25 fee. That $25 likely will keep that customer at his dealership for life, Sewell figures. Indebtedness in little ways cements the buyer-seller relationship.

Conversely, Sewell points out, he would have to gain 28 new customers through a $700 radio advertisement to equal the cost-effectiveness of retaining the loyal customer. One ad is unlikely to draw in that many new customers.

The 47-year-old Sewell credits his parents and John Sewell, his cousin and long-time partner who died in May 1990, with teaching him the importance of customer satisfaction.

Carl Sr. started in the automobile business in 1911 while working in his father’s hardware store in Arlington, Texas. Although old Pop Sewell didn’t drive, he did sell Model T Fords that came in kits. His son, Carl Sr., then 14, gave local farmers a driving lesson with their purchase of one Model T kit.

After World War II, cars were in big demand but short supply. Price gouging was commonplace. But not with Carl Sr. He charged list price. As a result, the Sewell dealerships now have second- and even third-generation customers. A Sewell dealership is a family affair all around.

Carl Sr. bought the Cadillac dealership in 1957 for his son and namesake, who was then 14. In 1972 when Carl Sr. died the younger Carl took over the dealership with his cousin, John.

Like Carl Sr., John Sewell catered to the customer. “He always said, `We don’t criticize people for giving away too much. We criticize for giving away too little,’ ” recalls Boyne McHargue, director of customer services.

That philosophy continues today at the Sewell dealerships where Sewell not only gives away services, he gives away expensive Steuben bowls to customers buying their 25th car from the dealership. He replaced a tennis racquet that a customer claimed was left in the car when he brought it in for service. He has flowers delivered to customers when the dealership has erred.

The indication that Sewell Village Cadillac is different from other dealerships becomes obvious as soon as one steps into the showroom.

A table with a lush bouquet of fresh flowers sits on an elegant table at the mahogany-paneled showroom’s entrance. Three brass chandeliers hang above the cars displayed in the showroom. In areas of the showroom that resemble an elegant living room, Oriental carpets cover the glossy tile floor. Soft leather sofas and upholstered chairs are clustered around a table with another bouquet of fresh flowers.

“The theory behind the chandeliers, the floor and wood paneling is to make a person feel at home,” says Phil Dunnet, Sewell Village Cadillac service director and an 18-year employee. “People feel comfortable here. They’re not in a poster or tinsel environment like a lot of stores.” One trademark of successful car dealerships all over America is attention to the selling environment. When people feel at home, they are more likely to spend more time in the dealership. The more time they spend and the less pressured they feel, the more likely they are to buy.

Adds Sewell: “The easiest way to set the right tone is to think of your business as your home. You are inviting friends and neighbors in. You want them to feel comfortable.”

Selling should be theater, insists Sewell. In Dallas, Neiman-Marcus not only set the highest standards for retailing but also created an image of fun, with its annual extravagant Christmas gifts. Sewell notes that automobile dealerships, on the other hand, often engender no warm feelings from the public.

Borrowing the Neiman-Marcus idea in an effort to give the dealership a personality, Sewell started inviting customers to an annual party for the introduction of the new cars. Over the years these celebrations have grown more and more elaborate. Chef Paul Prudhomme cooked for one such event. The dealership has displayed Western art from the Cowboy Hall of Fame and exhibits from the Model Railroad Association. Actor Larry Hagman, star of “Dallas,” drew a crowd of 5,000 during the summer of the “Who Shot J.R?” publicity.

While the Cadillac showroom sells 3,000 new and used cars a year, the real action is in the back. The service department is the largest Cadillac service department in the nation and services a massive 150 cars a day on weekdays and 75 on Saturdays.

“I decided I wanted to have the best operation that we could,” recalls Sewell. “It became very clear to me that our opportunity was service. Since I couldn’t control the product, service was something we could control and make much more desirable for our customers.”

Sewell visited the best dealerships around the country. He hired a California consultant who taught systems for running a service department.

“If you’re more efficient and therefore, more profitable, we have a little cushion we can use to give back to the customer,” says Sewell.

When customers bring cars in for service, a greeter welcomes them and asks if they wish to see anyone in particular. The response usually is “yes.” Customers are introduced to their personal service advisor when they purchase the car.

The appointment system is set up so the service advisor can spend 15 to 20 minutes with each customer. A number is placed on the roof of the car to indicate the order of arrival. Each number has a colored card sticking out of the top to indicate which service advisor the customer requested. The customer receives a card listing the direct phone number of the service advisor to call to check the status of the car.

Customers who purchased their car from a Sewell dealership are entitled to one of the 115 loaner cars free. An Avis rental agency is on site for those who didn’t buy at Sewell.

Customers wait in one of two elegant lounges, a smoking and a non-smoking area. The lounges, wallpapered with rich, textured paper, are like someone’s living room. Inviting leather sofas and chairs are arranged around tables. The rooms are decorated with fine paintings and Chinese porcelain vases. Restrooms for customers feature shiny tile and expensive wallpaper. They are cleaned every hour. Yes, every hour!

The customer also can grab a bite of breakfast or lunch at the dealership’s restaurant. About five years ago Sewell asked a well-known local restaurant, Celebration, to install an eatery within the dealership. Now it is also open to customers who can enjoy a hot lunch for less than $4. “What better way to build a relationship than for the employee and the customer to break bread,” says Dunnet.

The walls of Celebration restaurant are lined with awards for the dealership and individual employees. Charts and graphs contrast the dealership’s performance with Cadillac dealerships locally and nationally.

The restaurant’s other wall is glass and looks out into the immaculate service bays. It’s like watching a show. Theatre? Well, dinner theatre maybe.

“Cleanliness is a very high priority,” says Rich Parker, service manager and 19-year employee. “There are times when we think we have it clean enough, and Carl will let us know it’s not.”

But more than just smiles and appearance set Sewell Village Cadillac apart. Sewell’s dealerships use systems to ensure that they deliver the product and service as efficiently and responsively as humanly possible.

“We spent 20 years working on smiles, and we’ve gotten pretty good at that,” says Sewell. “Now we’ve got to work on the systems. And we’ll work on those for another 20 years. If we keep the smiles, we’re going to be damned good.”

Rather than reinventing the wheel, Sewell advocates taking proven systems from other businesses and adapting them to his dealerships. He has adapted ideas and systems from Disney World, hotels and airlines.

A visit to Chuck E. Cheese pizza parlor with his wife and two children gave Sewell the idea for a computer system for his service department. In the past, the cashier bellowed over the overburdened public address system for someone to retrieve a car. The cashier never knew if she was heard or if the car was delivered. Meanwhile, the customer would wait. Now, Customer Service Representatives, the people who shuttle cars from the service lane to the parking lot and back, sit on a park bench beneath a computer screen. When they hear a beep, one of them looks at a screen and sees a number for where a car is parked. He then punches some buttons and dashes out to fetch the car. When he returns with the car, he punches more keys on the computer.

The computer allows the cashier to tell the reps that a customer has come to pick up a car without screeching it over the public address system. The rep then can tell the cashier the car is available for the customer.

The computer calculates the time elapsed from when the beep sounds and the car is brought up. Weekly rewards are paid to the reps who deliver the most cars and the one who has the best time. It’s a system of healthy competition where every worker has the chance to win.

Another system, installed in the parts department, created time and space efficiency where chaos once reigned supreme. Each time they needed a part, all 53 technicians had crowded the parts desk in a mad search. With the new system, parts which were used frequently were consigned to technicians for ongoing use. This opened the parts desk, reduced waiting time for less frequently used parts and eliminated frustration in the parts department.

Sewell says knowing how each process in the dealership works is vital to improving customer satisfaction. “You can structure the business in a way that allows everyone to work to their best level,” he says.

A voracious reader of business books and books examining quality and manufacturing processes, Sewell recounts a story used in The Goal, a business novel by Eliyahu M. Goldratt. The Israeli physicist has tried to teach U.S. companies how to beat the Japanese by putting more scientific discipline into manufacturing.

He tells a story about a Scout troop on a hike. The troop wants to be at a certain point by a certain time. But the Scouts are slowed down by Herbie, the fat kid. The question is, “Where does Herbie go in the group of 10 boys?” First? Last? In the middle? It is concluded that he should go first because the rest of the troop can only go as fast as Herbie.

People at Sewell’s dealership know where the Herbies are. In the body shop, for example, it’s the paint shop. They spend more time and work on the Herbies. Then the rest of the process can flow.

“Identifying your Herbies is a big issue,” says Sewell. “They’re your big hurdles. Then you break Herbie down into a whole bunch of more measurable things. Then your biggest problem is ended.”

“You go through the same process to the second problem and the third and the fourth,” adds Sewell. “Over a few years, you’ve really improved your product and your productivity by a whole lot.”

Sewell has also installed elaborate people systems to maintain high customer satisfaction. His theory: Providing great customer service requires great people.

That starts by hiring good people. Sewell conducts several extensive interviews for each job opening and tests the candidates. When a hiring mistake does occur, Sewell quickly fires the person and moves on.

“I think you have to have exceptionally talented people work around you. Don’t tolerate people who are not interested in working on behalf of the company and the customer,” says Sewell. “If they don’t want to do those things, don’t wait. Get rid of them fast.”

Sewell pays virtually everyone in his dealership for performance. They are paid on commission, piecework or a percentage of the net income. To attract the best people, Sewell believes they must be paid well and paid as if they were partners in the business. Sewell gives the example of an automobile dealership that sells 100 cars a month. A typical salesperson sells eight cars a month and a typical dealership has 12 salespeople.

Sewell Village Cadillac, however, sells 100 cars a month with only eight salespeople. The fewer number of salespeople lowers the dealership’s expense for floor space, desks, telephones and payroll. In addition, the dealership attracts better salespeople because they make more money.

Sewell is a staunch believer in consumer clinics and focus groups. After studying clinics and focus groups run by other retailers, Sewell now requires a focus group at each of his dealerships on a quarterly basis.

Sewell even insisted on doing a focus group on his book, probably the first of its kind. The participants read the galleys of the book. When they came to the focus group, they filled out a questionnaire and discussed the book.

As a result of their comments, Sewell changed some of the content. He changed the title, originally The $332,000 Customer, and developed a title based on key words suggested by the participants. The participants also disliked the cover with Sewell posing on the hood of a car. The publisher, however, resisted the change.

Despite his success, Sewell’s work is far from complete. He plans to expand his automotive empire further. He intends to add dealerships and franchises, mostly in Texas where he has the people to manage them. As he grows, he wants to improve as well. “That will mean inventing new systems and require help from automobile manufacturers,” he says.

Sewell and his managers are looking to W. Edwards Deming for the answers. Deming is the 91-year-old quality guru who taught the Japanese quality control before he was discovered by U.S. auto makers in the 1980s.

“As I began to analyze our customer satisfaction rating, I started reading Deming. He talks about the steady state. Well, our customer satisfaction rating is basically 95 to 98. We’re right there at every dealership we’ve got. That’s the steady state of the deal. So what’s wrong?”

Sewell points to the rate at which customers come back to the dealership for a second time for the same repair. Nationally, the “come-back” rate is 40 percent; Sewell’s dealerships run close to the national rate.

“We said that’s okay. And we lived with that,” says Sewell.

“We’ve got the customer care side of it down pretty well,” adds Sewell. “What we didn’t know enough about and still don’t know enough about is the process of a repair.”

By learning Deming’s technique for understanding processes, Sewell hopes his people will understand all the elements involved in doing repairs. Then they can identify where the problem is.

Sewell has hired a Deming expert who already has started work in the two departments most responsible for customer returns — motors and transmissions. As a result, the dealership has reduced its comeback rate due to those two departments to 18 percent. The goal is five percent.

“If we got to a five percent comeback rate, there would be miles and miles between us and our competitors,” says Sewell. And Sewell will have again re-defined “best.”