Unlock the transformative power of data as we embark on an exploration with Steve Clegg of Zintoro, where the convergence of business analytics and artificial intelligence takes center stage. Steve's remarkable journey from WR Grace to Avis, and eventually to EIA Investors, serves as our roadmap through the intricacies of predictive models, algorithms, and the potent net promoter score in customer retention strategies. This episode is a treasure trove of insights for those eager to understand the profound shift from raw data to actionable insights, and how they've reshaped business strategies from the 1970s to the digital age.
Join us as we unravel the threads connecting customer service to business triumph. Hear firsthand how the art of conversation and the choice of words can dramatically influence sales, and discover the benefits of proactive customer engagement over the industry's traditional reactive stance. Steve's experiences illuminate the path to enhanced customer satisfaction and market penetration, offering valuable lessons on benchmark surveys and the art of aligning service delivery with market expectations. This chapter is essential listening for anyone committed to elevating their company's growth and customer experience.
Venture with us into the future, where the narrative shifts to the ever-changing automotive dealership landscape and the revolution in workforce dynamics. From the potential impacts of Ford's electric vehicle contract to the rise of remote work, learn how analytics is reshaping the performance and operational skills within dealerships. This enlightening conversation with Steve doesn't just forecast the horizon of business practices and education—it equips you with the adaptability and knowledge to navigate and thrive in the dynamic marketplace of today and tomorrow.
Visit us at LearningWithoutScars.org for more training solutions for Equipment Dealerships - Construction, Mining, Agriculture, Cranes, Trucks and Trailers.
We provide comprehensive online learning programs for employees starting with an individualized skills assessment to a personalized employee development program designed for their skill level.
Unlock the transformative power of data as we embark on an exploration with Steve Clegg of Zintoro, where the convergence of business analytics and artificial intelligence takes center stage. Steve's remarkable journey from WR Grace to Avis, and eventually to EIA Investors, serves as our roadmap through the intricacies of predictive models, algorithms, and the potent net promoter score in customer retention strategies. This episode is a treasure trove of insights for those eager to understand the profound shift from raw data to actionable insights, and how they've reshaped business strategies from the 1970s to the digital age.
Join us as we unravel the threads connecting customer service to business triumph. Hear firsthand how the art of conversation and the choice of words can dramatically influence sales, and discover the benefits of proactive customer engagement over the industry's traditional reactive stance. Steve's experiences illuminate the path to enhanced customer satisfaction and market penetration, offering valuable lessons on benchmark surveys and the art of aligning service delivery with market expectations. This chapter is essential listening for anyone committed to elevating their company's growth and customer experience.
Venture with us into the future, where the narrative shifts to the ever-changing automotive dealership landscape and the revolution in workforce dynamics. From the potential impacts of Ford's electric vehicle contract to the rise of remote work, learn how analytics is reshaping the performance and operational skills within dealerships. This enlightening conversation with Steve doesn't just forecast the horizon of business practices and education—it equips you with the adaptability and knowledge to navigate and thrive in the dynamic marketplace of today and tomorrow.
Visit us at LearningWithoutScars.org for more training solutions for Equipment Dealerships - Construction, Mining, Agriculture, Cranes, Trucks and Trailers.
We provide comprehensive online learning programs for employees starting with an individualized skills assessment to a personalized employee development program designed for their skill level.
Aloha and welcome to another candid conversation. Today we're joined by Steve Clegg, who runs under a couple of company names, but we're going to start with Zintoro, which is an analytics company using a lot of artificial intelligence, and we're just going to start and have a discussion so that those of you in the audience can get an idea of what's coming in the way of tools to help you manage and control your business. So, with that as a backdrop, mr Clegg, sir, good day in sunny Chicago.
Speaker 2:For a change. Yes, the Guardsman of America now.
Speaker 1:It's been a weird winter.
Speaker 2:Very weird.
Speaker 1:How about you give us a little bit of a background on Zintoro Winsby, what you do have done and how you get to where we are?
Speaker 2:Yeah, for a lot of years, even from getting out of graduate school, one of the biggest problems that everyone faces is just the data, and so when I've started working, I worked for WR Grace and they were doing everything by hand, so one of the projects I ended up doing was automating all that and then applied that to my next job at Avis, where, as a responsible for funding and handling the finance of purchasing all cars around the world and the foreign exchange and a lot of other challenging things of assets, cars and getting paid, and so, through all that, I built up models to forecast and anticipate, because it's very difficult to go to a bank after you really need money. You have to go long before when you don't need it, and so forecast were pretty important and certainly after that, I ended up going to work for one of the first buyout companies, the EIA investors, and they did close to 100 acquisitions. That really was building companies up, and when you do that, you find out absolutely what you don't know, and generally forecasts were derived by asking the sales team, which was a waste of time, and are coming up with what you needed financially in order to structure the deal. The realities were somewhat limited other than historic, and historic oftentimes were distorted by the actions prior to sale which camouflaged a lot of the issues. So over that time we started building algorithms to forecast and that got better as time went by.
Speaker 2:But then late in the 1990s there was a professor at Harvard that had produced a paper on the net promoter score. So we were tracking customer retention as one of the primary drivers for having reliable forecasts and that score just as a standalone if front runs your ability to anticipate growth, which is what the professor was tracking. I think he looked at 14,000 companies and if you had high score you had a 79% chance that you're going to grow in the next 12 months. What we found was it had a close to a 90% correlation with your customer retention. And then later, as we introduced real time negative comments and words and tone actually on a phone call we do that for one of the big communication companies we could track and actually forecast the anticipated retention rate and also your net promoter score real time. So we introduced that.
Speaker 2:That then kicked into what are the other factors for the drive growth and interaction, distance from a location of service, a whole range of different things that go to that and unfortunately, for plenty of purposes. Every location is different. You have different competition, different road systems, different people and, of course, people represent the top three reasons why you lose customers. Number one is you didn't call them back. You didn't tell them first, they had to call you. Not keeping them informed and meeting their expectations. Number two change of personnel. Yours are theirs. It's a 50% loss rate in the next 18 months.
Speaker 2:And then you have an untrained somebody who just is not professional handling the customer and it's just like a bad waiter. If you've only gone to the restaurant once or twice, a bad waiter you'll never go back, no matter what the food tastes like. So a lot of this is it's built on consistency and repetition of transactions. It's not revenue and unfortunately for the equipment industry, the OEMs are selling equipment, which is the primary revenue source, but it's not how the customer sees the dealership. The customer sees the dealership through transactions. So by using AI, we're able to identify what are the key drivers, and that's where this all came from.
Speaker 1:Let's go back and list them off in big headlines. With WRGRACE they had copious amounts of data, but I'm going to say they didn't have any information and essentially, you build systems to deliver information so that they could deal with things differently.
Speaker 2:And they actually do variations. So by putting it on a computer, rather than spending a week coming up with one solution and then starting from scratch again, I think they had I mean, most of the companies had a sea of people doing this Right right, and with a computer you could give them multiple alternatives in moments, with a couple of changes and assumptions.
Speaker 1:So we're back at it. Just put a decade on it. We're back in the 70s.
Speaker 2:In the 70s, yeah, mid 70s.
Speaker 1:Okay, and then you went to Avis from there and essentially you took that information and the theory and the models and you put it in place and drove it in acquisitions and payments and different markets, et cetera, et cetera. Correct, Correct. So instead of it being the theory to a consulting outfit, it became practical dirty fingernails, with you doing it.
Speaker 2:Yes, and it was a challenge to Avis had a lot of computer power and a huge IBM facility literally at the headquarters and it was way underutilized and a lot of people treated us a black box. You put information in, you see what comes out and then, if it's wrong, you adjust the information that you put in.
Speaker 1:Yeah, to make it come out the way you wanted it to.
Speaker 2:Right.
Speaker 1:Okay, and then from there you went to an acquisition company. So now you've had the theory that, to develop the information under the data, you've tested it with various applications at Avis. Now you get involved in buying companies and making them healthy, making them grow, which is the final leg, in my view, of the whole puzzle. So now we've got the platform and then you started getting smart, building algorithms to match the solutions or information that was coming out of the various steps that we'd lead up to here. Is that kind of correct?
Speaker 2:That's how it works. I mean the benefit of after having been at Avis and Grace. I had banking contacts all over the world and also at Avis, had been involved in the acquisition of a bunch of the franchisees, moving them to corporate and also some other acquisitions. So I had the experience of going to a buyout firm by automating the process of evaluating potential acquisitions. They would take maybe a week to three weeks to evaluate a company. I moved it to about 20 acquisition potential targets within a week and then it was just continuing to automate that and validating our ability to forecast with reliability what actually was gonna occur. It was still. It's made a big difference as this thing's progressed but at least got us into a position to intelligently talk about what the opportunities were.
Speaker 1:So let me go down a different path. A guy by the name of Clint Merkerson whose father founded the West Texas oil fields he got a master's out of MIT and mathematics owned very, very wealthy guy, owned the Dallas Cowboys put computers into drafting for the first time all of that stuff. Well, clint had six men running around North America responsible for buying companies for Clint and Clint would fund the whole thing. They would run the companies that they acquired. He would give them 20% of the company, but it was a debt so they could keep a job as long as the company succeeded and they paid their 20% back. So it was kind of a very boots on the ground, rudimentary thing. And this is in the 70s, 80s and I got involved in that and fascinated by it and he brought me down to the States to run EBS, the data processing company that in the batch world in those days had 450 construction dealers in it.
Speaker 1:So we were going down different paths in different ways but there were parallel paths. And then you and I intersected, I think, somewhere along the line, with one of the major brands. You'd been asked to do something with dealer development. I was doing things with the dealers. They sent me financials every month and I had the real ones. The manufacturer gets the ones that you're audited, which are not necessarily the real ones. You were looking at the manufacturer's numbers, I was looking at the dealer numbers and we're both working with the same guy but didn't know of each other, which is kind of weird. And then I think, debbie, your wife breaks with Winsby customer service calls is where we finally intersected. I don't know how long I'd go that is, but it's a while.
Speaker 2:It's been quite a while right.
Speaker 1:Yeah, so far. Yeah, you can tell my baldness. I didn't have hair then, neither did you, but that's a separate sector.
Speaker 2:Yeah.
Speaker 1:So we've been playing with this, you and I, for I'm going to say six plus months, with the intent that, or the purpose of identifying, through analytics and transactions, market coverage, customer retention, that promoter score with skills and knowledge of the learning, without scarce classes. And we've been saying there must be a correlation between the performance on retention and promoters scores and the skills and knowledge of the people. And lo and behold, as we put those things together, it becomes true, doesn't it?
Speaker 2:The people. When you look at, the primary driver of a successful business is the people, yep, and in that, in the people team, determines the retention of the customers. So if you don't have, I mean, as I said, the top three reasons for losing customers are people, people, people, probably even more than that and people think that, oh, it's price. Price usually is fifth or sixth on the list and only has an excuse for some failure of the service.
Speaker 1:Yeah.
Speaker 2:Why am I paying you that much when you don't deliver on time or when you didn't do it right the first time, or stuff like that?
Speaker 1:In sales training I say to people you know, price is only important when every other element of the transaction is the same, and my job is to make sure it isn't ever the same.
Speaker 2:And like simple things, simple training things make a huge difference. I always tell people that if you answer the phone, no matter what they ask, you say yes because everything's possible, it's just when and how much. So there's no money in saying no and the difference between saying a negative versus a positive. And we track this because we monitor phones. If I tell you like on a part that you can, you ask me, do you have that part? And I say no, I don't have it but I'm going to have to order it. That's a 14% close rate. But if I say yes, I can get it to you next Wednesday. That's a 75% close rate.
Speaker 1:So stop there for a second. Just those two numbers. A 14% close rate no, I don't have it. 75% close rate I can have it for you next Wednesday. Most dealers, distributors in the capital goods industries have no clue about that kind of information. That's nowhere in their orbit of thinking. They think strictly about my sales revenues going up. Am I getting market share for my OEM on equipment? Cheese George is going to retire. Where am I going to get his replacement? All of them are reactionary issues, aren't they? None of them are proactively trying to drive or lead the business somewhere.
Speaker 2:Am I being too harsh? Yeah, the whole industry is reactive and that's really the problem. So by forecasting you turn the paradigm, because the industry looks backwards, usually 60 days, 90 days out of date. It's really who screwed up and who can I blame? And the manufacturers are just as bad. By putting a forecast in front of somebody, you change the paradigm to what's going to happen with high degree certainty, and we've gotten the forecast up to the last three years, We've been running better than 95% accurate for customers' transactions and we're deriving revenues based upon patterns of purchase and pricing.
Speaker 1:Okay, so stop there. When you say you're being successful to that level of confidence, that percentage of confidence, what are you forecasting? Specific values and trends, or what.
Speaker 2:We're forecasting specifically by customer. The whole world revolves around two people exchanging goods and services and everybody else supports that moment, and that moment depends on where it takes place and who's involved is affected by. Did you proactively call that customer and keep them informed? Did you deliver on what you promised? And it's more than what you promised. It's also what's the customer's expectations, because that overrules whatever you promised. So that's the reason why you have to keep them informed. If you're outside the window of expectations and the industry as a whole doesn't really focus on expectations, and yet that's the primary driver in your employees are the ones that manage that process.
Speaker 1:Yeah, it's really quite simple. Everybody has expectations prior to an event. Whether you get married or you're going to have a child, or you're interviewing for a job or you're trying to sell, it doesn't matter. I have expectations and those expectations are measured against, compared against the perception of what you actually got, and that's the definition of customer service. Have your perceptions equaled or exceeded the expectations that the customer had going in? And the trouble with both of those things is that the customer owns that and we don't know what they are unless we ask.
Speaker 2:Yeah, we benchmark them for a lot of the major companies in a lot of industries. So we'll do benchmark surveys to find out what is the expectation. And one example of a major company they couldn't make a delivery for seven weeks. That's the best they could do. But the expectation in the marketplace was four days. And the question that this all was driving that is why can't they penetrate this market? And you're going seven weeks versus four days. There's no way that anyone's going to buy it from you.
Speaker 1:Yeah, it becomes quite simple. So you get benchmark, top five, top 10, whatever and then you turn it around with analytics to measure the performance tied to those expectations and that's kind of the Harvard guys' score measure and you put it together with your algorithms and bingo, you've got Zintor. That's targeting, forecasting, retention, market coverage etc. Telling dealers how good they are. I'm not going to give them a score, but we could give them an ABCD type of score.
Speaker 2:Now you can tell them where they stand relative to everybody else. So what's their retention rate? And the dealers that understand this. We've got a whole bunch of them now that are at 98% retention rate, which, under rolling 12 months, the industry as a whole loses 55% of their customers under rolling 12 month period.
Speaker 1:Okay, let's go back. 55% of the customers at a dealership go away every 12 months, correct?
Speaker 2:In 12 months? Yeah, but you have to look at it. It's not a point in time. It's the 100 customers you had is 12 months, 12 months, 12 months. So if you've got a 95% retention rate, which people think is a good rate, well, every month you're losing 5% of those customers. So over a period of 12 months, you've lost 60% of your customers that you started with 12 months ago.
Speaker 1:Yeah, and with the AAD, every five years they did a survey of their customers and one of the things that we were looking at was retention in the service department and found that 15% of the service customers defected, stopped doing business completely. So there's the first problem You've got to define what retention and defection is. So 15% defected every year and on the surface that sounds like a pretty good number. And then I think Harvard back in the 80s, the business school, did something called the service profit change same kind of thing, foundation data. But 15% a year means you've got 50% of your business in five years and I used to tell the dealers congratulations, we can keep doing this for another five years before you run into the customers.
Speaker 1:Yeah, well that was nuts.
Speaker 2:Yeah, they added challenge around is that, because this is a service driven, not something that's postal driven or delivery driven, you're radius. We forgot dealers that never retained a customer for more than three years, 40 miles from their branch.
Speaker 1:And that's something that doesn't. You know, we've got this big idea and I hate this. I haven't hated it for a long time. We call them branches. So we got a head office and we got a branch. They're kind of building it like an octopus. You know, I got a nerve center and all of these arms going up. Why don't we have? We have drop boxes. We can be within five. We can put it right in the customer's job set, depending on the signs.
Speaker 1:And then let's get into subscription services. I'll give you a free delivery. You want it the same day? You want it the next day? Fantastic, I'll guarantee availability. I'll give you a longer. I can do all kinds of things. What do you want? And to your point, I think you've heard me say this I started confusing people a couple of years ago. Anytime anybody asked me anything, I said yes, confuses the hell out of them. And if they don't ask me anything after a certain period of time, I say how can I help? And that scares people too, because they don't want to expose themselves. You know, but this whole thing about looking forward, not backward, is, you know, financial statements. It's yesterday, you can't do anything about it. It's used as a statement to beat somebody up for poor performance.
Speaker 2:Yeah, but if you look forward, the benefit of looking forward is what are you doing right? What can you improve? It changes the paradigm and it usually improving is a lot of. The problems are process. I mean the process. We track phone calls into the sales department. You know how many actually get answered Zero. Yeah that's good. It all goes to voicemail. You have one company after another, so you got to look at the process in the systems that you're using, and you can only do that at each location.
Speaker 1:So free string there for a second. Let's just look at that one thing the phone calls. You track inbound phone calls while the phone companies do that too. You track how many rings before it gets answered. If it gets answered phone companies do that also you track when the call back happens. If it happens. You do all of that stuff. How many dealers in my world construction equipment dealers on highway material handling, how many guys actually do that in your experience?
Speaker 2:Our experience. We've put it in a number of places. We kind of give it up because they don't really have control of their phones the way you really need to focus. So we've got it with a, we've put it in with a bunch of large companies and some of the big actually big communication companies behind their firewalls and monitoring all their phone calls, and that's when they have their own computer driven phone system, isn't it?
Speaker 2:Yeah, but you can do it. Almost all the new cloud-based phone systems that are out there will give you the metrics that we're talking about.
Speaker 1:So as a tool, as a device, you could sell a monthly subscription to a dealer to track phones by location with the key expectation measurements how long callbacks, et cetera. True.
Speaker 2:Yes, that's really easy to do and we do that with. We set up a company's data pile, but that's kind of a big enterprise operation but set up another company chatter hub, so we're rolling that out. But again, what always happens is large companies grab it, so you only have so many engineers and people that work on it, so it's always a challenge rolling out these ideas.
Speaker 1:So offline, let's let you and I talked about how we can make that available to the dealers so that we can get that puppy going, that piece alone. Let's move on to another direction and another direction. One of the things that drives me nuts is in the 80s we're going to be doing a lot of videos here, next ones in like this big area we got invaded by Japanese total quality management, continuous quality improvement, et cetera, and all of the mobs from that. Six Sigma, 5s, 7s, blah, blah, blah. Process improvement, from my perspective, died. We don't do that anymore. Is that true from your experience in your world?
Speaker 2:It's as if the education people bought into it. We came up with all those ideas Originally. Those are all US ideas, very similar. When I got into the steel industry we had the technology back in the 50s for continuous casting, forming and enrolling and it was adopted outside the country in France and Japan. The same thing happened once Ray Jones at GE moved a lot of his production to Japan on the electronics front, so GE could make money and overcome the problems with their manufacturing unions, just like what's happening now with China. It's like the body snatchers. You put your manufacturing over there and your technology and all of a sudden you've got a plant next door that looks and talks just like your plant.
Speaker 1:Yeah, it's kind of funny. Joel Barker, who kind of made popular the term paradigm, says you have inventors and that's primarily been us over the last 100 plus years Americans and you have innovators, and the innovators are the people that take those inventions and put them into practice.
Speaker 2:And apply them Exactly.
Speaker 1:And the example that brings best for me is the Swiss watch. It's a precision movement with gears and wheels and all kinds of wonderful stuff and the Japanese sell quartz watches has nothing to do with it. And everybody said, well, gee, the Swiss were stupid. Well, the Swiss went to a trade show and showed the quartz watch, the Japanese watch, my, sold it and took their business. It's a classic illustration.
Speaker 1:So your steel example you know cold roll steel. There's so many applications, steve. The one that drives me nuts is the steam engine replacing, being replaced by the electric engine. It takes 20 to 30 years before that tool is actually used. So here you've got all these tools and let's tie it back now At Learning Without Scars. We've got all of these classes for the job functions, the counter, the warehouse, the shop floor, the warehouse at warranty, administration, et cetera. And we know the skills and knowledge of those people in those stores, quantified by percentage scores. I'm a teacher so I need scores. You've got retention and analytics and unbelievably powerful tools, and it's putting those things together seems so logical.
Speaker 2:It does.
Speaker 2:But you have to have a team, and I think, as we're doing this, we've been doing the reflective executive function.
Speaker 2:So we're looking at what makes up the team, and what is surprising is that an entrepreneur and his team tend to be people that are problem solvers. They tend not to be great business builders, because you need people that they're innovators, and so what happens is they have a lot of things that they're addressing and they don't aren't as good at building the foundation. So you end up having to have on your team somebody that completes the forms, puts the systems, loves routine, because that's the foundation and the success of a business. And as corporations grow, you get more and more of those people that are not innovators or thinking of solutions. They're just going to do it the same way. They've been trained, and then you hardwire that with siloing the responsibilities and unions, and now you've got a system that absolutely can't change and is just waiting to die. So one of the keys here is how do you keep that team invigorated, with the right people in the right positions, like a basketball team.
Speaker 1:It's almost going back to Alfred Sloan in the early days of General Motors. That here's the model on how the dealer is to run, here's the metrics, here's the measures, here's the tools, here's the procedures, the systems, the policies. And if you don't succeed, mr Dealer, I've got a group of guys that I will send to you that will take over your business and put it back in shape and they will leave. And you better hold on to it, because if I come back a second time, you're not going to be a dealer anymore. And that's the way General Motors got created in the 40s, 50s, 60s, 70s.
Speaker 1:It was successful for a period of time, but the wheel changes. Today we have a bunch of tools from a toolbox that are doing jobs. They're hired to do a job, they're trained on how to do the job and that's the way the job's always been done. Don't change it, just do it over and over again, make it faster, make less mistakes, congratulations. But if something changes, I'm going to replace you. I'm going to get another tool to satisfy that need. That's the way business seems to think about itself today. Am I wrong?
Speaker 2:And they're doing that. But the people that are making those changes, they tend to be myopic. I always point to the pennies catalog. They found that shower curtains. They were measuring the catalog based upon the number of dollars, like a store, the number of dollars, shelf space, how much is it worth? So they put. Their approach was that we only went pages that are going to generate the right amount of money. So they had 60 pages of shower curtains but they forgot the bath mats because those weren't generating the revenue. But then people stopped looking at the catalog because all it was was shower curtains, yeah.
Speaker 2:And so a lot of times you end up the silo and the algorithms drive you into a corner somewhere. So, unless you've got a team that's, you've got people out there always scouting and then you've got people making sure that the food's delivered to the front lines, they have clothing, they have whatever it's required to support that. Moving forward, there's a different role. It's a lot of times when you're in a reactive environment and I think the equipment industry is extremely difficult because it's reactive and seasonal, cyclical is that people can't. They're so busy reacting they can't think about going forward. So without the ability to forecast and look forward. They fall back into the phone calls or rushing out on whatever the crisis is with a customer, and the year goes by and nothing happens.
Speaker 2:So a lot of this and change. I think that's the big thing. It used to be 20 years or 14 years that manufacturers would put in a fixed line production, which would then set the stage for how everything downstream worked Once you moved in the 80s to variable manufacturing so you could run multiple products on the same production line, and then the introduction of the CNC type equipment where you could change on the fly. It wouldn't take you a day to reconfigure a machine for the next product line. That window has gone. It went to seven years, it went to three years and now even the car companies can, from start to finish, push a car out within 18 months.
Speaker 2:Which is that changes? It's the speed in which this is taking place and the AI and this is the interesting thing anything that's routine is ultimately going to be automated. Whether it's physical or whether it's the middle management job, which is a routine job. Those things are going to get automated, and then, with AI, the automation will shift based upon the demand. So a lot of things that team on the. Just like the human body operates. Whether you like it or not, your heart keeps beating. Those things will adjust with the input automatically. So this becomes how do you keep in balance your management team and stay current with the rapidly changing world that you're faced with?
Speaker 2:It's really kind of very exciting times, but it's going to be challenging, it's exciting for a few people, but it's intimidating for most people.
Speaker 1:There's a really interesting thing there's 73 million baby boomers that are retiring, leaving the workforce, the workforce in America. The statistic is it grows 0.2% per year job-wise. So we've got growth of 0.2% a year and we're taking almost 50% of the workforce out through retirement over a 20-year term. Where the hell are the people coming from? So freeze frame on that one. Then we go back into education scores since 1970. The greatest change in education in America was from 1900 to 1970, with Henry Ford and Cars and America realizing that we had to have a better educated workforce to keep up with what the manufacturing community needed. But from 1970 on then we had competing inputs teachers, parents, unions, technology and the scores have been going down every year since.
Speaker 2:Yeah, I think with the schools having. When I was in graduate school, I substituted and most of the teachers at that time were barely ahead of the class as far as content material, and so what I think happened there is it used to be with women not in the workforce. You had really high quality pool of teachers that were available.
Speaker 2:And smart people and smart people. Once women got into the workforce, into real responsible jobs, that wasn't of interest to that group and so it got farmed out to less capable teachers and less trained and less actually not interested. That was what I saw, having substituted some actually decent schools in and around Chicago and the quality was just not there. So that continued to erode and you've got unions making demands that are putting the. It's putting all things out of perspective. It's not focused on the kids, that's right the customer it's.
Speaker 2:The customer is the kids, that it's totally lost and any type of government entity. I run into that over and over again. They forget that the customer living in the town are the people that reside there. It's not. You know the controlling interests that seem to fight over how money's spent or how situations can be manipulated and abused.
Speaker 1:Yeah, we don't want to go here, but this working from home has brought us back to that sense of community where the vector, the baker, the candlestick, we know them all, because we don't get up in the dark in the middle of the night and go drive an hour to get to work and we don't see these people all day. We go home into our little shelter and we never stick our head out. But you know. So your comment about education my grandmother got a master's in 1915. She taught her whole life one room classroom. My mother was a teacher and she did kindergarten, grade one, combined classes. Half of the kids were on drugs because of learning disabilities. We didn't know what that was then, but she was teaching a thing called the Pitman Learning Method of Reading and the kids were reading and understanding the newspaper at the age of five and six. My daughter has a master's teaching at middle school now, but high schools and they are teaching a thing called AVID advancement via individual determination. And this is in middle school. And the thing that turns my crank about it is that every week every student in every class has to stand up for 15 minutes and give a presentation to their classmates about what they learned this week that impacts their life. So all of a sudden they're being taught to think. My granddaughter is teaching. She's getting her master's here in Hawaii and she's teaching two or three classes in different subjects and finding, hey, she likes teaching. This is kind of cool.
Speaker 1:I love teaching. I've been teaching my whole damn life, but we haven't brought it into the equipment world. We teach technicians because the technology in a machine is changing. We don't teach people how to create a warehouse, how to process an order Customer calls up. First thing a dealer asks is who are you? The thing the customer wants is have you got it? Those two things are at opposite ends of the pole. They don't even relate. And your statistics show that one of the most important people in the dealership is a service manager. Surprise surprise.
Speaker 1:Not for us, but everybody else.
Speaker 2:It's the key role for a successful branch is having that service manager be a problem solver, in open and willing to look at better ways of doing things to meet the needs of the customer. The branch manager tends to be somebody that is receptive to that but also recognizes the importance of repetition and maintaining the foundation of a working, functioning branch.
Speaker 1:So those two jobs stay there for just a quick second, and I'm going to go off the edge of the world here. Every facility that we have, whether it's a tent or hundreds of thousands of square feet of plant, all we need are technicians and people supporting technicians. Every other job function at a dealership can be done remotely, doesn't need to be in that building. Is that true?
Speaker 2:That's true. I mean, that's what's happening. Is that? You can see it in the offices Only 50% of the offices in the cities. Today we have a full floor down in the middle of Chicago, Clark and Madison. It's been empty for three years. Nobody wants to come back.
Speaker 1:It's going to get worse, isn't it?
Speaker 2:Well, yeah, that's why you're looking at $3 trillion of real estate loans that are going to hit the banks and pension funds in the next probably 18 to 36 months.
Speaker 1:OK, so let's go down another path before we come to putting it together Forward. Early this year, late last year, well, it was last year now announced a separate contract for their electric vehicle. The electric vehicle contract requires the dealers not have any car inventory It'll all be shipped from a factory.
Speaker 1:The contract is cancelable without cause. The Ford Motor Company can spec a vehicle on like car max and true car and these things and give the customer a price directly. The dealer doesn't need to be involved at all. In effect, the manufacturer is making a move to eliminate the dealer in the supply chain. I used to say whoever was closest to the customer wins, ie the dealer or the peddler who's actually looking. The other the two-sided discussion. It looks like we're getting to the point that systems are going to who's closest to the system with expectations is going to win.
Speaker 2:It is. But the reason why you had distributors is it was always a time leg and you had inventory. But with industrial printing, our military now is flying in factories and they're making their arm and the aircraft carriers are fully capable of making any part in their manufacturing bay. So they're printing it which brings you right to the local, right to your doorstep. So there isn't handling and shipping in the need to have someone sitting there with a large bunch of inventories like, as I've got the drawings, I can make it for you. So it's the same thing with food and same thing with water. So all this stuff is coming to that local moment and the efficiencies that go with that. So it's like you watch it over and over again. There were 9,000 or 10,000 office products distributors in the US. They represented 60% of the market. That's after Staples and OfficeMaxOffice Depot took a chunk with the box store those.
Speaker 2:That consolidation that's taking place is weirdly, they're transcending the local delivery issues. But with the delivery of Amazon and that whole process, you're bringing that. It's bringing it to your doorstep. You don't have to go out, you don't have to buy it and what will happen is you'll end up having, whether it's in the city or the middle of nowhere, you'll have economies that are created Because I think statistically you only need like 4,000 families to have a viable economy. You'll end up seeing this fragmentation take place in a rapid rate with the technology as it moves forward. It's not command and control, as you can see, especially with our governments and local governments, those decisions, you're losing control of the decisions and they're misguided on a lot of the activity.
Speaker 1:Yeah, and it takes a while for pendulum to move back and forth, but the OK. So we're going to put up on our website, on the landing page, a tab that will be relating to a reporting portal that Zintoro has done for Learning Without Scars. That same reporting portal allows dealers that are common between you and I, between Zintoro and Learning Without Scars, to see the analytics of your algorithms, your promoter score, your retention, et cetera, and tie it back and we're working you and I are working and others to put together a scoring performance type of approach. That's chapter A and that's close and, in some cases, in place.
Speaker 1:The next step is, with John Carlson and David Jensen, executive function, tabletop exercise and that's more a leadership profile type of circumstance, so that we're going to have a three-legged stool performance of the dealer through Zintoro, skills and knowledge of the operating people through learning, leadership measurements, personality measurements through executive function and tabletop and putting those three together in a grading position. And then there's other things floating around on the sideline. But then you and I were talking prior to this. So here's your score You've got a C-level performance in your marketplace, you've got an A-level leadership quotient and you've got a B-level operating. What do you do with that? And you and I talked about, we'll create a series of tips that will allow the dealers to see and select different solutions, different executable, implementable solutions to their situation that will help them overcome their results. Am I saying this properly?
Speaker 2:Yeah, I think it's just bringing it as you have to think of this as a whole. You know it's like a team In the military they put together a patrol and people assume roles. Someone becomes a comic, somebody becomes a mother, somebody you know fills the voids of that community. That is that unit. The same thing is required on building a management team. You have to. You don't hire exactly the same person that looks and talks just like you. You have to hire a mix of people, just like you're putting together a basketball team. You have to hire a mix of skills and mentalities to make an effective team.
Speaker 2:So that's what we're trying to create, but also maintaining the flexibility to deal with the ever-changing environment. And as you're talking about this dealership concept, when you take the diesel engine out of the machine, you're removing 90% of the parts. So the reason you know, on an electric vehicle they can assemble that and do it cheaply is that you don't have that many parts. It's, you know it's relatively from a manufacturing standpoint. You know, a lot simpler than what you've been faced with in building. You know cars that passed.
Speaker 1:And that's also where unions are starting to say well, wait a second, we maybe went too far with this thing, because we're going to have 80% of our employees are not going to have a job tomorrow.
Speaker 2:I think they've totally missed the boat. It was similar to I mean, I've seen this over and over again when I was buying steel mills. I picked up one of the Bethelmills in Seattle and they had 17 layers of management to the floor. They had more people outside of the steel mill than inside the steel mill and it was costing them I mean, at that time it was costing them about $600 a ton to make rebar and we could do it with a plant manager, two superintendents and pretty much everybody else was on the line other than the accountant, the woman who, or man who was answering the phone, so we could make that same rebar for under $200 a ton. And that's what's happening here is that this is going to come down to assembling a team, but the people on the team are going to be the ones that are actually interacting.
Speaker 2:It's not so a lot of the mundane stuff will get automated, but with the flexibility capability that a lot of times old systems don't have. It's really the impact of AI. But this is all about people and it's about who do you have and are they trained? And most people aren't. They're narrowly trained. They don't have a broader picture, they don't know how they fit. So, like Sam Walton, ran a walk and talk program, he'd. Do you know from when I gathered six stores a day and he had walked, the store forced everybody to get on the parking lot see what the customer sees. He always had the branch, you know, the store manager, at the door to answer questions because he was in charge of buying what was required for that specific store to stay viable and knowing where it was located. So a lot of this is the best fertilizer a farmer has is the soles of his shoes. The same principle applies here.
Speaker 1:Yeah, and Sam Walton did something that was unique, that allowed the whole thing to happen, which was Mr Supplier, you'll be my sole source, but I want you to put it on stock it on my shelves. I'll pay for it when my customer buys it, and he just took a chunk of cost out of it. Bezos and Amazon you know I buy it whole foods, vegetables and things that I can't get locally to the same degree. But what I'm seeing is I can pay with my hand. Now. I don't have to have any cars, don't have to do anything. I just put my handprint over. That reads. It says okay, you're okay and you're done. I should go. Then I go just down the street to a Kroger's or a Safeway or a Foodland or whatever the hell it is. And it's all manual, put in your number. Do all this old stuff. They just don't get it. Did you notice this week? Target now has an annual subscription to follow Walmart and Amazon. It's only taken them 10 years.
Speaker 2:It's 10 years and it's the same thing why Sears went under. Sears required it cost them 15 to 17 percent just for their warehouse operation. Walmart came in and they dropped that down to about 6 percent because they put a distribution center and then for the things that they needed to store and deliver to the 20 stores that distribution center supported. And then they had one of my brothers I'm Ransom B Moster. I mean he had an automatic feed every day. He knew what was required to ship to every store their shipping direct, just like you said.
Speaker 1:Yeah, it's amazing. I remember doing a job with Home Depot 20 years ago and every morning every employee gets together in a circle. That's some stretching exercises. They talk what's new in your life, share things. What are we doing today? Anything special going on? Blah, blah, blah. Everybody there, it didn't matter what your job was, the boss of the store, the janitor, they all knew Everything was out in the open, phenomenal. They didn't have warehouses for storage. They had warehouses to sell from and in public warehouses, all of the other stuff. They didn't know that. They rented it. It was a variable cost. It moved with the market. So many examples, steve. It's just amazing.
Speaker 2:And it changes it, but it takes because of the resistance to change that you're faced with, which is there's an important element to that. You don't want things moving too quickly because oftentimes you can't see the consequences, but still that resistance to change right now has created probably the most opportunities, more opportunities than it can possibly imagine. This is probably the most wonderful time ever for finance, for manufacturing.
Speaker 1:Exactly, it's exciting as hell. You're not going to have it.
Speaker 2:It's exciting. I don't think I've ever seen anything close to this.
Speaker 1:No, well, I can't conceive of anything. You know one of the things. The other day we were talking about the difference between AI and EI artificial intelligence and emotional intelligence and I'm saying this is really cool. You've got all this artificial intelligence, you've got chat, gpt and everything else, but you've got to have people that understand and know what questions to ask. And nobody's teaching anybody to think anymore. It's really becoming a little distressing.
Speaker 2:And I think the people are out there. That's in doing the executive function test. We're finding that people are there and, surprisingly, they actually are filling the critical jobs Exactly and they're successful Exactly. So it's just really giving those people the tools. You can't have everybody being out there on the front line. You'll have chaos. So it's also getting the team to appreciate each other in the roles that are necessary to keep the organism viable, whether it's a company or a community or whatever you want to look at. And I think that that goes with getting the right people into the right jobs. It's training and education, and also what's missing in a lot of places is that they're not getting the broad education. They come up a silo. They only know what's important. They keep on doing to end of time what they were set out to do.
Speaker 1:You're seeing that very prominently now in the business schools. The MBA programs over the last 10 years are almost the same today as they were in 2003. They haven't adapted at all.
Speaker 2:And you talk to them and you interview them. It's just like have you really gone out there?
Speaker 1:Yeah.
Speaker 2:And when I worked for Avis, Colin Marshall, who later took over British Airways, required all of us to work two weeks at one of the local stations in Washington cars. I drove a bus at Kennedy Airport, washed cars in the 66th Street Avis location and you find out what's going on. You stand behind the counter and you find out that the monitor that you're using trying to book rentals is a disaster.
Speaker 1:I used to have product support parks and server salespeople spend one day a month minimum hopefully two days a month working the counter For exactly the same reason and bringing the equipment guys onto the counter once a month, once a quarter, so that they could realize how little they knew about what the hell was going on in the business. So it's your right, steve, it's exciting time and I think, with your data analytics and the algorithms and how you got to where you're at, I think, with our skills and knowledge and learning without scars, and with the executive function and John Carlson and David Jensen, we're putting together a really powerful foundation for dealers to manage and direct their business, lead their business rather than react to it. How do you want to wrap this one up?
Speaker 2:I think that a lot of this is getting people to really look at very simple things how do you retain your customers and also really focusing on who's really touching that customer and what's the experience. And that's why the customer satisfaction surveys that we do that for a whole bunch of companies and the reason is it front runs at retention rate and you hear about the problems. But you have to be listening.
Speaker 1:Yeah, exactly, Exactly Well. Thank you very much, Mr Craig, and thank everybody who's been listening to this. I hope you pay attention to this because this is coming soon to a store near you.