Learning Without Scars
As a third-generation educator, it is easy to say that teaching and training are in the blood for Ron Slee. From his beginnings as a coach, through his time at McGill University, Ron developed a foundation for the work he does today. From working within dealerships, to operating a consulting company, creating a training business and running twenty groups, Ron has been directly involved in this Industry since 1969. Ron has been known as the industry expert for years, and has brought this expertise to bear through his training programs. Today, Ron provides specialized, job function based internet based subject specific classes, job function skills assessments, as well virtual seminars and webinars. These courses are designed for manufacturers and their dealers, as well as independent businesses in the construction equipment, light industrial, on-highway, engine, and agricultural industries through Learning Without Scars (www.LearningWithoutScars.com). This platform is a continuation of the work begun by Quest, Learning Centers which was established in 1996. This training is aimed at improving dealer parts and service operations through qualified people that are knowledgeable in using operational metrics and current market and operational best practice methods.
Learning Without Scars
Data-Driven Transformation: Navigating the Equipment Industry's Future
Unlock the secrets of data-driven business strategies in the equipment industry with our fascinating guest, Nick Mavrick, the visionary founder of BiltData. From corporate life to entrepreneurial success, Nick shares how data analytics is revolutionizing customer service and strengthening relationships in the face of industry consolidation. Listen as we discuss how empowering salespeople with the right tools is transforming traditional transaction management, and hear Nick's invaluable insights on how data can bridge the gap between executives and their markets.
Explore the whirlwind of technological transformations shaping the equipment rental landscape with industry giants like United Rentals and Sunbelt Rentals leading the charge. Drawing on historical lessons and personal experiences, we delve into the necessity of adapting to change—from the shift from steam to electric engines to the rise of artificial intelligence. Learn from the triumphs and setbacks in the industry, and discover how data can be a powerful tool for crafting business strategies and gaining customer insights, as illustrated by Nick's experiences with NationsRent.
In an engaging discussion with Jennifer and Joseph Albright of SpendRite, we uncover the changing dynamics of sales and leadership. With a focus on storytelling, data analytics, and perseverance, this episode reveals how modern tools like Power BI and CRM systems are reshaping sales strategies. We also predict the future of distribution channels, drawing parallels with CarMax's model and emphasizing the importance of integrating data analytics into strategic decision-making. Join us as we conclude with strategic insights on collaboration, growth, and the promising future of the equipment industry.
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 on this good Friday. I'm joined today by a gentleman I use the term loosely by the name of Nick Maverick, not from Top Gun fame, and he has a company called Built Data, and what I find intriguing about what Nick is doing is that he's the lead dog on a dog sled. He sees something, he saw something. He's been in this business for a long time. I'm going to let him speak for himself shortly, but we are moving from transaction management of our companies, our businesses parts, sales orders, work orders, equipment, sales bills, invoices, payments to data, and that's the foundation on which Nick has built his company. So with that as a rather obtuse introduction, mr Maverick, good to see you. Thank you for being here.
Speaker 2:Ron, it's a pleasure why?
Speaker 1:don't you round out that little background of who you are and what you do a little better than I did?
Speaker 2:Well, first of all, it's an honor to be here, certainly an honor to know you and thank you for your kindness and also the great learning platform that you offer to folks, and I wish I was more sort of awake or aware when I was younger or I could rewind the clock because I would parachute myself to your platform today. So thank you for what you do for folks, thank you. So my name is Nick Maverick. I, for the most of my career, I have been a entrepreneur within companies, so some people would say a corporate guy and I would say entrepreneur maybe. But when I realized I had become a corporate guy, I left the corporate world because I never really wanted that label and it certainly taught me a lot about in companies who the real client is.
Speaker 2:I know we're talking about construction equipment today, but my client was the salesperson or the store manager, certainly was the field and if you can invert the hierarchy, the tip of the spear is whoever is closest to the customer and in the world that I have been in in construction equipment rental and dealerships, it is the salesperson. Equipment rental and dealerships it is a salesperson. I formed Built Data as a data, as a service company to serve to provide sales analytics to the tip of the spear, so in one or two clicks they can get into information that allows them to provide better service to their customer. And I'm happy to tell you more, ron.
Speaker 1:Well, you know where you started saying the person that's closest to the customer, the tip of the spear that's near and dear to my heart. The person who has the relationship with the customer is the one who's going to keep the customer. Yep, with the customer is the one who's going to keep the customer. And one of the dilemmas we've been seeing over the last 20, maybe 30 years is, as the price of everything has gone up, the capital required to run distribution, dealers, distributors, has become rather obscene. So we've seen a very aggressive consolidation, sometimes through bankruptcies, sometimes through logic. And you know, I'll give you a very simple example. When I started in 1969 at the Caterpillar dealer in Canada, there were 10 Caterpillar dealers in Canada. Today there's two. There were God knows how many John Deere dealers. There's one industrial John Deere dealer, there's one Comatso dealer coast to coast. There's one Volvo dealer coast to coast. This is Canada. Now I can give you the same statistics in the United States where again 1969, there were 50 Caterpillar dealers. The last word I heard from Caterpillar is there. You think that 15 is the right number. Well, as that happens, corporations start taking over, like you were indicating that. You know you didn't want to be a corporate guy like you were, indicating that you know you didn't want to be a corporate guy.
Speaker 1:And a quick story when I left Finning 1980, and went into business for ourselves, I was working with most of the guys that ended up running Finning. And I went back after four or five years and was chatting with one of them and he said I said this is kind of exciting. He says not so much. I said what are you talking about? He said I said this is kind of exciting. He says not so much. I said what are you talking about? He said I can't remember the last time I was visiting a customer and that's the world. So now we've got executives, leadership, that are insulated from the business and trying to make decisions on the yeah, which to me is a fool's game, and that's why what you do appeal to me so much. Data is going to be driving business period. It has been for some time, we just haven't recognized it and that's, that's your holy grail, that's where you live.
Speaker 2:Right and how we kind of connect some pieces in this may or may not be appropriate, but sometimes you can forget who you are. And I remember reading a long time ago it was when Mike Tyson had lost to Buster Douglas and there was my least favorite newspaper that we always would get in the Courtyard Marriott for free it was the USA Today and picked it up because it was in front of my room, it was free, but it was really an article that I remember from that day and it said it was George Foreman's advice to's advice to tyson. After losing the buster tuglet douglas has been, he said. He said tyson has these amazing sort of natural, god-given talents. And he said but he never really understood, um, how all of his talents fit together because they were his. And he said it's like driving a ferrari and you're racing around town. You're the fastest car in town, he said. Finally you get an engine warning light side on steam's coming out of the engine. So you pull over and you open the hood and you see that there's no engine, there's just a little chicken with skinny legs pedaling this car and you shut it quickly so nobody will see.
Speaker 2:And in many respects, construction equipment dealers and rental companies to some degree, have lost their way, in the sense that what they were good at, they no longer necessarily understand what they're good at, and what I see is their businesses are polluted with I don't know layers, hopes and dreams that they may have bought, maybe from people like me, right, who worked for other companies. Could be a latest CRM system. It could have been quote unquote power BI, right, it could be. They went from just serving the customer to now they have GCI or heavy equipment and Salesforce and a compact Salesforce and a product support Salesforce and a rental Salesforce and they kind of work together but they kind of don't and they lost their way.
Speaker 2:So data is just behavior and you can get. What I see is you get lost in this confusion. If you look at everything, you can't process it. But if you boil it down to one-on-one meeting with a customer or what we aim to do as a company is, instead of looking at one of our clients has 20,000 customers, you don't have to look at 20,000. You can look at seven buckets and two of them will count for 80% of the revenue and profitability. It doesn't mean it's the right answer, but it means it's where you start.
Speaker 1:So yeah, you know data. Data will tell you everything. I, you know, my background is mathematics and physics, and statistics specifically. So data is, you know, my friend and you know Reagan said it in 1980, facts are awful, stubborn things. You can't fight with facts, and there's some very clear indications that in our industries we don't know what our core competencies are. We try to be all things to all people without understanding what I need to be really good at, and so it becomes confusing.
Speaker 1:You know, you become an employee in a company. Company hires you. This is terrific. You're looking for a job and you're excited. You're an enthusiastic beginner and somebody trains you. Somebody tells you what the job is you're going to be doing. Somebody shows you how to do that job. The trick is it's how they did it, it's not how you might do it. And you're told you know, do this, do it faster, make fewer mistakes and we'll give you more money. Congratulations.
Speaker 1:And very few people are asked to be critical about. Why do we do it that way? Yeah, and it's even worse with data, nick. The quality of data that we deal with is abysmal. We've had data dictionaries in the systems world for 60 years and I'm manic and anal about any data field has to be owned by somebody, yeah, and nobody can touch that thing without that person's approval. And CRM is a good illustration. Where Salesforce and other CRMs are going to have a customer profile, so does the business system that the dealership is operating on, as the business system that the dealership is operating on, and those two profiles are not the same and they do not sync because it's counterproductive for the software company.
Speaker 2:That's right. They love confusion and they make money off confusion. But here's the problem when you fight a very directed competitor and you know who. I wish I knew younger Brad Jacobs, right United Rentals. Then he went on to XPO. He had done United Waste and I worked for another billionaire competing with him, a guy named Wayne Huizenga, and I was much younger, I was in my late 20s but, like everything, if I could rewind the clock I would have studied him more because he was a very directed competitor and master craft. I'm just.
Speaker 2:This is my take Fast forward when you're United Rentals. When I was competing with them, they had a $2 billion fleet. Now they have 20 billion, over $20 billion fleet. They and Sunbelt combined are in essence have Amazon type like market power and the shopping malls are becoming vacant. There's no traffic in them and dealers. If it's not too late, it's now to change and you have to get out of confusion because United now I know Jacobs has moved on, but he built a great company and they're a pretty focused competitor and I'm not trying to sing their praise. But when you can't, when you're in a battle and the water's hot, you better change because not everybody's going to go now. They are very focused. There are a few companies that are exceptional in what they do, and they're you know. I'll stop there.
Speaker 1:No, it's a perfect illustration and it leads to. I met Jacobs and had the opportunity to chat a little bit, yeah, and Heisinger, I did the same thing.
Speaker 2:And.
Speaker 1:I've been blessed. The guy that got my attention was Bill Blackie, who was chairman of Caterpillar, and I offered to work for him for 500 bucks a month and I told him that I'd like to learn and I'll do whatever the hell he wants. And he said well, you know the little Scott. He was about five six. He delivered milk with a wagon in Peoria, illinois, when he was going to Bradley to get his degree. And, scott, he said I'm not sure I could teach him much, ron, but isn't 500 bucks a bit rich? Which did make me very happy. But so the moral of the story on that is, in my experience there's been two chairmen, a caterpillar that I will say are A plus. I believe that, and if you look at every major corporation, there's somebody who's a pioneer, a creator, an innovator, a revolutionary, and I'm going to use Jeff Bezos as the model, 100%. And he's smart enough to recognize after 10 years he passed the buck on to somebody else, right? Starbucks, same thing. Sam Walton, same thing, yeah, all of these folks.
Speaker 1:Well, I'm troubled by our ability as a society forget business for a second as a society, to adapt to change, and the illustration I've always used is the steam engine in the 1800s. In 1880, the electric engine came into being and it replaced the steam engine. It took another generation, 20 years, before the benefits of the electric engine could truly be realized, because society wasn't able to adjust to that rapid a rate of change. Because society wasn't able to adjust to that rapid a rate of change. So I'm looking at my work life and I go back to the 1950s, and the computers arrived earlier, but call it the decade. Then, in the 60s, data storage and operating systems came. Then in the 70s, the internet arrived. Then in the 80s, the cell phone arrived. Then in the 90s, the internet arrived. Then in the 80s, the cell phone arrived. Then in the 90s, telematics and GPS arrived. Then in 2000,.
Speaker 1:Sensors and computerized components, and then 2010,. Subscription services for extended warranties or parts deliveries or Amazon Prime. And now we have, in 2020, artificial intelligence. You know when artificial intelligence first hit the planet? World War II, 1936. Right, that's the last time I looked, 85 years ago, and now we're seeing it.
Speaker 2:By the way, I only know it because a guy who was essentially lying to me, but he would use that as a reference. That's the only reason.
Speaker 1:I know that Well, and very few people. Mccarthy and he was in a 1956 Dartmouth summer research project, which is where it was first discussed. But the point is you are one of those guys. I'm not going to put you into that same scale.
Speaker 2:But I have some contribution, that's what.
Speaker 1:I've got a niche that you've identified, that nobody else is in, and so how do you use? What does built data do for dealers for?
Speaker 2:customers.
Speaker 2:So a connection point. I'm processing. You know, I feel alive. I'm processing so much learnings from other people. As Charlie Munger would say, you're learning from theaterpillar, who I don't know, or a Heisinger or a Jeff Bezos. They are learning. Certainly, charlie Munger, learning machines. They would call it Steve Jobs learning machines.
Speaker 2:You, ron, are a learning machine. You are. I wish I'd found you a little bit earlier, but we're here. We provide a learning machine. So we provide very directed sales analytics so you don't have to waffle through this pile of garbage to get to a conclusion. That's what we do and we allow you to do it in two clicks. What I've seen?
Speaker 2:This whole notion of data is like a fancy word. It's an intimidating word. Some people would say when you use it, they'd say you're talking down to them. You know somebody you know. Data is behavior. All you're doing is summarizing a conversation. I'm taking a snapshot and I'm showing you what we found. We do it in a very directed way.
Speaker 2:I developed the model when real quick NationsRant was a multi-billion dollar startup. It was consolidating, competing against Brad Jacobs. Brad Jacobs beat the Sox off of us and Nations Rent ultimately went into Chapter 11, was bought out of bankruptcy by one of the entrepreneurs that the company had screwed and a large hedge fund called Bowpost. And a large hedge fund called Bowpost and I'll pause there momentarily and as the company was going down, I was asked to work on something that had talked about customer concentrations. First time we looked at the customer data God forbid, right, Because you're just buying companies and playing the goodwill game. Right, amortizing goodwill for Wall Street and Nations rent, 3% of the customers did 62% of the business. It was 15 people per store and if you lost five of them, the acquisition that you overpaid for was no longer accretive. It's one of many reasons Nations Rent went bankrupt. Brian Rich and Bow Post recapitalized it, restructured it, cleaned it up, capitalized it, restructured it, cleaned it up and sold it on to SunMill Brad Jacobs, to his credit, and his team. They had some bumps. They persevered through that.
Speaker 2:I took that experience then to Volvo. Volvo was starting a rental division and we were looking to put the local owner back in the business. So I call it the law of small numbers. Those 15 people that were the 3% per store. They were the people, the entrepreneurs, who cut the deals with the local customers, who knew them. And so if Ron is the customer.
Speaker 2:I understood your growth trajectory. I understood your capital constraints. I understand you had maybe some. You worked nights and weekends and I did.
Speaker 2:If I wanted your business, because you're a creator, I had to do special things and go out of my way to serve you. And once I did that and you knew you could rely on me because all you're doing is outsourcing. You're outsourcing To Nation's Run, it was. You're outsourcing your rental equipment If it's a dealer. You're outsourcing uptime right, keep me up and running. And you knew I would keep you up and running, right, see you at uptime.
Speaker 2:I took that model to Volvo and our attempt was to put local owners back in business to fill the void for the corporations that our attempt was to put local owners back in business to fill the void for the corporations that our hypothesis was that they couldn't serve, they couldn't hear the heartbeat of those 15 people and I'd say we were moderately successful. You can always be more successful with that strategy. And when I reentered the industry a few years ago, doing work for a large industrial company, what I thought this notion of the 80-20 rule, I thought it was pretty pedestrian. They were lost in Power BI and data warehouses and data lakes, and CRM, none of which, by their own admission, worked. So built data is designed to give you answers in two to three clicks. Happy to show you our latest development line.
Speaker 1:Well, we're going to do that. But what you come back through there with that history on the rental side is really valid and it turned upside down how a dealer worked, a traditional dealer worked, and what you did with Volvo Caterpillar did with their rental side. It was a modification, but similar structure. I've done a lot of work and continue to do a lot of work with Sunbelt. I've done a lot of work and continue to do work with people like Home Depot. And you know one of the guys that contributes to us like you do. His name is Ed Gordon. His name is Ed Gordon. He is predicting that 50% of the American workforce will not be employable by 2030. So give them a little bit of slack, but somewhere in the next 10 years, because they won't have the skills.
Speaker 1:And then another of our contributors, ed Wallace, who's both of these men have written multiple bestsellers. He's a good dude, he's a real good dude and his deal is relationships and the story and again, everything in communications and selling, et cetera storytelling. In my view, the story that Ed uses on relationships is a guy that took him to the airport and he was doing work out of town. His wife wasn't happy, he had to leave early, left home and his normal driver was sick. So he called somebody and this guy showed up at the door and he comes up and he rings the doorbell which is a no-no it's 4.35 o'clock in the morning and finds out that there's a sick child or whatever in the house. And the next time he literally scratches the screen. But Ed tells the story about this guy and that he is the model that Ed compares everybody to. He knew more about Ed and how Ed lived and how he worked and what he needed and what he wanted, what he liked, what he didn't like, than anybody. And a good salesman to me doesn't sell a damn thing. Yeah, you're right. You're right. People buy from them because they trust them. That's right. And building that relationship. So then I go back and you know data's behavior. You couldn't have said it better than that. And then we have these fancy terms power BI, wonderful Machine learning, absolutely amazing.
Speaker 1:A friend of mine is a director for MD Anderson, a big medical group, and they're digitizing patient data in America from 2010, 2000, I think, to 2020. All patient data, everything as a form of data. Put a little chip under your skin. I know that's radical, but go out 50 years. That'll be the case and that'll be your full medical history. And you go in anywhere.
Speaker 1:You go see your doctor, you'll get their, you know the blood work and everything else and they'll say fine, you're 57 years old, you're a little bit overweight, your blood is this, your pulse is that, all the rest of this stuff. You're going to live until you're 77 years old unless you do this and away we go. My doctor's doing that to me all the time. I'm 250 pounds. He says, ron, I need you to be 220.
Speaker 1:I say to him you know how young I was, how old I was when I was last 220? He says, no, how? I said 17 or 18. I said what will it do to my body to drop 30 pounds after 55 years and have to live in? He said that's not a good idea. So you know, all of this stuff is relative. So here we go. And the 80-20 rule yeah, it's pedestrian. I like to stratify things. I like using increments of 5% and just find those people that don't care what happens. I am never, ever, ever going to lose you, that's right. And whatever you need, I'm going to do 100% and we show.
Speaker 2:we just break down all that clutter and show it to you. You're a sales guy, I can see the screen right, so I'm going to use my hands Left to right Best customers. You can look at a CEO and see that you have 2,000 of them. Now John Doe or Jane Doe salesperson sees a chart, sees 15. Law of small numbers. If Jane Doe or Jane Doe salesperson sees a chart, sees 15. Law of small numbers, if Jane Doe gets three more people, it is a catastrophic blow to the competitor and it's a high value kill, right? And now it's understandable, right? Somebody can understand 15 to 18. And it's not.
Speaker 2:I'm not trying to. I should change the way I said that what, what management does? Is it kind of Fs it up from above, because they just push it all down and they say go get more people and they say I want to see your sales pipeline. Put it in CRM. Do you really need CRM to to track 18 people, right? I mean, do you have to look in your? We all know 18 people.
Speaker 2:I'll put, say, my friend Keith. He's a very good friend of mine. We see each other two, three times a week. I don't have to put it in CRM. To remember, january 6th is his birthday, right, and now I'm not. So I'm talking about a friend, I'm not talking about a cousin or my spouse or my mother, or so we have to. We buy all these systems for what you got to organize 18 people the best salespeople I see have a day planner and they lie to management because management has junked up their CRM and beats the hell out of them and they'll go in there and they'll do the minimum in CRM, but they go to a day planner and management wonders why salespeople sort of lie to them, cause that's what they asked them to do. Yeah, that's very true statement. Make your numbers. Well, I gum you up with a thousand pounds of horse shit to do every day.
Speaker 1:Selling is a tough game. It's a tough job and you know a lot of the perception that a lot of people have about a salesman. What I call a peddler is yeah, they buy lunch and they have dinner and they have drinks after work. They play golf on the weekend yeah, maybe some guys do that, but there's a lot of guys that are working 14, 16, 20 hours a day regularly to find a solution for a customer that doesn't even relate to anything that they're selling.
Speaker 1:For the last couple of three years, I've confused people and I've said this to you. I think Anybody asks me for anything. I say yes Confuses the hell out of people. How can you say yes, you don't know what it is, you don't know how it's going to be, it doesn't matter, I'll do it. And then what stands in the way of you doing a better job? How can I help you get better?
Speaker 1:And one of the missions purposes we try to get to with Learning Without Scars is we want to try and help people identify their personal and professional potential. Now you don't want to talk about a bone crusher. That is it, because now you're standing naked in front of me and we're going to talk about how you can be all you can be. You don't use the Army's deal between the last two transactions A and B. The size of the last two transactions, relatively speaking, will, with an unbelievably high probability, predict the next transaction 100%. And if I know, that is true and people that have got statistics and have that kind of education know it's true if there's a change in the buying pattern, why the hell is there not an interaction?
Speaker 2:an intervention.
Speaker 1:Hey, nick, I noticed something wrong. I haven't seen you for a while. Talk to me. The other thing Harvard did a huge study back in the 80s, 90s and he wrote a book, harvard Business Review, called the Service Profit Chain. Three Professors and they said definitively, in the industrial distribution business, if you can increase your customer retention five percentage points 20 to 25, 40 to 45, you will improve the profitability of the organization, and I don't care what it is by 45. Yeah, I believe that I tested it with my clients.
Speaker 1:It's true now there is nothing else on the planet, nick, that compares to that. Sure, yeah. Who the hell's doing anything like that?
Speaker 2:Sure Yet who the hell is doing anything like that. So when you have to navigate, you know my goal is we want to make people money. If we don't, don't pay us. It's that simple and you have to move quickly. You now for a lot of the industry frankly has to be like have very highly trained special forces guerrilla if they're going to survive. That's the truth. Multiple conversations with you, not only people it's like stealth downsizing. It's happening. It's either happening where wages don't keep up. Revenue goes up the same amount of people. Of course there are layoffs goes up the same amount of people. Of course there are layoffs. It's happening. The water's hot and't want to sound, but let me say it this way there's companies buying a lot of products that don't make them any money and the product should make the money. That's certainly how. That's the hope that when those dealers buy those products they're hoping they'll make more money for it, but they just end up with another annual subscription and maybe some guilt when they don't want to renew it.
Speaker 2:I think we can do better, and the way we do better is by pushing that information to the tip of the sphere, increase its accessibility. You don't have to go through layers of management to get to a fancy word called data, which is just a snapshot of behavior. That's it. That's it. Become a learning machine.
Speaker 1:Yeah, your comment about adding brands. A lot of people do that and they get more revenue and all the rest of the nonsense. There's two wonderful people, jennifer and Joseph Albright, have a company called SpendRite. Jennifer worked at the dealer side and Joseph ran the Caterpillar data processing wing and did all of the systems installations around the world Two very smart people. And they go in and look at you know, is this brand making any money? You know you want a good exercise.
Speaker 1:Go into a company and ask to see a list of all of the printed documents that they use, or a report out of your computer system and find out what the frequency of use of it is and who uses it. And it's amazing, we continue to do things. And there's also and you've heard me say this there's a generation delay by I'm going to say 10 years. It might be more of transition of power. So today we've got a lot of men and women in their 70s still running businesses when they should be in their 50s and as a result of that, a lot of the guys and gals that were pretenders or on their way to becoming those leaders have left. There's a finite amount of talented people in this planet. There's a finite amount of people that are leaders, and leadership's a really nasty thing.
Speaker 2:And one of the things with you know call it the 80-20 rule, because I didn't invent the 80-20 rule is call it the Great Wayne machine. If you and I are looking at you know we get on a scale and we see that 11% of your customers do 83% of the business and it's 15 or 30 people. Why don't now we have common ground, like if I'm in marketing and you're in sales, now we can work together right. And it's no longer sort of opinion about when I was in marketing and had to.
Speaker 2:When I first worked for Volvo, I'd had franchise owners say to me nobody knows our Volvo brand because they confuse us with the car company. Why don't you advertise like the car company? And I said you know, look the Geico, gecko that you think is cute is you think it's cute because they spent $300 million a year brainwashing you that it's cute. It is cute, but it wasn't a good idea. Like it becomes a good idea with $300 million behind it and yeah, it's freaking hysterical. So we had to be much more targeted in how we spent money. And rental companies today, if you're independent, you have to do that. If you're a dealer, you have to do that Because somebody out there is lurking. They're smart and they're chipping away, that's for sure.
Speaker 1:Well, let's take it into a different direction. Let me make the statement that the current distribution channel for construction equipment is dead. It will be gone within 20 years completely. The OEM will continue to make machines. There'll be brokers all over the damn place selling them, including the OEM. Look at CarMax. The dealers have somewhere in the range of 10% best practices, 25% market share on labor.
Speaker 1:They've already lost 75% of the labor business Caterpillar somebody that I'm much more familiar with data on in 1965, had surveyed every single person who owned a Caterpillar machine in the world. They would have a face-to-face discussion with them. 1970, they shifted that to 10%, 20% every year. So they did the same type of thing, but it was five years and some of it's every year. So they did the same type of thing, but it was five years and some of it's aged, and a good friend of mine, ray Polhill, ran that division for a while. So in 1970, just use that as a benchmark we had about 80% of the parts market for parts sold to Caterpillar Machines.
Speaker 1:I had a dealer meeting in the early 2000s in the southeast and the president of Caterpillar North America USCD in the old terminology was in the room. So there's two or three hundred people and I usually wander around with a lavalier and a mic in my hand and stick mics in people's faces asking them questions and I went up to him and I welcomed him and thanked him. I said I have a difficult question and if you want you don't need to answer it and he said fine. I said what's your parts market share in North America? He said, without batting an eye, 38.3%. And I stopped and I thanked him for being honest and I said I gave that little story.
Speaker 1:So let's call this 2005 and let's call 1970 to 2005. It's 35 years. So I looked at the room and I said isn't this wonderful? In the last 35 years, your market share for parts has gone down by 50% and that's one of your more profitable aspects of your business. How much longer are you going to go before you do something about that? And of course, nobody knew how to answer the question Because they weren't there.
Speaker 1:You can present data to them 100%, but in many cases they don't understand what that is. So, from me to you, not only do you have the business to provide the data to people, but you also probably have the need to create a group of people that are going to be analysts that you're going to charge to the dealer to use your data.
Speaker 2:I was talking to a colleague of mine the other day, larry K, a gentleman, and they were talking about training and the behavioral part of it, meaning, obviously, what you do, and, yeah, we need to work with your team by example and other folks who can make our product culturally embedded. It's not so much our product, frankly. What we're doing is showing you your strengths and how to do more, better right, george Foreman? Telling Mike Tyson understand your strengths. That's what we're doing and how to do more of it. We can make you it we can. We can make you stronger, we can, but we're we're really just enhancing you. That's it. We're not magicians. We're starting with you.
Speaker 1:The thing. The thing that we did when I started consulting, you know, is pick up the phone and call a guy and say you know, I know how to run your business better than you do and you're going to pay me 30 grand to prove it to you, which is a little bit tongue in cheek. But I would go out and I'd do a review of a business operations, parts and service. That's my strength, and at least I thought it was my strength, and I'd go. I'd be at the dealership for two weeks, I'd be doing the job over a month, and then I'd make a final report and you know, maybe an inch, inch and a half, a whole series of recommendations, things to do, how to do all the rest. And we'd have the final meeting and I'd say have you got people that you would have implement this? And they'd said, well, we've got some people in mind. Well, we haven't made a selection just yet, and so I'd leave. And three months later I'd call and follow up for six months and nothing had happened. So after a year and a half or two years of that, I started saying to them have you got anybody that would do it? Or, if you want, I'll do it for you.
Speaker 1:So all of a sudden I started doing it for them and I'd go in there two weeks a month, one week a month depending on the size and gravity of the issues, because they don't have inside people to do that. They've got process people. They've got a parts department, for example. What's the core competency? Why have you got HR? That's not a core competency. Outsource the darn thing. Systems. Why do you have any systems? Outsource the damn thing, it's not the core competency. Keeping the machine running, protecting the resale value that's a core competency.
Speaker 2:Yeah, helping your clients make more money, exactly, helping your clients make more money, exactly. Ron, I've got a question for you. I probably didn't plan well enough and in two minutes I have a client call.
Speaker 1:You're good. You're good. No, we've probably exhausted this, but I'm going to call this chapter one. Okay, we need to do a chapter two, let's go to work.
Speaker 2:I could use your help with training our clients. Not a problem, I'd love to talk to you about that?
Speaker 1:you remember, like comment, at whatever you ask, I'm going to say yes.
Speaker 2:Well, cool then I'm I I can say this I I also like saying yes, and it's taken me to a lot of like. That horse has taken me to a lot of like sunrises and sunsets and it's fricking fun Sure.
Speaker 1:Okay, so, even if it's bad it's fun. Give me a ribbon to wrap around our discussion. So far. What did we get done this morning?
Speaker 2:I think we, we and I'm just going to say common ground was you've created a learning machine, so have we meaning we can fit underneath yours is? We would love to serve the industry to provide a learning machine to help them understand what they're good at, how to do more of it quicker and of course it's a euphemistic way to say stop doing some of these self-inflicted wounds and you'll heal quicker than you can imagine. The game isn't over yet. It's not. It's not. But the time to act is now, and market by market by market. If you tell us your target, I promise you we will do everything we can to help you win that battle, even if you're smaller.
Speaker 1:That's a perfect way to end, and thank you, nick, for this time and I look forward to future and thank all of you listening to this. I hope you, I hope this makes you think a little bit, because it's a changed world and what Nick is doing is taking us to the promised land. So I look forward to having you back with us at the next Bandit Conversation.
Speaker 2:And have a great weekend and I want to come visit you all of a sudden he wants to I'd like to convince my wife to uh do an in-person meeting so aloha, just on it aloha.
