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
Connecting Technicians to Customers Efficiently
Ever wondered how the machinery repair industry could mirror the convenience of hailing a ride? Meet Alex Kraft, the visionary behind Heave, a game-changing platform that's redefining how heavy machinery repairs are conducted. With insights drawn from his journey from a traditional heavy equipment dealer to launching an on-demand service, Alex shares how Heave addresses long-standing pains in the field service sector. Discover how this Uber-like model is swiftly connecting skilled independent technicians with customers, effectively addressing the slow responses and inefficiencies of OEM dealers.
We get into the nitty-gritty of optimizing labor efficiency and how Heave has claimed a significant share of technicians' labor hours. Our conversation uncovers the strategic maneuvers that have allowed Heave to expand into more complex repair jobs without compromising on their hallmark rapid response times. With a nod to historical shifts in the industry, Alex reflects on what it takes to keep pace in a market that has long suffered from a lack of competition. From Napa Genuine Parts to new service paradigms, we examine the landscape changes that are opening doors for innovative solutions like Heave.
Quality control and technician marketplace dynamics also take center stage as we explore the challenges of scaling a technician network while maintaining excellence. Hear firsthand about the strategies to balance supply and demand, ensuring both technicians and clients benefit from this revolutionary approach. Whether you're interested in the operational intricacies of repair services or the broader implications of Heave's expansion into cities like Atlanta and Nashville, this episode offers a comprehensive overview of how Heave is poised to reshape the machinery repair 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. Today we're going to have a lovely discussion, a lovely conversation with a guy by the name of Alex Kraft. He's written blogs for us, he's been on podcasts, he's the guy that is revolutionizing customer service for repairs and maintenance, and that's all I'm going to say at the moment. So good day, mr Kraft. How about you go backwards a little bit and tell us a little bit again about your background and how you got to where you are now?
Speaker 2:Aloha, ron, good to be with you. I feel like this is our annual checkup From the neck up. Yes, so the very quick version worked for a heavy equipment dealer for almost 20 years for a heavy equipment dealer for almost 20 years. Then dealer was sold. I worked in all the different departments in the dealership so I had a wide exposure to all aspects of the business. Started around, covid started a company called Heave. We started with a little different business model than where we ended up, but then in late 2022, early 2023, we pivoted our business to field service and then it was all systems go from really from day one, which is awesome and so easiest way to describe it is Uber for heavy machinery field service. We refer to it as on-demand service, so customers can if I have a wheel loader down in the field, instead of calling a dealer, what if you could go to a website or an app and see available heavy machinery mechanics near you with their rates published and you can book someone to come fix your machine?
Speaker 1:That's what we do. And from 2022, 23,. When you started, let me say, when you pivoted, you had nobody in the field service on-demand business, correct? That's correct. And today you have 20 plus employees, correct, we do, yes. And hundreds of technicians. Well, forget the hundreds of technicians for a second. What do the 20 people do?
Speaker 2:A variety of roles. So we have a field sales role which I would say most closely resembles, like a dealer PSSR, and that's really what a salesperson is for Heave. You think about it in the traditional PSSR role. We have customer success people, so like they work behind the scenes to make sure that customers are having a great experience. So they'll do things like making sure that the technician is communicating every step of the way with the customer. They can monitor the text messages in our app. You know they make sure that customers are comfortable, they're getting, like I said, the communication, and making sure questions are answered, Like sometimes like hey, have parts been ordered? You know they'll step in and order parts if need be. We have software engineers. We have a team of six software engineers, all in-house that build all of our technology. And you know we have marketing. So that's the bulk of our team.
Speaker 1:And now shift over to mechanics. How many mechanics would you say use your system, say, at least once a month.
Speaker 2:We're in the hundreds now.
Speaker 1:Good for you. Good for you. Why do you think this has been so successful?
Speaker 2:Well, you know you have to have a few things. Luckily for us. The first thing is the pain of the customer. You don't have to convince customers that field service is a need that's overwhelmingly accepted. Um, you know, they're, they're not happy with the. What has been the experience for however many decades, so that's the biggest thing, that that has helped us be successful. Um, you know, right place, right, successful, right place, right time a little bit.
Speaker 2:The good thing for us too is that there's plenty of independent technicians that exist. We haven't convinced anyone to leave a dealer to go independent. These skilled technicians have existed for a long time. They've just been largely invisible to the marketplace. They might know a couple of customers here or there, but you know. So both sides have existed and both sides have had certain pains has been what I just described. They're not marketers, they don't really have websites. They've relied on word of mouth to get their customer business. And so we come along and we show them all of the customers that need service and when, and we give them access to just a wider range. So they don't have to market and they don't have to drive job site to job site with business cards handing them out to get business. So that's, I would say, that's why we've been able to be successful, is that there's pains on both sides.
Speaker 1:Yeah, I think that's that's pretty good characterization. Why do you think the dealers haven't looked after this market such that the opening existed for you?
Speaker 2:I think it's very clear there's a couple of things. Having worked at a dealer, unfortunately the economic environment lends itself to stasis and you just, frankly, don't have to, you don't have to improve. So if you are the such and such dealer in this territory, no one else can sell that product or service that product in that area. So you have a lock on it and that breeds a culture of, well, hey, those customers have to come to us, and so they've never really had to address competition for service, and so that's been deeply rooted for a long time. And so that, and with that this happens in all the other industries too. Right, Like I think the dealer business model is very similar to the cable companies.
Speaker 2:You know, if you I live in Tampa, if you move to Tampa and you want to get digital cable, now people might laugh because streaming has basically killed it. But if you wanted to get digital cable, there was only like three providers, that's it, you know. And the same thing if you want to buy a deer or cat or Komatsu, there's only a couple people that you can buy that machine from and get serviced. And so that is why there's been really no conversations or focus on hey, are our customers happy? Are they satisfied? How can we be better? Because they've never really felt threatened before.
Speaker 1:The other thing that comes back. I think I don't want to put words in your mouth, but I'm known to do that. We're equipment houses, we're not product support houses. The car dealers sell cars, we sell machines. The car dealer has a parts business, has a labor business, but it's not the whole business. And there's a whole bunch of independents in the automotive side, or on the marine side, or on the on-highway truck side, or on the lawnmower side, or skid steers, loader backhoes, whatever the hell you want to talk about. And yet the money is made in parts and service, not in equipment. That confuses me, because the people that run these businesses are pretty smart, alex.
Speaker 2:They are. I think the one thing that's very important to mention is that the service business is very difficult. So I think that plays into it. It's brutally difficult. Yes, there's more margin, but there are so many more things that can go wrong. Is it hard to sell equipment? Yes, it's hard. I'm not saying it's easy. I started selling equipment. I wasn't very good at it but theoretically I could go make 10 customer calls today and I could sell something you know. But think of all of the different moving pieces, because service and parts are a logistics business. You have to coordinate all these different mechanics that you have. You have parts that you have to stock, decisions on what to stock. You know scheduling aspect, quality control, service is very difficult and I think that's why there's just not as much focus on it is because it's really hard work and if you're not excellent at it you will lose money very quickly, and so it's hard.
Speaker 1:My conclusion was is that the service leadership at a dealership not just construction equipment but generally are technical people. Very rarely are they business people. As a result of that, fixing a machine, getting it back to the customer, is the only thing that's important. They don't really give a hoot as to how much it costs. It's understood it takes that much to get it done. Here's the bill. How come you want to complain about it and not pay it? And I think the customer has shown that they don't like that approach by leaving the dealership. First place they left was in maintenance. The dealers back in the 60s.
Speaker 1:Dealers back in the 60s were confronted with a broad range of new products to deal with and had to back off on maintenance because they had to keep up with warranty on the new machines. You know, if you go back to World War II, we had tractors. We didn't have a lot of rubber tire loaders. We didn't have any excavators. Now, none of them were made in the United States, they were all made in Europe and Japan. Everybody, I think, got blind to the reality on the ground. I guess the fundamental flaw is we don't have any tools that measure customer satisfaction that are meaningful. Your three cable examples. It's a perfect one, because television is an exact model for this, and so is Uber and Lyft, although I like your term on demand. Whatever you want, we're here. Whenever you want it, we're here.
Speaker 2:Where do you go next? I mean, our mission is to be a nationwide service provider. That's pretty unique for all brands. So you know some cool things. Now that 2024 is wrapped up, we've fixed over 100 different brands of equipment since we started in 2023. I think that's something we're really proud of, not something that I necessarily expected.
Speaker 2:You know, when we started, it was like very basic. You know earth moving equipment, because that's what I knew. You know we were a dirt house, so I know excavators loaders we didn't. Volvo didn't have dozers, but you know we were a dirt house, so I know excavators loaders we didn't. Volvo didn't have dozers, but you know we were just. We were focused on repairing you know that type of of of those products.
Speaker 2:And then, quickly, what started happening was customers would use us and then they would ask us hey, do you have, do you have techs who can fix generators? Do you have? Hey, do you have technicians who can fix cranes? What about uh on highway trucks? What about? And you know, our marketing manager, uh, was creating some materials and she came to me one day. She's like you know, we fixed uh at the time. It was like 85 different brands of equipment and I didn't believe her and I was like, no, no, there's no way. I think you're confusing that for something else. And then she came back to me with all the logos and I was like, oh okay, this is pretty cool.
Speaker 2:So, for what's next is just, yeah, we started in Florida, then we expanded to Texas, now we're in Georgia, north Carolina, tennessee, we're in Indiana, of all places. We do some work in Ohio. We want to expand our footprint in Ohio. It makes sense for us to do so, meaning when we have enough talented technicians to support customers in a certain area, because we don't. We don't want to just plant a flag and have one technician.
Speaker 2:If we're going to tell customers we can support them, we got to make sure we have enough technicians who can respond quickly, cause we we do very religiously monitor response time, and that's one of the more exciting things. Like, for example, we're looking at 2024 performance and, like 86% of our jobs in December were completed within 24 hours from the customer request. But here's where it gets a lot of fun. So, as we get more and more business, what's hard is making sure you have enough technicians to support the business, and at the end of last year, I'll give you what an average customer experience is like on Heath. I'll give you what an average customer experience is like on Heath, and it's if I am a customer and I come on and I say, hey, I need a technician on this job site. Within a minute you're going to get a technician first technician to respond, telling you when they can be there. And then we find that in thousands of jobs it takes on average four minutes for a technician to get booked.
Speaker 1:So that is our average customer experience. Freeze frame for a second Sure. So somebody coming in on an app or a piece of software on their laptop or tablet or whatever makes a request over the internet and somebody from Heave responds within 60 seconds.
Speaker 2:Not from us, no, no, a technician.
Speaker 1:A technician who's affiliated with you. Yeah, okay, within a minute you're going to get a technician. Okay, so that transaction, then, between a technician and a customer is concluded in four minutes.
Speaker 2:Yes, that is the average customer experience.
Speaker 1:Pretty cool right? Well, I was going to say what do you think that does to the customer? Probably shocks the hell out of them.
Speaker 2:Most of the time, yeah, yeah, especially like new ones.
Speaker 2:That's really fun, like I was.
Speaker 2:I was talking to somebody the other day, uh, and for me it's never gonna get old when you see a customer's first impression or first reaction to what we're doing there, it's, it blows them away. We, we were actually like we're in a phase right now like our territory or eight account executives like they're trying to tell customers to wait a little bit, so they're trying to tell, hey, give it like five more minutes and you'll see more choices, like you'll see more technicians respond. Because what's funny is like we're trying to please both sides and so when things get booked really, really quick, it's awesome for the customer. But then we end up getting technicians who are kind of upset because they feel like they didn't have, they don't have a shot at a lot of these jobs because they're getting booked very quickly. So we have to tow this interesting line of keeping both really, really happy Cause if you're, if you're an independent technician and you get 10 alerts in a day and you didn't get any of those jobs, you're kind of mad at Heath.
Speaker 1:So let me shift in that direction. Then let's talk about the technicians. How much of a 40-hour week do you think they book through Heath? How much of a 40-hour week?
Speaker 2:do you think they book through Heave? Yeah, that's a really good question. And so we see similar to like customer behavior. So if it's a technician that's new to us you can kind of see like they're dipping their toe in the water Like I don't know about this company. I'll try. We probably get like 10% of their hours and then they do a few jobs and then they see how easy things are. They see that we mean what we say. We pay them quickly. Then it's like 30%. I would say we now are about 80% of many technicians' labor hours in week like that. We can't expect more than 80, but that's kind of like. Our goal is like how quickly can we get them from that 10 to 80 percent?
Speaker 1:so if they have 80 of their work coming through heave, what kind of a backlog do they need to maintain such that the customer still gets the response we're talking about? Like I missed the the ultimate question and I'll get to it. We we get a response, first of all, within 60 seconds. We conclude a transaction within four minutes. The ultimate question is when does that? You said 80% are done within 24 hours. That implies you're dealing with jobs that are four to six hours in duration.
Speaker 2:Yeah, our average job is five hours, five and a half hours.
Speaker 1:Okay, Any idea what the average job was for an AED dealer or or an equipment dealer in general? What do you, what do you think the backlog is for them?
Speaker 2:I don't know I've been out of, I've been. You know we've been doing this for five years now.
Speaker 1:I know you and I've been talking about that long too. So where it gets interesting to me is the backlogs at a dealership. Last time I did anything on it it was between three and five days in the field and two weeks in the shop, and that's what precipitates the customer looking for alternatives Over the last 70 years, although I haven't been involved that long.
Speaker 1:they have taken first the maintenance work away from the OEM dealer, to the point that today, less than 5% of the maintenance the scheduled maintenance preventative maintenance is recommended by the manufacturer. Less than 5% of it is done at the OEM dealer, and that's a problem.
Speaker 2:It's also an opportunity for others.
Speaker 1:Well, that's what I mean. It's a problem. Can you imagine selling bananas and the market for bananas is 100 tons a day and you can't keep up with it. And then it gets to 90 tons a day by the time you realize what's happened. It's down to 10 tons a day and there's no way you're going to get that 90 tons back. Yeah, tons a day and there's no way you're going to get that 90 tons back.
Speaker 2:It hasn't hit the dealers yet, which really I find astounding. You talk to OEMs, you talk to dealers they don't talk about it.
Speaker 1:They don't Worse than that. They have no clue about market share. Don't forget that the manufacturer of the machine does not make any money on labor. They're not interested in labor. The only reason they have field people for service is for warranty, making sure you're not taking advantage of them. So it's kind of a wrong-headed approach, but they don't give a hoot about labor.
Speaker 2:And you're right about no market share for service. That always used to frustrate me. Then you just, I guess, assume, and you know what? I guess that's part of the problem too, right, is that no one's talking about it because they already know that they're shorthanded for the work that's on the books. Right, you said backlog, and you're right. So, hey, if I can't, if I'm one to two weeks out right now for customers who call in for field work, I'm already shorthanded. You know what is there to talk about Now? I mean, I would argue that it's a perfect opportunity to talk about hey, can we do our business differently so we can get more throughput? But no one has ever really talked about that.
Speaker 1:Yeah, it's going to come back and bite. In 1952, general Motors sued a dealer who had two locations in California you and I have talked about this and the dealer won, which forced General Motors and the car manufacturers to say well, wait a second, we don't get the market on parts and labor we want, so we're going to start another company called Napa Genuine Parts. It's been around since 52. They have a margin on parts that's just a little bit under 40% and the dealer doesn't have 25%. The business model they went after was well, we're not going to carry the 100,000 parts, we're only going to carry the parts that move 2,000, 3,000, 4,000 parts. So far, heave is doing short jobs. How difficult do you think it'll be to transition to, instead of five hours, 10 hours?
Speaker 2:We do. Some of those, some customers that we work for have their own shops so they've asked us to do bigger, longer, more complex jobs. Of course we'll do that, but yeah, it's not that far off. We just focus on the. Like our main competitive advantage is speed. Yeah, like I was outlining, so it just and there's so many different avenues.
Speaker 2:You can go down here right, like being at the dealership, I knew at the time it's not great, it's cost prohibitive and it's punitive for a customer who has like a hydraulic leak to call a dealer and roll out in a $300,000 service truck to fix a hydraulic leak and then send a customer a bill for $1,200. Like all those small things which are many jobs, like safety stuff, backup alarms we give customers an option to fix the backup alarm, fix the horn, and here it's $200. Because it was an independent technician, get out there real quick. Hydraulic leak here's a bill, $375. $200 because it was an independent technician. Get out there real quick, you know. Hydraulic leak here's a bill, $375,. You know, because somebody was 15 miles away from me too, so travel time was near nothing. Like all of this has been out there and you know a company like ours can really align with the customer, get them up and running and uh, and it's not cost prohibitive.
Speaker 1:You know, that's the kind of stuff that I love no, absolutely, and and that's why it's been successful, alex, and you know it's you, you noticed it, you saw it. As you said, you pivoted from where you started and and you found niche that has just been wanting to have, screaming to have a response like this. And it's been 70 years to my knowledge, like when I started in the late 60s. We already were shedding maintenance service. Like you wouldn't believe, I was excited when we started with product support salesmen in 1970, first one in the Caterpillar world to do that and we got over a thousand machines on maintenance agreements. I thought, wow, this is fantastic. Well, 15 years later they still had a thousand machines. It reaches the point of satisfaction and you're comfortable and okay.
Speaker 1:Next, and we've had a program I call it rapid wrench for 40 years where the mechanic goes out with a van, doesn't need to do the horn, to do the fan belt, to do the filter change, whatever the heck it is, and there's so many things where we haven't adapted to the reality of the customer. What do they want and need? Correct, and you did. So. How do you know who's a good mechanic that's in your stable?
Speaker 2:Customer reviews help.
Speaker 1:Who provides the warranty? Does the technician or do you?
Speaker 2:We both. You know that's part of our terms of service. If a technician wants to be a part of our network, is that they have to agree to warranty their work, and we also stand by it. Like there's so many things that we learn right, and like one of the things that I learned recently, in the last 90 days, from some new customers that came on is that they had an impression that we were a broker and that's not how we operate. And the reason why I bring it up is the warranty piece. Like we have a team of people in the field, but also customer success. Like we are invested in every job that we do goes great, and if it doesn't, we'll figure we'll send somebody else out and make sure the customer is taken care of.
Speaker 2:And I guess that wasn't. You know. People just had a misconception about what we were doing and thought like, hey, we were hands off. You know, hey, you booked a technician, but that's not what we do. We're actively involved to make sure that it's a great experience, and so we both want to technician and us heave warranties, so do you?
Speaker 1:have a standard warranty that your technicians have to stand up to.
Speaker 2:In terms of like just overall customer satisfaction, like if the customer had, if they. If they go out and the customer complaint comes back up a day or two later so they didn't fix the core issue, then we step in. Either they go back out and fix it to the customer satisfaction or we are able to send somebody else out at no charge to the customer to fix it. The first guy gets paid.
Speaker 1:Absolutely, yes, absolutely, yes. So the first guy that caused the problem gets paid. The second guy who goes out and solves the problem gets paid, but the customer doesn't get billed correct I don't negotiate, I do.
Speaker 2:I don't negotiate with technicians. Um, that's always been like a core value of ours, Cause number one. We know that um, diagnostics are not black and white. There's a lot of gray area. Uh, fixing heavy equipment's hard. Um, now, if it's a repeat problem with technicians, then you know we, then we can kind of tier them and maybe say, hey, that's, this type of repair is not for this technician. But we honestly really haven't gotten to that place where we have jobs going wrong frequently. But I always pay the technicians.
Speaker 1:Yeah. Similarly, though, you haven't got to a place in the duration of the job where failure will be very high the duration of the job, where failure will be very high.
Speaker 2:Correct, I mean, part of the reason why this doesn't happen is that the technicians have to opt into the job. So we don't assign technicians jobs. So a customer puts in their complaint, their service request. They state the problem, service request, they state the problem, and so.
Speaker 2:But when opting into a job, you don't have technicians who are saying, hey, I can do this if they don't have the software to do it, if it's beyond their skill level. You know, I think that's a huge difference, and it's something that I saw at a dealership. Go wrong all the time is when a dispatcher would send a technician to a customer job who wasn't prepared or didn't have the skill to do it, because dealers are under pressure to tell the customer what they want to hear and so they're not thinking through. They send the first available, they don't send the best person for the job, and so the kind of the way we've always designed our app to work is let the technicians opt into the job, and so you're not going to say, hey, I'm going to be able to do that if you can't do that.
Speaker 1:So let me circle on that one for a second. Technician responds within a minute. Conclusion within four minutes. How many different mechanics are involved in each transaction, would you say?
Speaker 2:So on average, a customer's experience with us is you'll get three to five choices of technicians before the book Within five minutes. Yep.
Speaker 1:Three to five. Okay, so how does the customer know which one to pick?
Speaker 2:So we do this a couple ways. One of the things sometimes I forget that we haven't talked for a little while and things are always evolving. So one of the biggest unlocks for us in 2024, I think this was maybe April or May, because that was a common question how do I know who to pick? And so we built a profile in our app so every technician has a profile and so you can click. So a customer can click. He sees there's choices, clicks, profile. Now he can read up on the technician, see how many jobs they've done on.
Speaker 2:He uh click into this box and they can see their, their prior, like a resume. You know, it's very, it looks very similar to linkedin. I don't know, uh, maybe maybe some people took uh, some pointers from linkedin on our software team. But but, oh, okay, this part. So, say, I have a cat wheel loader, I click into this profile and I see, oh, for the last eight years before going independent, this individual worked at the cat dealer in Atlanta, georgia, and prior to that had spent six years at the John Deere dealer. And oh, these are the skills that are listed. Oh, these are the skills that are listed advanced in electrical, advanced in hydraulic.
Speaker 2:And so the profile piece was a huge help, and that was our number one question asked by customers for a long time. So we have a profile on every guy. One of the other things that we've learned in the last like six months is for customers that it's their first order or it's like within their first three orders. For us, our sales reps are like they see the order come in and then they're calling the customer right away and say, hey, I would recommend that you pick so-and-so. He's done great work or she's done great work, and so we kind of steer them towards some technicians if they haven't had a ton of experience with us yet, until they get to know them.
Speaker 1:So, with the use of the terminology product support salesman, your territory salespeople, are restricted to how many technicians or how many machines or how much geography restricted to how many technicians or how many machines or how much geography.
Speaker 2:They have very large geography today. So we have yeah, we. So we have one AE in the Dallas area, we have one AE in the Houston area, and so we'll just keep monitoring and see. Once it gets to a certain size, we'll probably have to bring in other people, but we give our territory, people, large areas.
Speaker 1:Without exposing anything, and if you don't want to answer, don't worry about it. What would you say? The income potential is for an AE.
Speaker 2:We have set goals for what they should earn by year two, because what we're doing is extremely difficult. Yes, there's a lot of value it's undeniable. But when you start something from scratch and you're trying to build a brand and people haven't heard of you, it's very, very difficult to get the ball rolling. So you know we're talking. You know low six figures in year one, but increasing significantly by year two and then by year three increasing significantly by year two and then by year three.
Speaker 1:So let me just say 100,000 as a number, just a full, arbitrary number. How much business would you say an AE should be generating if they're going to earn 100,000 in their geography, no matter how big or small it is? Have you gone that far? Geography, no matter how big or small it is.
Speaker 2:Have you gone that far? Yeah, I mean we have. We have assumptions and we have ideas, but we're still learning. Yeah, Because part, as you can imagine, part of it is like well, how many customers make up that, that order volume, you know, do you have more customers who are doing fewer jobs, or do you have a few really really large customers who are doing a ton of jobs? So much of this we're learning.
Speaker 1:I'm coming at it a different way. Okay, I'm going to pay you $100,000. How much volume do I expect you to generate to earn that $100,000?
Speaker 2:For us, we measured on work orders. I understand.
Speaker 1:I came at it a different way, deliberately. Okay, at the moment you're dealing with time as your limit for a technician. We're saying that we basically can do one job a day, five, six hours for our technicians, and we keep people busy, yeah, but we don't really know what their backlog is yet, because it's still early days. And I'm not being critical, I'm just poking. Yeah, I understand being critical, I'm just poking. Yeah, I understand, and I don't. I let the technicians determine their rate. Correct, that is correct. But you determine their warranty obligation. So if a man made a repair that failed, he still gets paid by somebody. You pick up the repair for the quote heave warranty. How long does a guy have, and what's the number, before you say sorry, you got too many failures, or have you had that yet?
Speaker 2:We haven't had that yet.
Speaker 1:Do you think that's likely to happen?
Speaker 2:I'm sure at a certain point I'm not naive, but we just keep very close tabs on it.
Speaker 1:Yeah, you're far from naive, Don't get me wrong. Yeah, you're far from naive, don't get me wrong. The dilemma with the model is success and how far can you go? Like Napa is still 3,000 to 5,000 part numbers. They don't touch labor. They've been talking about labor for 40 years but they've never pulled the trigger because it's too much cost facilities, training, tooling, blah, blah, blah.
Speaker 1:You sidestep that because you've got the technician bringing all of the tooling, all the training, all of the materials, et cetera, to you and you're giving them access to a market of customers which they haven't been able to get before other than by reputation, handing out cards and all the rest of them. It's a struggle. They weren't necessarily good business people. They didn't collect their money very well. Sometimes the customer screwed them and put them out of business. You've given them a bit of cover. So I guess what I'm trying to aim at is what do you see as vulnerabilities? At the moment there aren't any. It's all upside. What do you need to prepare for that will insulate you from whatever vulnerabilities you have out there?
Speaker 2:No, I think you're touching a vulnerability and that is quality of work. I think you're touching a vulnerability and that is quality of work. You know, one of the things that we're all we always have a, you know a list of like three to four really important things that we're trying to address with our product and with our engineering team. And for Q1, I've kind of I've made the decision I want to tear down our review system and really reimagine it, because I do want more information on every job on, like, customer satisfaction. It totally is a vulnerability and it's fascinating to me, like how all of these things like you can get really in the weeds on. You know, there's a lot of nuance to this. Like, one of the things that I found with reviews is that you have many customers who don't want to give a review because they're afraid that that certain, certain information is going to get to the technician. And it's like I get it because you, you don't want to upset them. You still feel like you need them. But you know what.
Speaker 2:I want that information because it helps us become more knowledgeable about the labor force and so like, all right, we got to figure out. So now in our reimagined reviews we have a little box where it's like you know, don't share with technician, but it's important to us, we collect the data. So that, to me, is the biggest vulnerability, and so that's why we are not trying to grow too fast in terms of geography too quickly. Geography too quickly, because we're very cautious of overextending ourselves and then losing quality control.
Speaker 2:You know, so many things pop up that you don't imagine, and like we had circumstances where certain like mobile service companies because they have, when I say mobile service company, it's basically a dealer without selling equipment. It started as a technician, now has 10 technicians under them and all they do is service when we'd have like mobile service companies because they had multiple trucks gobbling up all these jobs or somebody always responding quickly, getting booked, and then you look and it's like one individual has 10 open jobs. That's terrible, and so that was a vulnerability for us. So we had to like put in like fences to prevent that from happening, and there's just so much that you learn over time. But the quality of work piece is the most important, because if we fix stuff correctly, we will be successful.
Speaker 1:So stay with quality of work for a second. Why don't you use that as a sales feature to say whatever the hell the warranty is in the area for labor. You're going to double it.
Speaker 2:What do you mean specifically? Double it.
Speaker 1:If they give a six-month warranty repair, I'm going to give them 12 months.
Speaker 2:Oh.
Speaker 1:I'll give it to them as an option. Here's our standard warranty, but for this additional price we can give you a 12-month warranty on any failure reported within 48 hours.
Speaker 2:MIKE GREENWALD Warranty is interesting. It's in my mind more as a long-term thing.
Speaker 1:Yeah, that's why I'm bringing it up. The other part of warranty, alex, that becomes interesting is you basically have two companies dominating in the world Lloyds and Aon on repair warranty, but that's something to consider. The second thing you mentioned that I found interesting is a guy's got five jobs in front of him. That's a bad thing. Why?
Speaker 2:Because I see this happening. This is one of the core problems at a dealer to me is that you want somebody to go out, diagnose, finish the job, on to the next. When you have all these open work orders, then you have customers who are waiting and you're spread too thin. It's something that we encountered early.
Speaker 1:Stay with that for a second, because you're making an assumption. The customer has chosen that mechanic and he knows he has to wait until next Thursday and he's agreed to that. Why is that an issue for you?
Speaker 2:Well, no, so getting a little deeper, so the technician's already gone out on Thursday. Getting a little deeper, so the technician's already gone out on Thursday had to order parts. This is Thursday.
Speaker 1:Yeah, the guy's booked for next Thursday. He's booked on Monday, tuesday, wednesday, thursday. He's not bidding on anything because he's busy.
Speaker 2:Why is that a problem?
Speaker 1:for you.
Speaker 2:That was the problem was he was in that circumstance. That person was bidding on stuff. He just wanted more and more and more work.
Speaker 1:Then, then you've got a device to make sure that doesn't happen, correct?
Speaker 2:Yeah, that's we had to, that's something that we encountered and we put something in to fix that.
Speaker 1:Including separation.
Speaker 2:Yeah.
Speaker 1:Okay, so the four-day backlog next Thursday. Is that an issue for the mechanic? Is that an issue for you or is it an issue for the customer?
Speaker 2:I think it's always a case-by-case basis.
Speaker 1:That's why I'm putting you in a corner. Whose problem?
Speaker 2:is that so? You make a good point, because that's why we want customers to decide what type of job is it. If it's a PM service, people are okay scheduling it out right.
Speaker 1:I'm with you 100%. But you mentioned if he's got five that's a problem.
Speaker 2:It isn't a problem because the customer and the mechanic are making that decision they are, I, you know, like, like I said, getting into the weeds, like one of the things that we've kind of noticed, um on experience is, like I just we've been so hyper focused on delivering yeah, yeah, no, no.
Speaker 1:And again, none of this is critical at all. I think what you've done is no.
Speaker 2:I don't take it as critical, but where I was going with it is we found that when people have a lot of open jobs, then it delays their invoicing. Like, invoicing is a critical component to what we're doing Like I love Perfect.
Speaker 1:So stop there. Yeah, perfect, so stop there. The mechanic today does a clerical job. He does his own invoicing. Why?
Speaker 2:We're working on that.
Speaker 1:It's, and similarly parts. Don't get carried away, but Tampa is where you started, correct? Yes, how many technicians have you got based out of Tampa? Now Spitball 50. Okay, and then go back to my very first question before we got on the call how many machines are there in the Tampa area that you're trying to service?
Speaker 2:Oh, how many machines are there in the Tampa area that you're trying to service. Oh, you know, probably thousands at this point, based on the customer size. Yeah, thousands, I mean tens of thousands.
Speaker 1:So I just did a quick look at a document that I did a long time ago. There were 2.8 million machines in the United States and I'm going to say that that record number is about 50% of what the real number is. That's what's been put out by, you know, caterpillar, aem, volvo, bobcat, whomever the heck. And if we go by the basis of having one technician for every 20 machines and let's just say we got 5 million machines, not 5.6, that means I'm going to have what 250,000 technicians the dealers get, maybe 10% of that. So they've got 25,000 technicians Say I'm completely wrong, they've got 50,000 technicians.
Speaker 1:There's 200,000 technicians out there that are independent, working for customers, component rebuilders, et cetera. That's your market, it is. So with TAPA, with 50, 50 guys just as a goal and I know it's you need to think about a little bit more. But how many machines, what percentage of the machines do you think you want to have in number of technicians? 20 percent, five percent, fifty percent? That's a nasty one, I know. So you know there's no real answer right at this point, but that's something that's going to hit you.
Speaker 2:The way we look. That's why we monitor response so closely, yep, and so the very difficult thing marketplaces are very, very difficult because you have to have both sides simultaneously Like we can't get, we couldn't not, we could not have 150 technicians in Tampa today because we don't have enough business to keep 150 technicians. You know it's like so it has to. Both sides have to go at the same time. That's why marketplaces are brutally difficult, because you know the first question. You know when we just went into, like Atlanta, charlotte, nashville, and so we were recruiting our first batch of technicians, and you know, obviously the first question is well, how much business is coming through here? Because if you don't have a certain level, you know they're just not going to, they're going to ignore you.
Speaker 1:And so yeah that's, you just have to do it both at the same time.
Speaker 2:What? What's the biggest surprise to me is and this might sound bad and a dig, but you got to remember my background. My background was with a Volvo dealer and so I always looked at Caterpillar as the gold standard. I did, and you know we had. You know, over my almost 20 years it was like a roller coaster ride and you know there were many times where I'm like you know we're got to be the worst in the world and you assume that everyone does it better, or at least I did. Everyone does it better, or at least I did. The biggest surprise to me is that no one does it really really well. That, honestly, I was shocked that some of the markets were in that Caterpillar is not very good at service and that's just an honest to God statement.
Speaker 1:Well, I think you know I've been at it longer and I've said that longer to dealers. I've been in meetings where we've got executives from the manufacturers and we talk about market share. And you know I'm all about product support and the machine is baked for me. You guys got to put out the machine. I don't care if you put out a cost because I'm the one that makes the money with it if I look after the customer. But then the product support world in the large construction business is terrible.
Speaker 1:If you're really lucky, best practice dealers, market share on parts might be 40%. If you're really lucky, service might be 15%. Yes, there's outliers that are better than that, but those numbers are terrible, alex. And yet you're going to have the majors John Deere and Caterpillar, probably pulling between the two of them 70% to 85% of the market share of machinery in any geography in the United States, meaning that I got 15% to 20% available for another 10 manufacturers, none of whom can really make any money doing this. So when I'm Caterpillar and I've got, let's say, 30% of the market share, just for grins, as long as I have 30% I'm okay. I'm fat, dumb and happy. Is that kind of what surprised you?
Speaker 2:Yes, did I say it properly? I think so. Yeah, another way of saying it yeah, and this is, this is a. This is one of our customers started a business and didn't get great service. And he had it in his words. He's like you know, I just thought that, look, it's because I'm the new guy in town. I got a small I'm not a big fish and I so he. He operated for years with this assumption of all right, well, once I get to this level, then I'm going to get a better level of service. And once I bought X millions of equipment and then he got to those levels and his experience did not change whatsoever. And that's honestly what forced him, or helped him, try out us. And then we haven't looked back. But yeah, it's just that was.
Speaker 2:The biggest surprise to me was that no one does it. Well, I won't say that I'm surprised anymore that there's not a focus on improving it. I just I've read enough about business and these other industries. Like we have, we are following the textbook layout of how to disrupt an industry. You know and you you mentioned it earlier. You know, true, disruption comes from someone from the outside who can compete against the incumbents. Who can compete against the incumbents, but without following any of the same rules. So we are competing head to head on service. We're a technology company. We don't have to employ any of those people. We don't have the capital investment in all of the tooling and all of the expensive parts that they have to supply. We're playing by different rules, you know, and that's a lot of fun.
Speaker 1:Oh, it's fantastic fun and I congratulate you. I think it's fantastic and you and I have been talking about it all the way along the line and you've done pretty much everything that you said. You would One of the you know go backwards too early on in the discussion. The reason that they don't pay attention to services is complicated. It's too complicated for most people. I don't know very many guys that I would hire to be the general service manager of a dealership that had a thousand technicians. They don't exist in my world because they don't know the business. They're wonderful at repair and maintenance. They go to schools that the manufacturer gives them for that particular brand. They don't look over the wall to the other brands that do it all the same way. It's a riot. This is wonderful news. I'm really pleased and I want to say, proud but that's not my role At what you've done. This is remarkable, and don't slow down and don't back up.
Speaker 2:We won't be backing up. We'll just, like I said, we keep learning every month. We keep. That is the most fun. I I love um. You know we, we came from a similar, I came from a similar world where you know there was no nothing changed over years and, like, every month, we learn something and we can, like, put something in place that fixes some a potential issue. For us that's a lot of fun a potential issue for us.
Speaker 1:That's a lot of fun. Yeah, it's why in 1980, that's a long time ago now I went independent of everybody. I didn't work for anybody because the job was babysitting in politics and I'm not good at it and I don't like either. So you know, here we are. What kind of a bow do you want to put on this? What conclusions do you want to have out in the air that people will remember at the back end of this?
Speaker 2:Oh, what to remember. Just there's a purity in we want to provide customers with very fast service for as cheap as possible, like for all their equipment. I love that. We're aligned with the customer, we're brand agnostic, we can fix all of it, we can fix multiple brands on one trip. Like there's a purity, purity, and I love that and there's, and then we'll just keep doing it. I feel like we win customers, one at a time, every day. And you know now what's fun is we're starting. I think it's natural for certain customers to not want to do business with a brand new company because you want to see, like all right, well, I'm going to monitor them, like we'll see, like if they're around a couple of years from now and I can start seeing that now, where it's like hey, we've been watching you guys. You know now let's talk. So you know, the timing has to be right for everybody and we're just going to keep doing what we're doing and executing. And more customers are coming aboard every month.
Speaker 1:Well. Congratulations and thanks for the time, alex, and thank everybody who's been listening to this candid conversation. I look forward to having you on with another one in the near future, mahalo.
