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
Mets Kramer and Ron have a conversation on Data and Information Technology in use in the world around us and how we are being left behind in the digital world.
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A Candid Conversation on Data and Information Technology in use in the world around us and how we are being left behind in the digital world.
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Welcome to another candid conversation. Today we're visited by Metz Kramer, a man with a very varied background who's coming to us today from Hamilton, Ontario, Canada. Good day, Metz. How are you? I'm good, Ron. I've known you probably 10 plus years. Could you give everybody a little bit of a background, what I lovingly call a thumbnail sketch on who you are and what you are?
SPEAKER_00For sure. I started my career similar to yours. I started with a large cat dealer, and for 20 years, I went from cat dealer to major manufacturers to other large dealers. I've worked in most areas of those dealerships, starting in the service side of the business, running parts and service throughout the country for a period of time, involved in the sales organization, and always also very tied into the information side of the business, how we use information in the business. And so in 2017, I left the corporate world and I started working directly with dealers. And one of my focus areas was how do we use information in a dealership? And specifically, how can we use information in a strategic way to make sales decisions, to run sales strategies, to run other pieces of the business? And I spoke at several conferences on that topic. And that's kind of developed into what is now my business working hand in hand with uh especially small and medium-sized dealers that tend not to have people with my background on staff, um, and starting up a small software company developing tools for those dealers as well.
SPEAKER_01It's an interesting arena, isn't it? The um you and I have talked over the years of how we've got financial reports, and we get very little in the way of management reports. And the reports that we get coming from data processing, and when I started in IT in your jargon, it's not information, it's data. So we get a 30-page report, and we send it to a sales manager or a 15-page report and we send it to accounts receivable, or and and then they have to pair through it and make some sense out of it. Did you did you notice that being seriously considered for change when you were working in dealerships, or was it just something that, well, that's the way it was, and we just continue on?
SPEAKER_00Um, my experience has been that because you we tend to have people who are very engaged in in reacting to customer needs and don't have a strong background in information or how to use information. Uh, the organizations tend to be pretty lean. So there's not a lot of resources allocated for understanding information. But a lot of reports just ended up being available and very frequently modified because someone was trying to understand or get more value out of a report. Uh, but very little work was done on taking what we learned from a report and either changing the business or taking what's coming out of those reports and somewhat automating or driving action to the business, unless it was read report and try and you know, call this sales rep in because of what you read on his report and try and act on it. But what was really missing was try and understand what those reports were telling us and how we could grow the business.
SPEAKER_01It's also interesting, I believe, that we don't have performance standards in very many things. You mentioned that we're responsive, reactive to the customer since. But it um, you know, today's the month of April, the first quarter is out of the way. Okay, so what do we expect in the second quarter relative to the first quarter? And um I'll ask that question on the telephone or face to face with people, and they say, well, it's gonna be a better better quarter. You know, it's it's really hard to get people to create a goal. A number. Yep. And and this magic world word has come into place. Directionally, we're doing better. Well, what the hell is directionally?
SPEAKER_00You know, we're moving in the right direction.
SPEAKER_01Yeah, right.
SPEAKER_00Um, but often not based on anything. Um I I I've sat in you know, strategic sales meetings and you know, forecast meetings for next quarter, next year, budget meetings. Um, and more often than not, unfortunately, you know, we try and show a good picture. So we're say, well, uh our sales has been increasing, so next year we'll probably do three percent more. So we take last year's number and we add three percent, and that's what we think we should be able to do. I think that's one of the things that really got me started down this road was you know, we actually live in a really predictable industry. Um, you know, selling TVs at a Best Buy is actually less predictable. It has lots of numbers behind it, and they certainly use them, but it it can't be granular. And so my first presentation at AED was called a granular data-driven approach to strategic sales. And the idea was you know, if we know what's in the market, how many machines are in the market, who owns them, what brands and usage is on them, we we know when people are going to buy or want to buy new machines or replace those machines. If we know we have this many machines in the market, we know what kind of parts and labor they should consume. We we shouldn't be guessing anymore at what our sales could be. Maybe we are guessing still at what they will be, but we should be able to know that there are X number of machines available next quarter for replacement, and we should be building a strategy to replace those machines. And so that kind of got me off on on this, it was probably a tangent, but in the industry, but to really talk to people about are you maximizing that information that you're collecting to be able to make sure that that sales rep knows he needs to go see this customer that he sold a machine to three years ago, but they only have two machines, and so we don't see them very often. But if we're not there at the right time, our competitor will have dropped by at the right time and probably flipped them over. And so that I think is a really good example of our industry should be predictable if we look at and apply information to the business. Um, that's tough for people that are relationship and reactionary.
SPEAKER_01So it it's um I believe it's fundamental truth and have felt that way all along. I I completely agree with you that our business is much more predictable than almost every industry that's out there. And I mean almost every industry, their best buy examples, perfect. They have analytics and reporting and structures and demographics and all manner of data elements that goes into allowing them to do forecasting and predicting. We need one thing: the machine population. We don't need anything more than that. When did you buy it? How do you use it? How many hours do you put on it? How much are you spending in parts and service per year, per quarter, per month? And based on all of that, I can tell you almost with precision within a six-month window that you're going to replace it or not. It's uh it's it's remarkable. And what gets me riled up even more, because you know I focus primarily on parts and service, is if I have the machine population, I'll know with precision what my parts and service opportunity is, and hardly anybody has accurate machine population to the point that we can get there. Now, I always used to say that's because the parts and service management didn't want to have visibility, they didn't want to know. And I always used to say, how do you know how good you are or bad you are? And uh it's it's stunning if you think about it. And transforming, like it's not going to be my generation that's gonna make those changes, it's gonna be yours. And I stressed the point earlier on that Metz is younger than I am, that's true with most people in the industry anymore. But you know, how do we transition the executive and general management of the dealerships whose age block is probably 50 plus, in many cases 60 plus, and there's some fear about technology, data processing, telematics. Um, how do we take them to the promised land if it is the promised land?
SPEAKER_00It's probably the toughest question. I think you have to show some people how things tie together. Um, you know, I for a period of time I ran the department that managed all of the maintenance contracts that we had. And we did our calculations very detailed on what an hourly cost for a maintenance contract would be, and we built that up from detailed information of every repair that was likely to happen and every maintenance that was required, and take that to figure out what the hourly cost was. And you know, not too many people looked at that uh and said, well, there's there's more value there than just pricing a contract. And I looked at it and said, This, I mean, this is our market model. Like every machine in our population, we should know um exactly what it's going to consume because this maintenance model predicts it already. And whether it's on contract or not, this is this machine should generate $36 per hour of usage in parts and service revenue. And if it's not, then that's a partial market share. It was actually the CIO at the first dealership. Um he kind of took me under his wing a little bit, and so I dropped by his office one day, uh, which is more of a privilege than I appreciated then. Uh, but I walked into his office and he was sitting there digging through stuff and he was looking at case 580 backhoes. Now, this was a dealership whose system could actually handle non uh branded brands that they didn't sell. And so they could store that information in their system. And so he would look up all of these case 580s, and he looked at all the 10-year-old machines, and he's like, Look, this is our next marketing campaign. We need to market 420 backhoes at these people because we know they have case 580s, we know they're 10 years old, we know they're going to want to replace them. We don't have to, we know exactly where to target. And that that's always stuck with me. And that was like in year three, year two of my career. And that's always stuck with me. And yet, going back to the same dealer and speaking there uh with their senior management only a couple years ago, they still admit that we they don't they don't execute on that available information. And that's a dealer that was set up to be able to actually collect that information. A lot of dealers don't even have systems that support collecting customer fleet data. If I look at one customer and I say, you know, oh, that customer has two of our machines. We sold them two machines, and so my system only shows that they have two machines, then they don't look like a big customer. But if I can store the fact that they have 300 machines from a competitor, suddenly that customer looks very different. And although a sales rep may intrinsically know that that customer has more potential, there's no senior or there's no strategic information-driven action that comes to that. And I think that's still where there's a huge opportunity in our industry. I I always use the example of uh if you lease a car, you know, your car dealership will call you three months before your lease is up, and they will give you an offer for the same car on the same payment. And they're calling you three months early, not one month early, because you haven't even started to look around and you haven't got the taste for a different car, and this just sounds easy. And you say yes. And they've headed off every competitor at the past. And that's I think how we need to start thinking if, especially if we're selling new equipment, how do we use this information to be in the right place at the right time and avoid missing opportunities?
SPEAKER_01Yeah, it's a a friend of mine, his name is Ray Polehill, who lives in North Carolina today. When he first started with CAD, he was involved in in the data reporting. And in in the early years, Caterpillar used to survey survey face-to-face every customer on the planet. Yep. And by the time Ray got there, they couldn't afford to do it every five years all in one smash, so they were doing 20% of their customers every year.
SPEAKER_00Yeah.
SPEAKER_01But I got to know Ray reasonably well and and a bunch of other folks, and I think it was 1970. And I had a similar experience with it. He was the executive vice president of your CIO. And I don't know why I was 22 years old and he took a shine to me or some damn thing, up to the point, and including five times he fired me. Uh, one once I actually got home, he was a rather emotional man. But he um he said to me, Slee, this is every year the guys sit down and they give me a sales forecast, and I have no clue if it's any good or not. He said, See what you can do with that. And there was a Swedish cat dealer by the name of Engstrom, and between the two of us, we put together a five-year machine population-based parts service new and used equipment forecast. And it was five years, and we did it every year for five years. And Rod took it and didn't laugh at it, but he then took the opportunity of rubbing everybody's face in it, who was doing the year-by-year forecasting. And he said, Okay, you think you're smart, Sli, give me that, and he stuck it in his door. The next year he calls me back and he said, How did you guys build this? I said, Why? He said, You're closer on what happened than what the guys were in their old way of looking at things. And we did that every single year. And the Angstrom guy and I, first year, second year, third year, the fourth year got a little wobbly. But for the first three years, our forecasts were closer than the people that did it the old-fashioned way.
SPEAKER_00Yep.
SPEAKER_01Nobody adopted that approach. So, unless you've got a champion in the business somewhere, and it needs to be, and I'm I'm going to call you and I both young idiots. It was in your two or three year period. I was in there a year or two, and um that we don't really have anything to lose, and there's nothing that we don't think we can do. I don't know that the dealerships are bringing that many of that kind of people in anymore. That's becoming a challenge.
SPEAKER_00Yeah, and and what do dealerships do to attract people who think that way also? It's do they look for them? Um, do uh and what can dealerships do to be attractive to the people who do think that way? You know, I I'm always a little hesitant to bring up, you know, too cliche an example, but I mean Amazon has shown us that good analytics can grow a business very quickly. And our our industry is ripe for people who will use good analytics to maximize their opportunity. Amazon watches every single thing they sell and has detailed metrics on everything. You know, something is falling a little bit below where they predict it would be, they look at why it's not selling the way it should. If something sells really well and then someone else's product that is posted there, they'll carry it themselves. And I think that same approach, um, there's enough background material now, there's enough knowledge base, um, is right for someone to walk into dealerships and say, this is something that needs to drive a good portion of our um sales strategy and our marketing strategy. And I think that's kind of coming back to your digital dealership concept is what is a digital dealership? There's a lot of aspects to it. Uh, it's both sales activity and how we empower the sales side of the business with information of where they should be spending their time, but it's also the marketing side. It's it's knowing that these are the customers that we should be talking to, or these are the customers we should be warming up because they're a year away. You know, what are the tools that we use to talk to these customers? Um, you know, one of the big things that is likely missing is that a lot of our businesses still transacted in a traditional way. The the interaction starts with a phone call. Um, and so it's hard to differentiate the the what we're used to as far as how the business acts and what what is really happening. But there are plenty of people in our industry now that will tell you and show you information that up to 85% of all the research that a customer does is now done digitally online prior to them making a phone call. So the old strategy of I post my machine, I say call for price, because that's going to interest that user, that visitor to come and call me because they also prefer a personal relationship is wrong. That machine listed with call for price to most visitors is a that's not enough adequate information for me to make the phone call. This person over here is giving me everything there is to know about the machine and the price. I can make my decision. And when I've made my decision of which machine I likely want to buy, then I'll make my phone call. And at that point, it still feels to most management in dealerships like, oh, business is still the way it used to be. It's still coming in on the phones, but it's actually happening digitally before it ever gets to them. I think that's the thing that managers need to start to recognize is what's happening prior. Things are happening much earlier than it used to. The decisions are being made much earlier than it used to. It used to be made on the golf course or inside the dealership or at a dinner, and now decisions are being made before that.
SPEAKER_01Let's let's round out this definition a little better. Paint a picture of what a digital dealership is. I'm I'm going to assume that most people hear that two-banger expression, digital dealership, and they think instantly of the internet. They think instantly of a uh an internet-based platform, a sales platform. I don't think that's what you're talking about.
SPEAKER_00No, not as a singular item. Um it's simply that a lot of the information is managed digitally now. And you know, I will admit that I'm now even in that group, that if I need to make a phone call to someone to do something, and someone offers me a digital way of finding information and doing something, I'm gonna do it digital. I don't want to make the phone call. But a lot of my perception, a lot of my early decision making, even subconscious decision making is formed by digital impressions that I'm I'm picking up. I I'm on social media, I'm on LinkedIn, I'm you know, um checking out websites, and in whatever way it comes to me, even just the communication with my sales rep, more of and more of its digital, that creates my perception of the dealership, of the product, and what'll likely form the foundation of my decision making well before I actually go and see someone to work out the final details.
SPEAKER_01And the dilemma with that, Mets, is that the dealership or the company that wants the business doesn't know that's going on. And I want to I want to put it in a different context, if you will. Capital goods replacements it's not just equipment, but capital goods equip replacement have become a much more predictable science than ever. They've always been predictable. There's life cycle analysis that go back a hundred years. But today we have a different generation, a different style of management. You know, and if you think about the evolution of management, we've gone from the place in the 100 years ago where we thought we managed people to now we have to lead people. To the days where, in my example, is when we went from the Engine to the electric engine, the tool that we use is much more capable. And I transform this to today with artificial intelligence. Artificial intelligence is there because people have been have failed at analyzing data. And the first case was Watson with Big Blue winning a chess game. And all of a sudden, oh boy, what is this? Now we've got robotics, we've got artificial intelligence. You can have a surgeon in Boston who's doing eye surgery on a plate, a patient in New Delhi. It's quite common today. So the executive, the sales, the equipment manager, the project manager, whomever has got equipment replacement decisions, they stick that into their workday according to what works for them. In the old days, we would make appointments. We'd make sales calls. I'm going to see you today. We're going to have our call at five o'clock. Let's get everything ready. Well, today now that the man who's responsible, the woman who's responsible for purchasing equipment, he might do that at 10 o'clock tonight because he's not tired. He's not going to go to bed. And then he starts that research. And we don't have a clue. Yep. And our salesmen aren't tuned into that kind of world yet, I don't believe.
SPEAKER_00I don't think they are. I would add to that, even if you have, you know, you're still able to maintain that traditional, you know, your salespeople can come in and see talk to your customers and have a set meeting, and that's where the discussion happens. I think we underestimate the power of impressions that our customers are exposed to. That they weren't, you know, a customer wasn't perpetually exposed to a digital impression of other brands of other products. They may have had a very good, close relationship with your sales rep. And really the only other way they were going to see something different was if the other guy dropped by and left the brochure. But that that isn't much. But now that same decision maker at your customer is even just through his the regular work, is exposed to other options and other impressions. And all of those impressions do push the human brain in a different direction. That's why it that's why there's so much money in advertising. The automotive industry saw their advertising dollars go up tenfold from pre-digital days. And the equipment industry still spends dealers spend good money on advertising, but if they're going to follow the the vehicle model, then pretty much the industry follows the uh passenger car market by 15 to 20 years, um, that number in advertising for equipment dealers is going to go up tenfold. And if we look at you know how much we spend as a percentage of equipment sales on advertising, it's a really small amount in a world where advertising pays for everything. And there's a reason for that is because advertising and digital impressions works. You know, showing you when you're on New York Times a banner ad for the company that sells headlights for your car because you looked at it on some other site, it works. People are reminded that they looked at something and that they're interested in something, and filling that space does help push people in that direction. And that's the digital side of a dealership.
SPEAKER_01Yeah, I don't I don't know what the statistics are, but CarMax and TrueCar and these other things. You can go online, you can compare shop digitally. Let me just use that or expand on that term. I can see all the specs, I can see all the statistics, miles per gallon, uh life cycle on an engine, blah, blah, blah. And they'll deliver the vehicle to my house and let me have 30 days to try it. Yep. And I believe we've seen some of the manufacturers of equipment, some of the equipment assemblers, if I can be so rude. Um, Caterpillar now has two price points for a machine. One made in China, one made anywhere else. John Deere has three price points for a machine. Are they getting ready? Do you suppose? Of course they are, where the transaction will be direct. Because there's obviously dealers around the world that perform at higher or lower levels, and the manufacturer is a victim to the success of the dealership. You know, Don Fightz, when he was chairman of Caterpillar back in the 80s, said that our dealers are our biggest asset. But there are very few equipment manufacturers that view it that way. And let me give you an illustration, and you can probably accentuate it more. Komatsu owns most of their dealerships worldwide. It's only in North America that that is slightly different.
SPEAKER_00Yep.
SPEAKER_01Volvo owns most of the dealerships in North America. John Deere's in North America, they're not the rest of the world. They've gone out there with engines, but not so here comes Hyundai, here comes Cabelco, here comes We Young, all of these other manufacturers, and they don't have a dealer network. Nope. And it's going to cost a fortune to get them into a dealer network. Yep. They're going to look at the market in a very different way, and I will bet you money, the way that they come, is going to be digitally. Analytically. Yep. They've got no alternative.
SPEAKER_00No, they don't have an alternative. The capital requirements for running a dealership are monstrous nowadays. I think even in the biggest dealer networks, you see the amalgamation of dealers into larger dealers that have the capital to run large dealerships in a traditional model. The automotive dealership world is no different. They all may look like they're little different dealers on every corner, but they're actually owned by like 10 families. Yeah. And so I think when you are, and I've worked for a manufacturer who is much smaller, and their dealers were all blended dealers with multiple brands, getting the attention you need is probably the biggest challenge. It's easy when I was with the manufacturer to go to the dealership and work with the sales guys for a couple of months, and your brand gets a push. But after a while, you know, you got to go back home, and the next brand takes over and your sales drop off again. So getting that digital experience and being able to present your product to customers that are already looking online and open to comparing products will only work in the favor of those brands that don't have a physical presence. It'll allow them to get more equal access, more equal footing and present their product. We work with some dealers to in the use space to present um their equipment, just like some of the new online car dealers that do fly around video, interactive video, so that you can really experience the condition and state of that piece of equipment without having to go see it. With COVID, you can't. So if we can work digitally and present that information to the online visitors, then a small dealer can be as competitive as a big dealer because they have that interaction. They provide the information the user wants to have as they make their decision before making that phone call.
SPEAKER_01Yeah, one of our colleagues is a man by the name of Edward Gordon, who lives in Chicago, taught at the University of Chicago, he's got a couple of PhDs. I hate these smart people. But one of the things that he talks about is that education, and he's a big proponent of changing the education model in America, that first-year university is in about 80% of the cases remedial work. It's putting the student into the position that they should have been in when they arrived. And we're we're not delivering the work-ready product out of the school system. And something in the order of 50% of the technical schools in America in the last 15 years have shut down for lack of interest. And all of that goes on. And where's that guy who can listen to that engine for five minutes and tell you everything that's wrong? They're not there anymore. So we've got to have those analytics. We've got to have so now we got alerts, we've got sensors all over a machine, and the transmission and the hydraulics. Um and we know we have faults. And the satellite connects us to some smart person in Maine who says, shut that machine down, you're about to freeze the engine. Yeah. That's that's a brand new individual that we never contemplated that we were going to have to have.
SPEAKER_00And we still never contemplated. Say again. We never contemplated, nor did we develop them.
SPEAKER_01No, that's absolutely true. And then we still have today the mechanic walking to the back counter of the parts department to place a parts order when he could stay in his bay and place the order on an electronic catalog on a computer without moving. Yep. This digital dealership is it's here now. We're late. The other part of that point is we aren't getting, as our industry in the capital goods world, we're not getting the same attention that we used to get when uh computers arrived in the 50s. Um, the logical places for people to pay attention were financial and parts. So big consulting companies, Kinsey's and all of these boys came barreling in. Everywhere we go, there's been consolidation. You got JD Edwards, you got Infor, you got SAPL, you got Oracle that are providing business systems. Don't let me leave out CDK because they're one of the bigger players. The DIS people will get angry with me. And it's a smaller number of comp players, so say 10. And every single one of those players, after a period of time, becomes the same. So the creativity, so go back. Jack Walsh is famous for saying is if the world around you is changing faster than you are, the end is near. The consolidation of dealerships that you pointed out in Canada, there used to be 10 when I started. There's two today, caterpillar dealers. There's one Volvo dealer, there's one John Deere dealer, there's one Cometsa dealer. Wow. Going from 10 to 1 is a big change. In the United States, there used to be a hundred. Today there might be 30 caterpillar dealers. And as you said, the cost of the barrier to entry now is how much money have you got? Because you need a billion dollars if you're going to get into this game. And then are we doing anything to attract guys like you and I? And I'm not trying to be smart about this, but I stayed in the industry for 12 years. I think you stayed in the industry for about 20 years. I'm not saying we're smarter, but I'm saying we're impatient. And that impatience is probably because we get bored quickly. And and it it becomes where do we find these people? And and that impatience is a characteristic. I'm I'm sure you felt that.
SPEAKER_00I have. And I think maybe in the sense of like the digital dealership, it's relevant because you know, we live in a very digitized world. We see what's happening around us and the world we live in now, and then we you know work with our dealership and then see that it's far behind. Um and want to see that improve, want to see the dealership come up to the times and be competitive in that way. Um, and and I think that's you know both a reason why we struggle to find people to join this industry that think in a progressive or in a modern way, in a digital way, um, and why some of us bounce around a little bit.
SPEAKER_01Yeah, you know, in in my early years at Hewitt, we brought in students, MBA students, uh, masters, financial people, a year before they graduated. We had one or two, it was a smaller dealership. I go out to Finning, and they had 12 to 16 people in that category. So imagine between the third and fourth year of an undergraduate degree, say you're becoming an engineer, or between your first and second on an MBA, or becoming a certified accountant in Canada CA down here, um a different term. And you know, I I had control of some of those guys for a while, and the first thing I did was stuck them in the warehouse picking parts for the first 30 days. It's a good learning experience. Well, about half of them went away. That you know, this is too much like work. What are you doing to me? Right. But but after, and I think Finning had been doing that for maybe 20 years, but after a period of time, you get out of that, we're offered a job, you come in, you got a 15-day teen month training program, then you get a small territory selling equipment, and if you continue to be successful, now you're a small branch manager and on the way up. So by the time I got there in the late 70s, 53 stores, almost every management position had come in the company that way.
SPEAKER_00Talk about creating a culture. Yeah, I I went through a similar program as well. Um, and and the path was kind of set on where you would go. Yep. Um and I I I found that kind of challenging um because there were too many other opportunities I saw.
SPEAKER_01Well, it it it it was also a challenge to perform, wasn't it? You were being put on a path. It was a competitive path.
SPEAKER_00Yeah, I mean there were there were some who complained that people on our track got into positions too easy, too fast, and too young. Um others who saw that that was valuable. Um, it's certainly what drives change. Um, just like um no one ever got fired for buying caterpillar. Um, you don't get fired if you don't uh you don't go outside the box very far and you just keep you know the industry running or the the dealership running. Yet I I think if you I've been thinking about this, and if you look at other industries with significant disruptors, um someone will come in and pick up the equipment dealership model or concept, but execute it in a different way and will disrupt the industry. You know, where Carvana is putting all of the corner street used car guys out of business, um, someone I think will recognize that there is a different way to approach and serve the customers like they have in the traditional dealership model, but they will find a new way to do it and leapfrog a lot of other dealers. And I think that will, to some degree, like we talked about, solve some of the territory and capital problems that some of the manufacturers have.
SPEAKER_01Yeah, I think you're right. The um the number of dealers shrinks, but a byproduct of that, natural byproduct of that, is they become more conservative, they become more risk averse. And so we we don't have pioneering thinkers anymore. We have settler thinkings. Don't do that. I don't know what I'm not I'm not sure what that's gonna generate. And going back to what you were talking about earlier, relative to the predictability of the parts and service business, if we had machine population, it's very precise. And yet we still don't use those tools. Getting that change, now, to some degree I understand. That means that we'd be able to measure the performance of every parts and service manager everywhere in the globe. Yes. And up till now, none of them have been able to be measured other than through the traditional financial reporting basis. What's your gross profit? What's your inventory turn? What's your redo rate? What's your, you know, et cetera.
SPEAKER_00That's easy. Labor utilization and all that kind of stuff. Precisely. But not are you capturing all the available, all of the of the available market share.
SPEAKER_01Yeah. So, example, in Texas, there's over 50,000 working machines. How many of those are on a maintenance agreement with a dealer? Maybe if we're really lucky, 30%. Really lucky. Yep.
SPEAKER_00So in the last couple of years, while being on my own, I've worked with a lot of independent dealers. Uh, a lot of people who have left big dealerships and started their own. And one of the things I've come to recognize is that these people are smart people that have figured out there's a gap in what big dealers can do or what they focus on. And they exploit that gap for a period of time. Uh, it might be heavy rents. And then 20 years ago, if you went into heavy rents, there was a big gap there because the dealership, the big dealerships didn't do it very well. Now those big dealerships are closing those gaps. They're getting into the business, they recognize the value, and they're driving rental rates down. Um, similarly, used equipment was a gap area that a lot of people exploited. But once a larger dealer figures out how to manage that better and recognizes that there's still good profit to be made if they can figure out how to manage it, they'll close that gap. Uh and that's really no different. You know, once the people figure out how to exploit the digital gap, they'll figure out how to expand that.
unknownYeah.
SPEAKER_00But the digital gap doesn't have the same limit territory limitations.
SPEAKER_01And and that scares the bed out of everybody. It should. Of course. It's interesting. You can and and you see good examples now all across the country. There's there's dealers, I won't mention brands, but there's dealers that do a really nice job of internet processing, selling parts determination with pictures and electronic catalogs and drag and drop carts and chatting rooms, all kinds of beautiful stuff. So people of that brand that don't do that are at a huge disadvantage. You know, following up on what you said yesterday, 85% of the people that buy do their research before they go to a vendor. Yep. Well, they exclude 85%. They exclude maybe 95%. They might only find one. And you don't even know you weren't considered.
SPEAKER_00Exactly. You're just a blip on your Google Analytics.
SPEAKER_01Yeah.
SPEAKER_00Someone visited and left.
SPEAKER_01And and most of those people on the Google Analytics don't understand what they're looking at.
SPEAKER_00Yeah.
SPEAKER_01It's a, you know, it's a very like I can tell you how long anybody came onto one of our pages, how long they took, where they went after that, what country they were from, and how often they've been there before.
SPEAKER_00Yep. And that kind of leads to like the another piece of that whole, you know, 85% of the research is done online. Um, one of the things that drives visitors and that we try and address is the fear of missing out. So just like we have the perpetual death scroll on Instagram, always looking for the next thing, but what happens is when you start to present information on your websites or any other social platform, um, you have to think about the fact that your visitor is to some degree on the death scroll. And you have to provide enough information to break that, to tell that visitor, like, hey, no. You can stop looking. You've found what you're looking for. Now it's time to make the phone call. And so you know, I mentioned the idea of putting a you know, call for price. That doesn't solve it. You need to do something like point out this is the average market price. This is what we're asking. We're 10% below. Stop scrolling and give us a call.
SPEAKER_01Yeah. Yeah. Yeah. Or or functionality differences too, or value differences. Just a reason for them to stop looking. You know, you do the Google search and you got this multiple screen descending order on frequency according to Google. But if you haven't got a well-designed SEO structure, or if you don't have the right call words or identifiers, you're going to be three or four pages down the way, and yet you've got the best answer for the customer. Well, you never get a chance. I mean, this is this is becoming a very serious, and you're right, it's a it's a digital dealership, isn't it?
SPEAKER_00Yeah. Yeah. It's it's the I think the biggest challenge for any serious dealership organization to really get their heads around what it really means. And everyone's doing bits and pieces of it, but to really start to think that way is I think the next big challenge in our industry.
SPEAKER_01How about I suggest that be some a blog for you next time with with your company promotional on it, you know? Because that's that's the problem. Who's out there helping people other than you take us there? Who are the thought leaders that are considering this or presenting this or putting it out there other than you?
SPEAKER_00Yeah, there's not many, certainly not independent, right? Like, no doubt many of the dealers have excellent, you know, modern social media and digital strategy people. Um, but sometimes it takes just someone on the outside to say you to someone who's looking at all those people on their team and trying to decide what to do, like you need to think differently. It's time to think in a different way. And although you have a lot of people in your team, you need to let that whole let it let them into the whole dealership. Don't consider social media just a piece of your marketing. Yeah, our marketing team has a social media person. We're doing it, checkbox. Um, think about how that applies across the board and and how they should be involved across the board. And and we started this by bringing up the idea of like the sales rep doing his own social media, you know, and and yeah, the sales rep needs to have a social presence because people are connecting that way. They're building relationships, they're not seeing you face to face as often. But is that really what you want your sales rep spending his time doing, finding content and posting it? Not really, but you have to come up with a digital dealership strategy where your social media marketing supports a new area of the business, but they never really supported us directly. They used to create the banners, they used to create the brochures that the sales rep used, but now they have to work more closely together.
SPEAKER_01The thing that becomes intriguing to me also is you know, the here comes social media. Ed Wallace and I talked about that a couple of weeks ago, where we we got to get used to the world of the rectangle, like what you and I are looking at at the moment. But on social media, here we've got dealers that have 20, 50, 80 salesmen. Yeah, and they're all on social media. Now, I'm not so sure I want to have each of those, let's say, 50 people writing their own content. I think I want to have a brand that's associated with it. I want to have a filter on what gets put out there. The you know, this PC world is is rather full of people that'll take a shot uh at things. So maybe the salesman, maybe the social media presence should be controlled by quote-unquote marketing. Um I don't know that anybody's really having that discussion. There are salesmen all over the place that are on social media. Their background is their kitchen.
SPEAKER_00Yeah, and and some of them are really good at it. Exactly. They they manage to do it in you know 10 minutes a day and they have a great social presence. But you know there are people out there who think, like, oh, I have to do this, and they're spending three hours a day creating a video. And that's not an efficient use of time. And that's where I think you know, having your marketing working much more closely with sales nowadays because of the digital presence is where you need to be looking.
SPEAKER_01I think I think this has been quite helpful, Matt. I think people will be interested in what we've been talking about, and and hopefully it'll start some people thinking. The digital dealership is clearly something that's here now. It's not coming, it's already here. We're late to the game, as is typically the case in this industry. We're rather slow to adopt change. Um, so keep on doing what you're doing. Have you got any parting shots you'd like to put out there? As you know, a troll stopper.
SPEAKER_00Troll stopper. I just think that we, you know, say it's here, and it shouldn't be a fear point. It's simply not that scary. It's really it's not scary because we all live it. You know, even the people that we kind of talk about who are resistant to applying this, you know, in a senior position, um, they live that world too. Like we all live in a digital world. If we ignore the fact that no one can say I don't live in a digital world. We all have a phone, it's glued to us, we all do things on it that are social. I mean, like, that's that's proof that you need to think about your digital dealership.
SPEAKER_01Yeah, yeah.
SPEAKER_00Because you live it. Your business can't be different.
SPEAKER_01Yeah. Yeah, it's everywhere around us. You're absolutely right. Well, look, I've appreciated this.
SPEAKER_00Yeah, me too.
SPEAKER_01I hope we uh we can do this again in the future and and just keep pushing this ball up the hill with our nose. You know, it's the ball gets heavier and the nose gets smaller, not in my case, but you know. Thank you very much, Metz. I appreciate the time and look forward to doing that another this another time. And to all of you listening, thank you for listening. We hope you got something out of this. And keep posted and keep looking for future podcasts. We'll talk to you again soon.
