Alex Kraft and Mets Kramer address Technology and the Dealer Sales Efforts

No, no, no, no, no, no. Don't start.

Alex?

Let me just make a comment in the middle of this. The automotive industry was very clever when they published the prices. because they controlled the margins that the dealers made. The way that the dealer made his money was the amount of rebates they got or discounts they got at the end of periods. And the customer didn't know that. In the old days, before they published prices, we were always dancing around trying to find out their cost and their list and how much we were prepared to give them. Well, all of that went away. And we're starting to see some of that. John Deere has more than one price for the same model machine. Caterpillar now has two prices for the same model machine. These things are getting, I think people are so gun shy. What's your price? Can't you do better than that? It's about the values, folks, that we provide. And that's what you guys are focused on.

That's where Alex, one of you said that, you know, the customers don't want to see the salesman anymore. It's kind of, you know, don't call me. I'll call you when I have something that I need.

You know, in the old days, it used to be that the market leaders didn't want to change anything. They had everything under control. And it was the people who were trying to challenge the market leader that, you know, they used all kinds of different slogans. So we had Coke is the real thing. And it's the Pepsi challenge, you know, and it's Kleenex. That's a generic term for a brand. It's Kodak that was a generic term for a brand. Caterpillar has become a generic code. And I guess the best one today in our world is probably Bobcat.

You know, everybody calls that skid steer a Bobcat. And the other thing that was interesting about it to me is. Caterpillar and many others started doing loader back hoes and went after Case. Case wasn't particularly adept or quick at it. Then they turned around and went after Melrose, Bobcat. What happened was the Bobcat skid steer marketplace is more automotive than construction equipment. It's more a first-time buyer. It's name recognition. Then we have this generational thing between boomers like me. And, you know, the greatest generation that are older than me and the silent generation is the ones that they were in First World War. And you guys, the millennials, the Z's and the X's, is we're comfortable with how things are. You guys aren't. And I wasn't either at your age. You know, I was always asking why you do it that way. You know, and, you know, when people ask me why, I always say, why not? trying to provoke a little bit of discussion. And I think the answer you guys got was, well, it's because it's always been done that way here. Yeah. Whenever you hear it's always done that way, boy, oh boy, is that ever a signal something needs to change? Yes. So how do we, you know, and both of you have made the comment that most of the purchasing that's done in this country, in this industry anymore, is people by people under the age of 40.

different view on things. And you guys are just responding to it. Change is a blessing. You know, we confront change our whole life. It starts with birth, for goodness sake.

death, you know. I mean, and there's many in between. It's really challenging. I'm calling it business intelligence because I don't want Mets to be able to trademark the digital dealership. But it really is digital intelligence, isn't it?

How do you establish? So let's do that company. We're going to get together. We're going to have a bunch of Coca-Cola. We're going to be very generous to thank Mats a lot for the copyright information that he's got and trademark information to pay for this lunch. But what I would probably do first is I'd probably get the Randall. publishing the old EDA, Equipment Data Associates, and find out what machines are in this country or whatever geography we want to play with are the most popular. And then I'd probably list off every customer who financed a machine, one of those machines over the last 12 to 24 months. And I received this file and it might be in Excel that we have to mess with. It might be comma separated CSV files, whatever. We've got formatting dilemmas because it doesn't all comply and people put it in different ways. So there's a mess in the data. But I get the data and then, okay, I'd say, guys, okay, call some of these people. Let's have a short survey. Do you want to see a salesman? What's important in the sales transaction? Are specs important? Is price comparison important? What is it? And from that, I'd create. And equipment facts, just like Carfax. Spec out your machine online. We'll make available all of these different machines. Everybody who has an inventory machine, from Alex's perspective, we'll get them to load it up such that anybody who's looking for a machine can see. They can see the specs. They can see the hours. They can see the inspections. They can place an order. We can value their trades. We can deliver the machine. And we'll give them 30 days to keep it or get rid of it. If somebody dropped that in on a machine that's $100,000, that's okay. That's easy. For a million dollars? Holy mackerel, baby. I think that's part of our dilemma, isn't it? The cost of capital and the size of the transaction gets in the way of it.

Well, you know, the situation here is I think in the discussion, we should be thinking in terms of brand independence. We represent no brand. We're a conduit for buyers to buy from sellers. We're trying to make the transactions easy. Now, the customers are going to love this. The dealers won't.

Interesting thing. If you take what you're going at, we want to exceed expectations. As a guy who's been in the consulting world for more than 40 years, there's been so many different devices used. to repackage the same darn thing. Getting to simplicity finally gets us to the right place. I want to exceed expectations. Terrific. How do you know that? How do you know if you have it? Well, you got to know what the expectation is. Well, do you ask? No, I haven't asked. And then, you know, how do you measure customer satisfaction? It's the gap between expectations and realization, the perception of the service. How do you find that? You got to ask. Nobody asks. To Met's term, marketing at a dealership, in most dealerships, and this is not a happy comment, is brochures and trade shows. That's not what marketing is, darn it. No. Never been.

Oh, no.

Let me stick another little point in the middle to provoke something. It's not that long ago that we used to hire somebody. introduce them around. We'd take them around. We'd give them the keys to their vehicle, take them to their vehicle, show it to them, give them a list of customers and say, there's the door. See ya.

But isn't that amazing?

The other piece of the puzzle that I find even more amazing is I'm going to give you a specific geography. And in that geography, as the dealer employer, I don't know what you're saying to anybody. You're defining my brand. You're defining who I am. And I haven't got a clue what it is you're saying. That's right. That doesn't make me comfortable either.

You know, with texts, with emails, I've got a track that I can go back to. You know, there's an interesting, there's a software package out there now that'll take meetings like this and it'll transcribe our talking into a Word document, just like a dragon or a... via voice or one of these things. We're all looking for simplicity, as Alex said. Make it easy. And we had this wonderful expression decades ago, kiss, keep it simple, stupid. It was almost a mystical desire. Today, it's not mystical. People want it simple because it's a complex world out there.

I just edited a piece from a client in Europe who's starting a blog with us. She is in Belarus and works at the university. And she's with a Dutch company, company from the Netherlands. It's kind of a weird combination. And she's talking about loyalty. relative to employees. So the question I'd like to put out to you, I think I've heard over the last 10 years, go by five years, it seems that each five-year increment, the attention to loyalty has dissipated to the point that today, everybody who's selling something will say, oh, a customer has no loyalty anymore. If that is not a reflection of the fact that we haven't looked after our customers, I don't know what is.

Those damn guys are not loyal anymore.

Let me give you a small illustration on a different area. I was data processing manager at a dealership, and we had two computers running 11 stores, and both computers were down. They're apart in pieces on the floor. And coincident to that, we had all of the major publishers of the industry magazines and periodicals in the building. for a day where we're presenting what our business did. So we're trying to really hype the brand. Coincident to that, chapter three, both machines were IBMs, which stands for its better manual. And IBM had a strategy on customer service called fill the sky with planes. They had people there, baby. They were all over the place. And I'm the manager of the department and they're running around. They're interfering with everybody. The theater is just down the hall about 100 feet so they can hear the cacophony. I get up on my secretary's desk and I say, OK, I want to see a show of hands. How many in here can actually fix this problem? Let me see. Three guys stuck their hands up. I said, the rest of you, get out of here. And the three that were left, then we had. We had a solution reasonably quickly, but it's not acceptable to be out like that anyways. Today, think about that. But they assigned somebody to me specifically, like a buddy. And I'd only been married about a year. And that sucker wanted to be with me from the time I arrived till the time I went home and everything else. You know, he had my wife and all the rest of this stuff. And at one point in time, I said, you know, I love you to death, man. You're not helping me at all. Get out of here. Go home. Well, I got a report every day to everybody. Call me.

right. Yeah. And, you know, I mean, think of the lunacy. And we have the same thing. What Alex indicated is, I think, absolutely right. The buyer of a machine is no longer baffled by specs, technology, systems. They grew up with it. It's common. It's easy for them. What they want to know is, how are you going to keep my cost down? How are you going to help me make money?

Well, worse than that, Metz, I think. My focus this year is on two subjects. One is the customer experience, Alex's expression. The other is the business model. Because the business model has... determined how our headcount is structured and how we cover our market. And it was established from what the research is that I've been able to find out in the early 1980s. When interest rates were at an obscene level and dealerships had to adjust the only variable costs that they have, which is payroll, in order to pay for interest and stay in business. And then we set our sales for employee numbers for that. And that's what we've been working with for the last 50 years. It's our 40 years. It's nuts. So we don't touch our customers. 80% of the people that buy from us don't get a contact initiated by us. They have to call us. You know, it's no wonder.

And then, you know, the other little paragraph in there, because both of those things to me are aiming at loyalty, but the other paragraph is picks and mortar. I don't want any more bricks and mortar. I'll put up tents. I need portable things. When I was at Fending, we had 53 stores. We had a model that we used, a financial model that we used to determine when we added a store. Right. And I always ask the question, where's the model to closing a store? They didn't have one. We had stores that shouldn't have been there.

Or whatever the number might be. At some stores, we were selling light bulbs. The community was so remote. I don't care what it is. I'll sell anything I can make a buck at that'll help the customer. Mr. Customer, what do you want? I'm here for you. I might not like what they tell me.

Technology is a great neutralizer in all of these things. If you do market segmentation, and I've been a proponent of that a long time, the way that I use a six-digit segmentation code. And I try and have four variables within each. I can't always do it. Sometimes it's six. But I'm looking at a thousand segments that a dealership needs to cover based on machine population, relationships, payment patterns, loyalty, all this stuff. There's no way in the world that we can have a thousand different strategies.

To me, that's a function of the salesman. There's nobody that I go call on, Alex, as you can probably imagine, that is quiet. You can't be in a room with me and be quiet, even in a classroom with me. I refuse to have people sit there silent all day long.

Yeah, I think the last 45 minutes that we've spent chatting back and forth are more justification than I needed to have to have more of these. The interesting thing, one of the interesting things, and Alex mentioned it, you've got to be neutral. You can't have, you've got to be a chameleon. You've got to be what your customer wants and needs you to be. And too often, the salesmen have not been coached or trained on how to and what to do. I used to do in the consulting world, I used to do sales evaluations. I'd ride with a salesman for two or three days and I'd watch them in front of customers. And then I'd start intervening with them, trying to coach them and show them different things. It was always the same. And Alex will relate to this. They had a set of customers they wanted me to see with them. And I would leave with a customer list. And I figured it out after a day or so in your particular territory. I said, this guy's pretty close now, isn't he? He said, yeah. Well, let's go there. Well, I don't know if he's going to be there. Well, we got a phone. Let's call him. And he was there. And we showed up. And you walk in. And here's the customer saying, ah, good to see you. When was the last time you were here? I mean, it's unbelievable. How about we wrap this at this point? Alex, what have you thought in the last 45 minutes? Is this a valuable discussion to have for people to hear?

I agree with you 100%, Alex, on that one. I subscribe to and read all kinds of industry things, as you can imagine. And I noticed this morning, there's a podcast on technology controlling costs on the use of equipment on job sites. All Caterpillar. So I sent off an email this morning about five o 'clock because I do a lot of this stuff in bed before I get out to my guys at Deere and Volvo and Komatsu. I said, hey, do you do anything like this? And every bun of them came back. Jeez, that's a wonderful idea. No, we don't. It just amplified what you said, didn't it?

You got it. Mets, what do you think? Has this been a value?

really

I'm sure you did.

Guys, I think that's wonderful. Thank you both for participating in this. And to the members of the audience that are listening, thank you for listening. We hope you got things out of it. And I look forward to having you with us at another Candid Conversation in the near future. Mahalo. Thank you for listening to our podcast. We appreciate your support. Should you have any thoughts or comments, please don't hesitate to contact us at www. learningwithoutscars. com. The time is now. Mahalo.