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.

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. 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 especially small and medium sized dealers that tend not to have people with my background on staff and starting up a small software company, developing tools for those dealers as well.

My experience has been because we tend to have people who are very engaged in reacting to customer needs and don't have a strong background in. information or how to use information. 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. 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 call the 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.

We're moving in the right direction.

It's something we say very commonly to feel better about the direction we think it's going, but often not based on anything. I've sat in strategic sales meetings and forecast meetings for next quarter, next year, budget meetings. And more often than not, unfortunately, we try and A, show a good picture. So we're saying, well, our sales has been increasing. So next year, we'll probably do 3% more. So we take last year's number and we add 3%. 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. You know, selling TVs at Best Buy is actually less predictable. It has lots of numbers behind it and they certainly use them, but 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 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 shouldn't be guessing anymore at what our sales could be. Maybe we're guessing still 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 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 flip 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, that's tough for, for people that are relationship and reactionary.

It's probably the toughest question. I think you have to show some people how things tie together. 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 a 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 and said, well, 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. Every machine in our population, we should know exactly what it's going to consume because this maintenance model predicts it already. And whether it's on contract or not, 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. He kind of took me under his wing a little bit. And so I dropped by his office one day, which is more of a privilege than I appreciated then. 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-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 look 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's always stuck with me. And that was like in year three, year two of my career. And that's always stuck with me. Going back to the same dealer and speaking there with their senior management only a couple of years ago, they still admit that 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, 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 always use the example of 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 pass. And that's, I think, how we need to start thinking, 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?

I don't know that the

And what do dealerships do to attract people who think that way also? Do they look for them? And what can dealerships do to be attractive to the people who do think that way? I'm always a little hesitant to bring up too cliche an example, but I mean, Amazon has shown us that good analytics can grow a business very quickly. And 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. And if 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, there's enough background material now, there's enough knowledge base. is right for someone to walk into dealerships and say, this is something that needs to drive a good portion of our 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. 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 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. What are the tools that we use to talk to these customers? One of the big things that is likely missing is that a lot of our business is still transacted in a traditional way. The interaction starts with a phone call. And so it's hard to differentiate what we're used to as far as how the business acts and 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. And 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.

No, not as a singular item. It's simply that a lot of the information is managed digitally now. And I will admit that I am 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 going to 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 picking up. I'm on social media. I'm on LinkedIn. checking out websites in whatever way it comes to me, even just the communication with my sales rep, more and more of it's digital. That creates my perception of the dealership, of the product, and would likely form the foundation of my decision-making well before I actually go and see someone to work out the final details.

to

I 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 sales people 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, 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 isn't much. But now that same decision maker at your customer is even just through 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 vehicle model, then pretty much the industry follows the passenger car market by 15 to 20 years. that number in advertising for equipment dealers is going to go up tenfold. And if we look at 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. 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 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.

Yep.

No, 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. 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've got to go back home and the next brand takes over and your sales drop off again. 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 in the use space to present 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. And two, if you can get a good interactive experience with that piece of equipment and see its history, that's as good as going. We both know lots of people who can listen to an engine. And here the track turned once and they can tell you everything that's right or wrong with that machine and whether or not they would buy it. 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.

And we still never contemplated.

We never contemplated, nor did we develop them.

Yep.

I have. And I think a big piece of it maybe isn't so much impatience. It's that we see what's possible and where the industry or the dealership we're working with should go. 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 and want to see that improve. Want to see the dealership come up to the times and be competitive in that way. 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, and why some of us bounce around a little bit.

It's a good learning experience.

Yeah, I went through a similar program as well. And the path was kind of set on where you would go. And I found that kind of challenging. There were too many other opportunities I saw.

Yeah. I mean, there were some who complained that people on our track got into positions too easy, too fast, and too young. Others who saw that that was valuable. It's certainly what drives change. Just like no one ever got fired for buying Caterpillar, you don't get fired if you don't go outside the box very far and you just keep the industry running or the dealership running. Yet, I think if you're thinking about this and if you look at other industries with significant disruptors, 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. Where Carvana is putting all of the corner street used car guys out of business, 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.

easy. Labor utilization and all that kind of stuff.

But not are you capturing all of the available market share.

And in the last couple of years, while being on my own, I've worked with a lot of independent dealers, a lot of people who have left big dealerships and started their own. 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. 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. 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. And that's really no different. Once people figure out how to exploit the digital gap, they'll figure out how to expand that. But the digital gap doesn't have the same territory limitations.

Exactly. You're just a blip on your Google Analytics. Yeah. Someone visited and left.

And that kind of leads to like that. Another piece of that whole 85% of the research is done online. 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, 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 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. Yeah. Yeah.

It's 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.

Yeah, 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. But sometimes it takes just someone on the outside to say 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 on your team, you need to let that whole, 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. Think about how that applies across the board and how they should be involved across the board. 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 support it as 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.

Yeah, and some of them are really good at it. Exactly. They manage to do it in 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. That's not an efficient use of time, and that's where I think having your marketing working much more closely. with sales nowadays because of the digital presence is where you need to be looking.

Troll stopper. I just think that we, you know, say it's here. 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 in a senior position, 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. Yeah. Yeah. Cause you live it. Your business can't be different. Yeah. Yeah.