Mets Kramer and Ron review the machine ownership and a better use of information to drive equipment sales.

For sure. So in our last discussion, we kind of looked at something that we all have known about for a long time, equipment data, having customer equipment data, and then looked at how that applies to both the digital dealership and what you should be doing with that information. And fundamentally, in kind of a traditional way, equipment data is always being a piece of relationship. knowing everything about the people that you want to know well and work with so that you can serve them better. And at the same time, in the digital dealership and with analytics, and we touched a little bit on having analysts in place to make value out of that information, we're in a time when we need to be taking that equipment data and applying knowledge and other information to it. in order to better support our customers. And so in the last couple of weeks, I did some writing and I looked at this idea that self-service approach that we're all being become accustomed and kind of trained by the world around us to serve ourselves through apps that let us order our coffee at Starbucks and that that actually doesn't take away from the business, it just enhances it. And then I think the final piece that we want to look at is the relationship side. And the relationship side is why we're all in this business. It's what we enjoy aside from the iron. And it's an important part. And often what we find is that people are worried that you know, relationship is the most important thing. They think that all this digital stuff is going to take away from it. We just want to show people how that isn't the case, that digital doesn't take away from your relationship. All it does is strengthen that relationship.

sure. I think you touched on a couple of things there, like right off the top. One is lack of resources. You know, dealerships tend to be fairly lean operations. The last couple of years has certainly been very busy. And so it's hard to focus. I certainly learned that if you're going to focus on certain projects to move the business forward, you need to have dedicated resources. You can't have your parts manager. running the parts department in the same time trying to implement a digital parts strategy that just typically doesn't work. You can only have one master, as they say. And then the generational side, I think that I kind of touched on that with this self-serve idea. I started talking about how I went to a gas station that was actually full-serve. And I think to some degree, and then eventually we become self-serve. pump our own gas. And one of the primary reasons we do it is because we eventually decide that, well, it's actually faster for me if I just jump out of the car, swipe my card, and then I fill the gas and I'm gone. I don't have to wait for the teenager to run back and forth and do all the work for me. And that is a world that we grow up into. And if we look at generational differences, some generations are used to having things more full service, And younger generations, because of a lot of technology creeping into our world and making things easier, are used to self-service. And one of the key drivers there is people want to do things at their own pace. And if you have a generational gap there where people like that you were talking to, your chief operating officer, where if his disposition is he appreciates full serve. Then even getting involved and understanding customers who want to do things at their own pace in a self-serve world, the way the younger generations are becoming more accustomed to, that's a lot to stretch, both the technology and the disposition of how they prefer to do things.

Yeah.

Right.

No.

You do. You do. And I think if you draw, it depends on what you want to drive your business on, what kind of metrics. We talked about it a little bit last week in the last podcast, and that is the complacency that's in when you're doing well enough. A salesperson motivated by the total amount that he's earning isn't motivated to go much farther. And I think the same is true for any part of the operation. If you're satisfied with your sales, you become complacent. But if you measure your sales... based on historic sales and not based on market potential, that's an easy trap to get into. You may see reasonable growth based against historic sales, but you may be missing out completely on the market potential.

The most admired organizations that we all like to use as examples are acutely aware of any change, any deviation from predicted sales flows, et cetera. If a unit is selling at a particular rate and, you know, on an online store and that drops a little bit below what the expectation is, there's an immediate analysis of what's causing that change. You know, we admire these companies for how well they've done, how they've grown, how responsive they are. And yet we look at what they do to do it and are slow. to adopt the same kind of philosophies. How can we sit there and know that we're missing out on a significant portion of part sales and not be able to invest the resources to find out why it's happening? Facebook has a team of people analyzing what the impact is of adding an extra row of pixels on a particular screen. If we add another row, it pushes this down too far. And that is, we measure the impact and I use that to make it better. And these are the people that we look to and admire for how smart they've been and what they've been able to accomplish. We really should adopt their philosophies then and say, like, we need to understand why this customer is buying 5% less parts than this customer. Is it application or is it just because we're not doing something right to capture their business?

And how many sales reps bought them? Because they saw that even at $4,000, the value it brought them and being able to stay in touch with customers easier and faster than the role of quarters in their cup holder and a payphone. And yet that is quickly adopted. And now we spend, you know, we give them $1,200 phones every two years with big data packages. And we haven't changed the value proposition enough to justify it. Go back to a flip phone. If we're not thinking about now that you have all that capability in the field, how are you going to apply that? And I think sometimes we forget that that's... what we've done in the past that going to that Motorola phone for $4,000 was worth it. And we need to continue to look at what other things can we put in place to support. And in my blog, I was really focusing on how does that support your relationship? If you say your relationship is so important with your customers and how can you use these things to better your relationship? I think it's interesting you bring up. the depth of experience. But if you don't have experience in something, then you can't apply it. Most people cannot, out of nothing, conceptualize deep new ideas on how to apply a new technology if they haven't seen it. And so as a dealership, if you're running a dealership and you have this depth of experience in the... customers and equipment and relationship, you don't have it in-house on the technology side. You need to find the people that have it. They may not have the same depth of experience in the business, but they can apply these new technologies that you need to be looking at and buy in that experience. Most of the time, you can buy in the experience. You can make the changes you need to. You may find extra man hours in the rest of your team now. and suddenly offset the fact that you had to bring someone on temporarily for a year or two to work through these projects. And then you can go back to the size of the team that you had.

Go

I would say that that's that example of what new technology is like an internal approach to technology. It's like we bought a typewriter. What should we type? We bought a fax machine. Who should we fax? It's taking the technology and looking for an application inside the dealership. That's not how we should be approaching it. We should be approaching it from the customer's perspective, who is 20 years ahead of our business, and ask, what does our customer want to do? How do they want to use technology to communicate with us? And then say, okay, then what reciprocating technology do we have to implement in order to meet that expectation? If we keep looking at how fast can I find a new piece of technology and figure out nifty ways for me to apply it, we're going to stay 15 years behind. We should be market-led.

That goes back to that idea that people don't. conceptualize on their own ideas out of nothing if they have no past experience. Most of the things that we see in our business, someone saw somewhere and brought it in, whether we go to a training course like yours, or we go to a trade show, or we worked in another business. If we don't believe something different is possible, we tend not to come up with it. I've taken... You know, my parts staff at one point that ran the warehouse, who thought the warehouse should be laid out a particular way in a very old-fashioned approach to parts management, took them to the Worth warehouse, who supplied our nuts and bolts and other supplies in the shop. And that's a high volume, high paced, efficiently laid out warehouse with very different logic and where it placed everything in the warehouse based on how fast it moved, its size, all those things, instead of like, well, I like to have all my injector nozzles in the same shelf here. Well, that's not necessarily efficient for running a warehouse. So we have to change how we think. I always use this analogy from Tony Hawk, a skateboarder. I may have mentioned it in the past, but... I saw an interview with him where he had spent 10 years trying to do a 1080. It was like three full revolutions in the air on his skateboard before he lands. And he'd been working on this for almost a decade before he finally landed it. And he said what happened was shortly after he landed it, lots of other people started being able to accomplish the same feat. And the reason that is, is because he had to overcome the barrier of... believing it was possible to proving that it was possible. And it wasn't until he had done that. And then suddenly everyone else who tried the trick only needed to do the technical implementation. They just need to learn how to do it. They didn't have to believe that it was possible. They knew it was possible. And it's no different in many of the aspects of the dealership. If our people don't believe that it can be run differently, then you need to find people who do. And show them and have those people show your teams or take your teams to places that do believe it. And then it'll happen. I ran a service department at one point that didn't believe you could be profitable. No one there really believed that they could make money in the service department. That wasn't the service department's purpose. And so they would actually subconsciously sabotage their own profitability. They would write up an invoice for a perfectly fair piece of work and be like, I don't think that the customer is going to want to pay that much for it. So I'm going to take 25% off. And immediately we were unprofitable on that work order. We didn't even try because we didn't believe, you know, and when I started at the cat dealer, it was like, I don't think this is how we make money. You know, a fair bill is a fair bill and we, we presented fairly and we get paid and we make money, but they have to believe it's possible.

Yep.

I think it's... No doubt a contributing factor.

If you can see a dealer of any size that runs it profitably, I think that proves it's possible.

Therefore, anyone who's running out of money or isn't seeing the kind of margins they expect to see, they need to be looking at what's causing that.

True. There still aren't very many.

Yeah.

So as I've tried to outline more and more clearly, even in my own head, how do you define the digital dealership? And I keep coming back to the key pieces of information. And so you listed equipment data, customer data, obviously. That's information. And instead of, we're a transactional business. We're a reactive transactional industry. We sell a part when it's needed. We fix a machine when it breaks. We buy a new machine when it makes the most sense for our business. We tend to be a reactionary. industry that deals in transactions. But what knits that all together and what brings the logic or the decision-making into it is always information. We all say we like it. We use it in different ways. But we need to stitch it all together. We need to have a singular kind of information model that says, just like The service department used to have the equipment list because they serviced the machine and the parts department didn't have it because, well, they weren't talking to the service department. We need to start looking at those information objects and what's related and then look at the whole business and then understand when and where that information needs to pop up. It's like the lifeguard. It's like the blood in your body needs to get to all the right places at the right time. We don't have separate blood systems in different parts of the body. So at the same way, the dealership needs to look at information more holistically and then determine where it needs to be and when. If I'm a sales rep and I'm going to talk to my customer, what is it that I need to have? And yes, it's good to have customer account data and open work orders. I'm going there to bring value to my customer. What other information do I have to have? What makes me more valuable to be there? And then how do I, as an organization, provide that information? One of my posts that I mentioned to you in actually this week was from a good friend of mine, Kevin Paschak, who's the CIO at one of the universities up here in Canada. One of his rules was around the IT department. The IT department, he says, should never say no. They should always say yes and put a price tag on it. And that was his rule number seven. And you can look up his blog there. And that's really kind of the approach that we need to have. We need to be looking at the different parts of the business. And IT's job and technology's job is to say, yes, all of it's possible. We do a lot of software development. My favorite question is, can you do? And I say, the answer is always yes. It's just how much money does it take to get there? And that's the kind of approach we need to have with information in the dealership is what information do we need where and how do we get it there and what's that going to cost? And typically, we find a way that we get a value balance there. So I think that would be the best approach to stitch all of the things that you listed together. equipment data and the self-service model and that.

Absolutely.

Yes.

It does. It does.

Yeah. I had a situation where you mentioned this idea of not knowing what you didn't sell. I worked with some PSSRs and developed the role of a PSSR. in one of my past roles. And one of the things we did in our system is look at labor sales, part sales, and parts through service sales. And we separated parts through the parts counter and parts through service. And then with that, and a person who was in the service department and knew the customers, we were able to sit through every single customer and understand what they were doing just from those numbers based on the equipment they owned. where they were buying their parts, and if they were using our service and how much of the service they were using. We were able to develop a detailed strategy for every single customer. That wasn't a one-size-fits-all, go-sell-mark contracts kind of idea. It was, this customer thinks this way, you can see it by what they're doing, and now we're going to tailor our approach to that customer when we go see them. Furthermore, we're going to be able to put together some information for the customer that will fit. what we're seeing in their activity. And that was 90% effective. We'd go out with five customers to see exact strategies of how to approach them. And 90% of the time, we got exactly what we wanted, what we wanted to try and sell that customer to change that relationship that we had with them. We saw that they were buying all their parts to the parts counter and none through service. And we came up with a strategy that says, how do we get even a little bit more parts to service that we engage service? And it's in having that information and then being able to bring that to the customer that we're using that information. We're improving that relationship and actually capturing a lot more of the business.

That's right.

Yep.

exactly. Either help them determine what to do. At the very least, your friend who didn't understand half of what you said, how can you explain that and make it relevant? None of this stuff is that hard. But once you can explain how it's relevant. what it means in practical terms. The technology is just technology. Everyone gets over their technology problems. You know, I think it's funny that you would have someone in a senior position that says they're not comfortable with technology. They don't know much about digital, but then they'll pull out their phone and play on Facebook. You know, they're comfortable with it as soon as they see the value.

yeah years ago i love showing people the domino's pizza website yeah yeah and it first came out and they had the order tracker now it's pretty standard because of all of uber eats and all that but i love bringing up to everyone the domino's pizza order tracker and i was like this is genius like this takes care of you know, communicating so much to your customer about where their order is. It deals with anxiety problems of like, when is my pizza getting here? You know, it's, it's the simplest and probably most effective use of technology. It's just this little bar that says, you know, why, why do you think they invented loader bars and computer software? Because if you don't put a bar on the screen that says, Hey, You're 20% loaded,50% loaded,90% loaded. People close things. People shut it down.

Yeah, I have done that. I work with a handful of dealers every day. kind of managing that aspect of the dealership's business to grow.

Makes perfect sense.

Yeah.