Mets Kramer talks how we must change from processing Transactions to Transforming our processes

A subject that is taking us from transactions to transformation. Within the digital dealership, we have all manner of transactions. We have all manner of data. We've talked in previous podcasts and you've outlined in previous blogs the fact that we haven't really organized ourselves there. We haven't really transformed our processes, our approaches to business. And I'd like us to dig a little deeper into that a little bit. Can you expand on that transactions to transformation, what that means to you?

Sure, Ron. So, I mean, you have to remember that I started in the business 20 years ago, got involved in the information side of the business pretty early on, even though I was a shop supervisor or a department manager or contracts manager. what I kind of noticed is that we all, all the businesses have transactional business systems and we collect a ton of data, but we really only collect, you know, business transaction data. And then we turn that into some metrics and worse yet some reports. I remember getting my report in my mailbox every Monday morning of work orders over nine days old. And it's kind of stuck there. And even when I was at AD, you see a good amount of the same kind of thing. These business systems presenting transactional data that's been massaged only in how it looks. It's turned into a metric. It's turned into a chart, a graph.

Everyone has beautiful big screens up showing their business intelligence, which is really just a way to plot data. But it isn't transformative. And so I did my presentation on the digital dealership. And one of the four, I kind of created four legs to my presentation. And one of the legs was information. And to identify that, you know, in our modern world, and you and I often talk about those companies that we respect or admire, the ones that we use over and over, almost incessantly as the models for the modern business, they've gone a step further. They don't just... take information of transactions like sales or part number sales or labor sales, and then present it to their people as a metric and then tell them to do better, they become transformative. They've taken that information, they've processed it, and then they feed it straight back into the systems to adjust the systems to make them run better. It's not being done.

by showing a supervisor his numbers and telling him that if he does better, you'll be happier with him or he might get a bonus. But it's the focus of the business. It's inherently a quality of the business to take that information and feed it back in and change everything about how the business operates.

It's rather interesting that here we are,2022, and the total equality movement with Deming. was in the early 1980s. And exactly what you're talking about was what Deming was talking about.

All righty, back then.

Transforming how business operates, transforming how the processes, the systems, the procedures, the methods are implemented to make things better for everybody. We seem to be stuck. You know, we're going to end up in a series of discussions on this as well. But the leadership that we have today gets those reports, have standards from example from the AD with the cost of doing business survey with John Deere with the dealer management comparative studies. And as long as they're meeting those metrics, as long as they're hitting those standards, yeah, life is good.

Right.

There's an old truth in the world that I live in that says companies that look inward. And that's what those. metrics do

are

destined to fail.

Eventually. If you don't pay attention to the changing market and your customers changing expectations and you think you can continue to manage the business by only looking at your internal metrics, then I can't see how you're going to keep up. And that's one of the things I tried to introduce is that there are new data sets now. We only used to have transactional data. It was by and large only data being collected. But we have two other main sources of data now. One is we have a massive amount of market data. There are companies in our industry like Equipment Watch and Rouse and Ritchie and all of them, they're collecting massive amounts of data. And that data is available. And that data is there to augment what you're seeing. It's there to add depth to the transactional data that you're seeing. And it's there to add value to your salesman's transactions. So that's market data.

The third one is probably even less understood, and that's engagement data. We never used to have engagement data. Short of like a salesman's call sheet of who we went to visit. We've never had it, but now the world is full of it. You send out an email campaign and there's engagement data. Who opened it? Who looked at it? How many times did they click on it? If someone opens an email two days apart, there was something interesting that they went back for. There's a purpose. And there's tons of engagement data like that. I learned about a new product called Hotjar that one of the vendors was using to understand how people were moving around their website. It just screen captures visitors and what they do, where they click, so they can understand how people are engaging with their website so they can make it better. So those are two new areas of data that I don't see many or any dealers figuring out how to apply.

In my presentation, I used my own login on my own visit to Amazon. And I show up on Amazon and it says, hi, Matt's in the corner. And I happen to be in Florida and I'm in Canada normally. And on the top left, it says, ship to this address. By the way, you're in the US. You might want to change websites to the US site. And then it said, this is what you had in your cart last time. And then a bunch of products that reflected what I'd looked for last time. And that's engagement, right? That's a company that took what they learned from me and they recognize me without me having to type in my name. And they present back to me something that will engage me in their site. And there's not a single dealer doing it.

The interesting thing is you go back to Jack Walsh in the 90s, when the world around you is changing at a rate faster than you are, the end is near. That type of engagement data, it's very common in a lot of sophisticated retailers. Amazon's one, Walmart's there as well. But it's not exclusive to those guys. No, no. And I can't tell you one construction. Well, let me change that. I can't tell you one AED dealer member that has similar information.

Yeah.

They've got all the same data, but they don't know what to do with it. No.

And that presents like the big gap between what people are looking for, what your visitor, your customers are looking for. and what the dealership thinks they should be presenting. One of the other conversations I had was with Rouse, because I wanted to learn more about them. We've integrated some other market data in the work that we're doing with dealers and their business systems. And so I asked, like, okay, where are you getting your data? And while we get, you know, now that we're part of Richie, we get our auction data from Richie. And then we get all of our sales transaction data from the dealers who are our customers. We download from their systems all of the machine sale data, and we use that to generate market pricing data. And then the dealers come to the Rouse site to see what that means for their fleet. And I was stunned, Ron. I was absolutely stunned.

He said there wasn't a single dealer that wanted that data straight back in their own system so they could analyze it themselves and come up with an understanding of what that data meant. Just think about that. Of the hundreds of customers that they have, of all their competitors' sales that they could be consuming to get better themselves, it's left to go to Rouse's website and pick through your fleet and try and figure out if there's anything useful there.

Yeah, you and I were talking about that a while back, and dealers don't understand the power of that information. It's actually stunning, although it's not surprising, Mets. If you look at it, and we'll touch on this at another time, but the generation that's running the industry today are from 55 to 75, pretty much everywhere. That's the leadership, the executives. I had a chat with a senior executive, chief operations officer about technology a couple of years ago. And I'm saying, you know, you haven't got anything. You're not using anything you've got. And he said, well, what do you mean? And then he let me talk for about 30 minutes. You need this, you need this, you need that, you need that, you need blah, blah, blah. And at the end of it, I said, you know, have you considered any of those things? He said, I was just being polite and silent, but I didn't understand anything you said.

Now, I've been accused of having a problem with communications, but not to that degree. And the problem that, you know, after I hung up and I and this is a good friend of mine, I've known him for over 40 years. After I hung up and I sat and thought about that for a second, nobody has taken the time to train the leadership, the executives of the dealerships of the world in which they live. You know, the Internet has been a very serious transformation tool. I was first on it in the 70s. I remember bringing home a computer with an acoustic coupler when I first got married. Marlene looked at me as if I'd grown another head when I pulled out this electric typewriter because that's what it was. And I connected this acoustic coupler into the phone into a coupler. And I'm connected at 30 baud, which means that in order to print one line, it took four seconds. Right. And we thought that was heaven. Yeah.

Oh, if I have to wait a nanosecond today or if streaming runs into a burp and I have to wait for it, I'm unhappy. Yeah. It's it's it's really this really is becoming a problem. We are not transforming the industry. Our customers are going to start talking with their feet. They've already taken their business for parts and service. The market share in the last 50 years and both of those has dropped by 50 percent. They found alternate sources because we have not served them.

Yeah. Yeah. There's a, there's another guy that we should get on at some point. And he's got a presentation called Amazon is coming for your business. Yeah. They're not very good at it yet. They're learning through mistakes, but that that's, that's the heart of it. The heart of it is that the use of information is learning. Like you and I learn new things by taking an information. and then really applying it to how we're going to do things tomorrow. And no business should be different nowadays, especially with the depth of information that's available. Each day should be a learning process of what it means and then how I'm going to apply it tomorrow.

When you can be watching television and seeing an ad of a guy specking out a car, getting a quote, listing his year, make, mileage, of the one he has he wants to trade, getting a trade in value, conducting the whole transaction on the internet, and the vehicle showing up tomorrow,

and

a truck to take away his trade. It's what is called now contactless transactions. We can do the same thing with equipment today. Nobody's doing it.

That's a gap in expectations, right? We spent enough time at the bar talking over the last week. And most of the people think that that's not what the customer wants. But there are more and more people who are happy, perfectly happy to do that. And with some of the work that I do with some of the dealers, we see lots of cases in point. It's not every single one of them, but it's certainly proof that the shift is coming. Just a simple, great fly-around video done with a drone of a machine, of it working, of it standing still. And a buyer across the country from a small, fairly unknown dealer is happy to buy the machine. And then the second aspect of it is the current buyers don't want to talk to anyone. One of the metrics I heard and I threw out in my presentation is something like 97% of all phone calls and in voicemail, all business phone calls and in voicemail.

But text messages are open within three seconds on average and answered 89% of the time. People just don't want to stand around and talk anymore. When I did that podcast on the Summit Live from the Condex floor, It was two guys who become friends as sales rep and contractor. And they became friends because the sales rep learned that his friend, the contractor, actually never wanted him to show up and talk his ear off for half an hour. They had some great stories about contractors who would barricade their office with their door and stand in the doorway so that he couldn't quite come in and get comfortable. And the world is changing. The new people's expectation is they don't really want to spend a lot of time talking. They're too busy and they know they don't have to anymore.

That's funny. One of the people that writes blogs for us, Patrick Fisher, calls it the fifth element. He was the youngest manager in engineering with Case, the red side agriculture. Yeah. And he walked through on the blog and you can see it on the website. All of the elements. of technology that are around in machines. And this expectation you're talking about in that I don't want to spend time. I was doing a survey in the Pacific Northwest about 25 years ago and talking to, I think it was three or 400 different customers. One of the customers that owned a reasonably large contractor was a woman. Right. And it wasn't just because of the tax deal. It was because this woman was sharp. She knew what she was doing. Yeah. And I said, what's the single thing that bothers you the most about your relationship with the dealerships in parts and service? He said, oh, that's easy. I said, well, what is it? Napa.

Up here, they have women delivering parts to my shop. And they're dressed like they work at Hooters. And when they come in my shop to deliver the parts, every technician stops what they're doing to go to the door to see what they're going to, if there's anything there for them to pick up. She said, they're not at all interested in what they're picking up. At the same time, another dealer in the Northwest, we were trying to promote diversity. And we had a woman who was a product support salesman. And she was very good at what she did. I got a call from the wife of a customer

telling

me to get that woman away from her husband because they were spending too much time in the bar after work. You know, you can't, you can't, you know, you're going to run into word blocks. You're going to run into obstacles. You're going to run into resistance to change. Yep. But that expectation, Harvard did it with the balanced scorecard in the late nineties. It starts with customer needs and wants. What do they want? What do they need? Yep. And that turns into what do you need to excel at? And if they're saying they don't want to see my salesman, this is different, Mitch. 20 years ago, you talk to a customer. and ask them about their equipment salesman, oh, I haven't seen him since he sold me the machine two years ago.

Yeah.

You know, once he's made the sale, he's gone.

Yeah.

Now the sale can be made without the salesman at all.

Yeah. Yeah.

That expectation has changed. You're absolutely right. And we haven't adapted to that, have we?

We haven't. And I think it's because we haven't totally realized. There's two reasons, I think, actually. The second one's a little looser, but the first thing is we haven't realized that the role that the sales rep used to do, a lot of people think that they were selling. And I think we talk enough salespeople, you know, there are times when salespeople really sell, but many times salespeople are just a point of contact and they were the source of information to make sure that your customer had the information on your machines so that you could be considered for the next sale. And that role, of the sales rep has been replaced by Google and the rest of the internet. Every piece of information that a customer needs to make their decision, including great videos by other contractors and other people on every piece of equipment, including the manufacturers who put out great videos now, they have everything they need.

So that role for the salesman is gone. So the role needs to change. The sales rep needs to find a new way to bring value. I think the second kind of problem, why we haven't addressed this, is that we're an industry of people that are reactive. We like that. I think the industry retains people who like service people, like parts people, even salespeople are, salespeople get called when something's needed. The service department gets called when something breaks. Parts department gets called when they need a part. It's reactive. And so it naturally, we kind of filter out people who thrive on the reactionary business model. like getting called. And we kind of lose a lot of the people. And I remember seeing other management trainees come in at the cat dealership. We lose the people who are proactive because they don't really fit. There's not a lot of time spent on being proactive in the dealerships. And so we lose them.

So aside from the fact that we need to do it, we also have kind of lost a lot of those people because we naturally retain the people who love the excitement of the you know, the breakdown, the fix. And I think that's one of the things getting in our way of making this change.

Yeah, I think you're right. We call those, we're comfortable as firefighters. Right. Without recognizing that 95% of the firefighters job is preventing fires. We haven't figured that out yet.

I love when people bring that up. So busy fighting fires. It's like, well, then, you know. You understand what firemen do.

Yeah. I think you're right. Culturally, the industry, and you can see a profile for different OEMs. The Caterpillar dealer product support group are much more bureaucratic, much less entrepreneurial

than

a small, non-aligned. Once you get rid of the or they get the top of the pile done, Caterpillar, Komatsu, Wolo, Case, John Deere, add whomever you want to stick in there. I don't want to leave anybody out. But once you get past those guys, you've got 100 other manufacturers. And they have to scratch to get every damn dollar of business that they get. You know, Lee Trevino is famous for. You know, the pressure that somebody, an announcer, after he won a tournament, he says, there must be a lot of pressure standing over a putt for a million dollars. It's three feet. He said, that's nothing like standing over a putt that's three feet for a hundred bucks and you haven't got the hundred bucks. Different perspectives, right?

Yep, exactly.

This transformation, I can't wait for it to happen. I hope it'll happen when I'm still engaged, but it's really slow coming.

It's going to take a leader to show or a leader, a manufacturer or a dealer or a brand new dealer to decide that they're going to rebuild either because they're falling behind too far or because they have good foresight. But someone's going to have to take that chance and say, hey, our best road forward is not the traditional finding dealer model, but to change the model from. the way we've done things, to transformation, to use of information, to recognizing what engagement is and recognizing what customer expectations are changing. It might even pull a lagging manufacturer out of the doldrums.

Yeah, it's true in every aspect of society and life. Vince Lombardi, when he went into the Packers, it's a last place team. Bart Starr was the fourth string quarterback. It's identifying what your issues are. It's identifying the, you know, the solutions to it. It's, it's being good at that. Like you say, somebody has got to lead the way. There's, there were books written back in the 1990s, early aughts around the line of, you got to be a rabbit. You got to be agile. You got to be quick. You got to adapt. You got to adjust. And a lot of people have read that stuff. But the 55 to 75-year-olds seem to be very much risk averse because these changes will provoke risk.

They will. I think the feeling of risk is greater than the actual risk.

Well, that's, yeah.

This is not an all or not, right? This isn't about throwing away everything that you've done for 50,60, some dealers,100 years of business. It's not about throwing that all out. It's just about recognizing what aspects of the dealership need to change. It has to be throughout the dealership. It has to stop being like a bolt on like the number of people that have come up to me. Oh yeah, we're doing social media. We hired some 25 year old. She sits over there and she does our social media. I'm like, well, if that's what you think social media is, that's really just content. That's not the core of social media is engagement. It's not, you know, nice pictures.

We started out with the internet. At the very beginning, everybody looked at it like, I want to have a history of the company. I want to have nice pictures and the history of the company. And then we recognized, well, we better put our inventory up there. Another, as they said in Seinfeld and yada, yada, yada. And we really haven't changed anything. The number of people that look at Google SEOs as an example. Or look at Google Analytics to see who's looking at where for how long and what the transformation, what the movement is. It's very rare. The two themes I'm pushing this year, one is that we need more leadership and less management. And the other is we've got to reinvent our business model to recognize everything about the digital dealership and so much more. Yep. This transformation has to start happening soon. And you're one of the guys right on the front edge of that damn thing. So I think we beat this one up.

Have you got anything you want to put as a little quota, a little summary of what we've talked about before we move on to something else?

Again, I think the core of this aspect of changing the dealer business model are to look at what customer expectations are changing. And we should talk about that separately. The proper use of information and what kinds of information are available, recognizing what engagement is nowadays. And like one of the worst examples is the number of visits your sales rep records to make sure that he records enough of them. I mean, if I hear that one more time, I think I'll cry. for the sales rep who has to live under that. If that's what people think CRM is for, they think that's what engagement means. That's kind of sad. And then the final part is like the integration. None of these things work unless it all gets integrated. None of it can be a bolt-on. It just becomes the core. And like you said, there are lots of other parts of this business that are also a challenge in today's time, like labor force and...

supply chain and all those other things still need to be dealt with. But this is the core of all of our successful businesses in the world at the moment.

I think you're right. Thanks, Metz. I think that's pretty good coverage of the transaction to transformation. And thank all of you for tuning in again for this kind of conversation with Metz. I look forward to having you join us at another of these discussions in the near future. Aloha. 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!