Transforming Sales with Smart Data Strategies

And I wish I lived

Well, I am a student of life in the industry. And to just alter some of the narrative, I've learned so much from listening to the field. And I was probably in my... Early 30s. And I thought I was a good listener. I was certainly raised to be humble. And there was a sales guy. His name's Keith. And when I worked at Volvo Rents and he said, you don't listen. And he was right. It's the listening when people say nothing. And the behavioral side of most of my career has been as a generalist. But the longest length of my career was in marketing, supporting. sales forces in the construction equipment rental industry and of lately dealerships, construction equipment dealerships. And early in my career, I learned to count to 10. And the notion is the expression of disproportionate data. And just to sum it up would be called the 80-20 rule. It doesn't mean data,20% of the customers do 80% of your business.

It just means lopsided and pay attention to the proportions. So built data was formed for a few reasons. One is to serve the field, to serve salespersons as a behavioral tool, to put valuable market intel, whether it's internal or external, at their fingertips in three clicks. The second reason was to provide a direct connection to management so they could link or they should be called field support, where field support and salespersons can speak the same language about the customer. So provide them an equal data set that can either be observed centrally and all the way at the field where they can see, have a unified view of the customer. It's actually one of your recent blog posts. I think it might have been today or yesterday talking about how to treat the customer with love and the best dealerships and the highest performing rental operations spoil their VIP customers. And dealerships have an advantage that in many instances, I think.

is maybe they're not fully aware of their strengths, which is local ownership. And yes, some dealerships are not locally owned. However, the notion of, as I understand it, as the industry was born and dealers and rental companies really smothered their best customers with a better understanding of their needs so they could do their job. And when you pay attention to what you do well, try to do more of it. As opposed to many companies that I talked to today would say they have too much data. Everything's shouting at them. Their CRM, their point of sale, their ERP could be their e-commerce systems or online systems. And they have so much data. So they went from a dearth of data to now so much data that they can't distill signal from noise. I hope that gives you a little bit of a background of what we did.

No doubt.

Well, I want to go back to Steve Clegg. I've had the blessing of meeting Steve through you. And Steve, when you and I were speaking earlier today, off the charts sort of intelligence and understanding similar to you. I know you don't like hearing that. And Steve. And very simply, he distilled complexity to simplicity, just like you did. And what I've heard Steve say, I've heard you say on multiple occasions, which is about the transaction. And the transaction is the behavior. It's just a photograph of a point in time of the behavior. And Steve and you, who've collaborated, look at that transaction to come up with very accurate forecasts in the industry. We don't do that. by the way. And I have enough knowledge of the space, though, to understand what it takes to do it well. And one of the challenges is the industry is undergoing a lot of change. And I shouldn't say that. The water has been getting hotter over a long period of time.

And it's almost unnoticeable. And it's new market entrance, whether it's call it overseas iron. It's the shift of rental or, you know, the profound growth of rental. I was referencing a presentation earlier today. It was a great one given by Tom Doyle and Brad Lull at ConExpo. It was actually at AEMP that preceded this recent, this couple of years ago, ConExpo. And I was referencing it because I was writing some work for Built Data. about the growth of rental. And when you look at asset classes and earth moving in that presentation was quoted at 35% of all heavy equipment is rented. For telehandlers, I want to say just from memory, it was north of 65, could have been 75%. And what's missing in that conversation is the customer. And there's a ton of price wars. going on. There's conflict between, call it the OEMs, overproducing or underproducing. The dealer who they're leaning on to sell specific things.

The rental industries, which the big three, have tremendous market power and their own strengths. And my belief is that there's a simpler path. If I woke up at any one of those companies, I would be somewhat terrified because the environment is changing so quickly. I think what's really missing is a customer-centric view that understands, of course, helping that person get their job done. And it's not only the margin on the rental transaction. It could be everything else that helps get the job done. Parts and service, uptime, total cost of ownership. predictable costs for the contractor so they can make a profit on their job instead of this downward spiral. So we, if we go back to Steve Clegg and forecasting is what is the behavioral component to link a killer forecast to the sales manager who's scripting to a goal for the enterprise and to the salesperson who in many instances, is forced to lie to their boss and lie by omission.

That doesn't make you a fraud. It means you're sort of keeping your job. And so we principally link a goal. You can call that a forecast and transport that information to the salesperson so they can see the expression of the 80-20 rule in their data. and giving them a direct linkage so the central office and the salesperson can operate from the same sheet of music. There's also key market intel. I don't know if you ever read Tom Riley's book, Value Added Selling, but we should be selling value, right? I mean, we do a lot of things, our equipment rental companies and dealers do a lot of things that are actually extremely difficult, delivering equipment on time, billing accuracy. We can sort of dumb it down and say, well, how hard is it? It's hard. Or how hard can it be? It's extremely hard. Prompt pickup and delivery, keeping those machines at uptime and reporting back to that customer how they're serving them to increase their profitability.

I don't think we do a good job of that. So being able to translate the forecast to something that the salesperson can focus on and know that they have the back of their enterprise to deliver on those promises of uptime, call it value added. we believe increases profitability.

Yeah, super smart.

Yeah, they have market power.

Huge. Yeah.

And it's so fun to learn. I keep thinking at some point, I feel like I'm back in my freshman year. I don't know if it's high school or college, but behavior is one of the hardest things to do or culture, right? Pick your word is one of the hardest things to pull off in business. And I find

getting, if I can say best customer and what does that mean? Well, let's look at the segment that does 10. Let's look at deciles. Look at, let's look at the top 10% of your customers and see their contribution. Cool. Just having that common language between if I'm the salesperson, you're my sales manager or you're the CEO, and then you're talking to your OEM. Just having that common linkage removes layers of sort of mistrust, antagonism, et cetera, that breaks companies in half. And you've talked about the slow bleed before. I've had a small purview into that world, which is. You talked about parts coverage at one point, and you would quote a statistic. If I remember, it was one OEM had its parts business had declined from 50% to 25%. And I want to say to 18, you know the numbers better than I do. And there's a lot of slow bleeding. And I recently worked with a dealer with... I'm going to round the numbers.

10% of their customers did about 80% of their business and 100% of their marketing capital went to the 80% of the customers doing 20% of the business and it gets better. 60 or about 50,60% of the entirety marketing budget went to SG &A to spend the other 50%. It's nuts. And so if you're in a company, I'm going to say it's lost. And it's lost by, it forgot what it was good at. It forgot what it was focused on, which is serving a small group of customers and spilling the heck out of them. And it's a land of confusion. And it has a real human expense. And it's not only leads to lower margins. You know, I'm going to say it breaks families in half, you know, at the end of the day, a lack of prosperity has huge downstream negative, you know, negative implications for society. And it just starts with a company. They can't get their bonus. They don't get a raise. If I can shift into the positive, we have a client where we work.

By the way, we're not magicians. I don't want to oversell anything. We do dirty work. We dig for data, right? You can call it what you want. I've done my fair share of it. It is not fancy. Sometimes it means Ron Slee with one E, Ron Slee with two E's, R Slee. And it means finding those Ron Slees in the three different data sets. It sucks, but it gives the company a unified view of what you're doing. So we had one of our dealer clients. recently used this consolidated data set that their people can get to in three clicks. And their salespeople, they're planning the year and they set sales goal and they use built data to retrieve the information. That's not that big of a deal in itself. Now they have a behavioral component where they can track their progress against the coal. Even better, they can actually have the market intel so they can do value-added selling to their customers and prospects and treat, you know.

do territory management more effectively. It just strips out a lot of the brain damage from running around to, you know, grift for business. So we are not magicians. It's pretty simple. It's linking the behavior with a unified data set.

Correct. Yeah.

Yeah. Do you mind if I build on one of your points? Sure,

So you mentioned a customer and the customer has a name, right? So when you talk market share, right, that's a bunch of names added up to market share. And it's not that hard. And that's what's so screwy about this is. When I look at a salesperson with a $25 to $50 million business, they have 100 customers that will do 80% of their business. And you can say, well, it's 100. Well, can I partner with you? If I'm in marketing and you're the salesperson, can we figure out what it takes to serve Ron? And it's one customer. If I deal with this, even in my own company, in how we go to market, which is. If we don't really know your name, we shouldn't be talking. We shouldn't be marketing to you. We really shouldn't. If we can't do our homework before we come in, we shouldn't be doing it at all. And so market share has a name. It's the law. I call it the law of small numbers. And it's the law of small numbers in three clicks.

And if you don't know those 100 names, then any road. We'll get we'll get we'll get you there as the saying goes. And I don't know if you I know you're like a student of Charlie Munger, but he gave a killer speech. A lot of it's about life. But the speech was he was asked to speak, I believe, to Harvard College. And I believe his son was graduating. And the speech was how to live a life of misery. And he goes through a few things. And if you can't plan market share. by the law of small numbers, by the law of names, you're highly likely to live a life of misery. And a lot of companies are in this shape today. It's tough. I mean, you're looking at 10% EBIT margins. You're looking at supermarket type net income margins. And that's with price increases and layoffs. And it's a shame. Good news is, though, it can be reversed. And it can be reversed if you take a special forces approach. Maybe that's what it's about.

I defer to you and your knowledge, which is when the industry was less competitive, maybe a hierarchical approach gave you scale. Today, if you're seeing your margins decline, maybe it's time to reorganize and do special forces where a small team can collaborate. It can certainly collaborate on a name, right? A name times 100.

Great question. So I want to just transition off one of your points and then answer your question. If you go, I can't say I read a lot of Munger because he's. You know, I see clips here and there and it just resonates with me as sort of very distilled wisdom or Buffett. And so as I understand it, Munger and Buffett would talk a lot about incentives, you know, follow the incentives. And I think, you know, Munger would say it's like the strongest law of business. And they spoke of Munger spoke of a company called Les Schwab Tire. Right. Yeah. It used to be closer to you than me. Yeah. As I understand, in so many words, the tire business is just a ruthless, largely OEM controlled business. And somehow Les Schwab eked out a really profitable, handsome business. And it was a big business, I'm guessing north of a billion dollars at the time. And the notion was incentives. So the management called special forces was at the branch.

That was, quote unquote, the profit center. And there was a lot of because of the team participated in profits, it weeded out a lot of sort of processes and controls. So they didn't have to gum them up with advanced risk management because if I stole, then I was dipping into your bonus. And so there was a lot of very simplistic approaches to life. that were arguably better than fancy systems that controlled it. And I think it's worth considering for companies to go back to a branch level view. You can only consolidate, merge, integrate so much and take costs out. By the way, that's extremely hard and risky. It's simplistic in a presentation, very, very hard to do. So three clicks. We, then a lot of fancy reports, are very difficult for people in the field to access. By example, they're told to drive their market share up, but they're not giving the list of names that sum up to a market share percentage.

If they get market share, it's across their territory. It may not be down at the salesperson level or the store level or county level. So one view is we provide a geographic view of where your customers reside and within it, who's your best, your next best, et cetera. In three clicks, we're also linking what we call playbooks. It's the first, second, and third action to save them time. Another view would be an interactive market share report. So I'm a salesperson. I'm the CEO of my territory. Let's say it's Oahu. And my territory is Oahu. I'm the CEO of the Oahu territory. I'm sure the CEO would appreciate that. And I can actually click on. the Caterpillar line and see who bought Caterpillar and click at the number in the Komatsu line and see who bought it. I can look at maybe there's an underperforming dealer and I can look at their best customers so I can do a high value, you know, sales proposition.

So we present maps, graphs, tables, all where it's with dimensionality. You can click, click, click. Now, this technology exists. Again, we're not magicians. What we're doing is applying a point of view on the data. I believe in the proportionality of the data. Not all data is equal. Look at the 10%. Look at the 20% that does 80%. And we're giving them an accessible view to the data. Some would argue biased. Good luck. One of our clients has 32,000 customers. What are you going to do? Talk about all 32,000? A lot easier to talk about 3,200. And by salesperson, it's 100. And that's the great unifier. So we provide multiple visual cues, or we call it visual filtering. So you can say, I want to click on my best customer who's an excavation contractor who bought a wheel loader. And I want to look at where they also own CAT as well as Komatsu. And you can zero in where that market intelligence is in the salesperson's hand. Today, it's not.

They can't get it. It's in a point of sale system. It will spit out transactions. It's not in the CRM because the management has gummed up CRM to the point that I can't write your birthday in there, Ron, which is the black book.

We, it's a good question. I have to think it through. We principally follow, we try to be the weighing machine, right? So as I've gotten older, I've certainly gotten less opinionated because I know there's more ways to fail, right? And I'm not seeking to be right. I'm seeking to help you today. And it's like exercise, right? If you, I remember, you know, I ran one marathon. I will not run another one. But if you, if you said to me, great, you run in 10 minute miles. Okay, let's get to nine. Okay. You're not trying to turn me into an Olympic runner overnight. So we, we graft, we bolt onto their existing behaviors. and try to level set with a data set that the salesperson can share with their sales manager called the boss and agree on the state of the market. Now, when we fuse in other data, so generally my experience is it's customers by territory, but we bring in construction spending data. We bring in other external data.

So now there is some connection, which is if a salesperson has his territory has you know, a dearth of construction spending, you know, it's abundant when you can see the layers and say, bad market, good customers, this other territory is growing. And from the customer's point of view, salesperson go talk to Ron, the GC on a job, right at the bidding stage and say, what are your needs? Like what payment terms? What kind of uptime? What's the schedule of the project? You know, I'll script for you. Do probably what you want to hear. I'll script for you to helping you deliver your project on time and on budget so you can make money. Right. And you can pay me based on performance, whether I'm selling you equipment or running you equipment or keeping it up and running. So when we link together the customer with the jobs that they're on, with the geographies, with the competitive marketplace.

You can now have a more robust, you know, you can design the customer experience truly around them.

are. It's it. I'll break it down, though, because you just brought back, you know, something fresh for me. There is a company. It's actually not in this industry. It's in it. They rent and buy equipment. And the the CEO was. probably a lot like the younger version of me, right? He wanted to do above and beyond. And he thinks it's his job to provide this solution. He's got business intelligence. He's got the data warehouse. He's got the CRM. And he is blocking the head of sales from getting the data he needs to do what the CEO wants. The CEO wants to, he's got people doing four quotes and people doing 15s. He knows if he can bring the quotes of the fours to the 15th, EBITDA will increase from, I'm going to make up a number,50 to 60 million. I'm changing those numbers a little bit. But just that increment, if he gets his fours to 15s per month, EBITDA jumps by 20%. It's not trivial. And so it's internal fighting amongst themselves.

That's fair. Yeah.

Yep.

Well. I'm piecing together. By the way, I love to say following you because your mind is advanced. So I'm going to replay some things that was going through my head as you were talking. So I remember at one point in my career, finally understanding, quote unquote, the long tail and meaning what's not in the bell curve. And the buzz on curve. Correct. And I also remember. hearing an episode on Bezos where Saul Price, proving I'm a village idiot, I went to a school that was endowed by Saul Price, but I didn't know that he was at Priceco or Price, I forget the name of his original company, that predated Costco. He was a big believer in sharing his knowledge, as I understand it. He had shared with Brot with Bezos. I might be skipping one person, so forgive me.

But he is here with Bezos is the notion of call always low prices, but sell a membership and capture the, you know, raise your gross margin dollars and don't worry, you know, worry less about the gross margin on transactions. So to my knowledge, Costco today is 12 percent markup, as I understand it, give or take. I think your idea is brilliant. And I think. It's, I don't know why somebody wouldn't do it. They're actually doing it wrong, but they're not. That's perfect. Thank you. They're not getting the credit for it. And they're leaking money all over with not having a team that operates as one. So they overspend on marketing. We go back to that example where. 100% of the marketing capital was spent on, call it the long tail, and where they spent 50% in SG &A, they had a tax on every dollar spent on marketing to pay the marketing department. None of that marketing went to help the salespeople.

So that's one huge turd of trust, or broken trust sitting in the room. They have... salespeople under supported by marketing dollars, right? Relationship marketing dollars. You have departments with call it animosity. You have the stupidity of handing out promotional products, right? Because that's what ever I'm going to call it meet you thinking. So there, they could easily save those nickels and dimes everywhere by having a sort of a, you know, Bezos had a long tail plan. save those nickels and dimes that they're hemorrhaging, consolidate that, take a unified view of the customer. It means sales is not fighting with marketing. And that's probably a terrible word. What I've seen mostly is apathy. I'm not going to help you. Go screw yourself, salesperson. Or a salesperson, they can't talk to marketing because they've been shut down for so long.

They could do it. It's just they got a rifle through the brain damage. In marketing, if I could take it one step further, marketing should really serve the salesperson, right? In B2B sales, if 80% of the sales come from 20% of salespeople, marketing should work for sales. Go serve them.

I've heard you. You said yes to me and you're a gift.

I would be thrilled. And if you ever want to, I would love your feedback. I mean, we're not seeking to be right. We're truly seeking to help people make money. And if they make money, they will live better lives. It's not about greed. What I make, I plan on giving away. I'm not looking for a bigger house. I don't own a boat, you know, blah, blah, blah. But we'd love to show it to you and get your feedback and adapt. And I said it to you earlier today. There's a few people and I'm sure there's more. It's just who's on my mind. You, Steve Clegg. There's others that I believe we can help people make money, get it, frankly, have more fun, get out of the brain damage, get out of hating each other and whose fault. And frankly, Getting surprised is no fun.

And there's a lot of, you know, I bet was in an, when I was at Volvo Rents, we franchised in North America. In Europe, we didn't. It was through dealer distribution. And I don't know if you're, how, if you, franchising attracts a fair amount of scoundrels. Sort of get rich quick concepts, you know, buy my franchise because, you know, and you'll make a zillion dollars. And there there's a lot of vendors preying on dealers and rental companies with what I call hopes and dreams. And in like any in like any hope or dream, there's usually like nine truths and one lie. But good luck figuring out which one's the lie, because it's like a drop. It's going to make you sick.

It's FDOP. And so you got Power BI, data warehouses, rental analysis system, dealer business systems, CRM, ERP, NPS, subscription data, Octawazoo. And it's like, let me just grab onto you like a parasite and get my bite, right? I'm going to say they don't really have a lot of reverence for the host.

and pick

Thank you.