What If Data Made Your Next Sale Obvious

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Aloha and welcome to another candid conversation.
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Today we're joined by NIF Maverick.
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And those of you that follow us on our website and our blogs know that Nick has been um published the last two weeks in a row, he has one more coming.
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And and that's what I'd like to talk about today.
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It it seems a little radical in the world, but being able to provide somebody a list of prospects, customers for the coming week that have probability of activity rather than relying on the black book, I think that is absolutely brilliant, absolutely overdue, and that's what Nick's talking about.
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So I'd like to get Nick to get on record a little bit more, and I'd like all of you listening to pay a little bit more attention than normal because this is what we all need to do, not tomorrow, yesterday.
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Nick, I just put a big ball in your back pocket.
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Well, all right.
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Well, first of all, I have to say thank you for being a constant blessing.
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And um thank you for the opportunity to continue to learn from you.
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Uh, not only do you fill in many things that I don't know, but you give me and our company courage to uh to refine and adjust and continue to serve uh the industry.
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So thank you always.
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Welcome.
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So what do I do here?
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You you talked in one of your blogs, we're gonna give a salesman a list of custom 25 customers for next week.
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Yeah.
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What do you what you what are you talking about?
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What do you want him to do?
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Well, and please give me direction to adjust.
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So you and I have talked about um one is you you call it the black book, is the it's an interesting uh the the construction equipment industry should have bigger margins, broadly speaking, than it does.
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Um dealers have uh very compressed margins.
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Rental companies, uh, to the extent that they're in specialty, have much better margins.
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But in many instances, folks that are in the construction equipment and industry, whether they sell newer used, they rent, or even product support, are not necessarily given a directed list to run their day.
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And it results in this vicious cycle of uh vast cyclicality.
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Uh, it results in compressed margins, it results in uh turnover, um, dot.
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And what the industry uh when it doesn't properly support its salespeople has a pernicious effect on the entire enterprise.
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A lot of those industry salespeople are one given they have their black book if they're uh blessed enough to have experience in the industry.
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If they're starting brand new, they're vastly under-supported.
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And if they don't sort of miraculously achieve their quota, then they're turned over and replaced by somebody new.
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What we've aimed to focus on is common sense at scale.
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So we uh take a company's data, uh, whether it's their own data or uh data that they need, and we complement it both by filling in missing pieces in their data and also providing them a tool that gives them a closed loop.
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Specifically, if a sales guy, if you look at the law of small numbers, a good year for an equipment sales uh professional might be 25 machines a year, right?
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You can scale that up or down in any given market, two machines a month.
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When you look at statistically, it makes sense.
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If you pour in random data through the top of the funnel, you might end up with a 1% close rate.
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Um, when you pour in high quality data at the top end of the funnel, you will end up with a 6% or higher close rate.
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And when you have a tool that can monitor the number of opportunities passing through each stage of the funnel, from contact to opportunity to pre-quote to quote to negotiation to won or lost, and you're monitoring those metrics through each stage, you can make sure that your business is calibrated to achieve a defined outcome.
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Um the saying goes, you know, it's not magic, it's math, but it's quality of math that's being applied at each stage.
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You're starting with the top end of the funnel.
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Uh, the industry has relied on what we call status quo data, which is uh typically UCC data.
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Companies and banks or financial industries are under no obligation to file UCC filing.
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And that starts with the misconception.
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So people have regarded UCC as a proxy of the market.
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They might call it a proxy of market share, and it's actually not.
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Um, half of UCC filings on any given day are individuals, and three-quarters of the other half are companies with less than 10 employees.
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So it it by no means is it a proxy of the market.
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And if they're using that list as a prospect list, they'll have limited and inconsistent success.
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In other words, not predictable.
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So they may get lucky, like all of us get lucky when we go to Vegas.
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Uh, I don't gamble anymore because I was very unlucky.
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Um, but I don't play the lottery.
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If you're if you're turning to data and you you're not vetting that data properly, you will result in inferior outcomes.
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You may achieve partial success occasionally, but certainly not consistently.
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Um happy to dive into that more.
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Well, let's just start with the law of random numbers.
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You go out and you're gonna have about a 1% close ratio.
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You're gonna work your butt off, you're gonna be talking to all kinds of people, talking about football games, going to golf courses, having lunches, all that stuff.
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And the law of small numbers, you'll get two sales a month.
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Depending on the product, depending on the price range, that could be higher or lower.
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Congratulations.
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But to go from 1% to 6% by using quality data, that's that's huge.
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Absolutely amazingly huge.
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But what most people don't realize I took mathematics and physics at university in computer science and and statistics as minors.
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Now statistics are not arithmetic.
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Mathematical statistics are are dealing with probabilities.
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They're dealing uh looking at history to predict the future, and and looking at variables that will vary that prediction's success, standard deviation, all kinds of terminology that most people aren't into statistics wouldn't understand.
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But if I know the last two transaction dates, and if historically I know what that transaction distance is from one event to the next, parts, service, rentals, new equipment sales, used equipment, whatever it is, doesn't matter.
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If I know what the last two dates were on average, and I know what the size of the transaction is on average, I can predict the future with a very high degree of success.
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And that's your six percent.
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So if we look at this radical and and rapid transformation that we've gone through with technology over the last, I'm gonna say thirty years.
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It's been longer, but thirty years.
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Everybody's confused.
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It's happening, it's moving so fast we can't keep up.
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I had a podcast the other day with Matt Harris of Texata, sharp guy and MBA, but also has psychology in his educational background.
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And the business has changed.
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When I started 1970, you sold equipment, new and used, you sold parts, you sold repair and maintenance.
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But you didn't really do much of parts or labor.
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And Bill Blackie comes along, the chairman of Caterpillar and says, hey, wait a second, you make your money in parts and service, get over it.
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Well, it's one thing to say it, but to have people understand it, it's completely different online.
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And the people that were running the businesses then and continue today for the most part, are either sales or finance.
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And most of them don't they don't want to play in the service department because they don't understand it.
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So it's a similar circumstance, and what Matt and I were talking about, the dealers have to make a huge shift in their mind.
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Asset turnover is a critical element.
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In the rental business, the rent-to-rent business, you can have 50% return on net assets.
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In the heavy world, in you know, selling equipment, you're lucky if you have two to two and a half times turnover.
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Now the manufacturers are in a bit of a box because a lot of people are having trouble with selling new equipment or used equipment.
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And in fact, the rental industry and the equipment industry are almost in competition with each other.
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They both had their conventions at the same time, which is arcane because almost every equipment dealer is also a rental house, not vice versa, mind you.
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So getting to asset turnover, that's number one.
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Number two, going to six percent and what instead of one percent, that's that's huge, too.
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Now we're messing around with the leader's mind.
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And if the leader isn't the one that's driving the train, nothing's gonna happen.
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If the leader doesn't want this to happen, nobody's gonna do it.
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If the leader wants it to happen, there's no real probability of high degree of success because a lot of people, ah, there he goes again.
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All kinds of nonsense.
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So you're running up against status quo or paradigms or whatever terminology we want that you're challenging and saying, wait a second, what you've been doing the last 500 years doesn't work.
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So I'll I'll shut my mouth in one minute.
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Let me make one other comment.
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1878, which to me is the metaphor for change in anything that I've ever looked at.
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It was the arrival of the electric engine replacing the steam engine.
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There was a financial benefit, it was cheaper than a steam engine.
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So people bought the new engine, but they didn't change the process or the methods and how they used the damn tool for 20 years, a generation.
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And we're going through the same thing.
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Henry Ford, when he put the production line out, he had to raise the salary of his employees so people could buy the car.
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There was 44 miles of road in the United States at the time that Model T came out.
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What in the hell is he doing building a car?
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Elon Musk, three explosions with SpaceX before he hit the right ball.
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So, how do you overcome that much embedded tradition, status quo, and get people to say, damn, that's a great idea.
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Let's start it.
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How do you do that?
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Well, uh, like everything in life, you know, it's a small habit that consistently applied.
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It's hard to see the outcome, but if a I think deep in my heart, I do love this industry and I love the local ownership.
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And I love uh I look at the margins, broadly speaking, in the construction industry as a whole.
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And if then if you back into capital goods, the industry is best served, uh, in my opinion, through entrepreneurs.
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And we can look at sort of the backdrop before answering your question.
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The backdrop is uh high cyclicality, and people can say that's a cycle.
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Uh, it's a it's kind of a in many respects an avoidable cycle, right?
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I'm excluding booms and busts like the financial crisis.
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Um but the cyclicality is largely avoidable, certainly the extremes.
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The second thing is um the industry has been consolidating substantially.
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So you see OEMs and dealers either buying their distribution or buying adjacencies, and they're doing that to increase their gross margin dollars, but not their gross margin percent.
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And so they're they're kind of kicking the can down the road, and they've amassed a larger amount of customers, a bigger geography, and they have more things to count, but they're not let necessarily looking at what costs no longer serve them.
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And with it the small changes that can very easily occur is start with, and you inspired me, which start with a small number and it's a closed loop.
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So if you can start um it wholesale change takes certainly a lot of confidence, right?
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So short of having confidence, companies can certainly engage in an experiment.
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And that experiment would be the owner of the company or the leader of the company supplying their Salesforce with high quality buyers in a market, buyers being somebody who both owns rents and consumes parts and service.
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They build things, right?
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So they need machinery for their efficiency.
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Start by feeding them 10 process, 10 prospects that are highly vetted, where mathematically you can compute the outcome to end up at 6% close rate.
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Put it in a closed loop system where you, as the owner of the company, can see mathematically these tens go through each stage to see if you achieve your goal.
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Um, and you can intervene in the process.
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So I would argue start incrementally if somebody doesn't have the courage to do wholesale change.
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If they don't do this, the implications are quite severe.
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Um, you'll have continued turnover.
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You'll have uh turnover is very expensive because you have institutional knowledge acquired by even a new employee, leave, replace them, train them, put them back in the field.
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You'll have high turnover.
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Uh, you have very, very high selling expenses.
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And your net margins for most dealers is um your EBIT margins are less than 10%, and your net income margins are what, two, three percent.
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In the case of many OEMs, they're similar.
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So you have to start the change and look at um tasking your team with very, very directed outcomes.
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So then you can gain the courage to say, I'm gonna make a wholesale change and redo the capital structure of the business to focus on actually what's realistically achievable, as opposed to this constant cycle of hope and disappointment.
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And I I can break it down further.
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So let's let's still stay with that because in embedded in that discussion or dialogue was a brilliant point.
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We've had consolidations, either through failure of a company and they go bankrupt or because of negotiation with a neighbor and merging and all the rest.
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And what they got was more gross profit dollars.
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So they looked at the gross profit dollar value as their salvation.
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I get more income, I can look after more things.
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What they didn't realize is they brought across the same amount of debt.
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So coincident with that, here come the manufacturers and they're saying, Well, the market's getting a little softer, so I'm gonna put something out there to induce my dealers to buy now, so I protect protect my production line.
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And almost everybody has put out six-month, nine-month, twelve-month flooring.
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Well, that's cool, it saves the manufacturer, but what does it do?
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It pushes the cash problem into the dealer's pocket six months down the road.
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So here you are in in June 2026, and all of the things that the manufacturer gave me last year and credit to that I had to pay, that that payment comes due this month.
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I I the last car I purchased in California was a Genesis.
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And I go to the guy, and and they're a great car.
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And I I if if I wasn't on the island, I had a 500 horsepower Genesis here that I couldn't even get it up to speed before I ran into the water.
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So, you know, it was it was the wrong vehicle, but boy, it was it was silent inside.
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So I'm talking to the owner of the dealership, and I say, Well, you got a couple of nice cars out there, they're pretty expensive.
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They all pay for it.
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He says, No.
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I said, Well, okay, what's what's due next month?
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He said, Well, this and this and this.
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He says, Well, I'll buy one of them.
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Which one are you gonna have the hardest time getting rid of?
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He said, Well, that one.
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I said, Okay, I'll buy that one.
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Well, that's great, terrific, but I'm only gonna pay you what you would have had to pay.
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In other words, you're not gonna make any money on that sucker, I'm saving you.
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And he agreed.
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So I bought a card that was was worth 80 grand for 40.
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He said, That's terrific.
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We'll write it up.
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He said, No, no, no, I'm gonna ship it to Hawaii because I don't want to pay the sales tax in California.
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So I spent a thousand dollars shipping the thing from California to Hawaii to save six percent on sales tax.
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And I had the car.
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It was wonderful, absolutely fantastic.
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About 12 months later, I said, This is no good.
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I can't even I mean, it's nuts.
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So I shipped it back and sold it there.
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How much do you think I sold it for?
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Sixty grand.
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So that one year I made twenty grand on nothing.
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Right.
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Which is kind of what we need to do now.
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So here comes a rental company.
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The motivation that the customer has is he's got a machine that he needs on the short term to do a job.
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Needs to dig a hole, needs to make a mile, whatever the hell it is.
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The machine goes down.
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Oh my versus an equipment dealer who sells a machine.
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The customer bought the machine, he uses the machine as operation, it goes down.
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What does he do?
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He sends it to the dealer if he does.
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But let's say he sends it to the dealer, and the dealer, in order to be efficient, he's got two labor tracks.
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One is maintenance, one is repairs, one is repairs that can be scheduled, one is repairs that are in the field.
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So I've got shop mechanics and I got field mechanics, and I got different backlogs that give me different efficiencies.
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So now the customer is rental company, now the customer is a he bought a machine.
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If the machine's down and he bought it, he asks for a field service guy.
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The backlog field service, maybe it's today, probably tomorrow.
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The rental guy goes down, he doesn't ask for a mechanic.
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He says, Give me another machine.
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It's a different world.
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Different priorities, different asset utilization, different customer satisfaction, different urgencies.
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I mean, it's it's has anybody changed?
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No.
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You worked with Volvo Rents, you look at a Volvo dealer, has a rental fleet or a rental company, they operate those businesses in a completely different manner.
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Shouldn't, but they do.
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And you're right.
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Get a small test case, prove the point.
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Replace the steam engine with the electric engine.
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That's only a start of the deal.
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We've got to have people that are prepared to fail.
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But they're not.
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Yeah, you know, it's funny.
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I was reading something last night, and I I'm just gonna quote it off the top of my head.
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It may not be entirely accurate.
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Please know that uh it's a function of working too late.
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But I believe uh Volvo's uh results and North America Volvo construction equipment were down 14% year over year when the industry is unclear, call it flat.
00:21:48.539 --> 00:21:50.059
And the question is why, right?
00:21:50.139 --> 00:21:53.099
The dealer network, I'm not that close to it, please know that.
00:21:53.259 --> 00:21:56.539
Um, appears to have gone through some consolidation.
00:21:56.859 --> 00:22:08.139
Um they made some various bets that uh didn't work out, meaning entered certain segments like compact and then paving and then withdrew uh to some extent.
00:22:08.460 --> 00:22:18.859
And um you you're you're caught you're seeing some massive sort of whipsaws in distribution uh in that rip you know, ripples all the way through.
00:22:19.339 --> 00:22:20.700
So what do you do, right?
00:22:20.859 --> 00:22:22.220
How do you get out of it?
00:22:22.539 --> 00:22:36.539
And what I would say, you know, the OEMs, broadly speaking, need to, of course, grow closer to the distribution and to align the incentives, right?
00:22:36.779 --> 00:22:58.379
So if you think about the power of 10 names on a salesperson, and to the extent that the OEM and the dealer partner on the outcome to achieve and land those counts, they'll vastly increase their capital efficiency that you talk about because you deploy less capital and you're very, very focused on achieving certain outcomes.
00:22:58.779 --> 00:23:09.420
Or keep doing things the same way and you'll have very high cyclicality, you'll have losses, you'll you won't quite have booms, but you will have some negative quarters.
00:23:11.339 --> 00:23:15.740
If you also look at the industry, the industry is going through some major changes.
00:23:15.980 --> 00:23:21.019
And those are in itself are cyclical, kind of enduring cyclicality.
00:23:21.259 --> 00:23:29.740
If you look at the rental industry being north of 50% of all construction equipment demand, 30% of that is controlled by three companies.
00:23:36.859 --> 00:23:45.180
Another companion to that is they're normalizing 15% of the used equipment market when they dispose of those assets.
00:23:45.579 --> 00:23:47.500
Massive force, right?
00:23:48.139 --> 00:23:53.099
Compound that force with what sectors are growing today.
00:23:53.500 --> 00:23:58.619
You can call it label it data centers, but it's data centers and energy and sort of the electrical grid.
00:23:59.259 --> 00:24:06.539
You have the top 400 contractors in the United States controlling 30 percent of all construction spending.
00:24:06.940 --> 00:24:12.619
And so you have increasing concentrations both in the rental industry and in the construction.
00:24:12.859 --> 00:24:14.779
And so what does that leave?
00:24:15.099 --> 00:24:29.579
Um that leaves uh in in the in the math in my mind is about 23 percent of all construction companies will uh account for 77 percent of all outcomes.
00:24:29.819 --> 00:24:43.980
So when you've just shaved off the sort of the right side, the ER, top 400 controlling 30%, and you you shave off the bottom piece of the market, you're left with um uh a relatively small amount of companies.
00:24:44.139 --> 00:24:51.180
It's enough, by the way, that are likely to need uh uptime in TCO, right?
00:24:51.339 --> 00:25:02.299
You can leave the bottom end of the market to the bottom fishers who don't have the capital or the insight or the foresight or the wealth, frankly, to buy machines that are reliable.
00:25:02.460 --> 00:25:12.539
Um, so they'll buy uh call it less resource machines, and small companies wind up in this constant state of turmoil.
00:25:12.859 --> 00:25:28.539
So you must focus on the stable, growing, secure side of the market and move towards the hot spots or uh sign up for extreme cyclicality, you know, an extreme amount of pain and turnover.
00:25:29.099 --> 00:25:34.059
And cyclicality, cyclicality is is no no favorites.
00:25:34.379 --> 00:25:39.980
You you can be brilliant or you can be terrible, you're both going to suffer the same fate.
00:25:40.220 --> 00:25:43.019
You know, it's yeah, it's it's interesting.
00:25:43.180 --> 00:25:52.139
You and I have talked about this that I believe every 20 years the number of people competing in a supply chain has reduced by 50 percent.
00:25:52.539 --> 00:25:59.740
So when I started in Canada in 1969, call it 1970, to today that's 55 years.
00:26:00.940 --> 00:26:03.900
In 1970, there were 10 caterpillar dealers.
00:26:04.059 --> 00:26:05.339
Today there's two.
00:26:06.059 --> 00:26:11.660
So if we look at 10 and we go out 20 years, from 70 to 90, we're down to five.
00:26:11.980 --> 00:26:16.460
From 90 to 10, uh 2010, we're down to two and a half.
00:26:17.180 --> 00:26:21.740
Well, we're at 2025, so I'm not really there, but I'm there.
00:26:21.980 --> 00:26:29.099
And I do the same thing with every 1985, there's a hundred dealers out there in mining.
00:26:29.339 --> 00:26:31.259
Let me tick one that's nasty.
00:26:31.420 --> 00:26:35.339
Today there's three Caterpillar, Kamatsu, and Hitachi.
00:26:35.420 --> 00:26:35.740
That's it.
00:26:35.819 --> 00:26:42.460
Nobody else in the big stuff, and then you come down on the size of the equipment.
00:26:42.539 --> 00:26:46.619
So we've got mining that that could be 30 million, 100 million for a tool.
00:26:46.859 --> 00:27:01.900
Now you come back to the large crowd, the the tractors run from say t D10 down to D6, and and that's Caterpillar, Kamatsu, Deer, Case, Volvo, a bunch of people.
00:27:02.059 --> 00:27:07.660
And then you go down again to the smaller, the compact, small underlying, whatever you want to call it.
00:27:07.740 --> 00:27:11.660
That's the bobcats and the gales and the kybodas and the mahendras and all the rest.
00:27:11.900 --> 00:27:14.700
And now we look at economics.
00:27:15.259 --> 00:27:38.299
So I got three in the major, I got maybe a hundred in the large, I might have five hundred in the mid-size, and the magic with five hundred is there's enough net income made by the five hundred as a group, but there's not enough net income made by any of them to sustain themselves.
00:27:39.420 --> 00:27:50.379
So people have not people have not brought business thinking to the same place that the market requires today.
00:27:51.259 --> 00:27:57.500
Business schools, Harvard, Yale, etc., they're still teaching the old stuff.
00:27:57.900 --> 00:28:02.619
Most of the financial VPs and and whatever we want, they're dealing with history.
00:28:02.859 --> 00:28:06.299
Looking at the report, one of your blogs, you say, how do we do?
00:28:06.379 --> 00:28:07.660
Do we get more or less?
00:28:07.900 --> 00:28:09.259
If we had more, everything's cool.
00:28:09.420 --> 00:28:10.859
If we had less, we had a discussion.
00:28:10.940 --> 00:28:12.299
We didn't realize what happened.
00:28:12.460 --> 00:28:13.099
It's too late.
00:28:13.180 --> 00:28:13.980
We can't change it.
00:28:14.059 --> 00:28:14.619
It's done.
00:28:14.779 --> 00:28:16.299
What are we doing proactively?
00:28:16.379 --> 00:28:18.700
What are we doing tomorrow to make a difference?
00:28:19.420 --> 00:28:21.420
And therein lies the rub.
00:28:21.579 --> 00:28:23.339
People don't know what to do.
00:28:24.539 --> 00:28:27.500
Google's now training everybody on AI.
00:28:28.139 --> 00:28:28.779
Google.
00:28:30.059 --> 00:28:31.660
What in the hell is that all about?
00:28:31.900 --> 00:28:33.339
Well, because they think.
00:28:34.139 --> 00:28:42.139
Google looks at their investments, 7% on the current business, 2% on improving things, 1% on a wild, whatever.
00:28:43.660 --> 00:28:45.180
We should all do that.
00:28:45.500 --> 00:28:47.900
Throw some money against something you have no idea about.
00:28:47.980 --> 00:28:53.819
Who's so I have a little project in consulting that I've done for years called Five Things.
00:28:53.900 --> 00:28:55.579
And I might have mentioned this to you.
00:28:55.900 --> 00:29:03.180
We get a department together, all the employees, one of our monthly meetings that are an hour and a half, and I have three questions.
00:29:03.740 --> 00:29:06.139
Everybody get your pad and your pencil.
00:29:06.379 --> 00:29:13.099
The first question is, What would you like to change about what you do that would make your job easier?
00:29:14.059 --> 00:29:17.819
Just write down as many as you can, but I want five things.
00:29:18.139 --> 00:29:19.420
Finished with that, terrific.
00:29:19.579 --> 00:29:23.579
Next question is What are five things you do that are a real pain in the ass?
00:29:24.299 --> 00:29:25.660
Just write it down.
00:29:25.900 --> 00:29:31.019
The next one is, what are five things that you'd like to do that would make the company a lot more money?
00:29:31.259 --> 00:29:32.460
Five things.
00:29:32.779 --> 00:29:39.579
And then we don't editorialize, we just take a list, put it up on a flip chart, or put it on a computer, and we got them all up there.
00:29:39.819 --> 00:29:40.940
Then we start grouping them.
00:29:41.019 --> 00:29:42.700
These are similar, blah, blah, blah.
00:29:42.940 --> 00:29:45.180
And we end up with the top five.
00:29:45.420 --> 00:29:50.379
Things that we would change to make your job easier, things that are a pain in the ass, things that would make more money.
00:29:50.460 --> 00:29:51.579
And guess what?
00:29:52.139 --> 00:29:55.099
Two or three of those are on all three less.
00:29:55.819 --> 00:29:59.980
And then I start, well, if it's a pain in the ass and it makes more money, it makes it easier.
00:30:00.059 --> 00:30:01.980
Why aren't you doing something about it?
00:30:02.779 --> 00:30:07.339
But then next month, I bring in five or six customers.
00:30:07.660 --> 00:30:15.259
Have the same people sitting in the audience, and I ask the five or six customers, what do you guys need or want from us?
00:30:15.900 --> 00:30:17.099
What do you need?
00:30:17.500 --> 00:30:19.180
And they make me lists.
00:30:21.500 --> 00:30:24.299
And then we compare that they go away, thank you very much.
00:30:24.379 --> 00:30:26.379
And we have questions and answers and all the rest.
00:30:26.539 --> 00:30:28.859
The following month, now it's been 60 days.
00:30:29.259 --> 00:30:33.980
I got, here's what the customer said, here's what we said, where's there a match?
00:30:34.619 --> 00:30:37.740
What are the things the customer wants that we don't even do?
00:30:40.379 --> 00:30:45.980
It's really simple if people stick their head up over the wall and ask the question.
00:30:46.299 --> 00:30:48.379
You don't think, how can I help you?
00:30:48.700 --> 00:30:50.379
Somebody walks in the door.
00:30:51.019 --> 00:30:51.900
Good to see you.
00:30:52.059 --> 00:30:53.099
Thanks for coming by.
00:30:53.259 --> 00:30:55.420
Anything in particular you're looking for?
00:30:56.139 --> 00:30:58.220
People have lost that ability.
00:30:59.740 --> 00:31:01.420
How do we get it back?
00:31:03.259 --> 00:31:08.379
Well, what's kind of cool is um I think people are opening up.
00:31:08.460 --> 00:31:15.420
I mean, through the power of AI, um, it is an industrial shift, as you say, you know, an industrial revolution.
00:31:15.579 --> 00:31:34.859
It's a great opportunity to radically uh reassess your cost structure and how you do things in the sense that I know even in our company, uh, even though we're fairly nimble, um, once you've made a decision and it's a year later and you have to memorialize it, it's it's a little bit of baggage.
00:31:35.019 --> 00:31:40.139
And so if a company has been around, we've been around a little bit north of two years now.
00:31:40.379 --> 00:31:50.299
Um if you have 30 years of those costs that are accrued, now is a perfect opportunity to reassess your cost structure.
00:31:50.779 --> 00:31:59.180
You if if the owner of the company can sit down with you, by example, and do simple math, right?
00:31:59.420 --> 00:32:07.339
If you can't write it down by hand, the simple math is how to turn your business into a sort of a predictive uh engine.
00:32:07.740 --> 00:32:10.379
And you just predict what you can predict, right?
00:32:10.940 --> 00:32:19.579
Control what you can control, and come up with your uh pro forma about how you right size your profitability.
00:32:21.019 --> 00:32:41.500
Fundamentally, what this is going to break down to is about 15 customers per market in a geography for a rental store, by example, a little larger for a dealer, let's say it's 45 per geography per store, since it serves a wider geography, would do about 62% of their business.
00:32:41.819 --> 00:32:46.220
If you can't name those accounts, um, but you can, so let's go with that.
00:32:46.379 --> 00:32:52.619
You must name those accounts and you must radically go after them as Conquest.
00:32:52.940 --> 00:32:55.420
And I would, you've and I have talked about this before.
00:32:55.660 --> 00:32:58.139
I would absolutely starve the machine.
00:32:58.379 --> 00:33:08.539
Anything else that is not directed at either those 15 accounts in the rental business or 60, approximately 60 accounts for a dealer's operation.
00:33:09.259 --> 00:33:15.819
Starve that machine and then put all of your incentives directed at converting those named accounts.
00:33:15.980 --> 00:33:17.660
Um, you must do that.
00:33:17.819 --> 00:33:19.259
You must do it now.
00:33:19.740 --> 00:33:27.900
If not, um the big rental company has ridiculous advantages, meaning they control the capex of the industry.
00:33:28.379 --> 00:33:35.579
They have market power, they also control the used equipment market through their disposals, meaning control, meaning they make the market.
00:33:35.819 --> 00:33:39.180
Um, so they have fundamentally shaped the outcome of the market.
00:33:39.740 --> 00:33:45.819
Then if you look at the ENR top 400 and data centers, electrification and energy, that's another 30%.
00:33:46.220 --> 00:33:50.299
If you don't move in that direction, you're essentially a turnaround.
00:33:50.460 --> 00:33:55.579
And as Charlie Munger says um or said, he doesn't do turnarounds.
00:33:55.819 --> 00:33:57.500
Turnarounds are tough.
00:33:57.740 --> 00:34:01.900
And in many instances, this industry classically has comorbidities.
00:34:02.059 --> 00:34:07.740
Comorbidities are really hard to treat because you have to triage each morbidity.
00:34:07.900 --> 00:34:10.139
It's hard, very hard.
00:34:10.380 --> 00:34:12.059
So, how do you get out of it?
00:34:12.300 --> 00:34:15.180
Stop the bad habit one at a time, right?
00:34:15.579 --> 00:34:21.019
Um I I wish I could be more elegant in my speech.
00:34:21.180 --> 00:34:25.660
Um, you call it a closed loop, close the loop, see what happens.
00:34:25.900 --> 00:34:30.699
If you can't write it down, if you can't name the 15 or the 60, don't do it.
00:34:31.099 --> 00:34:32.699
Um, don't open the doors.
00:34:32.860 --> 00:34:36.780
If your CRM is not serving you, get rid of it.
00:34:36.940 --> 00:34:51.900
Um if you're stuck with your dealer management system and despair of data, if you can't see the 60 that you're targeting per market, then build something on top of it until you can replace your DMS with something relevant.
00:34:51.980 --> 00:34:54.380
Uh look for industry solutions.
00:34:54.699 --> 00:35:03.900
Don't necessarily buy into the notion of uh slick sales propositions from an ERP or a DMS.
00:35:04.139 --> 00:35:07.579
Um that essentially is kind of a tax on your business.
00:35:07.820 --> 00:35:10.380
Now's the time more than ever to be more nimble.
00:35:10.940 --> 00:35:22.139
So it's it's um what I took computer science as a minor and learned how to wire unit wrecking equipment in the 60s.
00:35:22.380 --> 00:35:24.300
I was the computer in the day.
00:35:24.539 --> 00:35:25.659
I'm a dinosaur.
00:35:25.739 --> 00:35:30.219
You can't, I'm uh maybe they're in museums somewhere, but I don't know where those machines are.
00:35:30.460 --> 00:35:39.820
The other day talking with Matt Harris, and and what I heard at the time was the coders of today, this is the 60s, are the clerks of tomorrow.
00:35:40.059 --> 00:35:43.099
And Mack made the comment, he said, we don't need coders anymore.
00:35:43.179 --> 00:35:46.780
The computer can do its own coding with artificial intelligence.
00:35:47.179 --> 00:35:50.699
So we can spit out code like you wouldn't believe.
00:35:52.139 --> 00:36:04.380
And and so as we follow that, Lewis Kirstner, when he took over IBM, guy comes from the largest consulting company in the country, has his first meeting of with his executive team, there's 20 in the room.
00:36:05.500 --> 00:36:07.259
And he goes around one by one by one.
00:36:07.340 --> 00:36:09.659
He says, Who are your top three customers?
00:36:09.820 --> 00:36:10.699
To your point.
00:36:11.500 --> 00:36:12.300
They didn't know.
00:36:12.460 --> 00:36:15.019
He goes, two or three guys, meeting's over.
00:36:15.179 --> 00:36:19.900
He says, We're gonna meet next Friday, and I want to know who your top three customers are.
00:36:20.059 --> 00:36:21.099
They didn't know.
00:36:22.780 --> 00:36:28.940
So the meeting comes back, he gets the top three, has a brief discussion with each guy, meeting's over.
00:36:29.019 --> 00:36:30.380
What do you think he did next?
00:36:32.380 --> 00:36:38.059
Took the list of 60 customers and went and visited every one.
00:36:39.420 --> 00:36:40.539
Sat down and talked to them.
00:36:40.699 --> 00:36:41.420
What do you want from us?
00:36:41.500 --> 00:36:42.380
What do you need from us?
00:36:42.619 --> 00:36:45.579
Went back after 90 days.
00:36:46.059 --> 00:36:48.940
He'd done some planning, gets his group together.
00:36:49.259 --> 00:36:56.780
This is what we're doing for the we're this is what we, IBM, it's better manual, international business machines, are gonna do.
00:36:57.019 --> 00:36:58.139
Save the company.
00:37:00.539 --> 00:37:01.340
Amazing.
00:37:01.900 --> 00:37:02.860
And that's amazing.
00:37:03.340 --> 00:37:08.219
And that's at the time that many computers were starting.
00:37:08.380 --> 00:37:09.420
Tablets were starting.
00:37:09.500 --> 00:37:13.259
Well, tablets not yet, but you think about the large mainframes.
00:37:13.340 --> 00:37:17.900
We start from unit record to large mainframes that take up a whole room.
00:37:18.860 --> 00:37:24.139
They gotta have you read on gas and things to protect any event there's a a disaster.
00:37:24.940 --> 00:37:25.980
And now you got it.
00:37:26.139 --> 00:37:31.659
My laptops got more, my cell phones got more power than the computers I started with 50 years ago.
00:37:32.940 --> 00:37:33.980
It's amazing.
00:37:34.139 --> 00:37:36.860
And how many people know what the heller system does?
00:37:38.139 --> 00:37:40.619
That's the other side of the world.
00:37:41.259 --> 00:37:42.940
And I think you've heard me say this.
00:37:43.099 --> 00:37:47.900
I I wanna I I asked somebody, you know, what do you what do you do?
00:37:48.059 --> 00:37:50.139
Who dude who told you to do what you're doing?
00:37:50.380 --> 00:37:52.460
He says, Well, I I did.
00:37:52.539 --> 00:37:55.500
I figured out what's the best way to do this job.
00:37:55.739 --> 00:37:57.739
I said, What do you mean the best way?
00:37:58.699 --> 00:38:03.099
And when you get down to it, it's the way that it's easiest for them to do.
00:38:03.579 --> 00:38:06.940
It has no bearing whatsoever on what that job should be.
00:38:08.219 --> 00:38:12.780
Somebody calls up today and they want a price and availability, and they're just checking.
00:38:12.940 --> 00:38:14.059
They hang up the phone and go away.
00:38:14.219 --> 00:38:15.500
Tomorrow I want somebody to call them.
00:38:15.579 --> 00:38:16.699
Do you think they do that today?
00:38:16.860 --> 00:38:17.659
Hell no.
00:38:20.619 --> 00:38:30.860
There's so many fundamental things, basic blocking and tackling, not difficult that we gotta do, but we gotta get people to want to do it.
00:38:33.019 --> 00:38:34.780
Well, you can start, you know.
00:38:34.860 --> 00:38:41.099
I I mean, I I've always learned I always learn from you in each and every conversation, either actively or passively.
00:38:41.179 --> 00:38:43.820
Sometimes it takes me a little while to catch up to you.
00:38:44.380 --> 00:38:46.300
Don't don't don't don't do that.
00:38:46.460 --> 00:38:48.699
Save your lift your left arm, save your watch.
00:38:48.780 --> 00:38:50.539
It's getting pretty deep in here.
00:38:51.420 --> 00:38:54.300
Well, actually it's true, but uh Yeah, okay.
00:38:54.380 --> 00:38:55.179
I appreciate it.
00:38:55.579 --> 00:38:57.259
You know, it doesn't sound true, right?
00:38:57.340 --> 00:38:59.820
Is it there's a core notion there, Ron.
00:39:00.219 --> 00:39:02.380
I mean that from the bottom of my heart.
00:39:02.539 --> 00:39:05.900
And when you recognize excellence, sure, put your earmuffs on.
00:39:06.059 --> 00:39:12.619
And I see it in everything you do and how you live and how you interact with me and countless other lives that you've touched.
00:39:12.940 --> 00:39:20.219
If you take that same discipline and you apply that to your enterprise, how can you change?
00:39:20.460 --> 00:39:21.099
Right.
00:39:21.659 --> 00:39:23.420
Find the good people, right?
00:39:23.659 --> 00:39:24.780
It's it's you.
00:39:24.940 --> 00:39:28.139
It's in Bill Gurley's book, you know, running down a dream.
00:39:29.420 --> 00:39:34.139
Make a defined list of outcomes of what you're trying to achieve and learn from them.
00:39:34.539 --> 00:39:38.219
Um, if it's your customer, learn from them, right?
00:39:38.619 --> 00:39:41.420
Distill your business down to the essence.
00:39:41.739 --> 00:39:47.019
And you're gonna, if you don't do that, you're gonna end up being a turnaround.
00:39:47.099 --> 00:39:50.380
And turnarounds end up being uh pain, right?
00:39:50.539 --> 00:39:52.059
Somebody's just gonna take a loss.
00:39:52.139 --> 00:39:53.420
There's no question, right?
00:39:53.579 --> 00:39:55.579
It doesn't just turn around, right?
00:39:55.820 --> 00:40:01.099
It becomes truly lost money, lost jobs, lost whatever.
00:40:01.259 --> 00:40:02.699
How does an OEM change?
00:40:02.860 --> 00:40:04.699
Start by redoing your co-op program.
00:40:04.780 --> 00:40:05.820
Start today.
00:40:06.139 --> 00:40:12.139
Don't make it sort of you want your dealers to use your co-op program, but re-engineer it.
00:40:12.219 --> 00:40:19.739
It's built on an anachronism that said, if you spend 50 cents on this, we'll we'll match you 50 cents on the dollar, right?
00:40:20.139 --> 00:40:27.820
Redo that, turn that into your little mini venture capital fund and make it a customer bogey on named accounts.
00:40:28.059 --> 00:40:31.340
So if you market to these customers, there's a bogey.
00:40:31.579 --> 00:40:33.820
If you sell to these customers, there's a bogey.
00:40:33.980 --> 00:40:36.619
When you complete a successful sale, there's a bogey.
00:40:36.780 --> 00:40:50.539
I would cancel the co-op program and reorient it 100% times the um 10, 11% of customers that would do 60% or 3% of the customers that will do 62% of the business.
00:40:50.699 --> 00:40:51.980
Start there, right?
00:40:52.300 --> 00:40:53.820
Don't spray and prey.
00:40:53.980 --> 00:40:56.780
Conserve your capital, wipe out your co-op program.
00:40:56.940 --> 00:41:04.460
You can still keep your uh large brand fund to go, you know, advertise in the market and sustain your brand.
00:41:04.619 --> 00:41:06.380
Start there, small change.
00:41:07.019 --> 00:41:14.699
If you're uh a dealer principal and you you sell and you rent, you do product support, do the same thing.
00:41:15.420 --> 00:41:19.259
Conserve your capital because your cost of sales is actually quite high.
00:41:19.420 --> 00:41:32.380
You may be paying somebody a pittance, but when you factor in uh a truck, a computer, the systems that support them, the subscriptions to UCC data and other data, you're looking at a quarter million dollars fully loaded.
00:41:32.539 --> 00:41:34.300
That's 125 bucks an hour.
00:41:34.460 --> 00:41:37.659
Every sales call costs 125 bucks.
00:41:37.980 --> 00:41:43.420
Narrow that down and establish incentives for targeting those 10.
00:41:43.900 --> 00:41:46.780
Um when you contact it, there's an incentive.
00:41:46.940 --> 00:41:49.259
When you close them, there's a double incentive.
00:41:49.579 --> 00:41:51.739
Starve the rest of the machine.
00:41:51.980 --> 00:41:56.300
Um, must start with small actions that will have a disproportionate impact.
00:41:56.460 --> 00:42:00.380
And that's how you can begin to correct the comorbidities.
00:42:01.019 --> 00:42:05.659
Um I wish I had more insight.
00:42:05.980 --> 00:42:08.460
No, no, it's it's it's it's perfect.
00:42:09.340 --> 00:42:12.219
The again, the numbers.
00:42:16.860 --> 00:42:26.460
Give give a a store 125 bucks a call.
00:42:26.780 --> 00:42:29.340
How many calls can I make in a day?
00:42:29.659 --> 00:42:35.900
Well, sales management about 10-15 years ago decided that CRM was the answer to their maiden dreams.
00:42:36.380 --> 00:42:39.980
So I'm gonna know exactly how many calls my salesman makes.
00:42:40.219 --> 00:42:49.500
And then I can get on their case because George does 10 calls on average a week, a month, a day, whatever the number is, and he gets two closes.
00:42:49.739 --> 00:42:51.820
Henry does five and he gets one.
00:42:51.980 --> 00:42:53.980
Now, which one of those two is better?
00:42:54.219 --> 00:43:01.019
Now we can start having those discussions about who's the better salesman, has no bearing on who's the better salesman, it's just who's got the numbers.
00:43:01.179 --> 00:43:11.340
Jim Surbrodby, who does the automotive side for us in a in a blog, just we're publishing a blog in the next week or so from him that says it's the numbers.
00:43:12.380 --> 00:43:15.099
And we've all been focused on numbers.
00:43:16.139 --> 00:43:18.139
What'd you make last week?
00:43:18.860 --> 00:43:20.460
How much was that work order?
00:43:20.619 --> 00:43:25.980
And then he starts so he he takes over a company and he he's interviewing all the people.
00:43:26.059 --> 00:43:31.820
And and you're right, turnarounds are a really difficult thing if they're possible, and you know why?
00:43:32.139 --> 00:43:34.380
It's the fundamental change.
00:43:35.659 --> 00:43:38.300
If you don't turn it around, it's going to fail again.
00:43:38.460 --> 00:43:42.059
The reason it failed is because how they did things was wrong.
00:43:42.380 --> 00:43:45.980
So it creates an opportunity for me, the buyer, to make it right.
00:43:46.139 --> 00:43:47.259
What's the right thing to do?
00:43:47.420 --> 00:43:49.659
Drop a bomb, blow it up, and start over.
00:43:49.820 --> 00:43:50.940
It's easier.
00:43:51.820 --> 00:43:53.179
Pretty much, yeah.
00:43:53.500 --> 00:43:54.460
And it's no question.
00:43:54.539 --> 00:44:01.259
I had a guy go off on vacation and tell me, Ron, I want you to come in run this place for the next six months.
00:44:02.460 --> 00:44:05.980
And he said, You can do whatever you think is necessary.
00:44:06.300 --> 00:44:13.659
So he goes away, I do that, he comes back, everything's good, company's on its feet, I leave.
00:44:14.699 --> 00:44:18.780
He calls me after every day for the first week, he says, They can't.
00:44:19.099 --> 00:44:21.259
I can't believe what you did.
00:44:22.460 --> 00:44:23.179
What did he do?
00:44:23.259 --> 00:44:24.139
What did he do that?
00:44:24.300 --> 00:44:24.619
Really?
00:44:24.780 --> 00:44:25.980
Did you know he was going to do that?
00:44:26.139 --> 00:44:27.179
No, I didn't know that.
00:44:27.739 --> 00:44:28.699
How'd it work?
00:44:28.860 --> 00:44:30.460
Oh, Jesus, it was real pain.
00:44:30.619 --> 00:44:35.019
Every single day they said he called me, said, you know, I could never have done that.
00:44:35.259 --> 00:44:36.380
It had to be you.
00:44:36.539 --> 00:44:38.300
It had to be an outsider.
00:44:39.259 --> 00:44:41.659
Because they would have made me feel bad.
00:44:41.980 --> 00:44:45.179
Or they would have argued effectively.
00:44:45.340 --> 00:44:47.340
They would have talked me out of it.
00:44:47.739 --> 00:44:50.219
Think about Charlie Munger and his lattice work.
00:44:50.300 --> 00:44:54.300
You know, it's it's very simple things normally.
00:44:55.579 --> 00:45:05.820
Well, if you cut cut it through on the call it the monger, it you know, it as you espouse, the power of incentives is vast.
00:45:05.900 --> 00:45:07.900
And it's vast in a number of ways.
00:45:08.059 --> 00:45:10.059
It cuts through a lot of opinion, right?
00:45:10.300 --> 00:45:12.780
And you can say, well, data cuts through opinion.
00:45:12.860 --> 00:45:17.019
And you know, it's is it my data, is it UCC data, is it built data's data, right?
00:45:17.099 --> 00:45:18.619
Whose data set is smarter?
00:45:18.860 --> 00:45:25.659
We're not necessarily seeking to be smarter, but one thing that can cause organizations to work together is the power of incentives.
00:45:25.980 --> 00:45:40.300
And if you can reallocate, form your own venture capital unit inside your company, inside your manufacturing organization, create uh a pool of money by wiping out some programs like co-op, right?
00:45:40.460 --> 00:45:40.940
Get rid of it.
00:45:41.019 --> 00:45:42.300
It's not serving you.
00:45:42.619 --> 00:45:52.539
Um, think it with put some money off to the side and try and co-investing through the power of incentive.
00:45:52.699 --> 00:45:59.579
So, you know, if you look at Buffett pre-munger, as the folklore goes, Buffett would look to buy the cigar butts, right?
00:45:59.659 --> 00:46:04.380
He looked to buy a, you know, an okay company at a great price, right?
00:46:04.460 --> 00:46:06.059
A deep, deep value discount.
00:46:06.219 --> 00:46:07.900
He'd like to buy a deal, right?
00:46:08.059 --> 00:46:14.219
And Munger changed his philosophy to buy a great company at a fair price, right?
00:46:14.699 --> 00:46:16.619
And very, very different.
00:46:16.780 --> 00:46:23.099
What the distinguishing factor is one was kind of financial engineering, which was the old buffet.
00:46:23.340 --> 00:46:32.139
The new buffet with Munger was more about uh sustain sustainable, predictable profitability, right?
00:46:32.300 --> 00:46:33.900
That's continually going to grow.
00:46:34.139 --> 00:46:41.579
One thing you know for sure, the same 15 or 60 customers per market will sustain and grow.
00:46:41.739 --> 00:46:42.940
It's a fact.
00:46:43.259 --> 00:46:53.820
So why not align your incentives to focus and you've secured 60% or more of your company's profitability, and you can begin to work yourself up the chain from there.
00:46:54.059 --> 00:46:55.980
Um you have to do it.
00:46:56.139 --> 00:47:02.059
And it you should, somebody should take great solace in that because you can actually see it, right?
00:47:02.219 --> 00:47:04.059
It's not couched in opinion.
00:47:04.219 --> 00:47:10.699
It's not counting somebody going and doing uh extensive financial analysis or data analysis.
00:47:10.780 --> 00:47:13.420
You actually don't need business intelligence to do it.
00:47:13.659 --> 00:47:15.659
You just need the discipline.
00:47:15.980 --> 00:47:22.219
And uh we just recently launched a client and we put in a limited amount of data.
00:47:22.460 --> 00:47:28.460
One of the remarks that came across is, well, I was a little disappointed by the volume of data in the system, right?
00:47:30.219 --> 00:47:37.500
Because they were used to a bunch of, in my opinion, to and say that to the client, a bunch of fucking nonsense, right?
00:47:37.900 --> 00:47:41.259
Um, that makes it look like it's plunk, right?
00:47:41.420 --> 00:47:42.539
That it's not, right?
00:47:42.780 --> 00:47:47.900
You you have to distill it down to the highest quality inputs and make it work.
00:47:48.380 --> 00:47:51.099
Um, you have no choice today.
00:47:51.739 --> 00:48:02.539
The beautiful thing about what you're saying there is I can identify in every one of the operating departments, parts, labor, rental, machines, new and new.
00:48:02.780 --> 00:48:06.059
So I got six different categories.
00:48:06.460 --> 00:48:17.980
I can identify the top 10 or the top 20 names, accounts, and what percentage they represent of the total in cash.
00:48:19.739 --> 00:48:24.940
So I know what the contribution of cash is to my ult overall enterprise.
00:48:25.659 --> 00:48:39.340
And frankly, I'll go down as deep in the number of customers as is required to come up with the amount of cash that they spend that's equal to or greater than the total expense that I operate in that company.
00:48:39.900 --> 00:48:44.380
Anything other than that, I I'm I'm gonna leave to chapter two.
00:48:44.940 --> 00:48:52.300
Chapter one with them is I want to make sure I get all of their business all of the time forever, and I never lose one of them.
00:48:52.619 --> 00:48:53.259
Ever.
00:48:56.460 --> 00:49:00.860
Then chapter two, who are the guys that underperform?
00:49:01.500 --> 00:49:10.619
Now, if you think about it, I know based on the rental fleet, what the consumption of parts and labor is per operating hour of a machine.
00:49:11.579 --> 00:49:19.019
So then I want to take that statistic and I want to look at the guys that buy machines and I want to look at what their consumption is for operating hour.
00:49:19.179 --> 00:49:22.059
If it's close to what the rental company is, same thing.
00:49:22.219 --> 00:49:25.019
I want to go make love to those guys and never want to lose them.
00:49:25.739 --> 00:49:28.460
If it isn't, who's the underperformers?
00:49:28.619 --> 00:49:34.300
Now I can identify who my prospects need to be, which is what you're talking about.
00:49:35.259 --> 00:49:38.619
I know who's going to buy next month, period.
00:49:39.019 --> 00:49:42.780
Based on what the operating cost is on that machine from birth to death.
00:49:42.940 --> 00:49:49.019
I've got life cycle analysis, I've got GPS, I know many hours, I know what they bought, I've got all that data.
00:49:49.340 --> 00:49:50.219
Use it.
00:49:51.179 --> 00:49:55.019
But chief information officers, etc., incentives.
00:49:55.420 --> 00:50:01.659
I don't know if maybe it's not the right approach, but landman, a a TV series.
00:50:02.539 --> 00:50:09.019
The very last episode, they own uh an oil company first time.
00:50:09.900 --> 00:50:20.380
And one of the first things the guy says, who's Billy Bob Thornton's the main guy, and he says, Okay, we're gonna take the company, the first 25% of the revenue, we're gonna put it in a pool, we're gonna share it with every employee.
00:50:20.619 --> 00:50:22.300
There's the incentive.
00:50:22.539 --> 00:50:23.179
Yeah.
00:50:24.300 --> 00:50:29.340
So there's a guy by the name of Jim Patterson at the largest car dealership in Canada.
00:50:29.420 --> 00:50:30.539
I mentioned them to you.
00:50:30.699 --> 00:50:35.259
Whoever was the least successful salesman every month lost their job.
00:50:35.659 --> 00:50:38.940
That's a different form of incentive, you know.
00:50:39.420 --> 00:50:43.900
Make a sale, or and and now what that did, that that did not create teamwork.
00:50:43.980 --> 00:50:46.219
That created a bunch of guys that killed each other.
00:50:47.820 --> 00:50:49.980
So you gotta be smart in how you do it.
00:50:50.219 --> 00:50:51.820
So we've got the data.
00:50:52.619 --> 00:50:54.380
You've got the tools.
00:50:56.059 --> 00:51:00.139
We gotta get you selling more to more people so that you can influence more.
00:51:00.380 --> 00:51:03.579
We gotta make it easier for people to understand what you do.
00:51:05.820 --> 00:51:08.059
How do you calculate market share?
00:51:09.019 --> 00:51:10.460
Well, you inspired us.
00:51:10.619 --> 00:51:14.619
I I know you don't like hearing that, so you probably uh just I'm gonna put your earmuffs on.
00:51:14.780 --> 00:51:19.659
You inspired us to um to map market share for the entire country.
00:51:19.900 --> 00:51:22.380
And I call it layers of common sense.
00:51:22.460 --> 00:51:24.219
And I I'll tell you a funny story.
00:51:24.460 --> 00:51:42.219
I was in uh San Jose this past weekend with uh one of our couple of our advisory board members, and Venke's wife works for the uh the company that produces the maps for companies like uh Apple and Google.
00:51:42.380 --> 00:51:47.579
And I don't know about you, I have not thought of the map before when I look at it in my car.
00:51:47.739 --> 00:51:49.099
It just works, right?
00:51:49.259 --> 00:51:50.380
It's awesome, right?
00:51:50.460 --> 00:51:58.460
I it's so awesome, I don't even think about it until I'm sitting there over dinner at this wonderful home cooked Indian meal.
00:51:58.860 --> 00:52:08.380
And um his wife, uh Artie, was explaining to me about all of the nuances of a map and all of the layers of the map.
00:52:08.460 --> 00:52:16.139
And it's so specialized in all the things that I take for granted when Waze works or the map works in my car or whatever.
00:52:16.219 --> 00:52:19.259
There's many good mapping programs, the amount of expense.
00:52:19.340 --> 00:52:20.780
I'm like, why would they outsource it?
00:52:21.099 --> 00:52:25.980
She's like, it's it's a freaking business in itself to keep those maps up to date.
00:52:26.139 --> 00:52:27.739
One is you have to map everything.
00:52:27.980 --> 00:52:29.579
Now you got to keep it up to date.
00:52:29.820 --> 00:52:38.699
So, with thanks to you, you inspired uh our data team, uh, as you say, data scientists, to build the layers of the map.
00:52:38.860 --> 00:52:41.820
So we understand the economic output across the country.
00:52:41.980 --> 00:52:45.179
We understand uh where those machines are consumed.
00:52:45.500 --> 00:52:54.780
We understand um, in some cases, specifically, in some cases, we have to impute it, is the market share by brand.
00:52:55.179 --> 00:53:10.860
Um ultimately, what we're trying to do is direct a few amounts of clients to take advantage of market hotspots and take advantage of companies and competitors that are confused by this whole subject that you and I have been talking about.
00:53:11.099 --> 00:53:22.619
Um where somebody is confused and misapplying capital, our clients can direct bigger guns, bigger incentives to accomplish their goals.
00:53:22.940 --> 00:53:28.780
And what that's gonna do over time is um little micro disruptions, right?
00:53:29.019 --> 00:53:42.619
Hate to put it in those terms, but it's fix your business one customer at a time, secure the 15 if you're a rental store, secure the 60 if you're a dealer per store, and you've turned your business around before you know it.
00:53:42.780 --> 00:53:45.420
It's not a three-year initiative, it can be done in months.
00:53:45.579 --> 00:53:49.259
So it's it's really intriguing because you know, the same kind of thing.
00:53:49.420 --> 00:53:53.659
The distribution model mapping is a good illustration.
00:53:54.300 --> 00:53:59.820
The dealer I started with in Quebec was created in 1952.
00:54:00.300 --> 00:54:03.500
Three brothers bought it.
00:54:03.900 --> 00:54:11.019
And the guy that came down to run it, Bob Hewitt, used to be the vice president of sales and marketing for the Caterpillar dealer in Ontario.
00:54:12.860 --> 00:54:17.259
And we had a facility in Quebec City that we inherited.
00:54:18.699 --> 00:54:23.019
And then I'm there and I redid all of their distribution centers.
00:54:23.659 --> 00:54:32.860
So we we we put designed the thing in the right location for transportation for customers and all the rest of the stuff, but we moved out of the old location.
00:54:34.300 --> 00:54:41.500
We found a basement that had parts that were rusted to the concrete floor.
00:54:42.539 --> 00:54:44.219
Nobody knew it was down there.
00:54:45.179 --> 00:54:47.500
And that's the trouble with data.
00:54:49.980 --> 00:54:54.780
You you've got wonderful situations.
00:54:55.099 --> 00:54:59.500
So what's the most important thing about market share?
00:55:00.699 --> 00:55:06.380
And what's going to be really interesting is, and this is survey data going back for 50 years, there's an interesting statement.
00:55:06.539 --> 00:55:17.820
IBM, excuse me, Caterpillar, used to interview face-to-face every single customer every five years up until 1965.
00:55:19.019 --> 00:55:28.380
They had a caterpillar employee talk with face to face in person, everybody who owned a caterpillar machine everywhere in the world.
00:55:45.659 --> 00:55:46.940
He said, What are you talking about?
00:55:47.099 --> 00:55:54.300
I said, Well, you get up close and personal, you can make very definitive decisions if you do it every five years, 100%.
00:55:54.860 --> 00:55:59.980
Are you telling me you're going to have the same quality of decisions if you do 20% every year?
00:56:00.780 --> 00:56:01.980
He said, Yes.
00:56:02.300 --> 00:56:03.099
I said, Okay.
00:56:03.659 --> 00:56:08.860
He then went over and ran Europe, which is all of Europe and the Middle East and Africa.
00:56:09.179 --> 00:56:10.460
EMEA today.
00:56:10.539 --> 00:56:13.179
It's called Europe, Middle East, and Africa.
00:56:13.659 --> 00:56:17.659
And he called me, I thought this is a long time ago.
00:56:17.739 --> 00:56:21.579
He called me, he says, you know, that 20% stuff doesn't work over here.
00:56:21.739 --> 00:56:22.619
I said, Oh, really?
00:56:22.699 --> 00:56:23.820
Why is that true?
00:56:24.139 --> 00:56:27.500
He said, bigger orders, bigger dealers.
00:56:27.659 --> 00:56:29.739
There's a thousand machines in Saudi Arabia.
00:56:29.820 --> 00:56:30.780
This is 1970.
00:56:30.860 --> 00:56:32.780
That's a lot of machines for one country.
00:56:33.099 --> 00:56:37.259
Find any dealer who's got a thousand machines today, you got a really big dealer.
00:56:37.579 --> 00:56:39.099
I said, Well, why is that a problem?
00:56:39.259 --> 00:56:41.980
He said, Well, we didn't have enough technicians to look after them.
00:56:42.219 --> 00:56:43.820
I said, Oh, how's that show itself?
00:56:43.980 --> 00:56:46.860
Well, you see a lot of tractors on the side of the road dead.
00:56:47.579 --> 00:56:50.940
Because there isn't enough technicians to come out and make the repair.
00:56:51.099 --> 00:56:54.460
So you buy a new machine, they had so much money, it didn't matter.
00:56:54.860 --> 00:56:57.179
Every market is different.
00:56:57.500 --> 00:56:59.420
Every county is different.
00:56:59.659 --> 00:57:07.820
So the major differentiator in market share from my perspective is how far the customer location is from the supply point.
00:57:08.860 --> 00:57:12.139
The further, the lower, the closer, the higher.
00:57:12.460 --> 00:57:13.659
Market share.
00:57:14.860 --> 00:57:17.420
Life is pretty simple in many respects.
00:57:17.579 --> 00:57:19.900
So take a brand, what's your market share?
00:57:20.059 --> 00:57:21.980
Take a salesman, what's your market share?
00:57:22.059 --> 00:57:23.739
Take a store, what's your market share?
00:57:23.820 --> 00:57:25.980
Take a department, what's your market share?
00:57:26.219 --> 00:57:30.139
In parts and service, we haven't had a good tool to measure market share.
00:57:30.780 --> 00:57:32.059
We do now.
00:57:33.019 --> 00:57:33.579
Yeah.
00:57:33.980 --> 00:57:37.900
It's interesting because, you know, in life, specificity builds trust.
00:57:38.059 --> 00:57:39.579
And correct.
00:57:39.980 --> 00:57:49.099
And if you uh I've learned some of the worst decisions I've made in my life is when I've sort of allowed myself to be confused, whether personally or professionally.
00:57:49.259 --> 00:57:53.179
And they were very, very expensive, whether it was personal or professional.
00:57:53.420 --> 00:57:57.500
And usually couched in somebody's lack of specificity was a lie.
00:57:57.659 --> 00:57:57.980
Okay.
00:57:58.699 --> 00:58:06.460
And that lie can be some people can play around with the definition of is it a white lie, right, or a black lie, right?
00:58:06.699 --> 00:58:10.300
Or but it's still a lie, it's deception.
00:58:10.780 --> 00:58:19.659
And the the owners of these companies and the and the families who are share, in essence, shareholders of their businesses.
00:58:19.739 --> 00:58:22.699
And if they have investors, then of course it's more traditional.
00:58:23.019 --> 00:58:26.539
Specificity will build trust, it will build happier lives.
00:58:26.699 --> 00:58:28.059
We're not here for long.
00:58:28.460 --> 00:58:36.460
Um focus in on a small, distill this data down and align the incentives.
00:58:36.699 --> 00:58:40.460
Um talk to you, right?
00:58:40.699 --> 00:58:43.179
Um for clarity in the process.
00:58:43.659 --> 00:58:54.059
If you're a OEM or a dealer and you're buying back your distribution, so you don't end up recapitalizing those operations, realign those incentives today.
00:58:54.300 --> 00:59:19.179
If you have to do that by cutting things like co-op programs or ripping out CRM systems or systems and processes that no longer serve you, you must do it to form this little venture capital firm to align the incentives to focus in on the 3% of customers that would do 62% of your business, or the 11% that will do 83%.
00:59:19.659 --> 00:59:24.300
And look for new technology that can allow you to jump the curve.
00:59:24.460 --> 00:59:28.699
If it feels too heavy to move, uh, usually it's designed that way.
00:59:28.940 --> 00:59:29.579
You know.
00:59:29.900 --> 00:59:34.380
So that's a perfect way to wrap this discussion.
00:59:34.619 --> 00:59:42.539
You gave people things to do, pretty simple, but it's all about reinventing everything we're doing.
00:59:42.780 --> 00:59:48.860
And it's all based on data, and that's still my concern because I don't like the quality of our data yet.
00:59:49.099 --> 00:59:50.699
It's still noisy.
00:59:51.099 --> 00:59:54.139
And and I'll I'll take the error.
00:59:54.940 --> 00:59:59.340
And I I'm, you know, what you're talking about is the Poisson distribution curve.
00:59:59.420 --> 01:00:02.780
If you can give me six percent of the companies, it'll give me 80% of the business.
01:00:02.860 --> 01:00:04.219
I'm I'm all in, man.
01:00:05.019 --> 01:00:08.380
If it's 80-20, I'll I'll still do that.
01:00:09.019 --> 01:00:14.219
But that tail takes too much time from too many people, and it doesn't give you any results.
01:00:14.460 --> 01:00:17.739
And and that's that's the message I want to give to people.
01:00:17.980 --> 01:00:20.780
Reinvent your business, have a look at it critically.
01:00:21.099 --> 01:00:25.259
Look for your biggest customers and pay attention, never lose them.
01:00:25.659 --> 01:00:28.300
So, on that, Nick, I want to thank you for the time.
01:00:28.380 --> 01:00:29.099
It was wonderful.
01:00:29.179 --> 01:00:33.259
I think I hope that you got a whole bunch of people thinking.
01:00:33.340 --> 01:00:37.739
And those of you out there that have been listening to us this whole time, thank you very much.