Full Transcript for Roundtable - How Data-Driven Decision-Making Maximizes Rooftop Profitability

measuring their team by the metrics, but also if they're good in variable, if they're good in fixed ops, if they're you know, if they've gone out and just had an expense explosion, um, or or are they hiding some of their expenses as well. 00:04:59.439 --> 00:05:10.240 You know, for some people they they want to make the the bottom line look great, but then they're sacrificing some of the integrity of uh what other dealers will measure themselves by. 00:05:10.399 --> 00:05:14.079 You know, one of the big areas is in rent factor, right? 00:05:14.399 --> 00:05:26.720 So you'll have some folks that will own a dealership, it's a 15, 16, 20 million dollar you know, piece of real estate, and they're only charging themselves twenty thousand dollars a month in rent. 00:05:27.680 --> 00:05:41.120 Well, well, apples to apples, and we compare them, well, you're gonna have to suck off of that statement another, you know, sixty to a hundred thousand dollars, depending on how large and that's per month, right? 00:05:41.199 --> 00:05:45.839 And it depends on how large or how expensive that real estate is, right? 00:05:46.000 --> 00:05:50.079 So I think you said it to me a long time ago. 00:05:50.319 --> 00:05:56.160 Show me show me how to uh score and I'll show me how to keep score and I'll teach you how to win. 00:05:57.439 --> 00:06:00.319 So yeah, show me how to keep score and I'll teach you how to win. 00:06:00.480 --> 00:06:05.920 So that's kind of like you see that a lot when you look at different uh operating statements. 00:06:06.079 --> 00:06:13.839 Um and when you look at a lot of different operating statements for the same brand, you get to see some of the idiosyncrasies of each one of the operators. 00:06:14.000 --> 00:06:17.600 Some people will want to put the money all up top to operational growth. 00:06:17.839 --> 00:06:22.959 Some people like to put all the money towards their net ads and deductions. 00:06:23.199 --> 00:06:33.120 Some people will take, you know, uh their reimbursements for floor plan or for advertising and post that same data into net ads. 00:06:33.600 --> 00:06:38.879 So everybody has, you know, a set of principles to follow. 00:06:38.959 --> 00:06:44.160 And I think revenue on an operating statement is probably the one that you can't you can't really trick. 00:06:44.480 --> 00:06:47.040 So revenue is probably the biggest one. 00:06:47.199 --> 00:06:55.199 Uh, if you have a store that can generate a lot of revenue, then you can put a better operator in there and they might be able to pull the efficiency out of it. 00:06:55.279 --> 00:07:06.800 And I'm what I would tell to a lot of the dealer principals owners when they're going to market, that's kind of the differentiator between you and uh another Chevy store that's right down the road. 00:07:06.879 --> 00:07:12.879 You know, if you're at$15 million in annualized revenue and they're at 50, well, guess what? 00:07:13.439 --> 00:07:16.720 The 15 ones are not going to be worth a lot less than the 50. 00:07:16.800 --> 00:07:18.399 You can't hide behind that data, right? 00:07:18.560 --> 00:07:26.959 Even if you're a great operator and you can finagle the rent factor and you can move the money from the top to the bottom, at the end of the day, the revenue is what the revenue is. 00:07:27.279 --> 00:07:27.360 Yeah. 00:07:27.439 --> 00:07:33.040 And I think ultimately when you have the context, I mean that that's kind of a double-edged sword. 00:07:33.120 --> 00:07:47.439 And I think that's on your side, Prasad, for with with Axel, is like when you see everything as a trend and you see it as percentages of your grosses, you see it as percentages of your operating, like you you really you can't hide from that. 00:07:47.519 --> 00:07:54.480 And it it it demystifies some of the process and the anti-transparency that happens with some of these transactions. 00:07:54.720 --> 00:07:55.600 Yeah, definitely. 00:07:55.680 --> 00:07:59.600 I think as you were saying, the revenue number is revenue number. 00:07:59.759 --> 00:08:05.519 So some of the reports users keep asking, can you show a percentage of GP on every c every row? 00:08:06.000 --> 00:08:09.040 Like, why do you want to see that as a percentage of GP? 00:08:09.839 --> 00:08:14.000 You're looking at, okay, this is 5%, 2% of my expenses. 00:08:14.319 --> 00:08:24.160 So that's when I realized you can look at a lot of numbers, but the ones you get really gravitated, you know, as an operator which numbers are what your percentage should be. 00:08:24.480 --> 00:08:26.480 So I talked to somebody who said, Oh, this gotta be 27%. 00:08:26.720 --> 00:08:33.919 I'm like, oh my god, I don't even know how they actually have that word in their mind to look at that exact numbers. 00:08:34.399 --> 00:08:53.120 So we had to build a lot of trending reports over 12 months, expense trend, paying uh expenses by vendor, because you're saying that you know hiding stuff here and there, and you're also looking at hey, somebody sneaking in their annual maintenance contract this month without even you noticing. 00:08:53.360 --> 00:08:53.600 Right? 00:08:53.679 --> 00:09:02.799 So, unless you have some kind of guidelines to say, show me whenever I'm paying 5% more on any line, then you can't hide from it and you expose that. 00:09:03.120 --> 00:09:05.519 That's usually the controllers' issue. 00:09:06.799 --> 00:09:13.600 And uh that that creates the my next question to you, Frank, is that how often do you see numbers contradict management story? 00:09:13.759 --> 00:09:22.720 Like how often and how do you fix that delta, navigating the complexities of telling, you know, if you're buying a store saying, hey, the data's not showing what you're telling me. 00:09:23.200 --> 00:09:26.879 Realistically, that's that's where you're you see that more often than not. 00:09:27.120 --> 00:09:28.879 Um see a lot of different things. 00:09:29.039 --> 00:09:37.679 Along the lines you were talking about earlier,

Gino, as far as like expenses and different things like that, it's also evaluating the balance sheet, what's in their prepaid expenses, right? 00:09:37.919 --> 00:09:47.279 You see a reasonable expense trend, and then you go through the balance sheet, you realize there's debit and an accrual account, uh significant amount of prepaids. 00:09:47.919 --> 00:09:55.440 There's a lot of things that get that could get moved around in the balance sheet that ends up becoming the 13th month or your end expenses. 00:09:55.759 --> 00:10:00.399 And those are items that really, as anyone's evaluating a dealership, you really have to evaluate. 00:10:00.559 --> 00:10:06.159 You really want to dive into those things in due diligence to make sure that you're accurately looking at what's happening in a dealership. 00:10:07.039 --> 00:10:12.399 To the point, one thing you can't really fudge, for lack of a better way of putting it, is revenue. 00:10:12.720 --> 00:10:16.720 Because every time you look at a dealership, everyone has their own expense structures, right? 00:10:17.200 --> 00:10:25.120 Management fees, certain ways they pay, whether general managers, operating managers, uh advisors, everyone has their own type of structure. 00:10:25.679 --> 00:10:38.399 But really, you're taking the revenue backing into how your tax and and uh overall the deal structure works, and then your expense structure to derive exactly whether it's worth the price you're paying or not. 00:10:39.039 --> 00:10:49.600 And you know, within an operation too, the one thing that we did, I thought we did a very good job of working with our dealerships was that Gino used to say it best you're on Front Street. 00:10:51.120 --> 00:10:52.960 The first couple meetings were a little rough. 00:10:59.039 --> 00:11:08.720 And really, once we started managing to the platform, everybody was really much more dialed in and we found that everybody was on the same page. 00:11:09.519 --> 00:11:13.919 Controllers knew they had to have stuff ready to go by our Tuesday meeting, for example. 00:11:18.080 --> 00:11:35.679 You know, the old way was your Mondays you had this spreadsheet that went out, your Tuesdays this spreadsheet went out as in daily operating, whether it was unbuild deals, the IT, work in process, you know, that took a lot of time out of the accounting department, which again you're paying for a certain block of time. 00:11:36.080 --> 00:11:42.240 So now you're able to reallocate that resource in different different avenues rather than just reporting. 00:11:42.720 --> 00:11:55.279 So as evaluating a platform reporting tool, something I don't think a lot of people really take in consideration is that you're paying for somebody to do nothing but a spreadsheet when they could be doing something much more productive. 00:11:55.600 --> 00:11:56.960 Yeah, that makes that that makes sense. 00:11:57.120 --> 00:12:01.679 It's what's that what's that spreadsheet, like building that spreadsheet actually costs you. 00:12:01.919 --> 00:12:05.360 And and and I call those like non-revenue generating behaviors. 00:12:05.440 --> 00:12:15.440 It's like I want to be finding where I can I can I want to be finding in the organization what's gonna move the needle rather than what's gonna be busy work just to give somebody the information to make the decision that they're having. 00:12:15.600 --> 00:12:20.639 So that desiloing that happens is I think that's what the next revolution is gonna be. 00:12:20.720 --> 00:12:28.799 There's gonna be a lot more density in the organization and the different silos talking to each other and creating it's like, and and Prasad, I think you said this. 00:12:28.960 --> 00:12:31.360 Like it data's not true until you see it in a bunch of places. 00:12:31.440 --> 00:12:31.600 Yeah. 00:12:31.759 --> 00:12:32.000 Right? 00:12:32.080 --> 00:12:35.759 It's like you start seeing it in the same, and everybody brings their own report. 00:12:36.080 --> 00:12:41.360 Like a CFO said, if I don't see the same number in five different reports, I'm not gonna trust it. 00:12:42.320 --> 00:12:48.080 What your number could be different in one report, he's gonna throw out all five reports, not just one. 00:12:48.399 --> 00:12:53.600 Yeah, and and then the manager bringing in the report that defends their decision tree, right? 00:12:54.159 --> 00:12:55.039 Show me a report up. 00:12:56.159 --> 00:12:57.840 I'll show you how to interpret it. 00:13:00.960 --> 00:13:04.080 You're just poking them shooting holes in it and whatever. 00:13:05.360 --> 00:13:11.759 We had a guy who's an actuary who was one of our salespeople, and he used to help us with these reports before we had a report um mechanism. 00:13:11.919 --> 00:13:14.720 And he was like, Well, what do you want the report to read like? 00:13:17.360 --> 00:13:21.840 Uh I want it, I want it to look like we're really doing great at internet closing percentage, right? 00:13:22.000 --> 00:13:27.600 So, you know, and then you go through and you start eliminating things that should be actually counted. 00:13:27.759 --> 00:13:49.200 And and a lot of these guys and gals that are out there in the industry, they they're they're they're more focused on making themselves look good on a report than they are on the activities and the metrics that actually put money in their pockets and you know, build value in the dealerships and and and build value for the customers, right? 00:13:49.440 --> 00:13:54.559 Uh they're they're like so focused on like Monday, this report's coming to come out and it better look right. 00:13:54.720 --> 00:14:00.639 So go in there and put everybody who's an internet lead into uh a fresh up, right? 00:14:00.720 --> 00:14:05.279 Because they're all more focused on internet closing ratio than they are on fresh up closing ratio, right? 00:14:05.360 --> 00:14:07.440 And it's reporting by the art department. 00:14:07.679 --> 00:14:08.240 Yeah, that's right. 00:14:09.039 --> 00:14:09.519

Yeah, exactly. 00:14:10.159 --> 00:14:14.320 To that point, I think a lot of dealer owners have a lot of faith in their management team, they don't want to hear that. 00:14:14.399 --> 00:14:17.759 And they they they get that report, like, okay, they are doing good. 00:14:18.000 --> 00:14:26.799 They think in their minds when then you get the report that contradicts it completely, and uh they find themselves just devastated that uh that happened. 00:14:27.519 --> 00:14:33.279 And and that's where it's like I think there's an inherent desire to trust uh your entire management team. 00:14:34.159 --> 00:14:35.600 You gotta trust but verify, right? 00:14:35.679 --> 00:14:54.080 So part of part of what we did is we we had two different DMSs or three different DMSs, and we had two or three different uh uh CRMs, and you know, everything that we did was you know I'm doing a good job, but you're doing a good job on that. 00:14:54.240 --> 00:15:09.519 So like uh we had to like declutter everything that we had and get a uniform DMS and get a uniform CRM and get a uniform reporting tool so that when we did have a Tuesday meeting or we did have a quarterly meeting, that everybody was being measured by the same metrics. 00:15:10.399 --> 00:15:10.559 Right. 00:15:10.639 --> 00:15:21.039 And I think that's one of the bigger things that if you're an owner um that have uh you know multiple rooftops or anywhere between five to fifty, right? 00:15:22.159 --> 00:15:27.759 It's important that we know when you're doing a buy sell, sometimes you have to bring in that CDK, right? 00:15:28.399 --> 00:15:31.039 And and I'm just naming DMSs, right? 00:15:31.120 --> 00:15:33.360 But your whole other company's on Reynolds and Reynolds. 00:15:33.519 --> 00:15:33.759 Uh-huh. 00:15:34.000 --> 00:15:44.080 Well, a lot of the guys and and gals out there, you know, will just keep it on CDK because there's, you know, a contract that has to has a stage life and they have to get through to the end of it. 00:15:44.879 --> 00:16:09.120 But if you don't have a a third party that can kind of eliminate some of the the noise between two different you know, CRMs or two different DMSs, uh, then it gets really hard for you to be able to manage uh you know Frank and and Paul because Paul's defending his right that he's he's correct because he's been using the DMS or the CRM this way. 00:16:09.200 --> 00:16:10.559 And the same thing with Frank. 00:16:10.720 --> 00:16:13.679 And uh we're all looking at Paul like, what's he talking about? 00:16:13.919 --> 00:16:24.399 Like I know he's from the California store, so I I I understand what 420 means, but this for this report is not just not smacking now. 00:16:24.480 --> 00:16:29.600 It's it's just something that's you know not accurate compared to what we can see on the financial statement, right? 00:16:29.840 --> 00:16:35.360 And so we scratch our heads and you know the biggest thing that's on an operating statement is your personnel. 00:16:35.519 --> 00:16:38.799 Like that's the most expensive thing that's on an operating statement, right? 00:16:39.039 --> 00:16:42.399 Even if you change it around and make it an outside service, right? 00:16:42.559 --> 00:16:46.559 Um at the end at the end of the day, the people is what's most expensive. 00:16:46.799 --> 00:17:00.159 And so I think inherently human beings, when they spend a lot of money on something, whether it's a car, a movie, a house, they want it to look good and and they'll defend that person, right? 00:17:00.240 --> 00:17:07.759 That amount of money that they're spending on all those people, including, you know, a hotshot general manager or a great F and I manager. 00:17:08.000 --> 00:17:19.359 When the reports come out that provide evidence that's different, there's like this, you know, moment where the dealer principal or the general manager or the owner like go, that can't be. 00:17:19.440 --> 00:17:20.880 I'm paying this person this much money. 00:17:21.119 --> 00:17:23.279 Yeah, it's when you figure out somebody's a Decepticon, right? 00:17:23.519 --> 00:17:33.440 Well, even though they're but but you might be your own Decepticon because you're still defending that person and you're you're paying so much money because I've spent this much money already. 00:17:33.519 --> 00:17:34.559 It can't, I can't be wrong. 00:17:34.880 --> 00:17:38.160 Going back to you inherently want to believe that your management team is right. 00:17:38.319 --> 00:17:43.519 And the biggest thing uh to your point, Gino, we I remember we called it we eliminated the yeah buts. 00:17:43.759 --> 00:17:44.079 Yeah, yeah. 00:17:44.240 --> 00:17:48.480 Yeah, but we don't have this, yeah, but we don't have we do this, yeah, but we do that. 00:17:48.720 --> 00:17:53.039 Eliminating the yeah buts as you're as you're doing your comparables across a platform. 00:17:53.279 --> 00:17:57.119 Well, you know, like the trend I like I I got to see this from from an IT perspective, right? 00:17:57.200 --> 00:18:04.000 It's like I'm the I'm the IT guy, so we're you know running behind the scenes, making things happen and getting yelled at by everybody, right? 00:18:04.400 --> 00:18:11.440 But what I saw from your guys' perspective is like you guys, there was there was a one source of truth that everybody agreed on. 00:18:11.519 --> 00:18:15.920 Okay, this is the numbers that we're having, and we've agreed on this over many iterations. 00:18:16.559 --> 00:18:24.400 And contextually, you have all the service managers, everybody working on their, you know, like side by side. 00:18:24.480 --> 00:18:25.359 So you have that context. 00:18:25.440 --> 00:18:28.319 All the general managers working side by side, so you have that context. 00:18:28.480 --> 00:18:31.440 All the FI managers side by side having that context. 00:18:31.599 --> 00:18:41.680 So the thing that I that I love particularly about Axel is that you now you're not only taking the DMS data, but you're taking all of the

data and putting it side by side and trending that over long periods of time. 00:18:41.920 --> 00:18:47.039 So, you know, it's like when in baseball, it's like steroid use comes out, like how they measure it. 00:18:47.119 --> 00:18:51.039 It's like if there's a massive jump in performance, there's something wrong here, right? 00:18:51.119 --> 00:18:56.079 It's like a massive jump in performance, there's something wrong, and a massive like decline in performance or something wrong. 00:18:56.160 --> 00:18:57.759 It's like, what does the trend look like? 00:18:57.839 --> 00:18:59.359 And are you trending in the right direction? 00:18:59.519 --> 00:19:14.480 And that I saw you guys do that live, and it was it was it was really powerful to see that to say if you pay, if you bring in the right people, you create the right processes, and you create their pay plans to adhere to that process, then things start shaping up and aligning. 00:19:14.720 --> 00:19:16.559 Yeah, the three P's, as Paul likes to say. 00:19:17.839 --> 00:19:19.279 People process and pay plans. 00:19:19.519 --> 00:19:19.839 Yep. 00:19:20.319 --> 00:19:28.160 But in order to do that, you have to right you have to get over the technology resistance and then the accountability resistance that people don't. 00:19:28.640 --> 00:19:31.839 Well, the only the you know and Prasad, there's another P. 00:19:32.160 --> 00:19:39.200 Um But the only way to do it is to tie the pay plans to the to the technology piece, right? 00:19:39.359 --> 00:19:42.880 That was one of the big, you know, Eureka moments. 00:19:43.039 --> 00:19:49.200 Oh, uh okay, we want to get people to actually use these tools that we're spending so much money on. 00:19:49.359 --> 00:19:57.920 We should tie it to you know adoption rates or utilization rates, and then all of a sudden those utilization rates turned into performance rates. 00:19:58.640 --> 00:19:59.440 And it turned into revenue. 00:19:59.680 --> 00:20:00.720 Yeah, it turned into more revenue. 00:20:01.200 --> 00:20:05.839 We you by incentivizing the people to just follow the process, the money follows. 00:20:06.000 --> 00:20:06.160 Yeah. 00:20:06.960 --> 00:20:08.240 Carrot in the stick, right? 00:20:08.319 --> 00:20:13.599 So there's just and one thing that I like about you guys is the playbook concept, right? 00:20:13.680 --> 00:20:15.279 It's like what do you want your another P. 00:20:15.599 --> 00:20:16.559 Another play P, right? 00:20:16.640 --> 00:20:17.599 So there's there's six P. 00:20:21.359 --> 00:20:22.319 Yeah, the playbook. 00:20:22.400 --> 00:20:27.599 And if any actually ask somebody, what is your playbook, they're like, okay, we always wanted to work on one. 00:20:27.839 --> 00:20:34.160 So I don't think many people actually sit down and say, What should we be looking at daily, weekly, and monthly. 00:20:34.400 --> 00:20:39.279 And when my flagship customer asked me first, hey, can we put our playbook in here? 00:20:39.440 --> 00:20:43.519 I wasn't

even sure what exactly they wanted to kind of put it in there. 00:20:43.759 --> 00:20:45.519 And you should talk about pay plans. 00:20:46.000 --> 00:20:49.359 You know, then they start running these weekly meetings of our data. 00:20:49.839 --> 00:20:54.319 So when you come into weekly meeting, I saw people like filling their spreadsheet. 00:20:54.559 --> 00:20:55.519 Okay, what's my number? 00:20:55.599 --> 00:20:58.559 So they run one of our reports and uh, you know, put that number in there. 00:20:58.799 --> 00:21:03.680 That's when I realized what we're providing is more than just reports or KPIs. 00:21:04.000 --> 00:21:06.559 You're now starting to create an operational flow. 00:21:07.119 --> 00:21:10.559 What how you should operate like on a daily basis? 00:21:10.799 --> 00:21:14.400 Who should be looking at this weekly, you know, and are they looking at it? 00:21:14.880 --> 00:21:27.039 And we don't want to be really a big brother, but at least if you want to find like if this is a big uh depth of you know something or a number, you need to look at it and go, Who's not doing their job? 00:21:27.519 --> 00:21:32.240 Because the exception management is the only way you're going to be able to control anything nowadays. 00:21:32.559 --> 00:21:38.480 And I keep telling everybody the reports the way that we used to run five, six years ago. 00:21:39.599 --> 00:21:44.079 I mean, they're still valuable, but everybody's short uh attention span is so short right now. 00:21:44.400 --> 00:21:47.039 It's almost like call it a real culture, thirty seconds. 00:21:47.519 --> 00:21:53.039 If you don't tell me everything in thirty seconds, I'm gonna scoop over and then go to the next topic. 00:21:53.200 --> 00:21:59.839 So we're starting to condense those digits to a something that I can explain you in thirty m thirty seconds. 00:22:00.480 --> 00:22:08.640 Here's your inventory, you're your buckets, here is your sleds, and here is where you have too many inventory without running to four or five reports. 00:22:08.720 --> 00:22:14.079 I know that some of them were KPIs, but you had to now translate, and we add another line at the bottom. 00:22:14.400 --> 00:22:18.000 For the last 90 days, this was what it used to be. 00:22:18.480 --> 00:22:21.119 Because the other thing you'll go, okay, these numbers are good. 00:22:21.279 --> 00:22:22.400 I'm just new here. 00:22:22.720 --> 00:22:24.480 Is it still good or is it bad? 00:22:24.880 --> 00:22:28.400 Nobody wants to kind of run the reports to actually find that out nowadays. 00:22:28.559 --> 00:22:40.000 So we're now finding data accuracy and the way they want to consume the data, you know, start changing and keep when you show up, it is what you should be looking at. 00:22:40.480 --> 00:22:51.920 And if you see something that's an anomaly, you can drill right down into what happened to yet what happened to this number, it just went out, and you can go right down into it and right to the source documents and see what happened. 00:22:52.079 --> 00:22:54.960 Is it a missed posting or is it bad news? 00:22:55.279 --> 00:23:01.279 Well, the like I was talking to to a dealer principal recently that that had their controller retiring, right? 00:23:01.519 --> 00:23:12.160 And it's like you don't want to find out that you have a problem with your new controller four months down the line when your accounts payables are you know are backing up and your receivables are are crap. 00:23:12.240 --> 00:23:16.640 And then you start you want to have the dealer principal that doesn't have a profound knowledge of. 00:23:17.119 --> 00:23:17.920 You won't make it four months. 00:23:18.160 --> 00:23:20.319 You don't want to make it like you won't make it four months, exactly. 00:23:20.480 --> 00:23:22.000 But you want to start seeing the falters. 00:23:22.319 --> 00:23:26.319 Yeah, you want to start seeing the the the cracks in the system very quickly. 00:23:26.400 --> 00:23:30.720 And I don't I haven't seen anything that can give an owner that perspective. 00:23:31.200 --> 00:23:33.279 To that point, you know, that's the thing. 00:23:33.440 --> 00:23:37.440 As we all seen in the automotive industry right now, talent's at a premium. 00:23:37.599 --> 00:23:39.519 I mean, it's at a significant premium. 00:23:39.680 --> 00:23:43.359 And there's a lot of people getting moved into seats that they're may not may or may not be ready for. 00:23:43.440 --> 00:23:53.119 So a platform reporting like this, you know, as you continue to look at different things, um, are bills being paid, are receivables being collected, you see these things grow. 00:23:53.359 --> 00:23:59.839 And they see a line on a financial statement that doesn't give you the full breadth of actually what's happening in a dealership. 00:24:00.000 --> 00:24:10.880 It's an ability to have those reports that are really at their fingertips to say, oh my gosh, my CIT is now at 15, 20 days, I've already paid off my floor plan, I'm burning cash now, right? 00:24:11.119 --> 00:24:18.799 Or I have inventory that's sitting there for you know 180 days no one's done anything with, what do we do? 00:24:18.960 --> 00:24:32.640 Or incentives that haven't been paid in 60, 90, 120 days, and they were either set up in a deal that shouldn't have been in there, not claimed in a timely fashion, you know, a lot of different things. 00:24:33.039 --> 00:24:40.400 And I the thing I liked about having a reporting system is that it found the different areas where we can monetize different aspects of the business. 00:24:40.720 --> 00:24:40.960 Right. 00:24:41.119 --> 00:24:44.880 I mean, if you think about this, you know, a lot of money gets tied up in work and process. 00:24:45.279 --> 00:24:45.599 Yeah. 00:24:45.920 --> 00:24:46.240 Right? 00:24:46.559 --> 00:24:50.400 Incentives, aged inventory, wrong inventory, wrong mix. 00:24:50.640 --> 00:24:56.160 And you know, the last famous last words of anybody in the car industry, I'll retail out

of it. 00:24:56.640 --> 00:24:56.960 Yeah. 00:24:58.400 --> 00:25:02.799 One of the things that's key also that you do very well is putting notes on things. 00:25:03.359 --> 00:25:12.240 Um, back in the day, I would run an open repair order report in the morning and I would transcribe from yesterday's open repair order report what was going on. 00:25:12.400 --> 00:25:31.680 It would take me 45 minutes to an hour, and then I would go out and start asking the service advisors what's going on with this car, what's going on with that, where are we going on where with CIT, with warranty claims, with open repair orders, you put notes on what's wrong, what's what what are we gonna do to fix it, and when will it be done? 00:25:31.839 --> 00:25:33.039 And everybody knows. 00:25:33.279 --> 00:25:35.440 And it's just clear communication. 00:25:35.680 --> 00:25:41.039 That's that's a a real key to everything is having real clear communication across teams. 00:25:41.839 --> 00:25:42.880 I think that also allows us to be. 00:25:44.240 --> 00:25:46.559 When you have multiple stores, right? 00:25:46.960 --> 00:25:54.079 Looking at it from a holistic perspective, like saying that give me the top five hours in each store that I need to be paying attention, it is exception management. 00:25:54.480 --> 00:25:56.240 And then we add another feature. 00:25:56.880 --> 00:26:00.799 How many days has it been since last note on the on the open RSP? 00:26:00.960 --> 00:26:01.279 Excellent. 00:26:01.920 --> 00:26:05.599 Because you put in and say I'm waiting for something and you just leave it there. 00:26:05.839 --> 00:26:07.759 And how often should we be updating? 00:26:07.839 --> 00:26:14.880 So you you can put a guideline saying that I need a weekly update on the ones that have status of X because you just glazed it on. 00:26:15.119 --> 00:26:16.000 You said that exactly correct. 00:26:16.079 --> 00:26:19.519 What it does, what allows a management team to do a set an expectation. 00:26:20.079 --> 00:26:20.160 Yeah. 00:26:20.640 --> 00:26:25.440 Here is exactly you know we expect an update every three days on these parts. 00:26:25.680 --> 00:26:30.880 We expect an update on the CIT that's uh over four days daily. 00:26:31.119 --> 00:26:32.240 When's when is it funded? 00:26:32.319 --> 00:26:33.440 When's the cash coming in? 00:26:33.839 --> 00:26:43.119 It allows a a principal, a dealer principal or an executive management team to really set the expectations across the stores without prejudice. 00:26:43.680 --> 00:26:50.160 And management has to take control of that and start hammering the people because it's the speed of the bosses, the speed of the help. 00:26:50.240 --> 00:26:53.839 If nobody's watching what's going on, nothing gets done. 00:26:54.160 --> 00:26:58.799 Yeah, and and the is it uh answers that question, is it a knowing problem or a doing problem? 00:26:59.039 --> 00:27:04.079 It's like people, we there's like seven things management-wise that we can control. 00:27:04.240 --> 00:27:06.079 It's like what a good job looks like, are they trained? 00:27:06.240 --> 00:27:06.960 Do they have the access? 00:27:07.119 --> 00:27:11.599 Do they know when they have to do it, what the cadence looks like, do they have the tools to be able to do that? 00:27:11.680 --> 00:27:12.559 Do they have the authority? 00:27:12.720 --> 00:27:17.519 And then you can say you can answer is like, are you actually resisting doing it because you're not doing your job? 00:27:17.599 --> 00:27:19.279 And then you can make a change, right? 00:27:19.359 --> 00:27:20.240 If you have to. 00:27:20.480 --> 00:27:27.440 But that context is is powerful to say, does everybody know that CIT needs to be updated daily, right? 00:27:27.680 --> 00:27:31.680 I think what you're talking about, uh, because I know we've been talking about the money ball thing forever. 00:27:31.759 --> 00:27:32.400 Yeah. 00:27:33.359 --> 00:27:38.079 If you really think about it, it's culture, right? 00:27:38.240 --> 00:27:39.680 And culture is set every day. 00:27:39.920 --> 00:27:46.720 It's not set because you put it on a piece of paper and you said, Here, put it by the bathroom, put it by the uh by the refrigerator. 00:27:46.880 --> 00:27:50.319 It's set based upon the activities and the allowance of things. 00:27:50.400 --> 00:27:52.799 Like your culture is what you allow, right? 00:27:53.440 --> 00:28:09.440 And so if you're uh allowing Jimmy or or Jenny not to put her notes in her CIT or his work in progress, and then you're not following it up with a feedback meeting, right? 00:28:09.920 --> 00:28:14.000 Then your culture is we don't moneyball. 00:28:14.160 --> 00:28:15.599 Your culture is we don't care. 00:28:15.839 --> 00:28:18.240 We we have all these tools. 00:28:19.200 --> 00:28:37.759 We have all these reports, but we're not using these reports to improve the lives of our uh team members, and we're not improving the lives of our customers because right like the the m I've seen a lot of statements that look great, but there's no money in the operation. 00:28:38.079 --> 00:28:39.599 Guess why eliminate the last five years. 00:28:40.079 --> 00:28:40.480 Guess why? 00:28:40.640 --> 00:28:48.720 Because there's no culture of managing work in progress and incentives and and and there's no culture in and managing CITs. 00:28:48.880 --> 00:28:57.839 There's there's a culture of put them on the road, lick them, stick them, get them going, you know, close the close the repair orders, and then we'll collect the money later. 00:28:58.000 --> 00:29:01.200 The only two things we do in automotive is we sell things and collect money. 00:29:01.839 --> 00:29:02.079 Yep. 00:29:02.240 --> 00:29:03.039 Yep, absolutely. 00:29:03.759 --> 00:29:07.279 And and last five years, it was easier than ever, right? 00:29:07.359 --> 00:29:09.680 Everybody was talking about money balls like steroid era. 00:29:09.920 --> 00:29:12.960 No, there was no what I it must have been really

hard for anybody. 00:29:13.200 --> 00:29:19.279 Sorry, Prasad, but like for you to come in and go, hey, I want you to look at this uh report, it's gonna make your business even better. 00:29:19.359 --> 00:29:22.240 And they're like, dude, the fish are jumping in the boat. 00:29:22.400 --> 00:29:22.960 Yeah, exactly. 00:29:23.119 --> 00:29:24.880 Like, what what do I need a sonar for? 00:29:25.039 --> 00:29:28.559 What do I need why do I have to have the latest and greatest lure? 00:29:29.359 --> 00:29:31.039 Like they're literally jumping in the boat. 00:29:31.119 --> 00:29:34.559 Like I I I have to leave after five minutes of being on the water. 00:29:34.720 --> 00:29:37.279 And you know, slowly but surely that plus me, that happened. 00:29:37.359 --> 00:29:40.640 And like, what KPI are you going to show me? 00:29:40.960 --> 00:29:43.680 I don't even have cars to sell in what KPI is going to be. 00:29:44.079 --> 00:29:45.279 Exactly in that time frame, yeah. 00:29:45.920 --> 00:29:53.279 Yeah, so there's like a before COVID and then there's an after COVID, and now there's going to be a before FTC, and then there's going to be an after FTC. 00:29:53.680 --> 00:29:55.279 Because the world is changing again. 00:29:55.359 --> 00:29:56.880 And and that's what I'd like to know. 00:29:57.039 --> 00:30:05.279 Like, when and if I was an operator looking at you know, data, I'd want to see like, okay, what did the last five years look like? 00:30:05.359 --> 00:30:07.680 And now what did the the next five years look like? 00:30:08.000 --> 00:30:25.039 And I want to see how that change occurred from you know, and let's just call it what it was, unscrupulous behavior that we all got away with that became part of the zeitgeist, and everyone just like kind of it the only reason why anybody got away with it because everybody was doing it, right? 00:30:25.200 --> 00:30:32.000 And it it was stuff that like when I started in the car business in 2001, they would take you in the back and shoot you for, right? 00:30:32.240 --> 00:30:35.839 And and so that's not the case anymore. 00:30:36.000 --> 00:30:40.240 And I kind of like I want to see what the data is gonna show going forward. 00:30:40.480 --> 00:30:46.559 Um, because I know when we worked for Kavali, we didn't do any of any of those things, and it was kind of a detriment. 00:30:46.640 --> 00:30:53.359 We'd look at a car that was like a toilet or corolla that had a 25-day market supply, and it would be 60 days and we're losing 1500 to sell the car. 00:30:53.440 --> 00:30:55.119 And like, this doesn't make any sense. 00:30:55.200 --> 00:30:58.160 Like, we did everything we were supposed to do here, and it's not selling. 00:30:58.240 --> 00:31:03.359 Well, we weren't playing by the same set of rules as the other folks were because of you know the allowance. 00:31:03.519 --> 00:31:08.000 Like, there were laws on the books to not allow it to happen, but they allowed it to happen. 00:31:08.160 --> 00:31:24.240 So I I

want to see what it's it's gonna be more of a return to normalcy with that, which is great for good operators, it's great for for the customers, it's great for our industry because you know, you do things the wrong way long enough. 00:31:24.480 --> 00:31:32.319 Um, there's gonna be a lot more than scouts and you know, Rivians and Teslas, you know, uh and Carvanas, right? 00:31:32.799 --> 00:31:38.640 Uh, because those though there's a certain group of people are like, I just want to not have to deal with any of it, right? 00:31:38.880 --> 00:31:42.640 And uh so I'm interested to see how your reporting comes back out of that. 00:31:42.880 --> 00:31:43.440 What have you seen? 00:31:43.519 --> 00:31:45.680 Any any le any learnings that you've gotten out of it? 00:31:45.839 --> 00:31:56.400 Yeah, I mean reporting is gonna be is the easiest part, but we will we start looking at the data, like you said, historic data, not leacher from DMS, every aspect of the data. 00:31:56.559 --> 00:31:58.160 Where you where are you hiding your data? 00:31:58.559 --> 00:31:59.680 Where is the source of it? 00:32:00.400 --> 00:32:08.000 When you start going two years from now, when somebody asks how easy to do in 2026, you gotta have real access and it's normalized and need to be available. 00:32:08.160 --> 00:32:08.480 Yeah. 00:32:08.720 --> 00:32:15.119 So we've we keep finding people are now starting to shift, looking at, okay, right now I need to look at the expenses. 00:32:15.279 --> 00:32:17.519 How did I used to do expenses in 2021? 00:32:17.599 --> 00:32:20.400 You know, when nobody actually looked at it hard enough. 00:32:20.559 --> 00:32:28.319 And when they ask or pivot to that particular data set, if you have historical data and also analyzed and ready to go, that's when you have the advantage. 00:32:28.559 --> 00:32:29.839 And that's what we were trying to say. 00:32:30.000 --> 00:32:31.440 What are you looking for the data now? 00:32:31.519 --> 00:32:41.279 And then we can bring that up really quick, or even a custom report to start adjusting to whatever the market uh demands here, even the compliance stuff. 00:32:41.599 --> 00:32:42.799 Oh, we never did that. 00:32:42.960 --> 00:32:45.119 Well, you know, data is not gonna lie. 00:32:45.200 --> 00:32:47.839 That was the whole premise of that conversation, right? 00:32:48.079 --> 00:32:49.599 Data is gonna be data. 00:32:49.839 --> 00:32:53.039 I don't make up any report, you know, the data is going to be report. 00:32:53.440 --> 00:32:55.519 And you know, here's a here's a tough question. 00:32:55.680 --> 00:32:58.960 It's like, is benchmarking an antiquated way of looking at things? 00:32:59.039 --> 00:33:02.160 Like, do you only want to measure yourself of how you did 90 days ago, right? 00:33:02.240 --> 00:33:06.240 Is that progressing in the right direction rather than getting industry benchmarking? 00:33:06.319 --> 00:33:11.759 Because the the reality is over the last five years, benchmarking is not

it's not anything that's a good thing. 00:33:11.920 --> 00:33:14.720 Well, take a look at the take a look at the depends on the brand, for example. 00:33:14.880 --> 00:33:14.960 Right? 00:33:15.200 --> 00:33:15.440 Right? 00:33:15.680 --> 00:33:16.799 Take a look at 2023. 00:33:16.880 --> 00:33:21.920 You benchmarked yourself over a 90-day period, your interest interest rates quadrupled. 00:33:22.000 --> 00:33:22.400 Yeah, yeah. 00:33:22.559 --> 00:33:28.960 So benchmarking yourself anytime prior to that, you're you're literally you're kidding yourself because it's a it was an unlevel playing field. 00:33:29.039 --> 00:33:38.559 And markets are gonna continue to shift as things happen, whether it's geopolitical, um overall environment or a retail environment, right? 00:33:38.960 --> 00:33:41.279 There's gonna be continual shifts in the marketplace. 00:33:41.519 --> 00:33:50.240 And so while I think it's there's a place for benchmarking, I don't think it's gonna be as critical as it was if we're gonna be able to do it. 00:33:52.640 --> 00:33:56.480 Last month, last year, so when they used to do these benchmarks even for everything. 00:33:57.039 --> 00:34:01.039 How much value is it's going to be anymore with this changing landscape? 00:34:01.359 --> 00:34:04.559 Are you gonna be able to compare last year and feel like good about it? 00:34:04.880 --> 00:34:08.000 Or is it just a something that you're used to? 00:34:08.159 --> 00:34:09.599 So And that's the other side too. 00:34:09.679 --> 00:34:16.320 You take a look at again first quarter of last year, car sales were higher than they had been the year before, right? 00:34:16.719 --> 00:34:19.840 Well, was that an actual shift in the marketplace or pre-tariff? 00:34:20.000 --> 00:34:20.239 Exactly. 00:34:20.559 --> 00:34:20.800 Exactly. 00:34:20.960 --> 00:34:23.039 Everybody race raced to buy a lot of cars. 00:34:23.360 --> 00:34:29.199 And to that point, I think it's gonna be a part, but not as critical because every year there's going to be something. 00:34:29.280 --> 00:34:31.280 There's gonna be that that anomaly. 00:34:31.519 --> 00:34:40.960 It's not gonna be the way it was, you know, we got in in you know the early, late 90s, early 2000s, where we had 9-11, and then we were pretty good until 2008. 00:34:41.199 --> 00:34:45.280 Then 2010, everything reset, then we were pretty good until 2020. 00:34:45.519 --> 00:34:52.000 I think we're gonna start to see every 24 months there's gonna be a major world event that's going to shift the way we look at things. 00:34:52.239 --> 00:34:52.880 Can't wait. 00:34:53.039 --> 00:34:53.519 Exactly. 00:34:54.000 --> 00:34:56.880 Yeah, it's like it's always sunny in South Florida. 00:34:59.280 --> 00:35:06.800 To your point, like if you look at March data from 2020, and you're like, why we need to get our expenses back to that March data from 2020. 00:35:07.679 --> 00:35:08.800 You had a 2% interest rate. 00:35:09.039 --> 00:35:12.320 You know, we were selling cars, and you know, some of the dealers were selling cars. 00:35:12.400 --> 00:35:26.320 They only had a general manager in the store, a finance manager, they cut all of their advertising, they had no you know, ancillary, you know, team members on the team, and you know, their average gross per employee was like uh$100,000. 00:35:28.239 --> 00:35:31.039 There's a lot of boats out there named August 2020, right? 00:35:31.519 --> 00:35:32.400 September 2020. 00:35:32.719 --> 00:35:33.199 PPP. 00:35:33.280 --> 00:35:33.840 There's another few. 00:35:34.239 --> 00:35:35.199 PPP, yeah, exactly. 00:35:35.519 --> 00:35:43.679 So so I I think you need to have data that's like really up to date constantly. 00:35:43.840 --> 00:35:47.440 And so like the benchmark is not really it's a trend more than a benchmark. 00:35:47.840 --> 00:35:56.159 I think one more I think the one he was mentioning, benchmarking in his others as of right now is more critical than benchmarking in SU data last year. 00:35:56.960 --> 00:36:00.639 Because are you the only one doing you know like this, or is everybody? 00:36:00.800 --> 00:36:05.599 So at some point we have enough uh customers on our platform. 00:36:05.760 --> 00:36:12.400 We're gonna give an analyze data saying that this car is this segment is doing plus five percent. 00:36:12.719 --> 00:36:21.360 So you're right in that right in that that's where we see the benefit rather than actually, you know, I can't believe, like you said, 45 days. 00:36:21.519 --> 00:36:27.440 Like it used to take 45 days, look at the financial statement, upload, analyze, and look the areas of improvement. 00:36:27.679 --> 00:36:33.519 That was so uh overnight right now compared to you cannot wait 45 days to react anymore. 00:36:34.079 --> 00:36:38.159 Gas price is going to change, and all of a sudden you're gonna sell the trucks again tomorrow, next week. 00:36:38.400 --> 00:36:42.079 I mean, world events change every week or month. 00:36:47.440 --> 00:36:47.519 Yeah. 00:36:49.280 --> 00:36:49.519 Exactly. 00:36:50.239 --> 00:36:55.760 At the end of the day, you know, it's it's the only consistent thing in the automotive business is change. 00:36:56.400 --> 00:36:57.599 And your ability, yeah, exactly. 00:36:58.400 --> 00:36:59.920 And your ability to adapt to that change. 00:37:00.079 --> 00:37:08.239 And without great great data that's constantly getting updated and being trended rather than snapshotting it is, I think, the wave of the future, what that looks like. 00:37:08.639 --> 00:37:12.320 One of the things I think that's also very important is your tech stack. 00:37:12.639 --> 00:37:34.000 What tools are you using and are they are are they valid and and are they set up properly so that the data is feeding the right way to do that, and that you haven't purchased a technology that has become closetware where things are, you know, there's you're just not using it or you're not using it correctly. 00:37:34.320 --> 00:37:35.920 Yeah,

well, like here's one. 00:37:36.000 --> 00:37:37.679 You want to hear one that's really great? 00:37:37.840 --> 00:37:40.639 Like we we've implemented a lot of different tools. 00:37:40.719 --> 00:37:44.880 So one of the tools that we implemented was a CRM that had a desking tool in it, right? 00:37:44.960 --> 00:37:47.039 And I and you were involved with this, so this is a good one. 00:37:47.679 --> 00:37:54.079 So um and then and and I changed the way that I helped people after that. 00:37:54.239 --> 00:38:08.559 I looked at it more as like I'm a veterinarian versus I am a doctor to try to help people, where a doctor sits there and people tell them what their problem is, and then they do an analysis and they they do a recommendation. 00:38:08.800 --> 00:38:12.559 Whereas a veterinarian, the person, the animal can't speak to you. 00:38:12.639 --> 00:38:14.639 So you have to like figure out where the problem is. 00:38:14.880 --> 00:38:23.679 And and when I had that moment that happened to me was when we put in a CRM, we had a desking tool, and there was a hurricane here in Florida. 00:38:23.760 --> 00:38:31.119 We had a store in California, and I get a phone call, and I'm going, All right, I'd like to buy X, Y, and Z car. 00:38:31.199 --> 00:38:44.400 Like we had a car, I liked it, I wanted to buy it, and uh, I was like, I hadn't used the desking tool, but I had my laptop, I was in Florida, and I was desking the deal, and I said, Can you do me a favor? 00:38:44.559 --> 00:38:46.320 Can you tell me if I desk this properly? 00:38:46.559 --> 00:38:49.519 And they go, Oh, the desking tool, we don't use that. 00:38:50.079 --> 00:38:50.400 Right? 00:38:50.559 --> 00:38:59.199 And this is a tool that like we were spending an extra three or four hundred dollars a month on, and we had the the programs in there, so that was another three or four hundred dollars a month, right? 00:38:59.440 --> 00:39:02.239 And we had the desking tool for at least a year, right? 00:39:02.320 --> 00:39:13.679 So then I started to do the math and I said, Okay, so that's you know, eight, eight hundred dollars, you know, times twelve months, you know, ninety six hundred dollars just poof down the drain. 00:39:13.840 --> 00:39:22.719 But also the customer's experience wasn't as good because these guys were using you know handwritten going into cheap forest like whatever, right? 00:39:23.119 --> 00:39:27.280 But the inefficiency, like that number wasn't even wasn't even quantifiable. 00:39:27.440 --> 00:39:46.159 But the only reason why I found it out, you know how I found it out is because I was on a my laptop that had enough RAM and we figured out that you know there was speaking of tech stacks, there wasn't enough RAM in order for the desking tool to work and in Silicon Valley, yeah, which was even crazier, right? 00:39:46.400 --> 00:39:51.440 And so, you know, not only is it, you know, that's why I became a veterinarian. 00:39:51.519 --> 00:39:58.480 I started saying, show me

how you do your job, so I can see if you're going around the system to do it, as opposed to using the system. 00:39:58.639 --> 00:40:00.559 So that's where you get the shelfware, right? 00:40:00.639 --> 00:40:02.880 Yeah, but the network is huge too, right? 00:40:03.360 --> 00:40:14.320 Remember we used to do the audit for tech stack as the first step, and we don't beat up on anything, but you see 15 to 20 different uh bills you're paying for tech stack. 00:40:14.719 --> 00:40:18.239 And you put everybody in and say, hey, how many of these you guys are using? 00:40:18.400 --> 00:40:23.199 All of a sudden you find at least three or five that nobody even knows they're still paying for it. 00:40:23.360 --> 00:40:23.679 Yeah. 00:40:24.079 --> 00:40:35.360 And one person uses one piece of one of the software is like, oh, we can't get rid of that because our highest performer uses one small piece of that uh to do the process where you can do it easier in a in a different program. 00:40:35.679 --> 00:40:40.159 And a lot of print dealer principals, yeah, and I could see where their point of view is coming from. 00:40:40.239 --> 00:40:44.480 They look at that overall tech stack, they look at the uh overall network uh capacity. 00:40:45.599 --> 00:40:46.960 Like, well, it's just money going out. 00:40:47.199 --> 00:40:49.039 They never see the additional revenue coming in. 00:40:49.119 --> 00:40:54.880 On to your point, Gino, about being able to desk a deal and being able to do it to somebody remotely. 00:40:55.119 --> 00:40:58.800 And when I we got my first Audi from Oakland, yeah. 00:40:59.440 --> 00:41:05.440 Remember you you were telling me to get in when I went to walk through the process, I'm like, man, that's next of a thing since sliced bread. 00:41:05.519 --> 00:41:05.840 Yeah, yeah. 00:41:06.000 --> 00:41:08.239 And and to a further extent, it's the other thing. 00:41:08.639 --> 00:41:12.320 Started going through the the uh CRM. 00:41:12.559 --> 00:41:17.599 We're looking at how many calls people were making, how many touch points they were getting, how many times they were making appointments. 00:41:17.920 --> 00:41:18.960 Same thing with service. 00:41:19.519 --> 00:41:26.000 One of I always brag about the one girl that we had in Livermore at Subaru went from a cer went from a receptionist to that Audi. 00:41:26.559 --> 00:41:28.960 I'm sorry, Audi went to one of the she was a receptionist Audi. 00:41:29.119 --> 00:41:29.920 We put her over at Subaru. 00:41:30.320 --> 00:41:30.800 That's right, yeah. 00:41:30.960 --> 00:41:34.320 And she'd end up being one of the top service advisors that month. 00:41:34.719 --> 00:41:36.719 $120,000 worth of gross. 00:41:36.960 --> 00:41:39.039 All she did was follow the process, do everything. 00:41:40.079 --> 00:41:40.559 No trend. 00:41:40.880 --> 00:41:43.360 Just here's how you do it, do it every time. 00:41:43.599 --> 00:41:47.760 And I remember seeing the payroll that month, and I still I've talked to multiple people about it. 00:41:47.840 --> 00:41:50.239 How called Gina Web and I said, Is this right? 00:41:50.800 --> 00:41:53.280 Like, she really did$140,000? 00:41:53.840 --> 00:41:54.480 Yeah, yeah. 00:41:54.559 --> 00:41:55.679 She followed the process. 00:41:55.760 --> 00:41:56.559 I'm like, man. 00:41:57.199 --> 00:42:02.480 I think there's a bias when when looking at data is like the data will kill your bias as fast as possible, right? 00:42:02.559 --> 00:42:08.800 Because you're like, oh, that it happened, you know, the the the whole famous line of was it the right color when you bought it? 00:42:09.039 --> 00:42:09.599 You know? 00:42:10.159 --> 00:42:21.119 And and can you guys talk a little bit about the buying by gut and and you know, a vehicle acquisition and it's been there for you know three months and has it moved, and was it the right color that you bought it? 00:42:21.199 --> 00:42:23.039 Like, what's the So here's one that I can tell you. 00:42:23.119 --> 00:42:26.960 When I started in the industry, nobody had websites. 00:42:27.760 --> 00:42:31.679 Like an internet lead came from the fax machine. 00:42:32.079 --> 00:42:37.280 There were no pricing on cars, on your used cars on the lot. 00:42:37.519 --> 00:42:46.320 Like there was no internet, and there was like like our first you know, website was a$99 splash page from autotrader.com, right? 00:42:46.559 --> 00:42:54.079 And so I try to you can't explain that to people who are newly in the business, especially ones that just started back in 2020. 00:42:54.719 --> 00:42:56.800 That was being revolutionary after the last page on that. 00:42:57.199 --> 00:42:58.800 Oh, it was gonna end the car industry. 00:42:59.119 --> 00:43:00.400 The internet was gonna end the car industry. 00:43:03.360 --> 00:43:03.760 Yeah. 00:43:04.400 --> 00:43:09.920 So, you know, it's there's a lot of changes still to come, right? 00:43:10.159 --> 00:43:19.039 And uh I think we just have to be prepared for what you said that the the the the most consistent thing is inconsistency, right? 00:43:20.159 --> 00:43:40.000 And uh and if you're not willing to partner with somebody who's gonna, you know, help be your referee, you're you're um at least the person that's keeping score, and then you can develop the playbook around that scorebook, you know, that you know that's kind of the Nick Saban thing is don't look at the scoreboard until the end, right? 00:43:40.079 --> 00:43:43.599 Because if you do your play over and over again, well, Nick, great story. 00:43:43.760 --> 00:43:49.199 I love it, but you're analyzing every play every day, every single down, every single second. 00:43:49.440 --> 00:43:59.599 That's what you know, a really good partner who can give you the data, you can do you know, what we call a check in in the morning to look at the data from the night before, a check up in the middle. 00:44:00.239 --> 00:44:01.760 Of the day and then a checkout. 00:44:01.840 --> 00:44:07.440 And it doesn't

matter what department you're in, fixed ops and parts and uh variable. 00:44:07.679 --> 00:44:19.440 These are the places where if you have a really good you know partner that's giving you the right data, um you you can rocket mortgage your entire dealership and get rid of the subscriptions, right? 00:44:19.519 --> 00:44:25.519 Yeah, but you can also rocket mortgage some of the team members that aren't doing what they say they're doing as well. 00:44:25.679 --> 00:44:28.400 So and finding holes in the boat. 00:44:29.039 --> 00:44:35.199 If if you're looking at, we recently had a a dealer that said, I think I'm paying too much for internet and phone. 00:44:35.440 --> 00:44:37.199 And send me all your bills. 00:44:37.280 --> 00:44:44.000 We analyzed them, and they were paying about$8,000 a month in services that they no longer had. 00:44:44.159 --> 00:44:44.400 Wow. 00:44:44.559 --> 00:44:47.039 Where the payables girl was just paying the bill. 00:44:47.360 --> 00:44:48.400 They just want it off the desk. 00:44:48.480 --> 00:44:48.559 Yeah. 00:44:49.039 --> 00:44:49.599 Get it off the desk. 00:44:50.320 --> 00:44:51.039 Get it off the desk. 00:44:51.280 --> 00:44:54.559 Because they got yelled at once for not posting that bill the year the month before. 00:44:54.719 --> 00:44:54.800 Yeah. 00:44:55.039 --> 00:44:56.239 And there was a double posting. 00:44:56.480 --> 00:44:57.440 There was a double posting. 00:44:57.519 --> 00:45:02.639 And general manager goes, How the heck is my my my expense sixteen thousand dollars this month? 00:45:02.719 --> 00:45:04.239 It's normally eight thousand dollars. 00:45:04.400 --> 00:45:11.119 Regardless of whether or not they're using any of the services, they saw a jump from$8,000 to$16,000 and they had to explain it to an owner. 00:45:11.199 --> 00:45:14.320 And they're like, Can we can we do that over three months? 00:45:16.719 --> 00:45:18.960 Yes, ever famous amortization. 00:45:19.519 --> 00:45:22.000 But you know, that that speaks to the you know, 1010, right? 00:45:22.079 --> 00:45:44.400 If like if the general manager's not getting paid, like the general manager doesn't get paid on process adherence, doesn't get made on how smooth the operation is running, how drag versus flow in the organization, you're cutting expenses, and that you know, you cut your nose off to spite the face in in so many of these aspects, rather than looking at what the trend looks like over a period and are you going up and up, you know, are you trending in the right direction? 00:45:44.800 --> 00:45:47.679 It's it's the winning by circumstances or winning by knowledge. 00:45:48.320 --> 00:45:54.159 And sometimes we win by circumstances, and so we just continue the same behavior over and over again, and we got lucky. 00:45:54.239 --> 00:45:56.400 And you know, it's better to be lucky than good sometimes. 00:45:56.559 --> 00:46:13.440 But at the same time, when you have something that can tell you that these sets of things actually contributed to your performance going up, and you start monitoring those set of things, and you start, you know, champion those things, right? 00:46:13.679 --> 00:46:25.920 Yeah and you know, you you you champion it, you communicate it, and then you challenge the rest of your team, the three C's of that, and that that's when it, you know, you get that consistency, right? 00:46:26.159 --> 00:46:36.880 So the the um, you know, and and in your world, Prasad, particularly, you're based in logic, and this industry is full of things that are completely irrational, right? 00:46:37.199 --> 00:46:50.000 It's like, how do you manage that piece of like managing through data, managing logic, and transitioning people from that gut gut understanding of how their dealership they think they run versus the one that they're actually running? 00:46:50.400 --> 00:46:55.280 I mean, m most of those guys are still running by the gut because they don't trust a lot of systems, right? 00:46:55.519 --> 00:46:58.079 And we talked about tech stack in the last question. 00:46:58.320 --> 00:47:01.679 Nowadays, this it's actually actually increased, right? 00:47:02.320 --> 00:47:03.599 With all the AI tools. 00:47:03.840 --> 00:47:04.960 They can buy everything. 00:47:05.199 --> 00:47:07.679 It went from 1520 to 25 now. 00:47:07.920 --> 00:47:09.360 Because they're all trying different things. 00:47:09.440 --> 00:47:11.360 So I started looking at the tech stack now. 00:47:11.599 --> 00:47:17.119 Oh, yeah, we just implemented this for BDC AI, or we implemented this for recording nodes. 00:47:17.360 --> 00:47:22.719 I mean, I went to the SO2Con and I saw so much new tech stack coming out. 00:47:22.960 --> 00:47:26.400 It's gonna be another revolution of what I'm paying for, what I'm not paying for. 00:47:26.559 --> 00:47:29.599 Six months from now, I would like to see how many more things they're buying. 00:47:29.920 --> 00:47:34.400 Then I also talked to another dealer and they said, How many calls are you getting a day now? 00:47:34.559 --> 00:47:38.960 People wanting to pitch a new technology because everything is now enhanced by AI. 00:47:39.119 --> 00:47:40.719 It's the same thing, but it's now enhanced by AI. 00:47:40.960 --> 00:47:42.480 It's like crappy CRM.ai. 00:47:42.719 --> 00:47:42.800 Yeah. 00:47:43.039 --> 00:47:43.280 You know? 00:47:43.519 --> 00:47:45.599 Like it's it's garbage in, garbage out, right? 00:47:45.679 --> 00:47:46.239 At the end of the day. 00:47:47.119 --> 00:47:55.119 If you started using so many technologies, how would you even ask people to use them and trust how it's gonna help you? 00:47:55.360 --> 00:47:57.039 So they will just give it a try. 00:47:57.199 --> 00:48:00.639 If it doesn't give you results immediately, they're gonna just deviate. 00:48:00.960 --> 00:48:02.800 So we started looking at the user activity. 00:48:02.960 --> 00:48:07.360 How you said some people are not using testing tools in CRM, right? 00:48:08.079 --> 00:48:11.760

Paying for software is one thing, how many features they're using is the other thing. 00:48:12.159 --> 00:48:15.760 And how many times they're using is the third thing, right? 00:48:15.920 --> 00:48:19.599 So we kept looking at on our platform, why are people not logging in? 00:48:20.079 --> 00:48:27.840 And the minute you started giving them the numbers or the information that makes their job better, all of a sudden the trust and the activity goes up significantly. 00:48:28.320 --> 00:48:30.320 Better or it makes their job easier. 00:48:30.960 --> 00:48:33.599 Uh whatever it clicks for that. 00:48:34.559 --> 00:48:34.800 Yeah. 00:48:35.039 --> 00:48:40.480 You could say better because if you're able to allocate your time more resourcefully, and that that's where I think a lot of people are. 00:48:40.639 --> 00:48:50.400 And also answering the question when somebody calls you and you deal with and says that, hey, is this correct that you're showing me this percentage on your PVR compared to last you know, three months? 00:48:50.559 --> 00:48:55.280 And they now log into and then pull the number quickly instead of say, Hey, let me get back to you. 00:48:55.679 --> 00:48:56.000 Right? 00:48:56.159 --> 00:48:58.719 This is some some other uh feedback I keep getting. 00:48:58.800 --> 00:49:00.960 And a lot of GMs are pretty smart. 00:49:01.039 --> 00:49:05.519 They came from selling cars, you know, all the retail guys, they want to make the deals and all that. 00:49:05.760 --> 00:49:11.119 So you said every time I call my GM and I ask a question that is not sales related, they'll say, I'll get back to you. 00:49:11.360 --> 00:49:13.599 Because one, they don't know where to look up. 00:49:13.840 --> 00:49:14.480 They don't, you know. 00:49:14.800 --> 00:49:17.199 It's because the service department wants everything to be by gut. 00:49:18.880 --> 00:49:24.239 I can tell I can tell you, servicemen parts, they they they are probably the biggest pushback on any of the data. 00:49:24.480 --> 00:49:31.360 I know because they you start form you start formalizing them, they go, uh oh, I know what's gonna happen right now. 00:49:31.519 --> 00:49:38.480 They're gonna track actually my activities and and they can maybe replace me, and and they start getting a little nervous. 00:49:38.800 --> 00:49:39.679 That's exactly what he said. 00:49:39.760 --> 00:49:45.199 You know, they have no visibility on the fixed side and all this stuff, you know, they'll just get some numbers in a spreadsheet. 00:49:45.760 --> 00:49:52.079 But we're now starting to give them more real-time numbers to start making them like, hey, I can look this up myself. 00:49:52.639 --> 00:49:56.079 So I was talking to one uh one of our friends, Joe Shaker. 00:49:56.159 --> 00:50:02.880 He said, We need to create a GM playbook on how to look up numbers easily to do your job better. 00:50:03.039 --> 00:50:08.639 Then you will all in then you will start having much better results across the board. 00:50:09.360 --> 00:50:23.360 Because that's hesitation is I don't know the number right away, I'm gonna call you back, and then you know, two hours later, you hope that whoever asked the question forget about the question and then switched on to something else, and now they're talking about inventory and it never comes back. 00:50:23.440 --> 00:50:25.360 Oh yeah, I never got that number. 00:50:25.679 --> 00:50:34.239 So, but having those numbers handy and getting the trust factor where data is available is where we you know, I I think everything is gonna be. 00:50:34.480 --> 00:50:37.920 The one thing I will tell you, most owners ask questions they already have the answers to. 00:50:38.559 --> 00:50:39.920 So uh you can only play? 00:50:40.880 --> 00:50:45.039 Well, you can only play uh and if they're partnered with you, you can only play that game so many times. 00:50:45.199 --> 00:50:48.960 Yeah, let me get back to you because they're like, no, no, no, no, wait. 00:50:49.119 --> 00:50:52.000 Like uh you don't have to get back to me. 00:50:52.159 --> 00:50:53.280 I actually have that information. 00:50:53.440 --> 00:50:55.039 I was just trying to see whether or not you do. 00:50:55.280 --> 00:50:55.920 Yeah, yeah, right. 00:50:57.039 --> 00:51:04.639 And uh you know, there was a wall for a long time between service and sales, and it was intentional somewhat too, right? 00:51:04.880 --> 00:51:06.880 I can beat up on Paul a little bit about this. 00:51:07.360 --> 00:51:09.920 Like they don't want us to know what's going on, right? 00:51:10.079 --> 00:51:15.599 And uh the ambiguity is kind of a good thing, you know, and for them at least, right? 00:51:15.760 --> 00:51:32.000 And so when we started putting manners and using technology that actually um connected the dots and made it more of like variable, then it you know, like there was some an you know analysis or an analogy between like you do this, this is what you get. 00:51:32.079 --> 00:51:41.840 And so we started to be able to activity-based yeah, but we do you know, you are big on you got to make so many phone calls to generate so many clients that are interested, but it's the same leads. 00:51:42.320 --> 00:51:46.880 In ServiceNow, it's like how many times are you doing the digital walk around and how many times are you doing the digital MPI? 00:51:47.119 --> 00:51:47.840 And the video, it's the same. 00:51:47.920 --> 00:52:00.480 And the video, and and you you can actually see with some of the technology that's out there, not only can you see like who your best advisor is, but you can see who your best technician is based upon based upon their MPI performance. 00:52:00.800 --> 00:52:02.000 But let me let me push back on that. 00:52:03.679 --> 00:52:04.800 But let me push back on that. 00:52:04.960 --> 00:52:08.639 It's the you know, I remember when you guys implemented the video walk around. 00:52:08.800 --> 00:52:19.039 It was better for the technician, it was better for the service

advisor, it was better for the dealership, but they resisted it because they they're they they you know they're resistant to change, right? 00:52:19.280 --> 00:52:24.639 But when the first one, the first early adopter started doing it and their pay plan blew up, right? 00:52:24.960 --> 00:52:27.119 Everybody else was like, they sold more hours, exactly. 00:52:27.199 --> 00:52:32.800 And then you guys incentivized the adherence to that process that ultimately gave the outcome that you wanted. 00:52:33.519 --> 00:52:47.280 Commitment to the process, we communicated what needed to be done, and then we championed the people who like did a video who you know the technician does a break job video on a 9-11. 00:52:47.519 --> 00:52:51.599 We have a new bile, you know, service advisor, and he goes, Well, what should I do? 00:52:51.679 --> 00:52:52.559 Just send the video. 00:52:52.719 --> 00:52:59.920 Yeah, and then so the guy sends the video and the MPI with it, and then he goes, I don't know what we're gonna do. 00:53:00.079 --> 00:53:02.480 This is a$19,000 repair. 00:53:02.559 --> 00:53:05.360 Uh the customer's gonna get upset or mad when I call them. 00:53:05.519 --> 00:53:10.079 I go, send them the video and then call them and say, Well, what did you think? 00:53:10.320 --> 00:53:11.199 And that's it. 00:53:11.360 --> 00:53:12.800 Don't say anything after that. 00:53:13.039 --> 00:53:15.840 And the customer goes, Well, it needs to get done, right? 00:53:17.840 --> 00:53:20.159 And that that's so good. 00:53:20.320 --> 00:53:23.039 But then you then you but then you champion that. 00:53:23.440 --> 00:53:37.920 Like you go, such and such has no clue on how to be a service advisor, but he has a clue or she has a clue on how to follow the process, and you know, they just put X amount of dollars in their pocket just by following the process. 00:53:38.159 --> 00:53:39.840 I remember why don't you want to do that? 00:53:40.079 --> 00:53:46.480 Like I I remember the first time one of the Audi stores we started doing the videos, techs were completely resistant. 00:53:46.639 --> 00:53:49.920 And the first one pops like a$3,500 was it, break job or rotors. 00:53:50.000 --> 00:53:50.960 I can't remember exactly what it was. 00:53:51.039 --> 00:53:53.840 You can see everybody like, oh light bulb. 00:53:54.480 --> 00:53:54.960 Wait a minute. 00:53:55.039 --> 00:53:55.119 Yeah. 00:53:55.360 --> 00:53:57.920 Well, then they used to get mad at the advisors for not sending the videos. 00:53:58.159 --> 00:53:58.400 Exactly. 00:53:58.559 --> 00:53:58.639 Right. 00:53:58.960 --> 00:54:06.559 And then when you really got to make each other accountable, and then to a point they started using their UCIs and going to the sales department and sending the videos as practice. 00:54:06.880 --> 00:54:07.840 What did you guys think? 00:54:07.920 --> 00:54:12.079 What would you are you guys gonna pay me to do the video and to and do the MPI? 00:54:12.320 --> 00:54:15.360 That was

the first pushback you got by the county. 00:54:16.639 --> 00:54:26.000 But that's like that that goes back to that question of does it make it better, your job better, or does it like is like how do we incentivize people to adhere to the process through the data? 00:54:26.320 --> 00:54:29.440 I think he said, you know, everything works through the pay plans, right? 00:54:29.599 --> 00:54:42.480 So all of a sudden you start showing the benefit of any of this change because people used to resist technology thinking that you're just doing this just to speed up or make me, you know, instead of me making mistakes, technology is replacing it. 00:54:42.719 --> 00:54:55.039 But it was really pushing that that report that we had, tech efficiency and the actual hours, clocked hours, and then what you actually worked on the job and never realized how important that report that report was. 00:54:55.280 --> 00:54:56.079 And you started reporting. 00:54:56.400 --> 00:54:59.440 And that's tying the payroll platform to the DMS. 00:54:59.679 --> 00:55:00.320 Yeah, exactly. 00:55:00.719 --> 00:55:10.400 Which we what when we did it, we were just pulling what we were pulling out of the DMS, and that was all based on accurate clocking by the technicians, which none of them did right now. 00:55:10.480 --> 00:55:10.719 Yeah. 00:55:11.280 --> 00:55:20.159 Well, let me let me ask this question is that I think there's a set and setting for each part of this process, is that you can't go into a dealership that's a dumpster fire, right? 00:55:20.320 --> 00:55:24.719 So let's say your guys' autogroup, when when he just bought it, right? 00:55:24.880 --> 00:55:27.440 You're just establishing basic things. 00:55:27.599 --> 00:55:31.519 And then there's an optimization phase, and then there's a fine-tuning phase. 00:55:31.599 --> 00:55:36.719 So if you go into a fine-tuning product into the dumpster fire, it's not gonna, it's not gonna stick. 00:55:36.800 --> 00:55:39.039 Everybody's gonna resist it and they're gonna resent you for it. 00:55:39.199 --> 00:55:46.960 But if you apply the appropriate tools at the appropriate stage where they are, you can create that momentum that ultimately turns out into a great exit. 00:55:47.199 --> 00:55:50.400 And that's building the culture that goes right back to the culture question. 00:55:50.559 --> 00:55:52.079 Yeah, it's all culture. 00:55:52.320 --> 00:55:56.719 I la I still laugh about how we used to do the quid games with the uh technicians. 00:55:56.960 --> 00:55:57.679 Oh, yeah, that was fun. 00:55:57.760 --> 00:55:59.679 Yeah, we did we you make it exciting. 00:55:59.760 --> 00:56:01.119 Uh, the technicians are really easy. 00:56:01.199 --> 00:56:08.559 You give them a you know, a$200 uh gift card with some, you know, mama doesn't know money. 00:56:08.880 --> 00:56:11.599 And uh because they like tattoos and they're gonna be. 00:56:11.679 --> 00:56:13.679 Well, you want to talk about how competitive that got? 00:56:13.920 --> 00:56:16.800 I mean, that that you would have thought they were playing for the blood. 00:56:17.280 --> 00:56:20.719 And then you would you would give them the feedback and say, okay, who has the best video? 00:56:20.880 --> 00:56:30.079 And then you would do a video thing, and everybody would stand there and we'd review the videos, and there would be like a panel like, oh, Jimmy did a great video, and Janet did an okay video. 00:56:30.559 --> 00:56:38.079 And then you would be like, Jimmy's, and next thing you know, you went from these like really drab videos where like this is Jimmy looking at the car today. 00:56:38.719 --> 00:56:40.239 You know, you've seen those videos, right? 00:56:40.480 --> 00:56:46.559 To hi, I'm Jimmy, you're a service technician here at such and such motors. 00:56:46.800 --> 00:56:48.320 And you're like certified. 00:56:48.639 --> 00:56:50.719 Yeah, guess what? 00:56:50.800 --> 00:56:52.000 They get the little hiller. 00:56:52.159 --> 00:57:04.239 Yeah, no, but then we got yeah, they got digital, we got the digital, we got the digital tire treads, and the like next thing you know, like they were so exciting, and the customers were like, this is awesome. 00:57:04.400 --> 00:57:06.400 Like they felt like they were part of the process. 00:57:06.559 --> 00:57:20.000 And I think you know, when you can get the customer to to have customer delight, you know, enthusiasm over something that they've you know bit that it's just as obscure for them as it was for that general manager and what the heck they actually do back there. 00:57:20.159 --> 00:57:25.440 All I know is I drop my car off and then they tell me that it's fifteen hundred dollars, and I have no idea why. 00:57:25.599 --> 00:57:28.400 But if I don't do it, the car's gonna explode, right? 00:57:28.719 --> 00:57:29.360 Yeah, exactly. 00:57:29.599 --> 00:57:31.760 Well, you wouldn't want to leave your wife on the side of the road like that. 00:57:31.840 --> 00:57:32.960 Yeah, you brush your teeth, don't you? 00:57:33.119 --> 00:57:34.000 You want to get this done. 00:57:34.239 --> 00:57:41.840 Your kids are in this so that technology actually translates to people having a better experience. 00:57:41.920 --> 00:57:44.159 And when people have a better experience, what do they do? 00:57:45.199 --> 00:57:46.480 They spend more money, right? 00:57:46.559 --> 00:57:47.760 Like, and that's what to your point. 00:57:49.119 --> 00:57:50.079 Who's not doing that now? 00:57:50.320 --> 00:57:54.480 But to your point when you originally when you started this people like, yeah, why should I do this to now? 00:57:54.639 --> 00:57:58.079 If you don't send a video MPI, how many people are gonna plus you would say? 00:57:58.400 --> 00:57:59.280 How many people do you still hear? 00:57:59.599 --> 00:58:02.079 I need more traffic, I need I don't have enough traffic. 00:58:02.320 --> 00:58:06.159 Is it really do you need more traffic or do you need to maximize traffic that you have?

00:58:06.400 --> 00:58:06.880 Both. 00:58:07.039 --> 00:58:07.360 Right? 00:58:07.679 --> 00:58:10.239 I mean and and that that really becomes a big question. 00:58:10.320 --> 00:58:14.239 And to your point, from a deal of principles point of view, that how is this going to monitor? 00:58:14.480 --> 00:58:16.880 How is this going to turn into a cash in the bank account? 00:58:17.039 --> 00:58:17.360 Right? 00:58:17.599 --> 00:58:25.840 In fact, on that on that report I was talking about, we actually added a bay, you know, number of bays you have, how many hours they're actually clocking in, bay utilization. 00:58:26.159 --> 00:58:31.199 And all you had to do is tweak a couple of those numbers to start increasing the revenue very quickly. 00:58:31.280 --> 00:58:33.440 You don't need to hire a bunch of new techs yet. 00:58:33.840 --> 00:58:35.280 No, it's how you dispatch your work. 00:58:35.360 --> 00:58:35.920 It's going to be high. 00:58:36.159 --> 00:58:39.840 If you add this gamification, he's talking about, hey, how many oil changes you can do an hour. 00:58:40.320 --> 00:58:42.159 We had to do that, we had to do that during COVID. 00:58:42.239 --> 00:58:42.400 Yeah. 00:58:42.800 --> 00:58:52.960 So we had reduction in forces that needed to be done, and we would do it based upon a formula um to tell us whether or not we needed to send somebody home or keep them, right? 00:58:53.119 --> 00:58:54.800 And it which is kind of crazy, right? 00:58:54.880 --> 00:58:58.159 Like I think about it, and I was like, we let go of a bunch of technicians. 00:58:58.960 --> 00:59:04.079 But we had to because we had no idea what was going to happen and we don't know how much workflow that was coming in. 00:59:04.239 --> 00:59:14.559 Um, but what we did is we kept the guys that had really good performances and that were doing a really good job with the data that we had from before. 00:59:14.719 --> 00:59:22.079 Uh, and the customers were happier because they were getting taken care of by uh technicians that did their jobs better, right? 00:59:22.320 --> 00:59:30.719 But but also um the technicians were super happy because there wasn't a whole bunch of people just standing around trying to take their jobs away from them. 00:59:30.880 --> 00:59:38.239 And then we had a really efficient shops, then our headcount went down, our efficiency went up, our productivity went up. 00:59:38.559 --> 00:59:48.480 And then from there, when we had a manager that would say, I need more technicians, I need more technicians, Paul and I would jump on the thing and go, prove it to me, why? 00:59:49.039 --> 00:59:59.840 And so if they were using the system properly, they would go, they would come back with they would come back with the education that we gave them, and they would say, We actually need to cut two technicians. 01:00:00.480 --> 01:00:10.480 Like that would be you're goddamn right you do, because you gotta you got you you when you put too many technicians in a shop and there's not enough work, what do you think happens? 01:00:10.719 --> 01:00:13.519 Everyone's screaming and yelling, no one's happy. 01:00:13.840 --> 01:00:18.880 Next thing you know, they're talking to other uh, and by the way, technicians talk to everybody. 01:00:19.199 --> 01:00:27.280 So they're talking to another you know dealer that's planning on bringing them in because their manager convinced the general manager or owner that they needed more technicians. 01:00:27.440 --> 01:00:37.199 And well, they go, Well, if you want me, I get to get paid an extra five dollars an hour more, and then they get a you know, a job offer, they come to you and go, I need another five dollars more, right? 01:00:37.360 --> 01:00:41.679 And then of course they didn't tell you know just their wife and you know their mom. 01:00:41.760 --> 01:00:44.719 They told everybody, all the technicians that I'm getting five dollars more. 01:00:44.880 --> 01:00:48.239 So then every technician wants five dollars more, right? 01:00:48.639 --> 01:00:56.480 Because you decided that you wanted more techs in the shop, and everyone was sitting around going, I don't have enough money, I'm not making enough money, and this, that, and the thing. 01:00:56.719 --> 01:01:06.639 And the result of that is the dealer saying, Raise your labor rate so that I can cover this extra cost, and that gets out of control, and then your return customers don't come back. 01:01:06.880 --> 01:01:09.039 That's right, yeah, because they're getting it's a vicious cycle. 01:01:09.199 --> 01:01:09.920 It's a vicious cycle. 01:01:10.400 --> 01:01:13.519 Do you think it'll ever create a sense of apathy in the shop too? 01:01:13.679 --> 01:01:20.960 That's I don't have to hustle as much because that guy's gonna get the next job as opposed to Well, no, they just they want to fight each other. 01:01:21.599 --> 01:01:29.599 Yeah, so but the best thing is when you run a really efficient shop is that when you tell somebody who's like, I want to go to Greener Pasture, she goes, you can go. 01:01:29.840 --> 01:01:40.559 But I can promise you this the door is wide open for when all those things that they told you that were gonna be so great, the amount of hours that you were gonna turn that because the extra five dollars an hour means nothing if you're not getting the work. 01:01:40.960 --> 01:01:49.280 Yeah, if you go from 45 hours to 45 years, more yeah, you go you go from 45, yeah, you go you go from 45 hours to 25 hours real quick. 01:01:49.440 --> 01:01:49.840 Yep. 01:01:50.000 --> 01:01:51.760 And then you're the new guy, nobody likes you. 01:01:51.840 --> 01:01:53.280 And next thing you know, I'm getting a phone call. 01:01:53.360 --> 01:01:56.079 Can you move my uh my my tools back? 01:01:56.639 --> 01:01:59.679 And you're picking up the phone, and that's my that that's kind of my favorite one, too. 01:01:59.760 --> 01:02:03.360 I was like, hell yeah, I gotta send in the truck mail. 01:02:03.599 --> 01:02:05.440

We had that happen for like three dollars an hour, didn't we? 01:02:05.519 --> 01:02:08.800 Somebody went for like three dollars an hour and and didn't even make it 30 days. 01:02:09.599 --> 01:02:10.000 Yeah. 01:02:10.320 --> 01:02:16.480 So here's a question for the for for everybody on the panel is what do dealers need to be looking at? 01:02:16.559 --> 01:02:20.639 Or so give me a no give me one number everyone should face tomorrow. 01:02:20.800 --> 01:02:23.679 Every dealer should face tomorrow that they'd hate you for. 01:02:27.679 --> 01:02:31.920 Everyone wants everyone sees the great gross profits, the net profits. 01:02:32.480 --> 01:02:36.079 You see$12 million net profit, you see four million dollars on the statement. 01:02:36.719 --> 01:02:38.079 Four million dollars in your bank account. 01:02:40.239 --> 01:02:40.880 Exactly. 01:02:44.719 --> 01:02:47.039 That that that's a that is a it's a punch in the face. 01:02:47.199 --> 01:02:52.320 You're number one in sales, you're number one in penetration, you're number one in parts and service, number one in net profit. 01:02:52.960 --> 01:02:54.960 It's not in your bank's not in your bank account. 01:02:56.400 --> 01:02:59.440 The one number that I would say is what's on your 13th statement. 01:03:02.719 --> 01:03:05.039 Because that's that's where you're hiding all your sins. 01:03:05.440 --> 01:03:12.079 You're you're writing warranty off, or you're writing CIT off, or you're whatever it is, you're putting it on your 13th statement. 01:03:12.320 --> 01:03:14.800 If your 13th statement is small, you did a great job. 01:03:15.039 --> 01:03:18.400 If you're buried on a 13th statement, what'd you do? 01:03:18.719 --> 01:03:19.360 What'd you really do? 01:03:21.679 --> 01:03:23.119 And you're overpaying your people. 01:03:23.760 --> 01:03:24.079 Yep. 01:03:24.639 --> 01:03:26.320 You're small, you're eating their sins. 01:03:27.519 --> 01:03:29.280 Mine's gross per employee. 01:03:30.960 --> 01:03:40.400 So it really comes down, and then super gross, not just you know, the operational gross because you can hide the with the packs and the this and the that and the NAD ads, but like gross per employee. 01:03:40.480 --> 01:03:52.239 So like if you know you have all these employees, right, and you're you're sub-ten thousand dollars gross per employee per month, and you're probably not running a very efficient uh operation. 01:03:53.039 --> 01:03:56.639 Um but you know transversely, the the same thing can happen. 01:03:56.800 --> 01:04:04.480 You could be thirty thousand dollars employee, you think you're great, but that's might mean you actually need some extra people because you might be missing some dollars. 01:04:04.880 --> 01:04:16.800 So uh gross per employee is probably the one that I'm looking at that by department too, because the gross varies by department of the number of people that you have and and how you're doing it. 01:04:17.119 --> 01:04:21.039 Yeah, you need five parts people for a fifty thousand dollar parts revenue, uh gross line. 01:04:21.440 --> 01:04:21.920 That happens. 01:04:22.079 --> 01:04:22.320 I know. 01:04:22.800 --> 01:04:27.199 To your point though about the super gross, I think it's a very valid point because everyone will look at, for example, new cars. 01:04:27.280 --> 01:04:31.920 A lot of a lot of new cars still retrade for below uh invoice in certain markets. 01:04:32.000 --> 01:04:50.239 And you really have to start thinking about the the below-the-line money into that because you need to hit those retail units in order to well when you have a car that has a$500 markup between uh invoice and MSRP and you put a$1,500 pack on it and an$1199 dealer fee, like there's no profit that's gonna show up as front-end gross. 01:04:50.480 --> 01:04:56.559 And then you have$800 a unit and you sold it at a sticker and you and the manager owes you money because he sold it. 01:04:57.840 --> 01:04:58.239 Thank you. 01:04:58.400 --> 01:04:59.519 Thanks, thanks, Frank. 01:05:00.239 --> 01:05:04.800 Took me some time to realize what super gross is, but now I'm actually familiar with it. 01:05:04.960 --> 01:05:11.440 But the one number that actually came out of all the reports we show, the performance standards. 01:05:11.760 --> 01:05:19.039 So a group set the performance standards for FNI average and all that, and they don't want to see it in the middle of the month and face that, right? 01:05:19.199 --> 01:05:28.239 Because now you need to have the hard conversation with some of the favorite people that you're paying so much on why they're not making the money. 01:05:28.800 --> 01:05:30.960 So sometimes you skip over that. 01:05:31.119 --> 01:05:42.000 But if I put that in the middle of the month scorecard saying that these two F and I managed you below are actually doing below the average on your back your numbers like that, the performance report that I called. 01:05:42.559 --> 01:05:42.719 Yeah. 01:05:42.960 --> 01:05:48.559 It's a jerk job, they always push it off and say, Hey, you go talk to all these people why they're not performing. 01:05:48.880 --> 01:05:57.119 So the performance above and below the group average and who's doing better or not, that's the report that I feel like they don't want to look at it. 01:05:57.760 --> 01:05:58.159 Yeah. 01:05:58.400 --> 01:06:01.119 My number would be Missed calls. 01:06:01.599 --> 01:06:02.159 Straight up. 01:06:02.320 --> 01:06:03.679 Still the highest intent. 01:06:03.760 --> 01:06:06.639 You're picking up the phone to do business with the organization. 01:06:06.719 --> 01:06:10.800 And if you saw the missed calls that you had in your organization, you'd be appalled. 01:06:10.880 --> 01:06:11.119 Right? 01:06:11.199 --> 01:06:12.559 We're looking for revenue everywhere. 01:06:12.639 --> 01:06:18.000 And it's like the phone is ringing and you're mixing those calls and sales and service, get update on their vehicles. 01:06:18.079 --> 01:06:23.039 Like you're you're

taking care of your herd that wants to transact with you and you're completely missing those calls. 01:06:23.280 --> 01:06:24.559 Yeah, he's answering all of those calls. 01:06:25.199 --> 01:06:28.639 And it comes down to you have to have a phone system that tracks that. 01:06:29.519 --> 01:06:31.760 So that comes back again to the tech stack. 01:06:32.159 --> 01:06:48.719 And you know, I I had this conversation with uh with a buddy of mine in the in the space, and you were like talking about inefficiencies and running the business a certain way, because you know, if you're running off of the financial statement, you're saying, hey, I'm doing good and I've got cash in the bank and I'm doing well, but the opportunity missed that you have, right? 01:06:48.800 --> 01:06:56.960 If so you start putting that numbers in, if you start quantifying those numbers, you can start, you you really start having nightmares of what that looks like. 01:06:57.119 --> 01:07:04.800 But also there's some very inefficient operators out there that are sitting on$25 million of real estate that don't have a transition plan, and that's where you your services come in. 01:07:05.119 --> 01:07:10.000 Don't have a transition plan, nobody wanna wants to take over the business and say, I'm gonna cash out and move forward and and do that. 01:07:10.079 --> 01:07:14.719 And and I think we the the our world is still abound with opportunity for that. 01:07:15.360 --> 01:07:21.440 Uh yeah, I I the biggest thing I I was thinking about this today before I was coming down here. 01:07:21.599 --> 01:07:38.079 It's like especially with reporting and money balling and everything, is the data is great, but if you don't have a solution for the problem and all you have is a problem with no solution, then then the team members that are because they're not all robots yet, right? 01:07:39.199 --> 01:07:40.079 We're not there yet. 01:07:40.400 --> 01:07:48.000 So but those folks need to you need to educate them on how to like change the data to a more favorable data set. 01:07:48.719 --> 01:07:57.280 Uh and so a lot of us will focus in on just the data and not how to you know correct the data. 01:07:57.599 --> 01:08:05.519 And then you'll start having people do less than you know, some nefarious activities in order to get the data set to look the way that they want, right? 01:08:06.159 --> 01:08:10.559 So identify the issues is super important to do, right? 01:08:10.960 --> 01:08:16.399 Because you you can't go where you want to go unless you know where you're at, right? 01:08:16.960 --> 01:08:42.399 But at the same time, if all we're doing is identifying the issues, kind of similar to what you were talking about before, which is like hey, you're supposed to be at$2,500 a copy and and 275% product penetration, you're at$1,300 a copy and 112% product penetration, you know, and then you don't like teach them how to change that, all you do is bludgeon them with the data and the numbers. 01:08:43.279 --> 01:08:50.640 You know, they're already, you know, applying for you know some position somewhere else, they're on the phone, they're not focused. 01:08:50.880 --> 01:09:01.840 So like it's great to have all this data, but then if you're not a really good educator and trainer of your people, then you need to go get people who know how to educate and train your people. 01:09:02.079 --> 01:09:10.800 So you're the you as an owner or dealer principal don't have to know how to do everything, but you also know need to know when to ask for help from outside people. 01:09:11.119 --> 01:09:19.840 Well, there's I think we for so many years for and for decades upon decades, people were arguing about the validity of the numbers. 01:09:20.000 --> 01:09:22.960 Like that part has to be in the equation, has to be solved. 01:09:23.039 --> 01:09:27.760 It's like we all agree that these are the numbers, and now we can actually do something about it. 01:09:27.920 --> 01:09:35.760 And that's like step one to get to step two, which is step two is the most important thing that's gonna fundamentally change how the business is the profitability of the business house. 01:09:36.079 --> 01:09:45.199 I also think as as coming out of COVID was a primary prime example of of that particular where everyone had the data going back to like 2019, 2020. 01:09:45.439 --> 01:09:53.279 And then as we found we as everybody, and and everybody in the marketplace found this out that they're they had weaknesses in their operation. 01:09:53.840 --> 01:10:04.000 The successful ones to Gino's point come in and give them a roadmap on how to be successful, not just take the data and club them over the head every day, you know, make them feel like they're idiots. 01:10:04.399 --> 01:10:07.600 You know, we'll see more of that, and we saw a lot of that. 01:10:07.680 --> 01:10:14.960 We saw salespeople who at some point in time you had to figure out weren't came in at the right time, but this wasn't a the uh long-term career. 01:10:15.039 --> 01:10:25.279 Some were able to adjust and figure it out, but you know, through the data and giving them a roadmap, an opportunity to adjust their behaviors, to adjust their processes, to adjust their their mindset. 01:10:26.159 --> 01:10:31.199 You know, not just you didn't do this and you didn't do that, and you didn't, you didn't, you didn't, you know. 01:10:31.279 --> 01:10:40.720 I mean, I I thought we all did a pretty good job of when we had people who weren't getting it, giving them an opportunity to figure out how to give them steps to take. 01:10:41.039 --> 01:10:45.199 I remember you telling uh one person exactly here's exactly step one. 01:10:45.520 --> 01:10:52.079 You walked them through how to answer a call, how to load it in the system, how to how to basically walk through a sale. 01:10:52.319 --> 01:10:58.880 And we and we came up with checklists for team members like general managers, and we were talking about he was talking about that before.

01:10:58.960 --> 01:11:00.319 We need a playbook for the general manager. 01:11:00.399 --> 01:11:01.199 I was like, oh, we got one. 01:11:02.000 --> 01:11:03.119 You were reading my mind on that, man. 01:11:03.199 --> 01:11:04.239 I was thinking that I was thinking about it. 01:11:04.479 --> 01:11:05.840 How much am I gonna make? 01:11:07.039 --> 01:11:10.399 But but but but having that checklist helps, right? 01:11:10.479 --> 01:11:11.920 So and that's kind of what we did. 01:11:12.000 --> 01:11:16.640 We the checklist for the service manager, the checklist for the general sales manager, checklist for a salesperson. 01:11:17.199 --> 01:11:20.479 But the data can actually start helping in the small areas. 01:11:20.640 --> 01:11:21.119 I understand. 01:11:21.199 --> 01:11:23.119 Like you need to show the top opportunities. 01:11:23.279 --> 01:11:42.880 They're not gonna solve most complex problems on how to fix the cash flow or things like that, but at least the smaller ones, you analyze the data, look at the historic data, and start recommending if you increase your ELR by three by addressing these three or four guys that were not below your average, at least you can start giving some pushback on that. 01:11:43.119 --> 01:11:46.399 He's gonna push back to push back too. 01:11:46.640 --> 01:11:55.520 That that you start fine-tweaking those, you start doing creating habits to adjust to make those uh reports start to look the way you want, you'll start to see your cash flow, right? 01:11:55.760 --> 01:11:58.880 It's making sure your ROs are closed, your receivables are paid. 01:11:58.960 --> 01:12:01.840 That takes your your net profit and turns it into cash. 01:12:01.920 --> 01:12:02.479 Yeah, right. 01:12:02.720 --> 01:12:07.920 I mean, it's it's not having, you know, looking at your getting rid of finance managers and having doc processors. 01:12:08.000 --> 01:12:09.680 How much more cash do we have on the account? 01:12:10.079 --> 01:12:19.279 We we it took off like a rocket, but and it allows somebody because they it allows to expose areas where uh dealer principal may not see they're technically burning cash right now. 01:12:19.920 --> 01:12:20.079 Right? 01:12:20.159 --> 01:12:27.039 They're looking at they're looking at gross profit and expenses, and you may not see that you have that technician that's only turning 30 hours a week. 01:12:27.920 --> 01:12:35.279 That you know what I mean, or or that salesperson that or that FI manager that's floating an extra three days on their CIT because they're just seeing the CIT number. 01:12:35.520 --> 01:12:38.239 Well, you start to expose those things of where your average CIT stands. 01:12:38.319 --> 01:12:52.560 Well, that if you're beyond your floor plan payment date, you're floating an extra three days of cash, three, four days of cash, and an increased interest rate, at least higher than we've had in the last 10, 15 years, that's real cash walking off your statement. 01:12:53.119 --> 01:13:09.439 You know what I what I hear kind of the overarching the overarching conversation is that solid data plus culture, which is pay plans, people, and processes, and those pay plans that adhere to the process, incentivize the process, creates incredible outcomes, right? 01:13:09.520 --> 01:13:12.159 And great stories of potential of the organization. 01:13:12.399 --> 01:13:13.600 Yeah, for the potential at least. 01:13:13.680 --> 01:13:13.760 Yeah. 01:13:14.239 --> 01:13:19.359 She could still have some outside factors that just kind of I mean, which is the change part, right? 01:13:19.439 --> 01:13:22.640 And so we'll adapt and adjust and things that we can control and things that we can't. 01:13:23.039 --> 01:13:25.439 You know the old saying, how you do anything is how you do everything? 01:13:25.520 --> 01:13:25.920 Yeah. 01:13:26.479 --> 01:13:32.079 The more successful people I've seen, they're following the exact same processes. 01:13:32.560 --> 01:13:34.239 As times are good when times are bad. 01:13:34.720 --> 01:13:38.560 They're maximizing everything they did when times were good, so when times are bad, they're ready for them. 01:13:38.720 --> 01:13:43.279 They don't have to have that, oh my gosh, moment where they I have to change this and I have to change that. 01:13:43.520 --> 01:13:44.720 They're ready to walk into it. 01:13:45.039 --> 01:13:54.640 Not only do they have the cash reserves to manage these whatever these situations, but they also have the processes in place that they know that their people are maximizing what's in the marketplace. 01:13:56.239 --> 01:14:00.720 When COVID hit and we had that big reduction in force, we didn't change our processes. 01:14:01.039 --> 01:14:01.279 No. 01:14:02.079 --> 01:14:05.359 And when the CDK hack happened, you guys didn't change your processes. 01:14:05.439 --> 01:14:07.600 You just went to paper and it you guys didn't miss a beat. 01:14:07.680 --> 01:14:07.760 Right. 01:14:07.920 --> 01:14:08.479 Which is amazing. 01:14:08.560 --> 01:14:09.840 Which it was That's great. 01:14:10.640 --> 01:14:11.039 Bring it back. 01:14:11.199 --> 01:14:11.920 I want more of that. 01:14:12.640 --> 01:14:13.439 That was awesome. 01:14:13.680 --> 01:14:15.680 Going through two buy cells and a CDK. 01:14:16.640 --> 01:14:18.960 But to your point, though, you're able to use utilize Darwin. 01:14:19.199 --> 01:14:19.920 Oh, and two hurricanes. 01:14:21.600 --> 01:14:23.199 Utilizing Darwin to deliver deals. 01:14:23.279 --> 01:14:32.560 I mean, and that was really important because you had a lot of competition in the area that we're on, the Reynolds and the Techyons, and you lose those customers, you lose them for a uh three years minimum. 01:14:33.920 --> 01:14:34.960 Exactly, at minimum. 01:14:35.199 --> 01:14:35.439 Yeah. 01:14:35.680 --> 01:14:40.479 And you know, to back to your point, Prasad, of like the data is good when it shows up in many places. 01:14:40.800 --> 01:14:44.319 Culture is good when it shows up also in many places, right? 01:14:44.399 --> 01:14:45.119 So everywhere. 01:14:45.359 --> 01:14:45.680 Everywhere. 01:14:45.840 --> 01:14:59.920 And I I think that I I got to have the front seat to the Kavali Auto Group and you guys particularly in each one of your roles to do that and see what next generation data is gonna is gonna bring to de-siloing and making that transition a lot easier. 01:15:00.000 --> 01:15:02.880 And I just want to really thank everybody for coming today. 01:15:02.960 --> 01:15:10.720 It's been it's been super cool to have um each one of your guys' perspective and people that I've been working with for you know over a decade, right? 01:15:10.800 --> 01:15:17.359 That we've been we've been working together and new partners and and putting kind of the next generation of what this is gonna look like uh together. 01:15:17.520 --> 01:15:21.199 And and I think um the the really the future is ours, right? 01:15:21.279 --> 01:15:29.680 To to put these things together, put data, culture, leadership, what processes do work and how that shows up in the numbers is is important for that context. 01:15:29.760 --> 01:15:30.960 So it's fun. 01:15:31.199 --> 01:15:33.359 I even I learned a lot today. 01:15:33.920 --> 01:15:36.720 Because you guys have been in the operations a lot more than I. 01:15:37.439 --> 01:15:38.000 Thank you guys. 01:15:38.640 --> 01:15:39.359 Thank you for having us. 01:15:40.079 --> 01:15:41.920 And that playbook is still for sale.