May 5, 2025 • 41 mins
In this episode, the second in a series of three interview videos, Andy Campbell and guest George Keene discuss strategies for equipment dealerships to leverage data for improved sales and inventory management. They explore the importance of understanding customer purchase cycles, critical performance metrics, and the challenges of managing aged inventory. The conversation also highlights cash flow management strategies, the significance of service departments, and the potential of rental opportunities in maximizing dealership profitability.
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(00:05):
Beyond the hood, and strategies to fuel dealer growth.
Welcome everyone to another episode of Beyond the Hood with Tractor Zoom.
I'm your host, Andy Campbell, and my guest today is George Keene.
If you're interested in how to turn your data into profit for your equipment dealerships,making smarter inventory decisions and sales strategies, this episode is focused on you.
(00:31):
In my conversation with George today, which is part of a larger three-part series, wetalked specifically about managing aged inventory, reducing obsolete stock, effective
inventory management strategies,
And then we get into the data talk, talk about leveraging data to improve sales andinventory utilization.
Let's jump right to my conversation with George Keene.
(00:51):
Now we had just talked about the importance of the CRM system and just your, processes andthe management of executing the strategy, which at the core basic skits down to data.
How is it structured?
How is it organized?
And you had plenty of years.
(01:12):
at a DMS company and then uh every other position after that I'm sure you dealt with dataand data utilization.
So how do you put that dealer data ship to work?
And maybe a more pointed question is what common data sets within dealerships do you thinkare overlooked, underutilized or potential gold mines?
(01:40):
I think as the current uh economy is so questionable what's going on, I think we need tolook at some of the data for salespeople and consider what's the purchasing cycle for an
(02:04):
account.
Do we have a farmer that buys every seven years or every 10 years?
Now, it may be different cycles for tractors than it is for implements.
Okay, but what's the purchase cycle for an account?
(02:29):
And to do that, you got to go back in history.
You got to look at your data.
So,
You've got a dealership that's in the third generation.
They've been on a computer software system for the last 50 years.
So let's go back to when we're only 25 years into the 21st century.
(02:55):
We go back to 75 and there were some computer software.
Yeah.
But 40 or 50 years.
But let's look back at all the invoices of what we've sold to that account during thatlast 40 or 50 years.
(03:17):
How many tractors did we sell?
What size, what model, et cetera?
What implements have we sold?
What's the replacement cycle for those accounts?
So I want to use the historic data of
the account to prompt the salesperson on when they need to the next tractor or implementsale.
(03:48):
Likewise, based on the history, does the customer buy new or do they buy used?
And what equipment do we currently have, especially with this tariff culture that we'redealing with right now?
(04:08):
If the customer has bought new in the past, but we have late model, well maintainedequipment on the lot outside, should that be something that we're pushing to the customer
because tariff is not going to impact used equipment predominantly?
(04:31):
If anything, it's going to drive the price up.
Right.
Okay.
But
the customer doesn't have a tariff charge on used equipment.
So is that the type of value that that customer would like to pay?
(04:54):
Now it's going to be the same answer for every customer, but you know, is that somethingelse to think of?
uh So we get a look at the turnover cycle for our customers.
Is there any way to look at turnover cycle for prospects?
(05:18):
How would you do that?
big quotations.
If we have quotations that long ago,
If we've been calling on that account and keeping records, we might have, you know, quotedwork, quoted uh equipment that didn't sell.
(05:40):
But that's the reason we have CRMs.
Which gets to the importance of data governance and collecting good data and not justbeing know transactional with the data and just using it for the here and now and then
shutting it in a closet.
(06:01):
How would you use that call data getting to maybe tariffs or a changing environment?
How would you use any of that historical call data plus whatever else is externallystreaming in to adjust call frequency?
Or would you?
I'm probably going to uh make a comment here that's not going to be comfortable toeveryone.
(06:28):
But as I said, my normal approach is to put more calls in the large accounts, less callsin the small accounts.
So one question would be, how many pieces of equipment
(06:49):
does an account have?
Now you probably need to balance that between tractors and implements, but you know, howmany acres do they have?
How many tractors do they have?
How many implements do they have?
Where are you going to put your effort?
(07:12):
ah Because one guy has the potential to buy
one tractor a year, somebody else has the potential to buy 12 tractors a year.
Well, I definitely want to go with the amount of calls and the effort into that largeaccount.
(07:37):
So I want to look at, there's a strong relationship between the revenue volume andpotential, the number of pieces of equipment, and generally the number of acres.
Okay, so I've got a specific question on that because this conversation actually just cameup with a colleague of mine here at Tractor Zoom and then a dealer that we're working
(08:05):
with.
How many dealerships do you think have great data on their customers in terms of thecustomer's fleet and the number of acres?
I think the number is small.
I don't have any specific information on it, but I think unfortunately the amount ofdealers that have good information is limited.
(08:34):
Yeah, but doesn't make that data any less valuable.
In fact, it probably makes it more valuable because it's a rare commodity.
Hey everybody, quick break from the show and then we're going to get you right back to theconversation.
But I wanted to take a moment to let you know how Tractor Zoom is partnering with all ofour dealership partners to fuel their dealership growth.
(08:54):
We're doing that with Tractor Zoom Pro to give people better valuations, faster access toit and the ability to manage their inventory using AI.
using large data, even if the dealership doesn't have the capacity to develop the AI andthe large data themselves, it's all there with Interactors and Pro.
And also with Anvil Pro, integrated business systems solution.
(09:15):
You can actually cut costs by integrating solutions, not paying for all these extraone-offs and keep people in the same solution so you're not constantly switching screens.
And then you could optimize your workflows, do a lot of things with automation thattechnology should be able to do right now.
So.
just two ways that Tractor Zoom is working with our dealer partners to really help themfuel their dealership growth.
(09:37):
Okay, you can check out some links in the show notes.
You can also go to TractorZoomPro.com to check all that stuff out, but we'd love to atleast show you all the different ways that we're helping our dealership partners.
Okay, let's get back to the show.
Hope you're enjoying it.
And speaking of those successes, those metrics that you really want to measure so that youcan manage.
(09:57):
What are some of your favorite metrics or reports ah that help you see whether adealership is gaining ground or maybe losing touch with profitability?
What do you look at?
I generally come into a dealership looking for what I call critical variables.
(10:20):
Critical variables are a set of metrics, benchmarks, in every department.
I want to know generally five.
I want to know market share or revenue growth from last year.
(10:41):
I want to know financial performance.
So for that department, I want to know net profit and gross profit.
I want to know what the employee productivity is.
We've been talking sales department so far this morning.
(11:03):
In the sales department, I want to know what the gross profit dollars are by salespersonevery month.
And I say that because some of that's going to be different if I'm doing a dealership thatsells strongly to consumers and homeowners and things like that.
(11:30):
It's going to be different than it is for somebody in Nebraska who's selling mostly largefarming.
But what is a good
consistent gross profit dollar uh amount per salesperson.
And I say that because one salesperson can sell at 11 % gross profit and another sells at20 % gross profit.
(12:00):
But salespeople still have a certain expected income.
We still have
benefits we have to pay, still have taxes we have to pay, we still have uh transportation,we have computers, we have cell phones, we have lot of expenses by salesperson.
(12:23):
So just asking all salespeople bring the same GP percentage doesn't guarantee to coverexpenses.
I want to know dollars.
I want to know true dollars per month per salesperson because I've got expenses to cover.
Now, I was on critical variables.
(12:45):
Market share, financial, employee productivity, asset management.
I want to measure the inventory, the turnover.
I want to look at how much obsolete inventory we have.
And by obsolete inventory, mean anything over 12 months old.
(13:08):
That is non-productive trapped cash.
And my fifth benchmark is I want to know what customer satisfaction score is doing.
Now, intentionally, those five are a mixture of long-term measurements, things over a12-month period, like customer satisfaction.
(13:39):
OK?
That's not usually just
the last month or the last three or four months, we get customer satisfaction over time.
And we can destroy it quickly.
can build it, but building it is not quick.
If we've got it up there to 85, 90, 95%, we didn't get it there in the last two months.
(14:08):
So to me, that's a long-term measurement.
Financial is usually under a one-year number most of the time.
We're talking month or year to date.
Market share, again, is a long-term measurement.
You don't get market share in a two-month period.
(14:32):
You get it over years.
You get trusted customers that are coming back to you over and over.
Those five benchmarks are meant to be a mixture of long-term and short-term measurements.
So on those, the inventory management is near and dear to my heart.
(14:54):
ah And especially now, ah as we've gone from this past, what, three years of having noinventory, then everybody wanted it to high priced inventory and then too much high priced
inventory.
And now we may be riding the ship, not in all categories though.
And many dealerships are still working through some of that aged inventory.
(15:18):
ah
You know, let's first talk about the psychological piece of it.
Why is it so hard to move and just get rid of something that is aged?
It's obsolete.
Well, you know, hard to get rid of stuff was probably a bad decision to start with.
(15:44):
Who's making the decision to accept trade-ins and how good are they at evaluatingtrade-ins before they take them?
Things that are on our lot for 12 months or more.
probably should have been a better decision to start with.
(16:09):
So what is the process you use to evaluate inventory?
Do you have a checklist?
Do you use the resources or something like what you're talking about of what's the auctionprice?
What's the local price?
(16:31):
Whatever you're going to use
Okay.
How long have you been doing it?
Did you do it 24 months ago?
Did you do it 36 months ago?
And is that the same equipment you have now?
Maybe you should go back and change process.
(16:54):
Maybe you need to evaluate things better.
But as we look at this uncertain economy, you may need to look at just unloadingequipment.
You may need to start looking at taking cash for what you can get for it and just convertit to cash.
(17:21):
may not have profit in it, but you need to get the cash out of it to keep the businessfunctioning.
And once you get your inventory down, don't build it again.
Okay.
Take a listen and grow.
(17:42):
In the dealership I worked with, the sales manager came in and did a phenomenal job ofreducing the used inventory level and brought it down.
But he had a lot of work to convince the owner that we needed to convert things to cash.
(18:11):
Some people, owners, sales managers, even salespeople, get emotionally attached to theequipment when they take it in as trade because they made the decision.
It's their reputation on the line.
(18:32):
They made that decision to bring it in because they thought it would sell.
They have trouble accepting that it may not have been a great decision.
an emotional issue.
But we've got to have some procedures in place that says used inventory is never going tobe higher than X and used inventory is never going to be in the lot longer than X number
(19:07):
of days or months.
And when it reaches that point, my humble opinion, you send it out to auction.
Okay, if your dealership takes in a tractor in March, then as of next April, I think itought to be out of here.
(19:33):
Okay, if you can't sell it in the next 12 months based on certain seasonality, then weneed to start getting rid of it.
Okay, because otherwise you're sitting on 40, $50,000 that is not anything you can use foranything else.
(19:56):
I can't use it for other trade-ins.
I can't use it for parts.
can't pay people with it.
Okay, you've got cash sitting on the lot and you've got to do something about it.
You need to be strong and make that decision.
So with that convincing then, because you're right, it is a lot of times it's the UEM, theused equipment manager, the sales manager, perhaps trying to convince somebody else that
(20:20):
this is the action we need to take, is our numbers, our math, the best way to do that,just running a financial model saying, you know, we're gonna lose this much if we hold it
for longer, or what persuasive method would you use if you had to go talk to an ownersaying, I know we're gonna take a
(20:40):
$5 million bath on this, but it's worth it.
You've got to have a process in place and different dealerships are going to havedifferent decisions of when they're going to do it.
uh Some of it has to do with ownership.
(21:04):
Some of it has to do with previous experience.
I've got one dealer I worked with years ago.
His parts department had a very large percentage of dollars that were obsolete.
(21:25):
They were obsolete when he bought the other location and he never did anything about it.
And I said, why?
He said,
I don't want to upset my banking relationship.
The bank thinks there's value there and I don't want to tell them otherwise.
Okay.
(21:48):
Not a great direction, I understood why he was doing it.
So respecting owners and their approach to their business.
What is the owner's
or senior management's reason for doing certain things.
(22:13):
Can we, using that, we structure an approach on how to handle parts inventory, usedinventory, even new inventory?
Okay.
What is it we want to accomplish and what are we going to do about it?
Could also be, I know a
(22:36):
dealership I'm currently working with that has been in business for 50 plus years and hasno debt.
Oh.
Unusual for many dealerships.
Yes.
But over the years, they've paid off everything.
(22:57):
When they make a decision, they're making a cash decision, not a finance decision.
that has a different impact on what procedures we're going to do.
my point is it's not one answer that's going to work for everyone.
(23:19):
We've got to go back to the dealership and talk about history, experience, strategy.
What are we trying to accomplish?
From that, we can craft a decision of what to do in the future.
I wish it was simple and say everyone should do this
(23:40):
Right.
Well, and if it was, everybody would have done that and, uh, and we would not be sittingwhere we are now.
Uh, you did mention, uh, parts inventory, uh, and you know, as an engineer or a formerengineer myself, like I love the idea of the just in time efficiency, you know, delivering
things where they need to be, when they need to be, and don't, have it just sittingaround.
(24:04):
But I also farm and we broke down many to
way too many times this past year.
And we were scrambling and driving all over the state to get the part that we needed so wecould get back up in time.
And again, we didn't know if it was going to snow in October or eventually in December andthen we had time.
We just don't know.
(24:25):
So that's a little scary.
But, you know, from your perspective, how would you manage, you know, restocking levels,um transfers, all of that, you know,
complex problem that is parts.
Okay, I'm going to try and keep this direct and short because you're touching on an areaI'm very involved in uh or emotionally attached to.
(24:55):
spent years doing some of that.
uh First, the computer system should have a methodology inside of it for looking athistory.
recommending stocking levels.
So what it was the stocking logic in the system.
(25:19):
Okay.
I'm hoping that first exists.
ah Secondly, in the dealership I worked in, as I said, we had six branches.
We established a trucking route that went from branch one to two to three to four, etcetera.
(25:41):
every day.
So if we had parts in branch four that were needed in branch one, rather than buy them, wewould transfer them by that trucking route and they would be there tomorrow.
So we were attempting to maximize the total inventory from all branches to take care ofcustomers before we bought them again.
(26:11):
because we already owned them.
One of the bigger issues I find for dealers in almost any industry is frequently ourstocking logic is something like if we get three calls or hits within a year, then we
(26:33):
stock it.
Our problem is we don't get rid of it quick enough.
The stocking logic
traditionally has been like no hits in 12 months, then we get rid of it.
The manufacturer may have already marked it as non-returnable by that time.
(26:55):
We need to consider tightening that uh get rid of logic.
I don't mind the bring it in, but I want to get rid of it before it becomes a problem.
You know, most of our logic in the computer systems has been built to be too lenient ontrimming inventory.
(27:26):
You got to take that up with the computer software guys.
Yep.
I know some.
So but I love your answer there.
And it really ties into a consistency from your overall inventory management of don't letit get obsolete.
And, and then also your earlier suggestion of, hey, use your computer logic.
(27:47):
And there's a lot more logic now out with AI as long as you're structured well, ah to tryto predict your levels, but also use a good method of practicality to have just run a
truck and go around.
And if you use the two in combination, you're using the best tools at your resource, bothin a very, you know, just a truck gas to move it around as well as, you know, logic and
(28:10):
AI.
Great answer.
I might even suggest that dealers, if you don't have six branches or 10 branches orsomething, do you have other dealers with the same brand within a local area that you
(28:30):
could share inventory transfers with?
Doesn't have to be the same ownership.
rather than
buying it from the manufacturer over and over and over, could you help another dealerreduce the inventory if you have the demand?
(28:53):
Just another idea.
On the obsolete inventory, anything over 12 months, what I'd like to do with that is runan extended inventory report.
I want to rank it from extended value high to low.
(29:15):
similar to what we're talking on large customer accounts and prospect accounts versusvolume.
I want to do the same thing with parts.
I want my obsolete value from largest to smallest.
I want to start at the top.
Now, if we're really going to use the computer software that is beginning to get evenstronger,
(29:46):
Can I match that first part number to a model of equipment?
And from the model of equipment, can I identify what customers ever bought that unit?
Because those are the only customers that would ever want to buy that part.
(30:09):
So I could market that part.
to just those four customers that have that model of equipment.
Okay, but it's gonna take some reverse engineering.
Okay, I've gotta take every part number, run it back through a where used system.
(30:34):
Tell me this part number is used on which models of equipment.
Now tell me which models of equipment customers have bought.
And now I wanna market that part number to only those four customers.
It can be done, but it's complex.
(30:56):
It is and it it gets back to what we talked about at the very beginning of well structureddata Knowing either what you've sold or what's on the farmers farm?
Again a good understanding in order to do what you want to do
And so shifting topics here a little bit, but not too far because we're talking inventorymanagement or parts management because it ties up cash.
(31:20):
And so if we move the discussion in terms of cash flow management in a time in 19 or in2025 year where, you know, it's a concern for sure.
Uh, you know, do you have any suggestions for dealers who are facing, you know, 10, 20, 30% less cash flow moving through their system this year?
(31:48):
I think the service department is certainly an area that I would want to focus onincreasing business because service has a much higher gross profit.
Doesn't trap as much cash in inventory.
(32:11):
And because it's not uh
a tangible product in that it's not an equipment unit.
It's not parts inventory.
I could increase the service business quicker than it could selling more parts or sellingmore equipment.
(32:35):
And I get more profit from it.
So let me use an illustration.
If I've got
10 technicians.
And if I could improve or get 15 minutes more per day from a technician.
(33:03):
Now 15 minutes, 220 days a year.
Or technician that's dropping all the vacation and all the weekends out.
220 days, 15 minutes, and $125 an hour at published billing rate.
(33:31):
I've got about $5,000 a year per technician for just 15 minutes.
Now, by the way, I said 10 technicians, Right.
That's 50,000.
And that was just picking up 15 minutes.
Now you could do that by how you round your time.
(33:57):
You could do that by not having technician that clocks in and goes and gets a cup ofcoffee and checks the newspaper before he goes to work.
There's any number of ways to pick up time.
The better one is, can I quote a customer for a job?
(34:25):
And if I can quote a four hour job, but the technician can do it in three and a half, Icould pick up half an hour and the technician could use that half hour for other billing.
So it's not only worth half an hour of billing extra,
(34:45):
It could be worth full hour.
Yep.
So I like the service department because it's going to improve revenue with the leastamount of investment.
Yeah.
The other area I would consider is going into rental.
(35:05):
Hmm.
Okay.
And by the way, both of these to me are uh methods of how do we improve our absorptiontoo?
We can come to that separate discussion.
Rental could be using equipment, which is currently on the lot that is just sitting thereidle doing nothing.
(35:31):
If I've got a customer that could use it but doesn't want to buy it, could I rent it for amonth?
It's at least cash that I'm not getting
while it just sits there.
Now, before you go jumping into rental, if you haven't done it, you need to understand allthe ins and outs of it.
(35:56):
But if you have the equipment and could rent it, it's potential.
Yeah, I just met with a dealer down in the middle of Texas and he went from a three storecase dealer and downsized to a one store Kubota.
Changes business model drastically, but he said it's it's much for the better because ofless of the used inventory and what he does take in.
(36:23):
He utilizes fully that rental model that you're talking about and he's like that now hisused equipment is making money for him and then it's out.
uh
And he's really streamlined and optimized all those resources in terms of his equipment tomake the most money for him and then not to cost him money because he gets rid of it after
that.
(36:43):
uh did a seminar for Kubota dealers, oh God, 15 years ago, something like that.
And one of the Kubota dealers said, you know, I don't want to get into renting tractors,that's what I sell.
Okay, that's his philosophy.
(37:07):
But he was renting.
But his approach was,
He would sell you the tractor and then he would rent you the postal digger.
He would rent you the boom or whatever else he, he was renting the attachments instead ofthe primary product.
(37:34):
I liked his creative approach to it.
He felt that he could make more money on the attachments by renting them himself.
Think about a rototiller.
Keep in mind, I'm going to the consumer side.
(37:59):
OK.
But if I spend $1,000 on a rototiller, that's a pretty good rototiller in many cases.
But if I put $1,000 into it and I could rent it for 12 weeks,
at the beginning of the season, spring, and I could rent it 12 weeks.
(38:24):
I'm going to have to do some real booking to make this work.
But if I could do 12 weeks at the end of the season in the fall while they're closing downthe garden and getting it ready for next year and all that.
And if weekly rental is about
$260, $270 a week.
(38:50):
I'm bringing in about $6,000 a year for those 24 weeks.
That's on a thousand dollar investment.
Now if I could do that for two years, I've got $12,000 and now I'm going to sell it for$400 because it's two years old.
(39:19):
I think that's a pretty good investment for a thousand bucks.
It is.
And you're also providing value to the consumer who may, I mean, if they're going to onlyuse it one time for their one garden every year, then they are only paying $200, $250 per
time instead of the thousand dollars, which they may not be able to afford.
They don't have to store it.
They don't have a storage facility.
(39:39):
And so you're providing extra value to them on top of, you know, six X in your money.
Yeah, I think rental is an under appreciated opportunity for many ag dealers.
It's a big category for dealers in some of the other industries.
(40:05):
Construction, forklift, material handling, things like that.
uh But I don't think agriculture has embraced it.
quite as strongly.
I think
There are issues that you need to watch.
Some are safety issues.
Some are what the lifespan of that equipment is, things like that.
(40:31):
And I know timeliness because I've talked to my dad about this quite a bit of, know, is asurvival business model and he's farmed 50 years and he's like, no, you need to get the
crop in the ground.
You need to get the crop out of the ground when you need it.
Everyone else needs it.
But I would say that the, you know, as technology has really come along, we can plant ifthe weather's good in a week and fall has really extended the harvest season.
(40:57):
And so I think there's more and more opportunity now that technology is better.
You can drive later into the night ah with auto steer.
And so I think it's becoming more and more of a viable option.
But I agree with you.
I don't see it in many ag equipment dealerships business models.
Thank you everyone for joining us in this episode of Beyond the Hood with Tractor Zoom andour conversation with George Keane.
(41:21):
Now keep in mind that this is a part of a three part series.
The next part, will be talking about change management tips and looking forward to thefuture.
Also, if you're not sure on how TractorZoom is already helping its partners have betterdata utilization and using that data to have effective use inventory management
strategies, go on over to TractorZoomPro.com.
(41:44):
You can learn more there.
Beyond the hood, and strategies to fuel dealer growth.
Welcome everyone to another episode of Beyond the Hood with Tractor Zoom.
I'm your host, Andy Campbell, and my guest today is George Keene.
If you're interested in how to turn your data into profit for your equipment dealerships,making smarter inventory decisions and sales strategies, this episode is focused on you.
(00:31):
In my conversation with George today, which is part of a larger three-part series, wetalked specifically about managing aged inventory, reducing obsolete stock, effective
inventory management strategies,
And then we get into the data talk, talk about leveraging data to improve sales andinventory utilization.
Let's jump right to my conversation with George Keene.
(00:51):
Now we had just talked about the importance of the CRM system and just your, processes andthe management of executing the strategy, which at the core basic skits down to data.
How is it structured?
How is it organized?
And you had plenty of years.
(01:12):
at a DMS company and then uh every other position after that I'm sure you dealt with dataand data utilization.
So how do you put that dealer data ship to work?
And maybe a more pointed question is what common data sets within dealerships do you thinkare overlooked, underutilized or potential gold mines?
(01:40):
I think as the current uh economy is so questionable what's going on, I think we need tolook at some of the data for salespeople and consider what's the purchasing cycle for an
(02:04):
account.
Do we have a farmer that buys every seven years or every 10 years?
Now, it may be different cycles for tractors than it is for implements.
Okay, but what's the purchase cycle for an account?
(02:29):
And to do that, you got to go back in history.
You got to look at your data.
So,
You've got a dealership that's in the third generation.
They've been on a computer software system for the last 50 years.
So let's go back to when we're only 25 years into the 21st century.
(02:55):
We go back to 75 and there were some computer software.
Yeah.
But 40 or 50 years.
But let's look back at all the invoices of what we've sold to that account during thatlast 40 or 50 years.
(03:17):
How many tractors did we sell?
What size, what model, et cetera?
What implements have we sold?
What's the replacement cycle for those accounts?
So I want to use the historic data of
the account to prompt the salesperson on when they need to the next tractor or implementsale.
(03:48):
Likewise, based on the history, does the customer buy new or do they buy used?
And what equipment do we currently have, especially with this tariff culture that we'redealing with right now?
(04:08):
If the customer has bought new in the past, but we have late model, well maintainedequipment on the lot outside, should that be something that we're pushing to the customer
because tariff is not going to impact used equipment predominantly?
(04:31):
If anything, it's going to drive the price up.
Right.
Okay.
But
the customer doesn't have a tariff charge on used equipment.
So is that the type of value that that customer would like to pay?
(04:54):
Now it's going to be the same answer for every customer, but you know, is that somethingelse to think of?
uh So we get a look at the turnover cycle for our customers.
Is there any way to look at turnover cycle for prospects?
(05:18):
How would you do that?
big quotations.
If we have quotations that long ago,
If we've been calling on that account and keeping records, we might have, you know, quotedwork, quoted uh equipment that didn't sell.
(05:40):
But that's the reason we have CRMs.
Which gets to the importance of data governance and collecting good data and not justbeing know transactional with the data and just using it for the here and now and then
shutting it in a closet.
(06:01):
How would you use that call data getting to maybe tariffs or a changing environment?
How would you use any of that historical call data plus whatever else is externallystreaming in to adjust call frequency?
Or would you?
I'm probably going to uh make a comment here that's not going to be comfortable toeveryone.
(06:28):
But as I said, my normal approach is to put more calls in the large accounts, less callsin the small accounts.
So one question would be, how many pieces of equipment
(06:49):
does an account have?
Now you probably need to balance that between tractors and implements, but you know, howmany acres do they have?
How many tractors do they have?
How many implements do they have?
Where are you going to put your effort?
(07:12):
ah Because one guy has the potential to buy
one tractor a year, somebody else has the potential to buy 12 tractors a year.
Well, I definitely want to go with the amount of calls and the effort into that largeaccount.
(07:37):
So I want to look at, there's a strong relationship between the revenue volume andpotential, the number of pieces of equipment, and generally the number of acres.
Okay, so I've got a specific question on that because this conversation actually just cameup with a colleague of mine here at Tractor Zoom and then a dealer that we're working
(08:05):
with.
How many dealerships do you think have great data on their customers in terms of thecustomer's fleet and the number of acres?
I think the number is small.
I don't have any specific information on it, but I think unfortunately the amount ofdealers that have good information is limited.
(08:34):
Yeah, but doesn't make that data any less valuable.
In fact, it probably makes it more valuable because it's a rare commodity.
Hey everybody, quick break from the show and then we're going to get you right back to theconversation.
But I wanted to take a moment to let you know how Tractor Zoom is partnering with all ofour dealership partners to fuel their dealership growth.
(08:54):
We're doing that with Tractor Zoom Pro to give people better valuations, faster access toit and the ability to manage their inventory using AI.
using large data, even if the dealership doesn't have the capacity to develop the AI andthe large data themselves, it's all there with Interactors and Pro.
And also with Anvil Pro, integrated business systems solution.
(09:15):
You can actually cut costs by integrating solutions, not paying for all these extraone-offs and keep people in the same solution so you're not constantly switching screens.
And then you could optimize your workflows, do a lot of things with automation thattechnology should be able to do right now.
So.
just two ways that Tractor Zoom is working with our dealer partners to really help themfuel their dealership growth.
(09:37):
Okay, you can check out some links in the show notes.
You can also go to TractorZoomPro.com to check all that stuff out, but we'd love to atleast show you all the different ways that we're helping our dealership partners.
Okay, let's get back to the show.
Hope you're enjoying it.
And speaking of those successes, those metrics that you really want to measure so that youcan manage.
(09:57):
What are some of your favorite metrics or reports ah that help you see whether adealership is gaining ground or maybe losing touch with profitability?
What do you look at?
I generally come into a dealership looking for what I call critical variables.
(10:20):
Critical variables are a set of metrics, benchmarks, in every department.
I want to know generally five.
I want to know market share or revenue growth from last year.
(10:41):
I want to know financial performance.
So for that department, I want to know net profit and gross profit.
I want to know what the employee productivity is.
We've been talking sales department so far this morning.
(11:03):
In the sales department, I want to know what the gross profit dollars are by salespersonevery month.
And I say that because some of that's going to be different if I'm doing a dealership thatsells strongly to consumers and homeowners and things like that.
(11:30):
It's going to be different than it is for somebody in Nebraska who's selling mostly largefarming.
But what is a good
consistent gross profit dollar uh amount per salesperson.
And I say that because one salesperson can sell at 11 % gross profit and another sells at20 % gross profit.
(12:00):
But salespeople still have a certain expected income.
We still have
benefits we have to pay, still have taxes we have to pay, we still have uh transportation,we have computers, we have cell phones, we have lot of expenses by salesperson.
(12:23):
So just asking all salespeople bring the same GP percentage doesn't guarantee to coverexpenses.
I want to know dollars.
I want to know true dollars per month per salesperson because I've got expenses to cover.
Now, I was on critical variables.
(12:45):
Market share, financial, employee productivity, asset management.
I want to measure the inventory, the turnover.
I want to look at how much obsolete inventory we have.
And by obsolete inventory, mean anything over 12 months old.
(13:08):
That is non-productive trapped cash.
And my fifth benchmark is I want to know what customer satisfaction score is doing.
Now, intentionally, those five are a mixture of long-term measurements, things over a12-month period, like customer satisfaction.
(13:39):
OK?
That's not usually just
the last month or the last three or four months, we get customer satisfaction over time.
And we can destroy it quickly.
can build it, but building it is not quick.
If we've got it up there to 85, 90, 95%, we didn't get it there in the last two months.
(14:08):
So to me, that's a long-term measurement.
Financial is usually under a one-year number most of the time.
We're talking month or year to date.
Market share, again, is a long-term measurement.
You don't get market share in a two-month period.
(14:32):
You get it over years.
You get trusted customers that are coming back to you over and over.
Those five benchmarks are meant to be a mixture of long-term and short-term measurements.
So on those, the inventory management is near and dear to my heart.
(14:54):
ah And especially now, ah as we've gone from this past, what, three years of having noinventory, then everybody wanted it to high priced inventory and then too much high priced
inventory.
And now we may be riding the ship, not in all categories though.
And many dealerships are still working through some of that aged inventory.
(15:18):
ah
You know, let's first talk about the psychological piece of it.
Why is it so hard to move and just get rid of something that is aged?
It's obsolete.
Well, you know, hard to get rid of stuff was probably a bad decision to start with.
(15:44):
Who's making the decision to accept trade-ins and how good are they at evaluatingtrade-ins before they take them?
Things that are on our lot for 12 months or more.
probably should have been a better decision to start with.
(16:09):
So what is the process you use to evaluate inventory?
Do you have a checklist?
Do you use the resources or something like what you're talking about of what's the auctionprice?
What's the local price?
(16:31):
Whatever you're going to use
Okay.
How long have you been doing it?
Did you do it 24 months ago?
Did you do it 36 months ago?
And is that the same equipment you have now?
Maybe you should go back and change process.
(16:54):
Maybe you need to evaluate things better.
But as we look at this uncertain economy, you may need to look at just unloadingequipment.
You may need to start looking at taking cash for what you can get for it and just convertit to cash.
(17:21):
may not have profit in it, but you need to get the cash out of it to keep the businessfunctioning.
And once you get your inventory down, don't build it again.
Okay.
Take a listen and grow.
(17:42):
In the dealership I worked with, the sales manager came in and did a phenomenal job ofreducing the used inventory level and brought it down.
But he had a lot of work to convince the owner that we needed to convert things to cash.
(18:11):
Some people, owners, sales managers, even salespeople, get emotionally attached to theequipment when they take it in as trade because they made the decision.
It's their reputation on the line.
(18:32):
They made that decision to bring it in because they thought it would sell.
They have trouble accepting that it may not have been a great decision.
an emotional issue.
But we've got to have some procedures in place that says used inventory is never going tobe higher than X and used inventory is never going to be in the lot longer than X number
(19:07):
of days or months.
And when it reaches that point, my humble opinion, you send it out to auction.
Okay, if your dealership takes in a tractor in March, then as of next April, I think itought to be out of here.
(19:33):
Okay, if you can't sell it in the next 12 months based on certain seasonality, then weneed to start getting rid of it.
Okay, because otherwise you're sitting on 40, $50,000 that is not anything you can use foranything else.
(19:56):
I can't use it for other trade-ins.
I can't use it for parts.
can't pay people with it.
Okay, you've got cash sitting on the lot and you've got to do something about it.
You need to be strong and make that decision.
So with that convincing then, because you're right, it is a lot of times it's the UEM, theused equipment manager, the sales manager, perhaps trying to convince somebody else that
(20:20):
this is the action we need to take, is our numbers, our math, the best way to do that,just running a financial model saying, you know, we're gonna lose this much if we hold it
for longer, or what persuasive method would you use if you had to go talk to an ownersaying, I know we're gonna take a
(20:40):
$5 million bath on this, but it's worth it.
You've got to have a process in place and different dealerships are going to havedifferent decisions of when they're going to do it.
uh Some of it has to do with ownership.
(21:04):
Some of it has to do with previous experience.
I've got one dealer I worked with years ago.
His parts department had a very large percentage of dollars that were obsolete.
(21:25):
They were obsolete when he bought the other location and he never did anything about it.
And I said, why?
He said,
I don't want to upset my banking relationship.
The bank thinks there's value there and I don't want to tell them otherwise.
Okay.
(21:48):
Not a great direction, I understood why he was doing it.
So respecting owners and their approach to their business.
What is the owner's
or senior management's reason for doing certain things.
(22:13):
Can we, using that, we structure an approach on how to handle parts inventory, usedinventory, even new inventory?
Okay.
What is it we want to accomplish and what are we going to do about it?
Could also be, I know a
(22:36):
dealership I'm currently working with that has been in business for 50 plus years and hasno debt.
Oh.
Unusual for many dealerships.
Yes.
But over the years, they've paid off everything.
(22:57):
When they make a decision, they're making a cash decision, not a finance decision.
that has a different impact on what procedures we're going to do.
my point is it's not one answer that's going to work for everyone.
(23:19):
We've got to go back to the dealership and talk about history, experience, strategy.
What are we trying to accomplish?
From that, we can craft a decision of what to do in the future.
I wish it was simple and say everyone should do this
(23:40):
Right.
Well, and if it was, everybody would have done that and, uh, and we would not be sittingwhere we are now.
Uh, you did mention, uh, parts inventory, uh, and you know, as an engineer or a formerengineer myself, like I love the idea of the just in time efficiency, you know, delivering
things where they need to be, when they need to be, and don't, have it just sittingaround.
(24:04):
But I also farm and we broke down many to
way too many times this past year.
And we were scrambling and driving all over the state to get the part that we needed so wecould get back up in time.
And again, we didn't know if it was going to snow in October or eventually in December andthen we had time.
We just don't know.
(24:25):
So that's a little scary.
But, you know, from your perspective, how would you manage, you know, restocking levels,um transfers, all of that, you know,
complex problem that is parts.
Okay, I'm going to try and keep this direct and short because you're touching on an areaI'm very involved in uh or emotionally attached to.
(24:55):
spent years doing some of that.
uh First, the computer system should have a methodology inside of it for looking athistory.
recommending stocking levels.
So what it was the stocking logic in the system.
(25:19):
Okay.
I'm hoping that first exists.
ah Secondly, in the dealership I worked in, as I said, we had six branches.
We established a trucking route that went from branch one to two to three to four, etcetera.
(25:41):
every day.
So if we had parts in branch four that were needed in branch one, rather than buy them, wewould transfer them by that trucking route and they would be there tomorrow.
So we were attempting to maximize the total inventory from all branches to take care ofcustomers before we bought them again.
(26:11):
because we already owned them.
One of the bigger issues I find for dealers in almost any industry is frequently ourstocking logic is something like if we get three calls or hits within a year, then we
(26:33):
stock it.
Our problem is we don't get rid of it quick enough.
The stocking logic
traditionally has been like no hits in 12 months, then we get rid of it.
The manufacturer may have already marked it as non-returnable by that time.
(26:55):
We need to consider tightening that uh get rid of logic.
I don't mind the bring it in, but I want to get rid of it before it becomes a problem.
You know, most of our logic in the computer systems has been built to be too lenient ontrimming inventory.
(27:26):
You got to take that up with the computer software guys.
Yep.
I know some.
So but I love your answer there.
And it really ties into a consistency from your overall inventory management of don't letit get obsolete.
And, and then also your earlier suggestion of, hey, use your computer logic.
(27:47):
And there's a lot more logic now out with AI as long as you're structured well, ah to tryto predict your levels, but also use a good method of practicality to have just run a
truck and go around.
And if you use the two in combination, you're using the best tools at your resource, bothin a very, you know, just a truck gas to move it around as well as, you know, logic and
(28:10):
AI.
Great answer.
I might even suggest that dealers, if you don't have six branches or 10 branches orsomething, do you have other dealers with the same brand within a local area that you
(28:30):
could share inventory transfers with?
Doesn't have to be the same ownership.
rather than
buying it from the manufacturer over and over and over, could you help another dealerreduce the inventory if you have the demand?
(28:53):
Just another idea.
On the obsolete inventory, anything over 12 months, what I'd like to do with that is runan extended inventory report.
I want to rank it from extended value high to low.
(29:15):
similar to what we're talking on large customer accounts and prospect accounts versusvolume.
I want to do the same thing with parts.
I want my obsolete value from largest to smallest.
I want to start at the top.
Now, if we're really going to use the computer software that is beginning to get evenstronger,
(29:46):
Can I match that first part number to a model of equipment?
And from the model of equipment, can I identify what customers ever bought that unit?
Because those are the only customers that would ever want to buy that part.
(30:09):
So I could market that part.
to just those four customers that have that model of equipment.
Okay, but it's gonna take some reverse engineering.
Okay, I've gotta take every part number, run it back through a where used system.
(30:34):
Tell me this part number is used on which models of equipment.
Now tell me which models of equipment customers have bought.
And now I wanna market that part number to only those four customers.
It can be done, but it's complex.
(30:56):
It is and it it gets back to what we talked about at the very beginning of well structureddata Knowing either what you've sold or what's on the farmers farm?
Again a good understanding in order to do what you want to do
And so shifting topics here a little bit, but not too far because we're talking inventorymanagement or parts management because it ties up cash.
(31:20):
And so if we move the discussion in terms of cash flow management in a time in 19 or in2025 year where, you know, it's a concern for sure.
Uh, you know, do you have any suggestions for dealers who are facing, you know, 10, 20, 30% less cash flow moving through their system this year?
(31:48):
I think the service department is certainly an area that I would want to focus onincreasing business because service has a much higher gross profit.
Doesn't trap as much cash in inventory.
(32:11):
And because it's not uh
a tangible product in that it's not an equipment unit.
It's not parts inventory.
I could increase the service business quicker than it could selling more parts or sellingmore equipment.
(32:35):
And I get more profit from it.
So let me use an illustration.
If I've got
10 technicians.
And if I could improve or get 15 minutes more per day from a technician.
(33:03):
Now 15 minutes, 220 days a year.
Or technician that's dropping all the vacation and all the weekends out.
220 days, 15 minutes, and $125 an hour at published billing rate.
(33:31):
I've got about $5,000 a year per technician for just 15 minutes.
Now, by the way, I said 10 technicians, Right.
That's 50,000.
And that was just picking up 15 minutes.
Now you could do that by how you round your time.
(33:57):
You could do that by not having technician that clocks in and goes and gets a cup ofcoffee and checks the newspaper before he goes to work.
There's any number of ways to pick up time.
The better one is, can I quote a customer for a job?
(34:25):
And if I can quote a four hour job, but the technician can do it in three and a half, Icould pick up half an hour and the technician could use that half hour for other billing.
So it's not only worth half an hour of billing extra,
(34:45):
It could be worth full hour.
Yep.
So I like the service department because it's going to improve revenue with the leastamount of investment.
Yeah.
The other area I would consider is going into rental.
(35:05):
Hmm.
Okay.
And by the way, both of these to me are uh methods of how do we improve our absorptiontoo?
We can come to that separate discussion.
Rental could be using equipment, which is currently on the lot that is just sitting thereidle doing nothing.
(35:31):
If I've got a customer that could use it but doesn't want to buy it, could I rent it for amonth?
It's at least cash that I'm not getting
while it just sits there.
Now, before you go jumping into rental, if you haven't done it, you need to understand allthe ins and outs of it.
(35:56):
But if you have the equipment and could rent it, it's potential.
Yeah, I just met with a dealer down in the middle of Texas and he went from a three storecase dealer and downsized to a one store Kubota.
Changes business model drastically, but he said it's it's much for the better because ofless of the used inventory and what he does take in.
(36:23):
He utilizes fully that rental model that you're talking about and he's like that now hisused equipment is making money for him and then it's out.
uh
And he's really streamlined and optimized all those resources in terms of his equipment tomake the most money for him and then not to cost him money because he gets rid of it after
that.
(36:43):
uh did a seminar for Kubota dealers, oh God, 15 years ago, something like that.
And one of the Kubota dealers said, you know, I don't want to get into renting tractors,that's what I sell.
Okay, that's his philosophy.
(37:07):
But he was renting.
But his approach was,
He would sell you the tractor and then he would rent you the postal digger.
He would rent you the boom or whatever else he, he was renting the attachments instead ofthe primary product.
(37:34):
I liked his creative approach to it.
He felt that he could make more money on the attachments by renting them himself.
Think about a rototiller.
Keep in mind, I'm going to the consumer side.
(37:59):
OK.
But if I spend $1,000 on a rototiller, that's a pretty good rototiller in many cases.
But if I put $1,000 into it and I could rent it for 12 weeks,
at the beginning of the season, spring, and I could rent it 12 weeks.
(38:24):
I'm going to have to do some real booking to make this work.
But if I could do 12 weeks at the end of the season in the fall while they're closing downthe garden and getting it ready for next year and all that.
And if weekly rental is about
$260, $270 a week.
(38:50):
I'm bringing in about $6,000 a year for those 24 weeks.
That's on a thousand dollar investment.
Now if I could do that for two years, I've got $12,000 and now I'm going to sell it for$400 because it's two years old.
(39:19):
I think that's a pretty good investment for a thousand bucks.
It is.
And you're also providing value to the consumer who may, I mean, if they're going to onlyuse it one time for their one garden every year, then they are only paying $200, $250 per
time instead of the thousand dollars, which they may not be able to afford.
They don't have to store it.
They don't have a storage facility.
(39:39):
And so you're providing extra value to them on top of, you know, six X in your money.
Yeah, I think rental is an under appreciated opportunity for many ag dealers.
It's a big category for dealers in some of the other industries.
(40:05):
Construction, forklift, material handling, things like that.
uh But I don't think agriculture has embraced it.
quite as strongly.
I think
There are issues that you need to watch.
Some are safety issues.
Some are what the lifespan of that equipment is, things like that.
(40:31):
And I know timeliness because I've talked to my dad about this quite a bit of, know, is asurvival business model and he's farmed 50 years and he's like, no, you need to get the
crop in the ground.
You need to get the crop out of the ground when you need it.
Everyone else needs it.
But I would say that the, you know, as technology has really come along, we can plant ifthe weather's good in a week and fall has really extended the harvest season.
(40:57):
And so I think there's more and more opportunity now that technology is better.
You can drive later into the night ah with auto steer.
And so I think it's becoming more and more of a viable option.
But I agree with you.
I don't see it in many ag equipment dealerships business models.
Thank you everyone for joining us in this episode of Beyond the Hood with Tractor Zoom andour conversation with George Keane.
(41:21):
Now keep in mind that this is a part of a three part series.
The next part, will be talking about change management tips and looking forward to thefuture.
Also, if you're not sure on how TractorZoom is already helping its partners have betterdata utilization and using that data to have effective use inventory management
strategies, go on over to TractorZoomPro.com.
(41:44):
You can learn more there.
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