Dealer Tech Tuesdays
Dealer Tech Tuesdays - Where we discuss all things dealership tech. The good, the bad, and the ugly. We believe tech can empower your dealership to conquer an ever-changing world.
Dealer Tech Tuesdays
How Data-Driven Decision-Making Maximizes Rooftop Profitability
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Pairing seasoned automotive instinct with the exact data needed for absolute operational transparency is the new baseline for modern auto groups.
Host John Acosta, CEO of VTech Dealer IT, brings together a panel of automotive experts in operations, financial leaders, and technology founders to discuss the practical application of real-time metrics in modern auto groups. They dissect exactly how to layer predictive data on top of decades of front-line experience to drive stronger performance.
Whether your goal is to maintain absolute operational accountability, align incentives with modern workflows, or protect your margins using long-term trend analysis, this episode delivers a practical framework built by operators, for operators.
MEET THE EXPERTS AT THE TABLE:
Frank D'Angelo – Chief Financial Officer & Corporate Controller (Held every seat where the numbers live. Deep expertise in dealership accounting controls, OEM financial statements, and multi-store cash flow optimization).
Geno Walsh – Buy-Sell and Valuations Expert (Former Dealership Platform Manager, now a specialist in leveraging multi-store operational metrics to maximize equity value during enterprise buy-sell transactions).
Prasad Chavali – Founder & CEO of Axel Automotive (Advanced data intelligence and AI pioneer engineering unified dealer analytics for proactive margin protection and real-time operational clarity).
Paul Jensen – Director of Strategic Operations for VTech Dealer IT (Dealership Operations Expert with 43+ years of front-line retail and operations management experience, now with VTech Dealer IT to maintain high level of alignment between dealership goals and IT management).
Hosted by: John Acosta – Host & CEO of VTech Dealer IT (15 years providing gold standard for dealership infrastructure, cybersecurity, and managed IT services).
VTech Dealer IT has worked exclusively with car dealers for 15 years, keeping systems running, data safe, and a reliable support team there when you need one.
Explore VTech Dealer IT services: https://www.vtechdealerit.com
Moneyball Leadership By The Numbers
SPEAKER_05Dealer Tech Tuesdays is brought to you by VTech DealerIT. Guaranteeing your dealership premier reliability, stability, and customer support. Transform your Tuesdays into a powerhouse of growth. Contact us at www.vtechdealer.com. Welcome to Dealer Tech Tuesdays. I'm John Acosta. For decades we sat in rooms where we made decisions on gut, on relationships, on the way things have always been done. And I watched what happens when we put data on the table instead. Today's episode isn't theory. Everyone on this panel has lived it. We built Moneyball together across 16 stores through an exit that paid off and inside the rooms where the numbers told us things nobody wanted to hear. So this is a conversation between people who already know where the bodies are buried. We're going to talk about data, trust but verify, accountability, and running an entire organization by the numbers and the resistance that shows up the moment you try. Today's episode is brought to you by VTech Dealer IT. Your dealership never stops, and neither do we. For 15 years, VTech Dealer IT has worked with car dealers and no one else. We keep your systems running, we keep your data safe, and whenever you need a real person, one is always there to help. That's what we mean by doing everything with speed, skill, and heart. Let me introduce the people at this table. Paul Jensen, we work closely together. 43 years in the car business, running operations, including fixed projects, construction, and emergencies across 16 stores in California and Florida. Geno Walsh, platform manager. He was on the plane when this whole thing started. Now he is on the buy-sell side, valuing stores dealers have built. Frank D'Angelo, the numbers guy from CFO, corporate controller, he held every seat where the numbers live. The man who held the actual numbers and the stories that didn't match. And last but not least, Prasad Chivali, the CEO of Axel Automotive, built the next generation of dealership data with Axel One and our exclusive partner in the dealership data space. Right. So one thing I wanted to start with is, you know, kind of this journey in general terms, right? It's like a highly profitable and successful auto group that was run through the numbers that um had a transformation. I know the dealer for, and we're speaking about specifically Kavali Auto Group, right? Where everybody on this panel had a role except for Prasad, and Prasad's bringing in the next generation of data. Um, Gino U as a platform manager, executive manager, uh Frank U as controller, corporate controller, Paul U as operations fixed, fixed ops. Um, you know, one thing I I wanted to kind of ask the ask the group, and thank you guys for all for coming, was what was what was the biggest resistance when you guys started looking at the numbers as a team?
SPEAKER_04When I first started, um the owner was asking specific questions about um KPIs. What numbers were was he looking for? How was the dealership performing? And we started putting together these spreadsheets, taking uh financial state uh statement data and keying it in, and then comparing that against all the stores that we had um and breaking it out into groups, and it was just very time consuming. What we were looking for was a platform, and what we started looking for was a um a platform that was online, and we looked at several. Um we ended up taking one and that kind of transformed us from being 45 days in arrears on data and bringing it to what was yesterday. Yeah, but it was just the DMS data.
SPEAKER_05So you're looking at an autopsy report, not an instrument cluster. Correct. You're you're looking at the smoking hole in the side of the mountain, right, rather than data that's gonna give you than the fuel gauge. Yeah, then the fuel gauge, exactly, like altitude-wise. So um, Gina, let me
From 45-Day Reports To Near Real-Time
SPEAKER_05ask you a question. What's um on your side? I know you're with uh performance brokers and dealers have sometimes inflated, sometimes real assessments of what their value is of the organization. What does the data expose in in that process and how do you fight that?
SPEAKER_01Well, you can't hide from the operating statement. The operating statement is gonna show a lot of you know the inefficiencies of your operation. It's also gonna show uh where you lack focus. You know, when we look at a lot of statements currently, you can tell immediately on page two uh if the person's good with uh 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. 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. You know, one of the big areas is in rent factor, right? 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. 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? And it depends on how large or how expensive that real estate is, right? So I think you said it to me a long time ago. 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. So yeah, show me how to keep score and I'll teach you how to win. So that's kind of like you see that a lot when you look at different uh operating statements. 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. Some people will want to put the money all up top to operational growth. Some people like to put all the money towards their net ads and deductions. Some people will take, you know, uh their reimbursements for floor plan or for advertising and post that same data into net ads. So everybody has, you know, a set of principles to follow. And I think revenue on an operating statement is probably the one that you can't you can't really trick. So revenue is probably the biggest one. 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. 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. You know, if you're at $15 million in annualized revenue and they're at 50, well, guess what? The 15 ones are not going to be worth a lot less than the 50. You can't hide behind that data, right? 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.
SPEAKER_05Yeah. And I think ultimately when you have the context, I mean that that's kind of a double-edged sword. 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. And it it it demystifies some of the process and the anti-transparency that happens with some of these transactions.
SPEAKER_00Yeah, definitely. I think as you were saying, the revenue number is revenue number. So some of the reports users keep asking, can you show a percentage of GP on every c every row? Like, why do you want to see that as a percentage of GP? You're looking at, okay, this is 5%, 2% of my expenses. 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. So I talked to somebody who said, Oh, this gotta be 27%. 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. 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. Right? 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.
Buy-Sell Due Diligence And Hidden Costs
SPEAKER_01That's usually the controllers' issue.
SPEAKER_05And uh that that creates the my next question to you, Frank, is that how often do you see numbers contradict management story? 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.
SPEAKER_03Realistically, that's that's where you're you see that more often than not. Um see a lot of different things. 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? 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. 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. And those are items that really, as anyone's evaluating a dealership, you really have to evaluate. 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. To the point, one thing you can't really fudge, for lack of a better way of putting it, is revenue. Because every time you look at a dealership, everyone has their own expense structures, right? Management fees, certain ways they pay, whether general managers, operating managers, uh advisors, everyone has their own type of structure. 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. 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. The first couple meetings were a little rough. 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. Controllers knew they had to have stuff ready to go by our Tuesday meeting, for example. 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. So now you're able to reallocate that resource in different different avenues rather than just reporting. 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.
SPEAKER_05Yeah, that makes that that makes sense. It's what's that what's that spreadsheet, like building that spreadsheet actually costs you. And and and I call those like non-revenue generating behaviors. 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. So that desiloing that happens is I think that's what the next revolution is gonna be. 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. Like it data's not true until you see it in a bunch of places.
SPEAKER_00Yeah.
SPEAKER_05Right? It's like you start seeing it in the same, and everybody brings their own report.
SPEAKER_00Like a CFO said, if I don't see the same number in five different reports, I'm not gonna trust it. What your number could be different in one report, he's gonna throw out all five reports, not just one.
SPEAKER_05Yeah, and and then the manager bringing in the report that defends their decision tree, right?
SPEAKER_01Show me a report up.
SPEAKER_05I'll show you how to interpret it. You're just poking them shooting holes in it and whatever.
SPEAKER_01We 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. And he was like, Well, what do you want the report to read like? Uh I want it, I want it to look like we're really doing great at internet closing percentage, right? So, you know, and then you go through and you start eliminating things that should be actually counted. 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? Uh they're they're like so focused on like Monday, this report's coming to come out and it better look right. So go in there and put everybody who's an internet lead into uh a fresh up, right? Because they're all more focused on internet closing ratio than they are on fresh up closing ratio, right?
SPEAKER_04And it's reporting by the art department.
SPEAKER_01Yeah, that's right.
SPEAKER_04Yeah, exactly.
One Source Of Truth Across Systems
SPEAKER_03To 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. And they they they get that report, like, okay, they are doing good. 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. And and that's where it's like I think there's an inherent desire to trust uh your entire management team.
SPEAKER_01You gotta trust but verify, right? 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. 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. Right. 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? It's important that we know when you're doing a buy sell, sometimes you have to bring in that CDK, right? And and I'm just naming DMSs, right? But your whole other company's on Reynolds and Reynolds.
unknownUh-huh.
SPEAKER_01Well, 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. 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. And the same thing with Frank. And uh we're all looking at Paul like, what's he talking about? 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. It's it's just something that's you know not accurate compared to what we can see on the financial statement, right? And so we scratch our heads and you know the biggest thing that's on an operating statement is your personnel. Like that's the most expensive thing that's on an operating statement, right? Even if you change it around and make it an outside service, right? Um at the end at the end of the day, the people is what's most expensive. 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? 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. 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. I'm paying this person this much money. Yeah, it's when you figure out somebody's a Decepticon, right? 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. It can't, I can't be wrong.
SPEAKER_03Going back to you inherently want to believe that your management team is right. And the biggest thing uh to your point, Gino, we I remember we called it we eliminated the yeah buts. Yeah, yeah. Yeah, but we don't have this, yeah, but we don't have we do this, yeah, but we do that. Eliminating the yeah buts as you're as you're doing your comparables across a platform.
SPEAKER_05Well, you know, like the trend I like I I got to see this from from an IT perspective, right? 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? 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. Okay, this is the numbers that we're having, and we've agreed on this over many iterations. And contextually, you have all the service managers, everybody working on their, you know, like side by side. So you have that context. All the general managers working side by side, so you have that context. All the FI managers side by side having that context. 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. So, you know, it's like when in baseball, it's like steroid use comes out, like how they measure it. It's like if there's a massive jump in performance, there's something wrong here, right? It's like a massive jump in performance, there's something wrong, and a massive like decline in performance or something wrong. It's like, what does the trend look like? And are you trending in the right direction? 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. Yeah, the three P's, as Paul likes to say.
SPEAKER_01People process and pay plans.
unknownYep.
SPEAKER_05But 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.
SPEAKER_01Well, the only the you know and Prasad, there's another P. Um But the only way to do it is to tie the pay plans to the to the technology piece, right? That was one of the big, you know, Eureka moments. Oh, uh okay, we want to get people to actually use these tools that we're spending so much money on. 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. And it turned into revenue. Yeah, it turned into more revenue.
SPEAKER_04We you by incentivizing the people to just follow the process, the money follows.
SPEAKER_01Yeah. Carrot in the stick, right?
SPEAKER_05So there's just and one thing that I like about you guys is the playbook
Playbooks Notes And Exception Management
SPEAKER_05concept, right? It's like what do you want your another P. Another play P, right? So there's there's six P.
SPEAKER_00Yeah, the playbook. And if any actually ask somebody, what is your playbook, they're like, okay, we always wanted to work on one. So I don't think many people actually sit down and say, What should we be looking at daily, weekly, and monthly. And when my flagship customer asked me first, hey, can we put our playbook in here? I wasn't even sure what exactly they wanted to kind of put it in there. And you should talk about pay plans. You know, then they start running these weekly meetings of our data. So when you come into weekly meeting, I saw people like filling their spreadsheet. Okay, what's my number? So they run one of our reports and uh, you know, put that number in there. That's when I realized what we're providing is more than just reports or KPIs. You're now starting to create an operational flow. What how you should operate like on a daily basis? Who should be looking at this weekly, you know, and are they looking at it? 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? Because the exception management is the only way you're going to be able to control anything nowadays. And I keep telling everybody the reports the way that we used to run five, six years ago. I mean, they're still valuable, but everybody's short uh attention span is so short right now. It's almost like call it a real culture, thirty seconds. If you don't tell me everything in thirty seconds, I'm gonna scoop over and then go to the next topic. So we're starting to condense those digits to a something that I can explain you in thirty m thirty seconds. 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. I know that some of them were KPIs, but you had to now translate, and we add another line at the bottom. For the last 90 days, this was what it used to be. Because the other thing you'll go, okay, these numbers are good. I'm just new here. Is it still good or is it bad? Nobody wants to kind of run the reports to actually find that out nowadays. 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.
SPEAKER_04And 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. Is it a missed posting or is it bad news?
SPEAKER_05Well, the like I was talking to to a dealer principal recently that that had their controller retiring, right? 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. And then you start you want to have the dealer principal that doesn't have a profound knowledge of. You won't make it four months. You don't want to make it like you won't make it four months, exactly. But you want to start seeing the falters. Yeah, you want to start seeing the the the cracks in the system very quickly. And I don't I haven't seen anything that can give an owner that perspective.
SPEAKER_03To that point, you know, that's the thing. As we all seen in the automotive industry right now, talent's at a premium. I mean, it's at a significant premium. And there's a lot of people getting moved into seats that they're may not may or may not be ready for. 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. 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. 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? Or I have inventory that's sitting there for you know 180 days no one's done anything with, what do we do? 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. 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. Right. I mean, if you think about this, you know, a lot of money gets tied up in work and process.
SPEAKER_02Yeah.
SPEAKER_03Right? Incentives, aged inventory, wrong inventory, wrong mix. And you know, the last famous last words of anybody in the car industry, I'll retail out of it. Yeah.
SPEAKER_04One of the things that's key also that you do very well is putting notes on things. 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. 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? And everybody knows. And it's just clear communication. That's that's a a real key to everything is having real clear communication across teams. I think that also allows us to be.
SPEAKER_00When you have multiple stores, right? 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. And then we add another feature. How many days has it been since last note on the on the open RSP? Excellent. Because you put in and say I'm waiting for something and you just leave it there. And how often should we be updating? 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.
SPEAKER_03You said that exactly correct. What it does, what allows a management team to do a set an expectation.
unknownYeah.
SPEAKER_03Here is exactly you know we expect an update every three days on these parts. We expect an update on the CIT that's uh over four days daily. When's when is it funded? When's the cash coming in? It allows a a principal, a dealer principal or an executive management team to really set the expectations across the stores without prejudice.
SPEAKER_04And 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. If nobody's watching what's going on, nothing gets done.
SPEAKER_05Yeah, and and the is it uh answers that question, is it a knowing problem or a doing problem? It's like people, we there's like seven things management-wise that we can control. It's like what a good job looks like, are they trained? Do they have the access? 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? Do they have the authority? And then you can say you can answer is like, are you actually resisting doing it because you're not doing your job? And then you can make a change, right? If you have to. But that context is is powerful to say, does everybody know that CIT needs to be updated daily, right?
SPEAKER_01I think what you're talking about, uh, because I know we've been talking about the money ball thing forever.
unknownYeah.
SPEAKER_01If you really think about it, it's culture, right? And culture is set every day. 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. It's set based upon the activities and the allowance of things. Like your culture is what you allow, right? 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? Then your culture is we don't moneyball. Your culture is we don't care. We we have all these tools. 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. Guess why eliminate the last five years.
SPEAKER_05Guess why?
SPEAKER_01Because there's no culture of managing work in progress and incentives and and and there's no culture in and managing CITs. 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. The only two things we do in automotive is we sell things and collect money. Yep. Yep, absolutely.
SPEAKER_05And and last five years, it was easier than ever, right? Everybody was talking about money balls like steroid era.
SPEAKER_01No, there was no what I it must have been really hard for anybody. 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. And they're like, dude, the fish are jumping in the boat. Yeah, exactly. Like, what what do I need a sonar for? What do I need why do I have to have the latest and greatest lure? Like they're literally jumping in the boat. Like I I I have to leave after five minutes of being on the water. And you know, slowly but surely that plus me, that happened.
SPEAKER_00And like, what KPI are you going to show me? I don't even have cars to sell in what KPI is going to be. Exactly in that time frame, yeah.
SPEAKER_01Yeah, 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.
Why Trend Beats Benchmark Now
SPEAKER_01Because the world is changing again. And and that's what I'd like to know. 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? And now what did the the next five years look like? 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? 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? And and so that's not the case anymore. And I kind of like I want to see what the data is gonna show going forward. 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. 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. And like, this doesn't make any sense. Like, we did everything we were supposed to do here, and it's not selling. Well, we weren't playing by the same set of rules as the other folks were because of you know the allowance. Like, there were laws on the books to not allow it to happen, but they allowed it to happen. 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. Um, there's gonna be a lot more than scouts and you know, Rivians and Teslas, you know, uh and Carvanas, right? 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? And uh so I'm interested to see how your reporting comes back out of that. What have you seen? Any any le any learnings that you've gotten out of it?
SPEAKER_00Yeah, 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. Where you where are you hiding your data? Where is the source of it? 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. Yeah. So we've we keep finding people are now starting to shift, looking at, okay, right now I need to look at the expenses. How did I used to do expenses in 2021? You know, when nobody actually looked at it hard enough. 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. And that's what we were trying to say. What are you looking for the data now? 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. Oh, we never did that. Well, you know, data is not gonna lie. That was the whole premise of that conversation, right? Data is gonna be data. I don't make up any report, you know, the data is going to be report.
SPEAKER_05And you know, here's a here's a tough question. It's like, is benchmarking an antiquated way of looking at things? Like, do you only want to measure yourself of how you did 90 days ago, right? Is that progressing in the right direction rather than getting industry benchmarking? Because the the reality is over the last five years, benchmarking is not it's not anything that's a good thing.
SPEAKER_03Well, take a look at the take a look at the depends on the brand, for example. Right? Right? Take a look at 2023. You benchmarked yourself over a 90-day period, your interest interest rates quadrupled. Yeah, yeah. 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. And markets are gonna continue to shift as things happen, whether it's geopolitical, um overall environment or a retail environment, right? There's gonna be continual shifts in the marketplace. 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.
SPEAKER_00Last month, last year, so when they used to do these benchmarks even for everything. How much value is it's going to be anymore with this changing landscape? Are you gonna be able to compare last year and feel like good about it? Or is it just a something that you're used to?
SPEAKER_03So And that's the other side too. You take a look at again first quarter of last year, car sales were higher than they had been the year before, right? Well, was that an actual shift in the marketplace or pre-tariff?
SPEAKER_01Exactly. Exactly.
SPEAKER_03Everybody race raced to buy a lot of cars. 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. There's gonna be that that anomaly. 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. Then 2010, everything reset, then we were pretty good until 2020. 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. Can't wait. Exactly. Yeah, it's like it's always sunny in South Florida.
SPEAKER_01To 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. You had a 2% interest rate. You know, we were selling cars, and you know, some of the dealers were selling cars. 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. There's a lot of boats out there named August 2020, right?
SPEAKER_05September 2020.
SPEAKER_01PPP. There's another few. PPP, yeah, exactly. So so I I think you need to have data that's like really up to date constantly. And so like the benchmark is not really it's a trend more than a benchmark.
SPEAKER_00I 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. Because are you the only one doing you know like this, or is everybody? So at some point we have enough uh customers on our platform. We're gonna give an analyze data saying that this car is this segment is doing plus five percent. 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. Like it used to take 45 days, look at the financial statement, upload, analyze, and look the areas of improvement. That was so uh overnight right now compared to you cannot wait 45 days to react anymore. Gas price is going to change, and all of a sudden you're gonna sell the trucks again tomorrow, next week. I mean, world events change every week or month.
SPEAKER_03Yeah. Exactly.
SPEAKER_05At the end of the day, you know, it's it's the only consistent thing in the automotive business is change. And your ability, yeah, exactly. And your ability to adapt to that change. 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
Tech Stack Audits And Shelfware Waste
SPEAKER_05like.
SPEAKER_04One of the things I think that's also very important is your tech stack. 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.
SPEAKER_01Yeah, well, like here's one. You want to hear one that's really great? Like we we've implemented a lot of different tools. So one of the tools that we implemented was a CRM that had a desking tool in it, right? And I and you were involved with this, so this is a good one. So um and then and and I changed the way that I helped people after that. 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. Whereas a veterinarian, the person, the animal can't speak to you. So you have to like figure out where the problem is. 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. 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. 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? Can you tell me if I desk this properly? And they go, Oh, the desking tool, we don't use that. Right? 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? And we had the desking tool for at least a year, right? 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. 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? But the inefficiency, like that number wasn't even wasn't even quantifiable. 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? And so, you know, not only is it, you know, that's why I became a veterinarian. 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. So that's where you get the shelfware, right? Yeah, but the network is huge too, right?
SPEAKER_00Remember 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. And you put everybody in and say, hey, how many of these you guys are using? All of a sudden you find at least three or five that nobody even knows they're still paying for it. Yeah.
SPEAKER_05And 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.
SPEAKER_03And a lot of print dealer principals, yeah, and I could see where their point of view is coming from. They look at that overall tech stack, they look at the uh overall network uh capacity. Like, well, it's just money going out. They never see the additional revenue coming in. On to your point, Gino, about being able to desk a deal and being able to do it to somebody remotely. And when I we got my first Audi from Oakland, yeah. 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. Yeah, yeah. And and to a further extent, it's the other thing. Started going through the the uh CRM. We're looking at how many calls people were making, how many touch points they were getting, how many times they were making appointments. Same thing with service. 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.
SPEAKER_01I'm sorry, Audi went to one of the she was a receptionist Audi. We put her over at Subaru.
SPEAKER_03That's right, yeah. And she'd end up being one of the top service advisors that month.
SPEAKER_01$120,000 worth of gross.
SPEAKER_03All she did was follow the process, do everything. No trend. Just here's how you do it, do it every time. And I remember seeing the payroll that month, and I still I've talked to multiple people about it. How called Gina Web and I said, Is this right? Like, she really did $140,000? Yeah, yeah. She followed the process. I'm like, man.
SPEAKER_05I think there's a bias when when looking at data is like the data will kill your bias as fast as possible, right? 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? You know? 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?
SPEAKER_01Like, what's the So here's one that I can tell you. When I started in the industry, nobody had websites. Like an internet lead came from the fax machine. There were no pricing on cars, on your used cars on the lot. Like there was no internet, and there was like like our first you know, website was a $99 splash page from autotrader.com, right? 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.
SPEAKER_03That was being revolutionary after the last page on that.
SPEAKER_01Oh, it was gonna end the car industry. The internet was gonna end the car industry.
SPEAKER_02Yeah.
SPEAKER_01So, you know, it's there's a lot of changes still to come, right? 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? 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? Because if you do your play over and over again, well, Nick, great story. I love it, but you're analyzing every play every day, every single down, every single second. 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. Of the day and then a checkout. And it doesn't matter what department you're in, fixed ops and parts and uh variable. 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? Yeah, but you can also rocket mortgage some of the team members that aren't doing what they say they're doing as well.
SPEAKER_04So and finding holes in the boat. 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. And send me all your bills. We analyzed them, and they were paying about $8,000 a month in services that they no longer had. Wow. Where the payables girl was just paying the bill.
SPEAKER_01They just want it off the desk. Yeah.
SPEAKER_04Get it off the desk.
SPEAKER_01Get it off the desk. Because they got yelled at once for not posting that bill the year the month before. Yeah. And there was a double posting. There was a double posting. And general manager goes, How the heck is my my my expense sixteen thousand dollars this month? It's normally eight thousand dollars. 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. And they're like, Can we can we do that over three months?
SPEAKER_03Yes, ever famous amortization.
SPEAKER_05But you know, that that speaks to the you know, 1010, right? 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?
SPEAKER_01It's it's the winning by circumstances or winning by knowledge. And sometimes we win by circumstances, and so we just continue the same behavior over and over again, and we got lucky. And you know, it's better to be lucky than good sometimes. 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? 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?
SPEAKER_05So 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? 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?
SPEAKER_00I mean, m most of those guys are still running by the gut because they don't trust a lot of systems, right? And we talked about tech stack in the last question. Nowadays, this it's actually actually increased, right? With all the AI tools. They can buy everything. It went from 1520 to 25 now. Because they're all trying different things. So I started looking at the tech stack now. Oh, yeah, we just implemented this for BDC AI, or we implemented this for recording nodes. I mean, I went to the SO2Con and I saw so much new tech stack coming out. It's gonna be another revolution of what I'm paying for, what I'm not paying for. Six months from now, I would like to see how many more things they're buying. Then I also talked to another dealer and they said, How many calls are you getting a day now? People wanting to pitch a new technology because everything is now enhanced by AI. It's the same thing, but it's now enhanced by AI.
SPEAKER_05It's like crappy CRM.ai. Yeah. You know? Like it's it's garbage in, garbage out, right? At the end of the day.
SPEAKER_00If you started using so many technologies, how would you even ask people to use them and trust how it's gonna help you? So they will just give it a try. If it doesn't give you results immediately, they're gonna just deviate. So we started looking at the user activity. How you said some people are not using testing tools in CRM, right? Paying for software is one thing, how many features they're using is the other thing. And how many times they're using is the third thing, right? So we kept looking at on our platform, why are people not logging in? 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.
SPEAKER_05Better or it makes their job easier.
SPEAKER_00Uh whatever it clicks for that.
unknownYeah.
SPEAKER_03You 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.
SPEAKER_00And 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? And they now log into and then pull the number quickly instead of say, Hey, let me get back to you. Right? This is some some other uh feedback I keep getting. And a lot of GMs are pretty smart. They came from selling cars, you know, all the retail guys, they want to make the deals and all that. 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. Because one, they don't know where to look up. They don't, you know.
SPEAKER_01It's because the service department wants everything to be by gut. I can tell I can tell you, servicemen parts, they they they are probably the biggest pushback on any of the data. I know because they you start form you start formalizing them, they go, uh oh, I know what's gonna happen right now. They're gonna track actually my activities and and they can maybe replace me, and and they start getting a little nervous.
SPEAKER_00That's exactly what he said. 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. But we're now starting to give them more real-time numbers to start making them like, hey, I can look this up myself. So I was talking to one uh one of our friends, Joe Shaker. He said, We need to create a GM playbook on how to look up numbers easily to do your job better. Then you will all in then you will start having much better results across the board. 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. Oh yeah, I never got that number. 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.
SPEAKER_01The one thing I will tell you, most owners ask questions they already have the answers to. So uh you can only play? Well, you can only play uh and if they're partnered with you, you can only play that game so many times. Yeah, let me get back to you because they're like, no, no, no, no, wait. Like uh you don't have to get back to me. I actually have that information. I was just trying to see whether or not you do. Yeah, yeah, right.
Fixed Ops Adoption Video MPI Pay Plans
SPEAKER_01And uh you know, there was a wall for a long time between service and sales, and it was intentional somewhat too, right? I can beat up on Paul a little bit about this. Like they don't want us to know what's going on, right? And uh the ambiguity is kind of a good thing, you know, and for them at least, right? 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.
SPEAKER_04And 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.
SPEAKER_01In ServiceNow, it's like how many times are you doing the digital walk around and how many times are you doing the digital MPI?
SPEAKER_04And the video, it's the same.
SPEAKER_01And 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.
SPEAKER_05But let me let me push back on that. But let me push back on that. It's the you know, I remember when you guys implemented the video walk around. 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? But when the first one, the first early adopter started doing it and their pay plan blew up, right? Everybody else was like, they sold more hours, exactly. And then you guys incentivized the adherence to that process that ultimately gave the outcome that you wanted.
SPEAKER_01Commitment 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. We have a new bile, you know, service advisor, and he goes, Well, what should I do? Just send the video. 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. This is a $19,000 repair. Uh the customer's gonna get upset or mad when I call them. I go, send them the video and then call them and say, Well, what did you think? And that's it. Don't say anything after that. And the customer goes, Well, it needs to get done, right?
SPEAKER_03And that that's so good.
SPEAKER_01But then you then you but then you champion that. 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. I remember why don't you want to do that?
SPEAKER_03Like I I remember the first time one of the Audi stores we started doing the videos, techs were completely resistant. And the first one pops like a $3,500 was it, break job or rotors. I can't remember exactly what it was. You can see everybody like, oh light bulb.
SPEAKER_01Wait a minute. Yeah. Well, then they used to get mad at the advisors for not sending the videos. Exactly. Right.
SPEAKER_03And 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. What did you guys think? What would you are you guys gonna pay me to do the video and to and do the MPI?
SPEAKER_04That was the first pushback you got by the county.
SPEAKER_05But 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?
SPEAKER_00I think he said, you know, everything works through the pay plans, right? 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. 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. And you started reporting.
SPEAKER_04And that's tying the payroll platform to the DMS. Yeah, exactly. 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. Yeah.
SPEAKER_05Well, 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? So let's say your guys' autogroup, when when he just bought it, right? You're just establishing basic things. And then there's an optimization phase, and then there's a fine-tuning phase. So if you go into a fine-tuning product into the dumpster fire, it's not gonna, it's not gonna stick. Everybody's gonna resist it and they're gonna resent you for it. 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.
SPEAKER_04And that's building the culture that goes right back to the culture question.
SPEAKER_03Yeah, it's all culture. I la I still laugh about how we used to do the quid games with the uh technicians.
SPEAKER_01Oh, yeah, that was fun. Yeah, we did we you make it exciting. Uh, the technicians are really easy. You give them a you know, a $200 uh gift card with some, you know, mama doesn't know money. And uh because they like tattoos and they're gonna be.
SPEAKER_03Well, you want to talk about how competitive that got? I mean, that that you would have thought they were playing for the blood.
SPEAKER_01And then you would you would give them the feedback and say, okay, who has the best video? 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. 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. You know, you've seen those videos, right? To hi, I'm Jimmy, you're a service technician here at such and such motors. And you're like certified.
SPEAKER_02Yeah, guess what?
SPEAKER_01They get the little hiller. 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. Like they felt like they were part of the process. 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. 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. But if I don't do it, the car's gonna explode, right?
SPEAKER_04Yeah, exactly. Well, you wouldn't want to leave your wife on the side of the road like that. Yeah, you brush your teeth, don't you? You want to get this done.
SPEAKER_01Your kids are in this so that technology actually translates to people having a better experience. And when people have a better experience, what do they do? They spend more money, right? Like, and that's what to your point.
SPEAKER_00Who's not doing that now? But to your point when you originally when you started this people like, yeah, why should I do this to now? If you don't send a video MPI, how many people are gonna plus you would say?
SPEAKER_03How many people do you still hear? I need more traffic, I need I don't have enough traffic. Is it really do you need more traffic or do you need to maximize traffic that you have? Both. Right? I mean and and that that really becomes a big question. And to your point, from a deal of principles point of view, that how is this going to monitor? How is this going to turn into a cash in the bank account? Right?
SPEAKER_00In 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. And all you had to do is tweak a couple of those numbers to start increasing the revenue very quickly. You don't need to hire a bunch of new techs yet. No, it's how you dispatch your work. It's going to be high. If you add this gamification, he's talking about, hey, how many oil changes you can do an hour.
SPEAKER_01We had to do that, we had to do that during COVID. Yeah. 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? And it which is kind of crazy, right? Like I think about it, and I was like, we let go of a bunch of technicians. 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. 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. Uh, and the customers were happier because they were getting taken care of by uh technicians that did their jobs better, right? 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. And then we had a really efficient shops, then our headcount went down, our efficiency went up, our productivity went up. 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? 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. 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? Everyone's screaming and yelling, no one's happy. Next thing you know, they're talking to other uh, and by the way, technicians talk to everybody. 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. 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? And then of course they didn't tell you know just their wife and you know their mom. They told everybody, all the technicians that I'm getting five dollars more. So then every technician wants five dollars more, right? 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.
SPEAKER_04And 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. That's right, yeah, because they're getting it's a vicious cycle. It's a vicious cycle.
SPEAKER_03Do you think it'll ever create a sense of apathy in the shop too? 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.
SPEAKER_01Yeah, 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. 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. 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. Yep. And then you're the new guy, nobody likes you. And next thing you know, I'm getting a phone call. Can you move my uh my my tools back? And you're picking up the phone, and that's my that that's kind of my favorite one, too. I was like, hell yeah, I gotta send in the truck mail.
SPEAKER_03We had that happen for like three dollars an hour, didn't we? Somebody went for like three dollars an hour and and didn't even make it 30 days.
unknownYeah.
Metrics That Turn Profit Into Cash
SPEAKER_05So here's a question for the for for everybody on the panel is what do dealers need to be looking at? Or so give me a no give me one number everyone should face tomorrow. Every dealer should face tomorrow that they'd hate you for.
SPEAKER_03Everyone wants everyone sees the great gross profits, the net profits. You see $12 million net profit, you see four million dollars on the statement. Four million dollars in your bank account. Exactly. That that that's a that is a it's a punch in the face. 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. It's not in your bank's not in your bank account.
SPEAKER_04The one number that I would say is what's on your 13th statement. Because that's that's where you're hiding all your sins. 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. If your 13th statement is small, you did a great job. If you're buried on a 13th statement, what'd you do? What'd you really do? And you're overpaying your people.
SPEAKER_03Yep. You're small, you're eating their sins.
SPEAKER_01Mine's gross per employee. 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. 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. Um but you know transversely, the the same thing can happen. 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.
SPEAKER_04So 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.
SPEAKER_01Yeah, you need five parts people for a fifty thousand dollar parts revenue, uh gross line. That happens. I know.
SPEAKER_03To your point though about the super gross, I think it's a very valid point because everyone will look at, for example, new cars. A lot of a lot of new cars still retrade for below uh invoice in certain markets.
SPEAKER_01And 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. 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. Thank you. Thanks, thanks, Frank.
SPEAKER_00Took me some time to realize what super gross is, but now I'm actually familiar with it. But the one number that actually came out of all the reports we show, the performance standards. 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? 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. So sometimes you skip over that. 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. Yeah. 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. 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.
SPEAKER_05Yeah. My number would be Missed calls. Straight up. Still the highest intent. You're picking up the phone to do business with the organization. And if you saw the missed calls that you had in your organization, you'd be appalled. Right? We're looking for revenue everywhere. And it's like the phone is ringing and you're mixing those calls and sales and service, get update on their vehicles. Like you're you're taking care of your herd that wants to transact with you and you're completely missing those calls.
SPEAKER_04Yeah, he's answering all of those calls. And it comes down to you have to have a phone system that tracks that. So that comes back again to the tech stack.
SPEAKER_05And 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? 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. 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. 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. And and I think we the the our world is still abound with opportunity for that.
SPEAKER_01Uh yeah, I I the biggest thing I I was thinking about this today before I was coming down here. 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? We're not there yet. So but those folks need to you need to educate them on how to like change the data to a more favorable data set. Uh and so a lot of us will focus in on just the data and not how to you know correct the data. 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? So identify the issues is super important to do, right? Because you you can't go where you want to go unless you know where you're at, right? 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. You know, they're already, you know, applying for you know some position somewhere else, they're on the phone, they're not focused. 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. 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.
SPEAKER_05Well, there's I think we for so many years for and for decades upon decades, people were arguing about the validity of the numbers. Like that part has to be in the equation, has to be solved. It's like we all agree that these are the numbers, and now we can actually do something about it. 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.
SPEAKER_03I 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. 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. 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. You know, we'll see more of that, and we saw a lot of that. 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. 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. 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. 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. I remember you telling uh one person exactly here's exactly step one. 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.
SPEAKER_01And we and we came up with checklists for team members like general managers, and we were talking about he was talking about that before. We need a playbook for the general manager. I was like, oh, we got one. You were reading my mind on that, man. I was thinking that I was thinking about it. How much am I gonna make? But but but but having that checklist helps, right? So and that's kind of what we did. We the checklist for the service manager, the checklist for the general sales manager, checklist for a salesperson.
SPEAKER_00But the data can actually start helping in the small areas. I understand. Like you need to show the top opportunities. 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.
SPEAKER_03He's gonna push back to push back too. 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? It's making sure your ROs are closed, your receivables are paid. That takes your your net profit and turns it into cash. Yeah, right.
SPEAKER_01I mean, it's it's not having, you know, looking at your getting rid of finance managers and having doc processors. How much more cash do we have on the account?
SPEAKER_03We 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. Right? 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. 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. Well, you start to expose those things of where your average CIT stands. 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.
SPEAKER_05You 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? And great stories of potential of the organization. Yeah, for the potential at least. Yeah.
SPEAKER_01She could still have some outside factors that just kind of I mean, which is the change part, right?
SPEAKER_05And so we'll adapt and adjust and things that we can control and things that we can't.
SPEAKER_03You know the old saying, how you do anything is how you do everything?
unknownYeah.
SPEAKER_03The more successful people I've seen, they're following the exact same processes. As times are good when times are bad. They're maximizing everything they did when times were good, so when times are bad, they're ready for them. They don't have to have that, oh my gosh, moment where they I have to change this and I have to change that. They're ready to walk into it. 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.
SPEAKER_04When COVID hit and we had that big reduction in force, we didn't change our processes.
SPEAKER_05No. And when the CDK hack happened, you guys didn't change your processes. You just went to paper and it you guys didn't miss a beat. Right. Which is amazing. Which it was That's great.
SPEAKER_01Bring it back. I want more of that. That was awesome. Going through two buy cells and a CDK.
SPEAKER_03But to your point, though, you're able to use utilize Darwin. Oh, and two hurricanes. Utilizing Darwin to deliver deals. 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. Exactly, at minimum.
SPEAKER_05Yeah. And you know, to back to your point, Prasad, of like the data is good when it shows up in many places. Culture is good when it shows up also in many places, right? So everywhere. Everywhere. 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.
Closing And The Playbook Tease
SPEAKER_05And I just want to really thank everybody for coming today. 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? 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. And and I think um the the really the future is ours, right? 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.
SPEAKER_00So it's fun. I even I learned a lot today. Because you guys have been in the operations a lot more than I.
SPEAKER_01Thank you guys. Thank you for having us. And that playbook is still for sale.