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In this episode hosts Casey Seymour of Moving Iron LLC sits down with Prescott Shibles, the general manager of Randall Riley’s asset intelligence division.

The two discuss the trends they are seeing in the used equipment market and how the way dealers acquire used equipment may need to shift in the future.

Prescott shares how he uses predictive analytics and data to help determine valuations and how emerging technology is impacting valuations.

Watch the VIDEO REPLAY of this podcast.

Full Transcript

Kim Schmidt:

Hi, I'm Kim Schmidt, executive editor of Farm Equipment. Welcome to Farm Equipment's Used Equipment Marketing Roadmaps podcast. In this episode, host Casey Seymour of Moving Iron LLC sits down with Prescott Schibles, the general manager of Randall Riley's Asset Intelligence Division. Let's jump in as Casey and Prescott talk about predictive analytics and turbulent data as it relates to the used equipment market.

Casey Seymour:

So let's jump into Manson. It's a weird time right now, especially when you're trying to use a crystal ball to figure out what's going on. Half the time it's so cloudy you can't use it anyway, and right now I think it's a black gelatinous mud that you definitely can't see what's going on in the marketplace. We've got delays out there and what that looks like. We've got price increases, we've got canceled orders, we've got delayed orders. We're looking at new orders showing up nine months to a year out even further and depending on what it is and manufacturing those kind of things. So I guess Prescott, when you guys are looking at the EDA data that comes through with that stuff, let's start with that first. Let's talk about EDA data for a minute. So when you're looking at EDA data right now and the amount of stuff that's getting booked outside of someone's normal role trade cycle and those kind of things.

So that's one thing great about EDA data is it's very easy to have that conversation with a customer. It's like, looks like every three years you're trading your equipment. Every five years you'll trade equipment and you can start targeting those things. But right now if there were two or three or four years versus their normal trade cycle, it might be out five or six years now just because of the way things have landed and those kind of things and the skew that you see there. How you having that conversation with your customers and how much has that affected the data that you see out there right now?

Prescott Schibles:

Yeah, I mean I think a couple of key things. One, seeing different patterns for different kinds of buyers.

Casey Seymour:

Right.

Prescott Schibles:

So one of the things we looked at your conference was combine stuff and seeing that hey, the under five year stuff was performing similar to new, down 15%, and the older stuff was performing similar, but the five to nine year old stuff was not selling nearly as much. Had about a 32% year over year decline and that's been in decline since last September.

So I think you're seeing certain cohorts of buyers opting out of the prices that are out there right now and based on the buyer behavior that's going on in that market. Folks that have really good balance sheets want to keep the younger equipment and keep their operating costs down and folks that don't really don't want to make bad investments at the top of a used equipment market in the same way that dealers are kind worried about it.

So I think a lot of what we're really working towards is trying to help customers, our client success department does a great job of really taking that data and trying to bring some analytics behind it and tell the story, here's moving, here are the themes that are changing in your market. I was talking to a dealer in Tennessee just yesterday about some of the really big shifts in his market and different strategies that they can deploy to get there. We just launched a couple of things that I think are interesting on that. Our predictive model's been out for about a year on that. So when you do have a challenging piece of equipment, I think one of the great things that we're able to do is really bubble up some high quality leads based on our predictive model, who's likely to buy in the next year.

The second thing is we introduced all of our brand loyalty stuff. So what we're seeing is a lot less, and I don't know to what extent you're seeing in the market, but we're seeing a lot less brand loyalty as people are kind of forced to consider new suppliers. And that means equipment and parts and tires and just about everything else.

Casey Seymour:

Yeah, and the customer loyalty side of that, I mean I think we saw some of that customer loyalty, the internet's made the world a pretty small place. So it's really easy to get a lot of information out pretty quickly, especially when you get it all on your phone or tablet or whatever it is. And especially if you're sitting in the cab during some planting season or harvest or whatever it is that you got going on there, not that you have downtime when you're in the cab, but it's just driving itself so you're kind of monitoring monitors. So kind of paying attention to those things and what happens there.

I don't want to say customer loyalty has gone away because I don't know that it has gone away, but you have to work a little bit harder now than you've had in the past to maintain and grow those relationships. Especially with a newer generation coming into the farm. You're seeing a lot more folks that are spending a lot of time looking at the latest and greatest whatever it is and they don't buy the same way that the previous generation did. And I don't want to say it's a disloyal group by any means because that's not what I'm saying. But what I am saying is that it's just a different buying pattern than we've seen in the past two generations that come along with it.

I mean they're looking at not so much as the dealership that's five miles away, not necessarily because they're five miles away, they're going to do business there. They're going to look at some other options that are out there too and whether that's on the equipment side or the input side or wherever it is, the banking side, whatever it is, I mean there's a lot of different functionalities that come into play there and it's just, like I said, more information's available, more responsiveness, those kind of things are all playing into that customer loyalty factor.

Prescott Schibles:

We just finished a survey of buyers and we saw a couple of interesting things, relationship with local dealers still the second most, they still cite price as one of the key influences, like 63%. The 56% said relationship with local dealer much more so than the brand. So I think the one core thing that I would say is, hey, you're kind of more in control of the loyalty factor as a dealer than your OEM is. And I think when you think about workforce development, when you think about customer service, those are the core ways to help sure that up. But we do see, even though some folks are loyal, 71% of those respondents said that they consider two or more brands when they're purchasing. So it's almost three quarters.

Casey Seymour:

Yeah. And that's what I'm getting at is that it's not that they're not disloyal. I mean they're not going to just go out and stab you in the back, but they're going to like trust but verify type of scenario. And I think that's what you're seeing a lot more in the overall marketplace than we've seen in the past. So when you're looking at this data now and you're trying to compile all these different functions and things that are rolling together, I mean because with what you guys have, you have the iron solution side, which is the ag equipment guidebooks that have been around forever. And then you got the EDA data which covers what do you cover? Farm equipment, trucks, the truck industry-

Prescott Schibles:

Construction, trucks, machine tools, work trucks.

Casey Seymour:

So how is this all playing together with that broader spectrum of equipment? I mean the truck side of it, it's been worse than I think any one segment of it, the marketplace has been.

Prescott Schibles:

Yeah, I mean think if there's one thing I can say about the future in the crystal ball is values in trucks have declined I think about 30% since spring.

Casey Seymour:

Yeah, I've seen that, yeah.

Prescott Schibles:

Supply chain has not changed. They're still not being able to take orders. So what's driving it? It's freight rates, you can't really justify that. So I think the canary in the coal mine here is going to probably be commodities prices more than anything else. But I do think there are a lot of lessons to be learned there. We saw some smart dealers really make moves to shut down their inventory acquisition at the right time and kind of burn off some of their stuff quickly. A lot of folks doing dedicated campaigns for their older equipment. So if it goes past 90 days, really moving special specialty campaigns, Facebook feeds, and even just targeting high volume used buyers. And then the interesting thing is after things stabilized, they actually started doing digital campaigns to actually acquire equipment. So I think that's kind of the new world too, is we might be in a world where trade-ins and dealer to dealer are not the only ways that you acquire equipment anymore. You may need to start thinking about diversifying your tactics on that side of things.

Casey Seymour:

Yeah, I've had that conversation a lot and some people listen to me, some people are asking questions about it and other people are, if there's any one thing I'll say about the farm equipment industry is that the customers are not afraid of change as much as people think they are because they're looking to be as profitable as they can be in a marketplace where you control nothing that goes into your business. You don't control inputs, you don't control commodity prices, you don't control the weather. There's nothing that you can control. All you can control is when you plant it and when you harvest, that's it. You don't control anything else. You don't control how much water comes out of the sky, you don't control anything. So in most industries there's some level of control as to what you can and some of your input costs, some of your labor costs, all these different things that come into play. You can control those things but you don't control that stuff on the farm side.

And I think that looking at what we see happening from a technology perspective, what we see happening from a finance perspective, what we see happen from all these different things, every one of these customers are looking at a way to make things better at varying levels of change right? I mean some people are, hey you know what, I'm going to go out and change things just for the sake of changing things. And some of them are like, I mean we've been doing it the same way for a long time and it's worked. We make little tweaks here and there, but for the most part we do it this way type of thing. And looking and having these conversations and talking to customers out there, using the data that you see, I mean one, technology adoption is at varying levels, but it's hard to find someone that's farming right now that's not using some kind of guidance, some kind of GPS guidance, right? I'm sure there's somebody out there that doesn't use it but they're like the one in the county that doesn't use it, right?

So mean if you're looking at the overall perspective and what that looks like. How are you looking at technology and the things that are coming down the pike now, how are you valuing that from a guidebook perspective? I mean, how are you taking that technology and really using it to show that hey, you know what this machine is worth X without an X, with Y? Because some of that technology, machine's kind of worthless without it.

Prescott Schibles:

Yeah. So I mean the best way I think we can handle that is through having conversations with you guys. So one of the core things that we've really tried to change, and I hope the feedback that I've gotten is that people are noticing is that we're having more conversations with dealers about the things that are the real needle movers. So John Wilmack has a conversation with a dealer that's documented with a standardized set of questions at least one per week. And he has a lot more conversations than that with dealers, but we're asking the same questions to make sure that we're getting and identifying the themes that are coming out of it. So identifying the needle movers on options on technology on any of those core elements are crucial and critical.

Then following up with folks who are submitting sold reports that are getting rejected because they don't have enough specific information on them is another core aspect. So a lot of people ask us about data collection and one of the hardest, one of the hardest things about the guides process I think is that I don't think anybody realizes how much effort goes into it. So there's a tremendous amount of scrutiny on each and every sold report and we throw away a fair amount of them if they're incomplete. And so the team spends all the time during between guide issues or updates or additions, cleaning up the data and making sure that we're only using good and complete data. So it is a huge degree of focus and I think when we do, so the other thing that we're doing is we actually do kind of comparisons with dealers. So give me everything, run an analysis of everything that you've sold this month, here's what you sold it for, here's what our values were, how close were we to that or not.

We're never going to be dead on everything. Every dealer's going to have a little bit of nuance in their strategy. But I have gained a tremendous amount of confidence through seeing repeatedly these kind of bakeoffs, so to speak, where we're actually looking at data in real time towards the end of the quarter. So a lot of people were like, Hey, is the data still relevant towards the end of the edition? And we see that and we see that coming through. The other thing is on the EDA side of things, we're taking that input and starting to bring that back into EDA as well. So certain things on, we're making some changes on what we're tracking in EDA, less relevant here, but in the construction space there's a lot of electrification. So fuel type is something that we're pulling in on that side and we're looking at a couple of other options based on the feedback that we're getting as well. So the goal is back and forth between the two. What are the real needle movers that we need to be tracking from a behavior standpoint?

Casey Seymour:

Yeah. So that's glad you brought that up because it is something that I haven't been paying attention to as much as I should have. It's always kind of back into my mind, but the electrification of equipment, I mean we're starting to see, that came out about five years ago, three years ago. We really started seeing some people playing in that space and they were going to make a 25 horsepower tractor, 40 horsepower tractor type of thing. And now you're starting to see some of the bigger manufacturers start to get into that electrification statement.

A lot of that stuff is lawn mowers and gators and side by side, those kind of things, you're starting to see those kind of creep in there. I think we're still quite a ways from battery technology being able to perform a 600 horsepower style tractor longevity wise. I mean we have that technology to do all that, but it's just how long can you make the battery last type of thing. I guess when you're looking at that spectrum of things, I mean is there enough data out there to show you that hey, this is going to happen in the next five to seven years that we're going to see a very strong battery operated fleet? Or do you think that's still quite a ways away?

Prescott Schibles:

Well I think it's probably more than just electric, especially in the ag market. You don't want to end up having a diesel generator charging your tractor, kind of defeats the purpose.

Casey Seymour:

Right.

Prescott Schibles:

I do think what you're seeing is on the construction side where there is urban environments, there is charging stations and opportunities, the technology is being developed to be able to be deployed for other use cases eventually. The other thing is since we're in Randall Wiley's in trucking and ag, we do see some stuff on that side of things that are pretty interesting. The renewable diesel, so not biodiesel but renewable diesel. We had a really great presentation from a fleet in Oregon who really did a massive pilot using renewable diesel as a fuel type and they saw some really incredible fuel efficiency, the consumption was down and they could use it, I think side by side with regular diesel.

So that's an interesting and exciting time and I think that part of your comments about identifying early adopters, that is one of a core use case for EDA, being able to see who bought something the first year it came out. Okay, that's somebody I should really be constantly talking to about for other new technologies, new adoptions. What do you think? Do you see any migration from a tech perspective to something that's less dependent upon diesel and with all the shenanigans in the Ukraine at this point, does that accelerate that at all?

Casey Seymour:

I think any technology that someone can get ahold of that's going to create efficiencies and it's going to cut costs, that we'll definitely take a hard look at it. The ag industry's no different in any other industry. You got that 20% that's going to go out and be the first one to the gate and they're always going to be on the cutting edge of whatever. And if it works, great, if it doesn't, we'll go back to the John board and figure it out. Those are also the same people that are more adverse to, their risk adverseness is way low compared to some of the other folks and they're willing to stretch out a little bit more than some others, those are the same people that are on that spectrum.

I think the thing right now that's going to drive price, not so much price, but customer buying decisions is interest rates. I think that's going to be a big deal, and I don't suspect this inflationary period that we're in where these higher interest rates are going to be like the eighties where we've got 10 years of 7% growth every year type of thing. But it's going to be in the next couple years I think we're going to be tight. I mean it's going to be a thing. And I think one thing that I've thought about is just here we got stuff guys trading in two and 3% interest rates for five to 7% interest rates. So there's a thing that's going to come into play there.

The price of equipment, I've written a series of articles called the Lines of Delineation, I've written though about the customer buying patterns and where those are, and those lines are starting to be, those lines are pretty blurred, I think, 10 years ago where you could see guys jumping in and out and doing different things, but now they're pretty solid just because of the customer that's up in that bucket. Maybe they've grown the farm to a certain level because they've been one guy and a hired man type of deal and they haven't expanded anything and they're looking at retirement and those kind of things and no one's come back. So the idea of growing their operation, there was not that motivation to do that type of thing and all the headaches that come along with doing all that.

So you're starting to see these folks that are, you got your new buyer, you got your one year old buyers, you your two year old buyer types and then they kind of funnel into those varying levels of buying. But I think one of the big things is, and this is where I think what your data, especially EDA data and what you guys are doing with the guidebooks is I think we're going to be trading more components than we are actual machines in the near future. You know what I mean? I think if you're looking at with this add on technology that you can see like in planters, you see in on sprayers, you see it on just about everything. But I really think that 2020 through 2023 is a year that we'll look back on and saying that was a platform that made it pretty easy for us to upgrade the technology, not necessarily the machine. And I think the manufacturers are seeing that, that their profitability is relatively the same at a low way lower price point by just looking at the components of the technology, not necessarily the entire machine itself.

Prescott Schibles:

That's super interesting. So is that something that we should be tracking? I mean it sounds like you're saying hey those are things that we should be adding to maybe other equipment in the guide's book itself in terms of being able to put out some data around that. And the other question I want to have is, are you following UCCs on that stuff or not?

Kim Schmidt:

We'll go back to the conversation in a minute, but first I wanted to invite you to join us virtually this December 8th and 9th for Ag Equipment Intelligence's Executive Briefing. To learn more and to register, visit agequipmentintelligence.com/executivebriefing. Now back to Casey and Prescott.

Casey Seymour:

I've got a customer that had the new planter was, I can't remember what it was, it was like 800,000 bucks or 900,000 bucks and to do the upgrade kit on the planter he has now was half the price, right? So everything's new except the bar, right? So the bar that the row unit's attached to. So at the end of the day, what are those row units worth? What's that residual value of that row unit? That row unit was not, I think they're maybe five. So I mean they're electric drill units, not high speed by any means, but they're still electric drill units, which is not the finger pickup, which is not the vacuum pickup. I mean it's a different deal. So what's that residual value look like and how does that work? I think those residual values now are really low and there's not that customer uptake.

But in five years when if we do the same thing, that same deal, now you're looking at something that's five year old technology that is high speed planter technology and you've got 54 row units of this technology. My neighbor has got a 24 row, I got a 24 row, we go together and we buy these row units and you take your 24, I take my 24 and here we go. So what's it worth? So I think those are going to start, that conversation is probably two to three years away to start really seeing what that looks like. You've seen it on precision planting stuff where you've seen a lot of those row units and stuff like that show up in big iron auctions, you start looking at the various and even just not necessarily the row units but just the components of whether it's speed tubes or 2020 down force or whatever it is that they're doing.

These different little spectrums are starting to pop up and what's that look like and what's that residual value have? It'll be interesting to watch that because if you take a spray right now, that's the seed spray type technology and you got the seed spray ultimate, which can tell the difference between various plants and weeds and those kind of things versus seed and spray, I forget what it's even called, but like gen one seed and spray. Now you can't just go swapping around and put some software in and boom, now you got ultimate. You have to change some components to make that work. So what's the sum? I mean I think the sum of those components are worth more than the sum of the machine is. And because I can keep the sprayer and if I blow an engine up in the sprayer and it costs me $600,000 to buy a new sprayer, but I put a hundred thousand dollars engine and I spend 10 or $15,000 on wheel motors, I'm good to go. I'm right back to where I need to be at.

And to your point with electrification, I take out that stuff, put an electric engine and I'm good to go. You know what I mean? So I think all those things are going to be some components of how the overall spectrum of used equipment comes into play because I think we're five to 10 years away from we're going to trade machines every once in a while and it's going to be part of the thing, but I think more updates are going to be done to the platform than to them to actually just get a new machine. Especially when you get to autonomy and fully cabless machines, then you're just looking at power generation and that's really it at that point.

Prescott Schibles:

Yeah, I mean I think that follows a bit of a trend on the consumer side. I mean whether it's your phone or your car, you're getting upgrades pushed to you and more and more of the money is being made off of not replacing that stuff as frequently but using it in different ways.

Casey Seymour:

Right.

Prescott Schibles:

Apple services model is what, 30% of the revenue right now?

Casey Seymour:

Yeah.

Prescott Schibles:

Deere's saying they expect to make 10% of the revenues off software and down the road. So why wouldn't that follow that same pattern? For sure.

Casey Seymour:

And if you can buy something for, and I'm just hypothetical numbers here, just throwing stuff out. But if you can throw 225 or $300,000 against the machine that you have and not spend six or $700,000 to get the exact new new, everything's brand new. Like I talked about earlier, you're looking for efficiencies, you're looking for cost savings, you're looking for everything. If I can increase my efficiency and not increase my costs that's a win. You know what I mean? So those things all start coming into play.

Prescott Schibles:

It's going to get real tough to manage your business off Excel.

Casey Seymour:

Yeah, it really is.

Prescott Schibles:

I look at some of the dealer conferences and I see how many people have got an Excel sheet in front of them and one of the things that, the core takeaway from that is as all this complexity is coming in, it's going to get harder and harder to do things the old way for sure.

Casey Seymour:

Yeah. And I think that's where data is. I mean I think whoever can crack the nut first and be really into predictive analytics and understanding what predictive analytics look like and how to recognize, I mean you can have all this data and if you don't understand trend lines and recognize the trend lines, you really just have a giant bunch of numbers and some graphs and whatever. But if you can understand that and see those things and recognize the trend lines of customers and the trend lines of technology and the trend lines of what this looks like. I mean I think laptops are a great example of that. I mean I buy a new laptop every three years because the one I have is out of warranty, but I'm getting three times a laptop for just about the same amount of money that I spent three years ago.

Prescott Schibles:

Yep.

Casey Seymour:

You know what I mean? And it's not a big difference. I think that model will eventually go into equipment, whether it's construction equipment, ag equipment, the truck industry, whatever it is, because you're going to have that ability to do that. And they've had those, in the construction side, they've had frame off overhauls where they strip everything down the frame, sandblast the frame, paint it and put every single component back brand new and you take your stories of scrapers out there that have got 50 or 60 or 70,000 hours on them type of deal and they've been running them for 40 years because they just keep rebuilding them. But I think it's different when you start talking about the technology side of it because I can take off the wet system and the boom system off of a sprayer and put a whole brand new one on there and just tie it in the canvas system, update a few things there and update some software. And I got the latest technology on a 15 year old platform type thing.

Prescott Schibles:

So yeah, I think the application of predictive is pretty significant. It should be able to help in a lot of different areas of the business, whether it's predicting who's likely to do those rebuilds or predicting who's likely to buy. We launched our predictive stuff in platform earlier this year and we learned so much about it. It was one of my goals when I first came to this gig was to bring more predictive stuff in. There's a developer I've worked with for 20 years and he's really into machine learning and we've done a heck of a lot with it. I think one of the core things is, one of the challenges I think folks have is like, hey, how does it work and what can you do?

I'd offer a couple of things about demystifying predictive for predicting who's likely to buy, simplest stuff and you already touch on it. How recently did someone purchase, how frequently do they purchase and what's the dollar value of their purchases? Are they bigger or smaller? At a really simple level, that's really what we try to remodel the data towards is to say, okay, how many purchases six years ago, five years ago, four. And try to look and see for patterns between their fleet size, their purchase frequency, the size of stuff that they're actually purchasing. And it's amazing how accurate that stuff can get.

One of the things that I think people don't necessarily realize is ahead of John Womack and the guides editors, we have a predictive model that's actually looking at our sold reports and pushing out a first version of the guides values before they go in and edit them and look at them and doing things along those lines. So we're using machine learning and predictive in the guides issue itself because we're trying to put a value out on next quarter and not on the last 12 months. So both of those things have been really transformative in terms of accuracy of the guides values, but also in terms of being able to help people identify buyers for hard to move equipment.

Casey Seymour:

Yeah. And I think, I've been saying this for a while, that if you're a dealership and you can harness predictive and analytics and really dive into that and really spend some time, because it's a dedicated position, it's not something you do on Mondays, right?

Prescott Schibles:

Yep.

Casey Seymour:

It's something you do every day, all day long of the work week, and then even some beyond that. Because if you can harness that and really get that and understand where things are going, I'm a firm believer three data points are a trend line and what's happening in those trend lines are going, and we see it so often in this business where those three trend lines are showing a direction that we should be headed and it's the ninth one that we finally make a decision on and it's nine months down the road and you could have fixed that problem three months in and it's just turn, it's a big ship, takes a long time to turn it to get it around, but by the time you've got it turned, man, you could have made so much. It's not saying that you're not going to lose money still because you still will when markets turn, but you can lose so much less if you do it early.

Prescott Schibles:

Yeah, I mean I think the marriage of those two things, making decisions on prices sooner and being able to find the buyers quicker.

Casey Seymour:

Yep.

Prescott Schibles:

Are the yin and yang of being really successful regardless of where the market turns. The EDA stuff, I think top 10% of our predictions of high likelihood to buy is our top 10%. About 35% of those people actually are a hit.

Casey Seymour:

That's a big number if you think about, I mean that's a big number, 35 out of a hundred people that you identify to go in and buy something and you know that's going to happen. That's a big number when you start thinking about that.

Prescott Schibles:

And when you start thinking about relationship management.

Casey Seymour:

Sure.

Prescott Schibles:

Service. One of the cool things about it is it doesn't just predict large volume buyers, right?

Casey Seymour:

Yep.

Prescott Schibles:

We can get you down to the smaller guys that are in that model as well and gives you an opportunity to get in and start building a relationship because honestly to God, these guys don't make a decision like, Oh, I'm going to buy no something tomorrow. They're planning that out. So you need to be in front of them a little bit ahead of that and build up that relationship, and the person who talks to them first usually has the inside track. So I think like 75% of the time, the first salesperson that's talking to someone gets the deal.

Casey Seymour:

Yeah. And that's data. Data, data, data, and people get tired of me talking about data, but data is whatever investment you make in getting that data and rendering that data, whatever investment that is that you make, I guarantee that you get at a minimum, at a very minimum, a 10x return on your investment, assuming that you've at follow what that data says and listen. Even if it's in a down market and well, I lost a hundred thousand dollars this month because of blah blah, well you lost a hundred thousand this month, not 250,000 because you waited nine months and you're the last one selling out of the trough and not the first one.So I mean, those all are huge, huge indicators. I mean, if you could have used that data to go out and predict what the tractor market was going to do at the beginning of '22, and you went out and bought all the tractors and you were sitting on 150 or 200 row crop tractors going into this right now, could you imagine how easy it would be for you to be profitable right now? I mean, it would be one of those things because not only that you have 250 tractors now that you're trading inside your AOR that's just a constant churn for all your customers, I don't know what everyone's talking about, we've got plenty of tractors to go get. I mean, that's a big deal. Big, big deal.

Prescott Schibles:

One of the things we're working on is getting EDA's data more frequent, so you can see that. So are you quoting stuff and losing business more frequently?

Casey Seymour:

Yeah.

Prescott Schibles:

So we're trying to give you kind of an indicator or a signal. We actually just spent a bunch of money really transforming the process. If you've ever come, we sometimes have customers come and check our data production process out. I think for those who don't know, we have about a 35 person team, 37 person team here in Charlotte that produce the data and everything gets printed out now. And so we've done a couple of things post COVID. First we augmented the team and the second is we're going through a complete digitization of the process with the whole goal being to get our data as current as possible. Now we're still dependent upon the secretaries of state, but our data, I think we knocked 30 days of recency off in the past year of getting the UCC data more recent.

We'd like to get it under 30 days. So that's not going to be possible in every single state. But one of the ways that you could check to see, hey, should you be dropping price is are you losing deals to other people who have?

Casey Seymour:

Yeah.

Prescott Schibles:

And we're trying to get all these investments that we're making in the data production process, we're really trying to get to the point where we can start giving you, the guides might be giving you an early warning indicator, but EDA can then make you more confident about that sooner rather than having to wait until it's real bad.

Casey Seymour:

Yep. And something from a pricing perspective we should talk about too is, you look at how things are priced and where things are going. The easiest in my opinion, and you look at the big picture in the grand spectrum of everything, I mean, to me, auctioned out is one of the single most important data points out there because it gives you that early indicator as what's happened in the marketplace. So if you're looking at a downturn in the marketplace shows up first in the auction market and it slowly trickles down and God love them. The first thing that gets it's head ripped off and kicked around as a soccer ball is combines and then everything else kind of falls in behind it. But it's watching those trend lines happen and then watching what happens in the retail marketplace too is where those trend lines start to develop and how, what's a differentiation between retail price versus auction value and all those different things that come into play, talk about that a little bit and how you guys are looking at that data via your guidebooks and EDA.

Prescott Schibles:

Yeah, so I think two things. First off, auction data, we look at it a lot. There are some real big hygiene problems with it. So you've got to be very, very careful about how you use auction data to build your trend lines. We get combines, if you put our data, our new combine data next to ADM's new data we have between an 85 and 95% capture rate on combines, depending on the year.

Casey Seymour:

So hold on, explain what that means.

Prescott Schibles:

So that means when we look at new UCC filings and the combines that we're able to get out of them are counts of new sales within a year are depending upon the year 85 to 95% of what AEM is reporting. So those folks that are the ones that we're not getting are people who have a blanket lien or using a line of credit. Maybe there's a cash buyer for some of that stuff, but I doubt it. But they're not financing that individual combine specifically as collateral. So because our capture rate is good, we see the serial number on a lot of combines, so we know what year of manufacturer it is.

The second time we see that, about 18% of the time that combine has gone from being X old to being X minus one old or X minus two old. And so sometimes the year of manufacturer is inaccurate at auctions and that has a really significant impact on perceived price. And so one of the things that we don't know what to do in that situation, we throw that data out, by the way, because we're not sure, hey, did somebody have a serial number book? Here we go, the iron guide serial number book, also have that. So were they carrying one of those at the auction and thinking that it's the correct mirror manufacturer or were they thinking that it was a younger piece of equipment? So that's issue number one.

Issue number two is a lot of the auction data doesn't have meter reads on it, but I do think you're right, that stuff shows up there pretty quickly. The third issue though is the number of observations. So when you talk about making a decision after a third data point versus the ninth data point, one things that we do have going for us is that we have both auction data and the sold reports and sold reports, there are a lot more of them than there are auction results. So more in ag, especially more stuff goes through the retail channel or the dealer channel, excuse me. And so we're able to give you that, some of those points a little bit quicker by marrying those two things together.

Iron Guides Pro and Plus both have the ability to look at comparable sales and they're updated nightly. So every single night we're putting new data up there. So when you're running an appraisal, you have the ability to go search through both through auction results, through sold reports and through advertised price to actually look at comparable equipment that has gone through our cleansing process in terms of being able to, whether we reject it or keep it. And so the goal is to try and create efficiency for you guys on that front so that you're not sitting there trying to figure out is it accurate or not? Or pulling that data from three different sources. We want to put it all in the same place and our vision is to hopefully bring in your own sold reports down the road as well.

Casey Seymour:

Right. And I think that's a good point you made. I have found those before in auction data when you're digging through there that, because I do everything via serial number, especially if it's a Deere thing, so I'm going to work for a Deere dealer. So you can go through there and pull those serial numbers up and see specs and everything like that and go through those different things. And I have found those before where there are some discrepancies in year and those kind of things versus what's there. So definitely something to pay attention to. But again, that goes back to my earlier statement about data is that you have to understand the data that you're looking at and you have to understand what it is that you're getting.

If you have 50% of your data is bad, then you're going to have bad results. So you got to measure it and cleanse what you need to when you don't need to. And same thing too, if I'm comparing a four wheel drive combine to a two wheel drive combine, they're just different. There's different aspects in the market based on where it's selling at. If you're out here where I'm at four wheel drive combines don't, no one really wants them because it doesn't rain, so it doesn't really get muddy. Right? Back home in south central Kansas where I'm from, four wheel drives a bigger deal, they want to see that. You start moving into the true corn belt, those kind of things, you see more four wheel drives machines pop up where who wheel drives aren't worthless, but they don't have the same return on investment that you would see from when it was new. Right? I mean, you're looking at the differentiation there. So all those things come into play, so definitely, definitely good points there. We've been going for a little bit here, Prescott. Any final thoughts you want to throw out there before we shut it down?

Prescott Schibles:

Yeah, I mean, I think no matter where the market moves, what we're ultimately saying is data can really help you be in control of what the market is.

Casey Seymour:

Yes, it can.

Prescott Schibles:

I will tell you, as a data company, we use our own data. Through COVID, when everybody else in the media and advertising and market intelligence business was going through challenges, we were still able to grow because we were able to find the safe spots in the market. And having used our data to be able to navigate one of those challenges, one of the core things that our whole team is really excited to do is to help dealers be able to do the same thing. So if the supply chain market is going to become harder, we're able to help on that. And the ways in which we can help are we people find equipment, we're having really great success with digital campaigns around that, we can help people see the most recent comparable data in the market and look at transactions that are updated nightly. EDA can help people find areas of opportunity, we can help people develop CRM driven sales processes. And then finally, workforce development where, not my division, but our talent intelligence division does a lot of diesel tech recruiting. And so one of the ways that we just want to partner with dealers is we want to try and help on each aspect of the business, whether it's parts, service, new sales or used sales, we really want to be as relevant as possible and empower dealers to take control of their business and create and outperform the market.

Casey Seymour:

Right on. Okay. Well, Prescott, folks want to reach out to you, get more information about what you're doing, what's the best way to do that?

Prescott Schibles:

Randallriley.com. Prescottschibles@randallriley.com is my email. PSchibles on Twitter, or just Google me on the LinkedIn. You can just Google me, too. I mean, there's really only one Prescott Schibles out there. It works for me.

Casey Seymour:

Right on. Makes it simple, huh? Right on, man. Well-

Prescott Schibles:

Casey, thank you so much. This was great. Lot of fun.

Casey Seymour:

Yeah, no, I appreciate you being the podcast, man. Thanks a lot.

Kim Schmidt:

Thanks to Casey and Prescott for sharing their conversation with us. You can keep up on the latest industry news by registering online. To receive our free newsletters, visit www.farm-equipment.com. For Casey as well as our entire staff here at Farm Equipment, I'm Kim Schmidt. Thanks for listening.