— Charles Smith, fixed operations director
Question answered by: Michael Quinn
This question has puzzled many body shop owners since the inception of time. They see an opportunity to expand their businesses by adding a DRP agreement, invest large amounts of money in facilities, equipment, staffing and training, and then find it difficult to realize a profit with a rollercoaster of repair volume.
The Short-Term Answer
The short-term answer to achieving a consistent flow of work is to increase referrals. Get out and meet the people who send the business your way, whether it be local insurance agents or the inside staff that take the first notice of loss. Help put a “face to the name” of the people you’ve been dealing with for years on the phone. This will require travel, but it’ll be worth it because it may also expose you to the insurers’ inner workings and plans for their claims directives for the next few years.
On one such visit, I was introduced to the call center people from my area and watched claims being called in. During my visit, I recognized one young lady in particular and told her about a specific claim we handled together involving one extremely difficult customer that we were able to resolve in a positive manner. She lit up when she remembered the entire scenario and went on to brag to her co-workers about how tough this particular customer was and how we both had saved the day. These types of visits are invaluable to building relationships.
And what about the local insurance agents? How effectively do you visit them? Do you have an outside marketing representative? Do you track their results? What social events do you organize with your staff and theirs? The old 80-20 rule holds true for insurers, too – 80 percent of premiums are written by only a handful of the over 200 insurers writing auto policies.
What about their needs to service our mutual customers? I’ve received the best “advice” from insurance agents and claims managers telling me about the challenges they’ve had with auto body claims. Once you get them going, it’s hard to stop them – but they’ll tell you exactly what not to do to earn more of their business.
What are some important steps to take to increase your volume? First, ask yourself the following questions:
- Do you measure repair referrals by dollars/cars and source?
- Are you confident you’re getting accurate referral information?
- Do you have outside marketing staff?
- Are you meeting insurance performance metrics?
- Is your close ratio in the upper 80s?
- Do your estimators know how to service and close a client?
- Do you read trade publications to keep yourself abreast of industry issues?
- Do you network at industry seminars and events?
If you answered no to any of these questions, then that’s an area in which there’s a great opportunity to improve your referrals.
It’s critical to gauge your success in any marketing venture, so gathering accurate information on referrals is imperative. If you can’t accurately measure effectiveness, why bother marketing?
I’ve read referral reports and noticed that we were getting “referrals” from XYZ insurer, who we did not have a direct relationship with. The customer was insured by them; was it possible that the insurer didn’t refer them but rather a local agent our marketing people called on? To accurately get to the proper referral source, make sure your staff knows how to dig. I often tell my staff that the only way to get to the true referral source is to go two levels deep or “ask the second question.”
For example, after the usual warm welcome to a new potential customer, ask her how she heard about your shop. Let’s say she responds, “XYZ Insurance Company.” You should then ask the second question: “Who at XYZ Insurance Company referred you?” She may then tell you, “Susan at my agent Tom Smith’s office.” Ah ha! Now we have the accurate referral. So instead of a “hit” for XYZ Insurance Company, the proper referring party (Tom Smith’s agency) is recorded.
Accurately tracking and reviewing referral data is important to measuring the effectiveness of your team and the staff recording the information. And remember – always thank those who refer to you.
The Long-Term Answer
I really think tomorrow’s body shop owners need to “read the tea leaves” in today’s environment to determine choices and direction.
You may choose not to have any DRP relationships in the future, or you may choose to have only a few. Future (and many of today’s) DRP relationships will be service- and performance-driven. Everyone wants front-of-line service, insurers included. If I sit in a restaurant for more than 90 seconds without someone coming up and asking what I’d like to drink, I start getting impatient. We live in a service-driven society, and we expect of others what is expected of us. In the near future, I doubt any body shop owner or manager will want to, or be able to, manage 21 DRPs. We’ll probably only be able to effectively service three or four at most.
If you run a multi-line dealership body shop like Charles Smith does, you have many opportunities to gain referrals from your own internal resources. How frequently do your service departments refer business to you? Yeah, I know…they’re all busy, so probably never or hardly at all. But what if they could at least point out the cars that were damaged? Don’t we all (service departments, body shops, etc.) have to do a thorough “check-in” of customers’ vehicles and note any prior damages? (We’ve all been on the hook for damages that were questionable and learned the hard way, right?)
Here’s a suggestion: Why not order some red flags or “hats” that the service writers can put on any vehicles with body damages? Every day, one of your estimators could peruse the parking lot or service bays and note, write and sell these damages. With cash repair volume increasing every year (some estimates put it at 15 to 20 percent of a body shop’s business), this could be a great opportunity to increase business.
A Look to the Future
I think that those repairers who continually work to deliver a quality repair and to improve operating efficiency will be here in the future.
Current industry statistics suggest that there are more than 42,000 shops performing $30 billion in customer-pay and insurance-pay repairs. It only takes 20,000 shops doing $1.5 million each to do all of the work. Our industry will experience a thinning of the herd due to performance and service objectives, not due to technology advancements or technician shortages as we believed.
One of our operational goals for 2007 is to reduce, if not eliminate, supplements – a crazy idea, I know. But supplements cost everyone, shops the most. You can literally double your sales if you cut your cycle time. We’ve done it. Now our goal is to keep our staff busy and not have “peaks and valleys.” The new paradigm or service delivery model is: cheaper, faster, better. If you’ve got that, you can eliminate the volume peaks and valleys.
Michael Quinn is co-founder and CEO of 911 Collision Centers & Autoglass. From a start-up in August 1998, 911 Collision Centers & Autoglass has grown to five locations in Tucson, Ariz., and two locations in Las Vegas. 911 Collision Centers & Autoglass received the National Auto Body Council’s “Pride Award” for its commitment to community service. The company was also a runner-up in the Better Business Bureau’s International “Ethics in Business” award and AAA’s “Top Shop” awards for service and repair excellence. In 2006, it was given the DuPont Joe Jackson award for community service. Quinn can be reached at [email protected].