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Independent Body Shops: Surviving in a Consolidating World

How can you, an independent, survive and even grow during a time where it seems like the mega MSOs are increasing their market share?

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Micki Woods is a marketing and business development specialist for the automotive industry. She used to own her own body shop and was on the management team of one of the largest auto body shops in Los Angeles County. She now speaks, teaches and emcees events across the country. Visit Micki’s website at mickiwoods.com or email her at [email protected]

MSOs are taking over the world! Okay, maybe not. But doesn’t it feel that way sometimes with all these “breaking” headlines we keep reading? The top body shop consolidators, Caliber, Gerber, Service King and CARSTAR, continue to grow. What does their massive growth mean for smaller shops or even dealer-owned shops? How can you, an independent, survive and even grow during a time where it seems like the “big boys” are increasing their market share?

In Trouble

I get it, times get tough. And when one of these big hitters comes knocking on your door, you can’t help but entertain their proposal – even if it’s just for a moment. I had purchased my body shop, Casa Automotive Group Body Shop/Casa Body Shop, a couple of years before the recession hit when the economy was on a massive upswing. Things were going great, and I watched dollars rain down from the sky and into my pocket. When the recession first hit, I wasn’t affected and knew it was because of my solid insurance contracts and dealership referrals. But when the owner of Casa Automotive Group decided to purchase his own shop for pennies on the dollar and not sublet the work any longer, paired with insurance claims being cashed out – I knew I was in trouble. I didn’t have enough working capital to sustain me through the difficult times ahead. I entertained so many offers it made my head spin, trying to figure out what direction would be best to go. So, when I say I understand the trials body shop owners go through during a downturn or unpredictable times, I truly get it and can personally relate.
If only I could go back to the young Micki and give her the wisdom I have now! (I think we all wish we could do that!) But lucky for you…I’ve lived hard times and learned a lot, and now I’d like to share some of my wisdom during these times of MSO hysteria that will hopefully help you jump-start your struggling business or help you make your profitable business even more profitable.

Steps to Grow a Business

In marketing and business development, I’ve learned that the best way to grow a business is to start by taking a good look at the business and identifying its strengths and weaknesses right out of the gate. There’s no need to fudge on these! You need to be able to get down to the true facts of your own business and be honest with yourself so you can create a solid jumping-off point.
You’ll then want to go through your expenses and see where your black holes are. Labor? Parts? Comebacks? Rent? You can’t be successful if you have money draining out of holes in your boat! (I think we’ll write about that more in a future article.)
The next step is to create goals for your business. Is it a certain number of cars you want to fix a month? A number of cars coming in from a specific insurance or dealership line you’d like to increase? A sales goal you’d like to hit? Then we’ll look at opportunities in your business and your local area to be able to market you more effectively.
Lastly, we’ll look at your competition. This is a very important aspect of building your business. What is your competition doing well, and what is it not doing well? Sometimes this can be easier to identify than you’d think, and other times it can be more tricky.

Breaking It Down

Let’s start at the beginning and break this down. Take a look at your business as a whole and ask yourself the following questions. You may not get the answers you wish but it’s so important that you be real about this:
  1. What is my shop doing really well? Any other owner would see how my shop does ______________ and they’d be jealous. *These are the things you’re succeeding at. Great job! You could refine these and make your business even better but, for the meantime, pat yourself on the back and enjoy the success.
  2. What does my shop do that embarrasses me because I know we could be doing so much better? *These are the things you’re “failing” at. Don’t worry – these are the big opportunities where you can begin to make money once proper adjustments are made.
  3. My shop does _______________ pretty well, but it’s just okay. *These are the things you’re doing that are just satisfactory. Depending on the item or process, you may be able to make a slight tweak and increase profits or it may need a compete overhaul. Either way, this is a place you can typically adjust more easily and start to see a shift fairly rapidly.
Because this article can’t go on for pages and pages (I can feel your disappointment), we’re going to jump ahead to the last point and the reason for this article. What is your competitor doing? What is your competition failing at and what is it excelling at? In this instance, we’re going to talk about these massive MSOs. We’ve all seen them work at one level or another and heard about them from customers, friends, colleagues, etc.

Disclaimer Ahead…

I’m going to preface this section by saying that this is the opinion of one Southern California girl who has been watching the Calibers and Abras move and thrive. Feel free to come to your own conclusions if they don’t jibe with mine. To each their own!
The big guys do a lot of things very well because they’re so powerful. They’re able to get massive parts discounts. They’re able to get insurance and dealership contracts due to their large purchasing power. They’re able to throw money at problems to make them go away because…they’ve got the dough! They’re able to offer job security because they just keep on growing. They’re able to offer great benefits to their employees. Their big money keeps on making more big money but because they’re so big, they’re often coming up short on the “small” things. Now, both you and I know that the “small” things in our business are the big things that keep our customers loyal and build our brand. And that, my friends, is where we find the weaknesses.
The weakness of all large companies is the lower level, day-to-day operations and “boots-on-the-ground” components. As companies grow large quickly, they simply cannot focus on these aspects as much as they should. It’s just not feasible at their growth rate. And this is where the small shops outshine the big guys time and time again. I see it and hear about it every which way I turn. Knowing that, we can create a fantastic game plan.
Let’s take a moment and go back to the three questions you asked yourself above. I bet that some of things you listed were bigger items such as gross profit, parts discounts, cycle time, KPIs, etc. But I also hope some of those things (specifically in question No. 1) were more along the lines of customer service, customer satisfaction, employee retention, relationships with local insurance reps, etc. You’ll always have a blend of items to work on. Your business growth to-do list needs to encompass the shop’s inner function and also how it’s perceived by your partners and customers on an intimate level.

Maximize Your Strengths

I’m going to talk about some things that you may or may not have listed that you can typically do better than an MSO…or at least more easily. Are they listed in your No. 1 question? Hopefully so!
  1. Slow down and win over your customer. Everyone is busy. No one has time to sit and chitchat for hours on end. But it’s worth it for your CSRs and estimators to take a deep breath and shift perspectives. While your customers are with you and going over the issues with their vehicle, encourage your staff to take an extra moment to pause and give that customer their undivided attention. Make them feel special and not like another number that has to be processed to get on to the next thing because corporate is breathing down their necks. I have a review driver that some of my shops use. It sends out emails with an internal survey and encourages those customers who submitted positive responses to share their reviews to Yelp or Google. What has moved me most over the last few years of using and watching this platform is that my shops who take the little bit of extra care with their customers have a much larger number of positive feedback responses and also a higher conversion rate of the customer going the extra mile and leaving a review for them online. Go the extra mile for your customers and they will be loyal and go the extra mile for you!
  2. Check your quality. Check it again. Then check it once more. Who has time to QC every vehicle before delivery? Well, I sure hope you do! Oftentimes when shops get busy, the first thing that happens is that cars start rushing through the repair process and mistakes are made. Then, at delivery, the customer is left to find imperfections on the vehicle. Now you’ve got problems. Either that or they get on the road and find something a day or a week later and they’re inconvenienced by the vehicle coming back…again, and you’re paying your techs or painters twice to redo a job they rushed through and completed halfway. Because a lot of the MSOs are on such tight turnaround times, oftentimes they don’t have the opportunity to fully QC the vehicle at a high level before delivery occurs. But you can! Whether you have your production manager going over each and every vehicle before calling the customer for pickup or you hire a separate QC employee, this is a must. Again, it’s slowing down and taking the time to truly care about each vehicle and customer.
  3. Make your partners feel appreciated. What referrals are you currently getting? Dealerships? Insurance agents? BNI group? Do you even know where your work is coming from? It’s imperative that you find out where your work is coming from. We talked about this in my article in the November 2018 issue of BodyShop Business, “The Power of Marketing: Why You Need It and How to Do It.” This is called “sourcing.” You need to delegate someone to look at assignments when they come through or ask questions when your customers come in as to who referred them or who their insurance agent is. Once you get a good grip on who’s sending work your way, make sure you reach out and thank them…regularly! Bring them cupcakes. Stop by with Starbucks. Bring holiday cards. Find out their birthdays and send them birthday cards. If it’s a BNI group or something along those lines, bring $5 Starbucks gift cards or promotional items for the entire group. If people are going the extra mile to send work to you, you need to go the extra mile and make them feel appreciated. No one is forced to send you anything, so all referrals are truly a compliment and a gift and should be treated as such. Again – do the big guys have time to do those little things? Not likely!
  4. Get involved in your town. Many MSOs visit agents and dealerships and sponsor events, but how much time can they actually spend on community involvement when their marketing people are spread so thin over such large territories? Take advantage! Prime marketing territory is generally a five- to 10-mile area around your shop. Do you have any schools within five to 10 miles of your shop? Does your child or the child of one of your office managers or technicians attend there? Find a school close by that you have a genuine interest in and start getting involved. Sponsor some ads, volunteer at an event and wear your body shop’s shirt, get in the yearbook. Make a sincere donation. Make that school’s body shop of choice your body shop. Find out if there are other groups in the area that you can participate in. The Chamber of Commerce is a great place to find such local events. Once you get “in” with certain groups, they’ll become powerful mouthpieces for you and then you, in turn, can be the same for them.

Summary

There are other things you can do to “compete” with the big guys in your market, but the aforementioned ideas are the ones I’d recommend you focus on to get started. If you’re an “independent” in the body shop world, you have some great opportunities right now, so I expect you to get on it and rock it out!
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