"What’s my future as an independent shop owner?"
— Everette Sharpe, owner, Quality Collision Repair Inc., Rockledge, Fla.
The days of opening our shops and merely waiting for customers to flock through the doors are long over. So what are shops now doing to bring in customers? Many qualified shops are trying to join direct-repair programs (DRPs) to attract a higher work volume — but they can’t compete with the larger shops and consolidators. While that’s certainly no reflection on the quality or qualifications of the smaller independent shops, it could have a direct bearing on their future success.
Although larger consolidated shops have the advantage of buying in quantity and offering larger volume discounts, many seem to lack the compassion or care that a small, independent shop owner can easily display in his customer service. That one major difference is the main reason I believe independents can survive and, indeed, thrive in the future.
A Source of Information
Recently, I was driving past a mega-home store in our area. About a block away, I noticed that a small Tru-Value Hardware had a full parking lot and was still thriving despite the fact that the larger competitor undoubtedly offered a wider range of merchandise at cheaper prices. Reflecting on the possible reasons for this, it dawned on me: The few times I needed advice from someone in the huge mega-center, I was rewarded with little or no information from an employee earning minimum wage. Most knew little or nothing about the products they sold; they couldn’t even direct me to items within their department. But each time I asked a pertinent question at the smaller hardware store, I was answered promptly and completely.
You see, the owner and employees of the hardware store knew their business because it was their lifeblood. They actually cared about the products they sold and the customers they serviced. Although the prices may have been higher, the service and care made up for it. And as a consumer, I don’t mind paying for exemplary service. In fact, I think most consumers feel that way.
Obviously, the hardware business and the collision repair business are different. People need nuts, bolts and other assorted houseware items more often than they need collision work. As repairers, we don’t offer a mass-produced product that can be packaged. Instead, we offer a unique and specialized service. How does a collision repair shop build an image like that of the friendly neighborhood hardware store? By helping to educate consumers about their rights and the repair process, you can build that "neighborly" trust and establish life-long relationships.
This is an area where independent shops can shine over consolidators. Finding quality, competent people to manage repair shops isn’t an easy task. And consolidators — who’ve opened new stores and redesigned existing ones — haven’t yet built loyal staffs they can rely on to establish customer relationships. How can you build relationships when the players are constantly changing? How much knowledge do new hires have to share? I’ve owned my shop for 15 years. My newest employee has been here for six years, and many have been here from the start. When you have a loyal and experienced staff who know what they’re doing, educating customers is second-nature.
We’ve taken a total consumer advocacy position at my shop. We offer a lifetime warranty and we bring the customer into the repair process. If an insurer doesn’t want to authorize a specific procedure, I’m on the phone with the customer, keeping him up to date on that and educating him on the repair process. When I explain what needs to be done to properly repair his vehicle and why the insurer refuses to pay for it, he thanks me and phones his insurance company to ask why his car isn’t being fixed the way the shop recommends. He respects my knowledge and trusts my judgment. He knows who to go to for accurate information.
Consolidation isn’t necessarily a good thing for the consumer or the economy. When I started banking at the local financial institution, it took years to cultivate relationships with the employees and officers there. But after that, I found I didn’t have to prove myself when I needed lines of credit or extra business services. Because of the relationships, the paper work was a mere formality. Business was conducted because of who I was and because of my business ethics and practices, which were known to the officers personally.
But over a period of several years, the bank was bought out by several conglomerates, finally becoming part of one of the largest banks in the country. During that time, I noticed more and more of the employees and key officers were being replaced. Each time I needed services, I had to fill out forms, go through interviews and prove myself over and over again. Eventually, I changed to a smaller, local bank — taking my personal and business checking accounts, my line of credit, my savings accounts and my investments with me.
Of course, people don’t need my repair services as often as they need banking services, but it’s still the quality of service that makes a difference. Letting people know you care and showing them even in small ways will go a long way in increasing customer retention and referral.
I advocate sending thank you letters to everyone you perform an estimate for. If we do nine estimates on Monday, the next week, I call those nine customers to see if we can help with the claims process or anything else. My competition isn’t doing that so it gives me an edge. It shows that I care and that I’m willing to do what I can to help the process move smoothly.
Does it work? I had one customer drive his car all the way from Racine, Wis., which is 70 miles away, because we sent him a thank you letter. He came in for an estimate and because we followed up, he brought his car to us rather than to a local shop.
Each year, I also send Christmas cards to everyone whose car we’ve fixed. In that card is a coupon for a free car wash. Out of the 2,000 or so cards I send, maybe 25 customers come back to redeem the coupon. But the promotion doesn’t cost me much, and if I get even one job out of those 25 people, it pays off. Even if nobody redeemed the coupon, at the least the cards show I care.
Show Them You Care
People enjoy interaction with other people, not computers, and they resent being treated as mere "account numbers" or statistics. The benefits of eye-to-eye contact and a friendly handshake still rank high with consumers.
This is an area in which smaller, independent collision repairers still have a distinct advantage over their larger counterparts. We have the ability to attend local meetings, such as Kiwanis, chambers of commerce, Rotary Club and community councils. We can participate in local fairs or other community events. By giving back to the community from where you draw customers, you can and will cultivate more business.
I attend a number of community meetings and organizations every month. The time invested is minimal compared to the rewards I gain. This is because each time I sit in the rooms and look around, I note that nearly everyone present is a customer. And though they may only come to see me once every three or four years, they have family and friends they refer to me. I once had a customer tell me he’d been referred to our shop by people at four different establishments: a local restaurant, a local insurance agency, a local car-rental agency and the customer’s insurer. What a referral network!
Because people don’t need collision repair as much as they need a hardware item, word-of-mouth referrals are critical to your success. And those referrals come from building strong relationships.
Statistically, 45 percent of my business is customer-paid, not insurer generated. I wouldn’t have it any other way — it affords me the opportunity to listen to my customers’ needs, address those needs and exceed their expectations. I also get to know them personally.
Being non-dependent on insurer referrals also allows me the opportunity to genuinely protect and represent my customers’ interests in the collision repair process. It lets me negotiate with insurers to effectively achieve a quality repair that’s paid for fairly.
I learned long ago that I can’t serve two masters: the insurer and the customer. The insurer’s wishes are to repair the vehicle in the most cost-contained method possible. But this philosophy isn’t necessarily in the best interests of my customers. By representing their interests, educating them and involving them in the process, I assure myself of a loyal customer, as well as referral business.
Granted, for us to get a damaged car from point A to point Z and then out the door, we must go through a lot of effort and energy in terms of negotiations with the insurer. So we let our customers know what we’re doing on their behalf, since most of them don’t have a clue about what it takes to bring their vehicles back to pre-accident condition. Keeping the customer well-informed of the negotiation process also helps us to nurture the relationship.
Obviously, delays are going to occur with some jobs. But if you consistently update customers on the progress of the repair and the difficulties of negotiation, they won’t be angry. They’ll understand because you’ve been up front with them and they trust you.
Over time, trust is built with each customer to the point where many don’t ask about price or a delivery date. They merely drop their keys on my desk, exchange cordial pleasantries and trust me to deliver their car back to them in a quality manner.
When I took over this shop in 1986, it was doing $250,000 a year. Two years later, we hit $1 million and have kept improving. We were able to achieve that success because we effectively employed the tactics I’ve shared with you. Take care of people and your business will grow.
The Future Is What You Make It
Trust is a great feeling. Like respect, it’s earned over time. It must be continually cultivated and reaffirmed each time I serve that customer. By continually placing my customer’s needs and expectations above everything else, I’m actually assuring the future of my business.
To assure a continual business flow, we call every estimate to see if we can help in any way, we continually update customers during the repair process, we do follow-up phone calls after completion and send thank you letters.
We have a 90 percent return rate on our customer service index (CSI) cards, and they reflect a 4.85 out of a possible 5.0 rating. Occasionally, if we receive a 3.0 rating on a card, which is "average," we immediately phone the customer and ask what we can do to earn that 5.0 we strive for. When was the last time you, as a consumer, received a caring, concerned phone call like that? It’s all part of building the relationships that build your business.
How can the independent repairers survive in the future, you ask?
You can assure growth and future business through exemplary customer service, representation and satisfaction. All of the DRPs in the world won’t assure future success when we treat the customer as a mere number on a spread sheet. Under promise and over deliver, then follow up, follow up and follow up again.
Writer Mike Melfi is the owner of C-M Motors in Chicago and chairman of the Coalition for Collision Repair Equality (CCRE).
Reading Is Fundamental
Consider sponsoring local events at your business. For example, you could team up with an organization like MADD (Mothers Against Drunk Driving) and set up a serial number etch-a-thon in your parking lot. Since your cost to put on the event would be minimal, you could charge customers $15 for the service and donate $10 from each sale to MADD. The event itself will put your shop in a good light, and you’ll get the chance to interact with potential customers. If you have promotional brochures about your shop and the services you offer, hand them out. The next time an event patron is in an accident, he’ll find your pamphlet in his glove box when he reaches for his proof of insurance and vehicle registration.
To start building relationships with future customers — those just getting their driver’s licenses — get involved with high school driver’s education programs. Put on a presentation about what to do when you’re in an accident. As first-time drivers, chances are they’ll be needing your services — and soon. If your name is the only one they’re familiar with, they’re going to come to you when they need collision work. I have a customer who was in an accident when he was 16. He’s now 30 — and he’s still a customer.