DRPs: Good, Necessary Evil or Bad for Business? - BodyShop Business

DRPs: Good, Necessary Evil or Bad for Business?

Panel at WIN Conference delves into effects of DRPs on various-sized shops, reveals percent of shops' revenue that's DRP-driven.

DRPs: like them, live with them or loathe them, most in the industry have an opinion on them. At the recent Women’s Industry Network (WIN) Conference in Orlando, Fla., four people from various-sized shops spoke candidly about their experiences – good and bad – with DRPs. The number of DRPs each panelist had ranged from 25 to none. Around 150 women from all sectors of the collision repair industry attended the two-day conference.

The panel, held May 4, was moderated by Mike Condon of Condon Consulting, LLC, who spent over 30 years with Allstate in many claims-related positions. Panelists included:

• Lorie Kinman, chief administrative officer of Auto Body World, a Phoenix, Ariz.-based MSO with six stores, 135 employees and 10 DRPs. Kinman estimated that Auto Body World had $24 million in revenue last year, and 85 percent of that revenue was generated by DRPs.

• Katie Gallegos, owner of Russo’s Collision Center, a stand-alone shop in Watsonville, Calif., with eight employees and four DRPs. Russo’s had $1 million in revenue last year – 60 percent from DRPs.

• Tina Clark, controller, Collision Solutions, an Indianapolis, Ind.-based MSO with five locations, 62 employees and 25 DRPs. Collision Solutions’ revenue is 60 percent DRP-driven.

• Mike Anderson of CollisionAdvice.com, who recently sold his two-store operation, Wagonwork Collision, in Alexandria, Va., which had 42 employees and no DRPs. Anderson estimated Wagonwork’s yearly revenue to be around $5 million, none of which was generated by DRPs.

Condon kicked off the discussion by asking panelists if they believed DRPs were good, a necessary evil or bad for business.

“Mostly good – the insurers we have relationships with are like our business partners, but some can be tough to work with,” Kinman said.

Clark, who juggles 25 DRP relationships, said the influx of work provided by DRPs is good, but the demands they put on shops can be difficult. Gallegos said that as a shop in a small town with a lot of competition, it’s difficult to establish a customer base without the help of DRPs. Her town of roughly 55,000 people is served by 11 body shops, she noted.

Anderson had mixed feelings.

“If your business is new and needs to gain clientele, it’s a good way to establish yourself. It’s also good if you’re in a rural area to drive business to your door,” he said. “But in a metropolitan area, DRPs can hold back the industry – there are too many shops competing for work and giving concessions.”

He added that shops can be come too dependent on DRPs, causing them to lose their marketing savvy.

The three women whose shops have DRPs also discussed changes they’ve seen in the last five years, the burdens DRP relationships place on shops and what their “ideal” number of DRPs would be. The women agreed that insurers are placing an increasing number of requirements on DRP shops, and they’re looking for more work volume from insurers but not necessarily more DRP relationships.

“It used to be that insurers would take just anyone for DRPs, but now, they’re taking on less shops,” Kinman said. “At the same time, they’re demanding a much higher performance from those shops.”

Clark said her ideal DRP number would be zero because it’s becoming burdensome to keep up with guidelines and requirements from different insurance companies, and insurers don’t necessarily inform DRP shops when changes are made. She noted that some DRPs require certain percentages of aftermarket parts and used parts, and many insurers are now asking for specific photos and other extras for their claims files in case of lawsuits. She said she would rather repair to a single standard.

“But our market dictates we must be on DRPs because of steering,” she said. “I’d like to have less DRPs, but I’d like to have more work.”

Gallegos said she’s not sure what an ideal DRP number would be, but she would like to see a 30-percent boost in work volume at her shop. She said that the “hoops” insurers ask shops to jump through to be on DRPs help build trust between insurers and shops.

“I want them to make me jump through hoops and present as much information about myself as possible,” she said. “That’s how you really get to know who you’re doing business with.”

Although the women had differing opinions of DRP relationships, all three said insurers have asked them to compromise repair quality to save money. The women also said that in those cases, their shops opt to fix the cars properly at their own cost.

“We need to keep up the standard of our shops,” Clark said.

Kinman added, “We refuse to do business with people who don’t really push for proper repairs.”

Condon said collision repairers must be realistic about their attitudes toward DRP relationships.

“DRPs exist, and they aren’t going away anytime soon,” he said.


More information:

WIN

Mike Anderson Sells Wagonwork Collision

Appraiser Targets Insurers, DRP Shops in Book on Consumer Fraud

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