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DRPs, Here We Come?

In talking with shop owners involved in DRPs – who changed their operations to serve the needs of only one market – I realized the importance of diversification. Part 6 of a year-long series.

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For other installments in this 12-part series, click on the corresponding number: 1, 2, 3, 4, 57, 8, 9, 10, 11, 12.

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According to Mark Twain, my
husband and I run our collision repair business like fools. We don’t believe in putting all our eggs in one basket, a view that’s completely opposite of Twain and the majority of direct-repair program participants. Twain believed only the foolish would scatter their money and attention, saying: “A wise man would put all their eggs in the one basket and watch that basket!” Looking at the state of this industry, many modern-day shop owners obviously agree.

In pursuit of our own DRP contracts, we take every opportunity to talk with shop owners who have established DRP relationships. Unfortunately, what we’ve found is troubling.

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While we look at DRPs as an additional basket, I’m realizing that, for many, it has replaced all other baskets. The DRP-connected shop owners we’ve spoken with have commitment, pretty equipment and a good source of income. What I didn’t expect them to have was a look of desperation and fear over new insurance company requirements.
Comfortable with a single source of income, they changed their operations to serve the needs of only one market. Instead of asking them for advice on how they got accepted to DRPs, I instead began to wonder about the monster that a DRP relationship creates and the importance of diversification. Thank goodness our business doesn’t rely solely on the kindness of an insurance
company.

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I was further surprised to listen in on manager meetings where dropping insurance contracts with lower rates is considered a viable solution to State Farm’s new Select Service pay structure. Yes, making changes to accommodate the largest client will keep profits pumping, but from a risk management standpoint, it makes me cringe. Throwing all your resources in to protect one lucrative income stream makes sense on the surface, but the single basket approach is only sustainable when you can really “watch that basket!”
And how closely can you properly guard the eggs if you aren’t the one holding the
basket?

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When being part of the program means sacrificing all else for the opportunity, there’s a problem. We need to continue to cultivate other baskets. For our shop, that means taking advantage of our prominent location and continuing to treat vehicle owners as the customer.

The realization is bittersweet. We’ve always had a large number of walk-in customers. These are the same customers we spend time educating —only to watch them be steered to another shop outside of our neighborhood, the same customers who had us pulling out our hair and running into the arms of insurance companies in the first place. Still, these customers are the people we can truly thank for our success.

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That’s why we happily gave a free estimate to an 18-year-old wanting a paint job on his ’93 Intrepid bought at a local auction. But that’s also why we passed up the fast buck and advised him to put his money toward mechanical repairs before investing his money on cosmetics. Sure, we didn’t get the job that day. But a month later, he came back, insurance papers in hand, with his “new” 2004 Maxima, which he’d just wrecked.
We have to keep our heads on straight and not fall into the trap of forgetting who we are. There are still people out there not romanced by big-budget commercials. They like to know they can stop by on their way home from work and talk to someone who gives a damn about their car. They want to know us by name — and have us know them by more than an RO number. They want a friend in the business.

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And that’s a special touch we can’t lose.

I can only hope that having a DRP relationship doesn’t mean sacrificing all else. There should always be room for fleet work, relationships with small dealers and community outreach. A business without a plan B or C has no hope at all.

Do I still want my DRP? Absolutely! Nothing wrong with adding a basket to the collection. If it’s weaved in gold is yet to be seen.

Writer Monica Dorsey is a partner at Classic CollisionWorks in Philadelphia,
Pa. You can reach her by e-mail at [email protected].

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