From the VP: How to Gain a Slice of the DRP Pie

From the VP: How to Gain a Slice of the DRP Pie

Whether your shop is big or small, DRP or non-DRP, your relationships with insurers are going to have the biggest impact on your bottom line above everything else.

VPWhether you want to admit it or not, insurer relations are a huge part of your business. Whether your shop is big or small, DRP or non-DRP, your relationships with insurance companies are going to have the biggest impact on your bottom line above everything else. Why? Because your interaction with them and the bottom-line price on the estimate is what you’re getting paid off of. Whether the appraiser is writing the estimate or you’re a DRP shop and you’re writing the estimate, your interaction with the appraiser, reinspector and desk reviewer will likely affect what the end result will be.

In this article, I’ll discuss how positive or negative relationships with insurers can affect you and the metrics needed that navigate it all.

DRP vs. Non-DRP

If you’re the owner of a smaller, non-DRP body shop, I would like to categorize your relationship with insurers as either successful or unsuccessful versus positive or negative. It’s probably more important for a larger DRP shop to have a positive relationship with an insurer, versus a smaller, non-DRP shop where that kind of relationship doesn’t always equal success.

For example, for a short period of time I worked at a dealership shop in Houston that had a positive yet unproductive and non-profitable relationship with a local insurer. It was a classic case of a local appraiser prescribing repairs that were not feasible when it came down to the nuts and bolts of getting the car repaired for a profit.  The challenge from that point on was to encourage the appraiser to allow for items and procedures that were necessary to restore the vehicle to pre-loss condition. The challenge after that was to have the appraiser understand that the way he was accustomed to doing things in the past (trying to hit company objectives by using our store as a driver to get his average down) would no longer work. Needless to say, things can get tense in a situation like that, but that’s a classic case of a situation that was extraordinarily unprofitable yet positive for that insurer and the appraiser. The situation then changed to a profitable relationship but one that was far from positive from the insurer standpoint.

Choose Your Strategy

Your business model, your source of business and how you obtain business often dictate which approach you should take. Do you take the positive insurer relations approach, which can be less profitable because you have to turn a lot of vehicles to make money, or do you adopt a higher profit margin strategy and perhaps be considered a shop that doesn’t necessarily have the most positive relationship with an insurer? There are so many shops across the country that have dominated their market without a DRP that are great examples of how that can be done. On the other hand, you also have your MSOs and other organizations that have dominated local markets and gained significant market share by fostering positive relations with insurers. In the end, the choice is yours. However, both strategies require significant discipline, proper planning and meticulous implementation.

Getting on a DRP

As a consultant, the most common question I get is, “How do I get on a DRP?” I often refer back to a friend who has a smaller, non-DRP body shop who emphatically stated to me one day, “I even wrote them a letter and everything!” I almost laughed myself out of my chair, and he couldn’t understand. I proceeded to explain to him the art of salesmanship, relationship building and strategy, all of which are necessary when attempting to position your shop as a candidate for DRPs.

Getting on a DRP is a long and tedious process, and the best way I can sum it up is relationship building. You can’t just write a letter, make a phone call and get added to a program.

First and foremost, you need to make sure your relationships with local appraisers are positive. The next thing you need to do is make sure your shop is clean and has plenty of curb appeal. After that, you have to show some need, for example the number of estimates you’ve written for a particular company. Also, what are the competing companies like? Is there a potential problem or conflict they’re having that would create an opportunity for you?

Persistence Is Key

There are some insurers I’ve pursued for more than 20 years that I still haven’t been able to do business with. There are also partners we have that have only some of our stores on the program and not all. I can tell you this much: persistence is the key. You need to keep swinging, and if an insurance company ever tells you they’ll get back to you, I can guarantee they won’t. Proof is that I’ve never had an insurance company contact me to put us on their DRP without me contacting them first…and following up…and following up. It just doesn’t happen. And now, with the larger MSOs coming into certain markets and having “ivory tower” deals (in some cases guaranteed for a certain amount of time regardless of their stores’ performance), it’s even more difficult to obtain market share and be included in the DRP pie.

Managing Metrics

One thing I can tell you for certain is that if you want to grow your business through DRPs, you better have a system to manage Key Performance Metrics like cycle time, touch time and CSI. This is key to being able to consistently improve your company’s performance. You have to be proactive in reporting your results and sharing them with team members. If you wait until one of your insurance partners presents you with your stats, you’re already behind the eight ball.

Accessing the key information at a moment’s notice, with a formula for forecasting and prediction, is the only way to fly nowadays. No captain sails a ship without plotting the course, and that course includes forecasting, predictions, weather reports, etc., which is all based on data. More and more, the business of fixing cars has become secondary, almost accepted, to the business skills needed to drive a company to results. This is all data driven.

Tough Odds

Still don’t believe me? Still think you’re going to take that Cameron dolly and fix that car and drive your business without key information and access to data? Think about this for a second, and here’s the proof: Millions are spent in research, development and sales of data- driven business systems by companies such as PartsTrader, CCC, ADP, Mitchell, Rome, UpdatePlus, Assured Performance and Performance Gateway. You certainly have to fix cars properly and have trained employees, etc., but unfortunately we’re in times right now where quality of workmanship does not in and of itself dictate success as a business. Right now, I could stock a shop with some of the best, most qualified technicians, but without the skills to drive business, gain market share/volume, and track performance, the odds of me being successful would be similar to the odds of winning the lottery.

Summary

Nowadays, word-of-mouth alone will not get the job done, nor will quality if you’re a production shop. Custom restoration shops aside, hail to the days of old when your reputation, upbringing, skill set and eagerness to please was enough to be successful. All those requirements are still there, but there is so much more that’s needed now to be a player in today’s market.

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