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Getting Noticed: Choosing the Best Marketing Strategy to Attract More Cars

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ng local relationships and keeping their name in front of insurance claims management.

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When I was an Allstate adjuster, a body shop that was out of my territory had a reputation for dishonesty and tough negotiations. Management and field staff joked about how this guy was always looking to be an Allstate DRP shop and that it would be a "cold day in hell" before his shop would be included in the repair network. After a year or so, my "territory" changed and this shop became part of my field route. Because this was a busy shop, I found myself there inspecting customer’s cars 10 to 20 times a month.

During a monthly meeting, I brought up the question of making this shop a DRP because he did a lot of Allstate work and I never saw any fraud or dishonesty –just the usual hard-nosed negotiating for more labor and parts and estimate add-ons. According to my boss and fellow co-workers, the shop owner had allegedly gotten busted in the past for repairing parts that were paid to be replaced and for substituting aftermarket for OEM parts. Although none of them had any first-hand proof of the circumstances and facts, a black mark was always associated with this shop.

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Shortly thereafter, with my recommendation, this shop was put on the DRP program and continues to be one of the best performers in the local repair network.

6 Reasons Insurers Have DRPs

  1. Exert more control over repair costs/lower repair costs.
  2. Improve claim-repair efficiency and claim-repair quality.
  3. Reduce claims administration costs.
  4. Compete effectively/competitive positioning (they have to compete with other insurers that have DRPs).
  5. Improve customer (insured) satisfaction.
  6. Increase policyholder retention ratios.

The Future of DRPs
In my opinion, DRPs are here to stay. The only thing that could possibly change this is an unforeseen regulatory action by government. And I bet my bottom dollar that we won’t see widespread anti-DRP regulations because the services these programs deliver are demanded by vehicle owners.

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So what will future DRPs look like? Well, we already have a glimpse of the possibilities by looking at current DRP arrangements insurers have with consolidators and multi-store body shop operations. A few examples are exclusive supplier agreements (only repairing one insurer’s customer cars) like those between Allstate and Sterling, and programs like State Farm’s Select Service with body shops that must provide vehicle owners with high service offerings (pickup and delivery, guaranteed delivery dates, rental cars, etc.).

There’s also the Progressive insurance model that’s dabbling with a kind of central inspection station where claims customers have their vehicle damages appraised: The vehicle is dropped-off, the customer is put into a rental car, and the damaged car is subsequently dispatched and transported to the next available DRP network repair shop. When repairs are completed, the car is shipped back to the insurance company’s central station for customer delivery. The customer never interacts with the body shop.

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Close to the Progressive model and what I think is the best example of what the future may hold for DRPs is a Japanese direct-repair model where a body shop operates as a repair factory. For example, a Japanese autobody shop performs repairs exclusively for a new car dealership. The body shop operates in an assembly-line fashion with timed repair stations that force targeted repair-production cycle times. The dealership resources manage typical front-end body shop processes, so the shop never has to deal with customers or insurance companies. The dealership delivers the customer’s car to the shop for repairs and includes all parts and the repair order.

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I think that some form of this model will eventually evolve as both body shops and insurers are increasingly pressured to reduce repair costs and lower cycle times. As vehicle owners continue to demand more and expensive customer services, body shop economics will only be able devote their limited resources toward enhancing the production end (repair) of the business. Other non-body shop entities (either insurers or third-party providers) will be able to perform the customer service end cheaper, faster and better than shops.

Ultimately, however, the economy, consumers and information technology will determine the "when" and "what" of future DRP models. Regardless of the timing and path taken, all future DRP models will result in closer business-to-business relationships with claims-service and referral sources, which could either be insurance companies or independent third-party administrators who are positioned somewhere in between insurers and body shops in the customer’s claim-repair or service-supply chain.

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As DRP programs continue to grow, consolidators, multi-store operations and mega-stores are also growing and threatening the existence of small, independent Mom-and-Pop operations. But take heart you who are vehement about staying independent –my neighborhood hardware store has doubled in size and sales as Home Depot and Lowes have saturated my market with new mega-stores. The proprietor of the hardware store, who I’ve known for years, told me that the popularity of Home Depot and Lowes seems to have somehow fueled his store growth. He says his smaller operation can deliver more personalized service and thus command higher prices.

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Personally, I believe there’s room in the marketplace for both independent and DRP shops Ð and that it’s also possible to ride the middle road by having part of your customer base come from DRPs and another part from non-DRP sources.

Before deciding whether to expend the resources for your shop to participate in DRPs, carefully consider the points I’ve made here. Also consider this:

"Our customers are always right." "We aim to please."
As part of a DRP network, you’ll have to apply these customer clichŽs to insurance companies. And for some of you, catering to insurance companies and their staffs as you do to vehicle owners may be too frightening of a thought. If that’s the case, attaining and maintaining profitable DRP work will likely be more of a headache for you than it’s worth.

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Writer Jake Snyder is the principle of CR Management Systems, a consulting, training and business-development company. He’s been in the industry for more than 15 years, has managed a collision repair facility, held various claims positions with Allstate Insurance Company, and performed consulting and product development for Body Shop Video’s, Business Development Group. Snyder can be contacted at (732) 886-5340 or at [email protected]

The Politics of DRPS
Large national insurers and dominant regional insurers typically oversee and manage their DRP network shops through local claims offices and associated staff. Smaller insurers or those lacking significant policyholder density employ remote or indirect methods to maintain DRP shop networks. In the absence of local staff, smaller insurers will commonly outsource network oversight and shop re-inspections to independent adjusters.

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Local politics always come into play in gaining acceptance to and maintaining a DRP relationship. So, as a general rule, regardless of insurance company size, if you wish your shop to be included in more DRP networks, I recommend staying friendly with all insurance types (staff or independent adjusters). Like anyone in sales will tell you, building and maintaining customer relationships is a key part of the selling game.

Becoming Auto-Claims Savvy
As a DRP shop, front-office personnel have to be auto-claims savvy to assist customers and deliver claims-settlement services normally delivered by insurance company staff. In addition to writing estimates and managing customers, front-office staff must also service and adjust auto physical damage claims. Don’t take it for granted that your staff has a perfect handle on insurance claims terminologies or understanding auto coverages or even simple claims investigation skills needed for DRP repair assignments (i.e. knowing the difference between old and new damage, what damages are covered and not covered, when more than a single claim exists).

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With zero training on auto policy coverages and insurance claims handling (unless your staff comes from an insurance claims background), your staff immediately will be expected by insurance companies to begin settling auto claims once you’re "turned on" to the incoming flow of DRP assignments.

Prepare your staff to learn about auto claims. Review with your staff basic auto claims, especially with entry-level reception or customer greeter employees. This isn’t as hard as it sounds, but make sure you don’t take it for granted that everyone has the knowledge down pat. Proper handling of auto claims is serious business and must comply with your state’s insurance laws. When I was managing a shop, I found it helpful to create resource sheets or binders with a basic glossary of terms and brief explanations of auto coverages. As a consultant, I’ve created little laminated cheat sheets for receptionist types to keep on their desks or posted on a nearby wall.

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If you or your lead estimator is unsure about a claims process or coverage circumstance, you’ll always be able to ask your insurance company DRP liaison or coordinator. The important thing is to document these processes and rules for future reference and training. (I always wondered why insurers don’t provide basic auto policy and auto-claims handling training to their DRP shops.)

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