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Market Like an Insurer

Progressive’s Concierge program is the boldest action ever
taken by an insurer to mitigate the role a shop plays with the consumer. But what might the possibilities be if repairers employed some of these same strategies?

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Writer Scott Biggs is currently the CEO and founder of Assured Performance Network, a shop owned co-op founded in 2004 representing approximately 5,000 independently owned collision repair businesses in the United States. Biggs is the former producer and host of BodyShop Video Magazine and president of Business Development Group. He has received many awards and recognitions including Industry Achievement, Hall of Eagles, Most Influential Leader of the 20th Century and more. He has toured thousands of shops and delivered more than 850,000 hours of management education to the collision industry. His organizations have provided marketing, technology, management services and consulting to thousands of body shops worldwide since 1984.

Scott Biggs

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The term “concierge” originally came from the title given to the person in a castle who held all the keys to the rooms. This person was called the “keeper of the keys” — or “concierge” in French. Today, the term has taken on all kinds of different connotations, including representing a white glove VIP service of convenience and expedition. For example, anyone staying at a decent hotel knows that he can call the hotel concierge for assistance in making reservations, getting tickets or any number of personal services.

On the other hand, when a body shop owner thinks of concierge, he most likely thinks of a loss of control over his customer. In fact, the original term probably applies more appropriately than any other when it comes to Progressive’s Concierge – “Keeper of the Keys” – program. In just the past few years, Progressive Insurance has opened nearly 50 Concierge facilities around the United States with plans to open hundreds more. Under this aggressive program, they’re the keeper of the keys, the cars and the customers.

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More than any other direct-repair or insurance company referral program, Progressive’s Concierge represents the boldest actions ever taken by an insurer to mitigate the role a shop plays with the consumer. Body shops, under the terms of the program, are expendable, interchangeable vendors that provide production repair services only. The type of repair quality, repair process and the general costs are clearly defined in their program, and so too is the ownership of the customer. Consumers may never even know who fixed their vehicle.

Ironically, for some, this definition doesn’t necessarily equate to a negative. Some shops go along to get along and are happy vendors under the program. Other shops are outraged over Progressive’s audacity (although few complain or say much at all — at least publicly).

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To understand the scope and complexity of Progressive’s Concierge program, it’s better to skip the outrage and the discussion regarding the potential violation of anti-steering laws. The value to be gained here is in closely reviewing this innovative program because it’s the first of its kind — and certainly not the last.

Marketing at Its Finest

To see the future and learn from the lesson at hand, shops must consider Progressive’s strategy and tactical execution. In many ways, their rollout of Concierge is a brilliant marketing and customer retention program, not to mention a great way to eliminate huge friction costs and to establish control.

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Consider how Progressive has positioned their program with consumers and how they’re now offering something more than insurance and a hassle-filled repair. In a press release, they effectively delivered their story with headlines that appeal to consumers’ hottest issues. Consider their story headline from June 5, 2006:


“10,500 Hours of Productivity Are Lost as a Result of the More Than 215 Car Crashes That Happen in Albany Each Week!”

And their subtitle: “Drivers involved in crashes report spending four days’ time managing claims/repair process; new service from Progressive cuts that down to 15 minutes!”

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Brilliant! Just brilliant! Why didn’t I think of that?! They go on to tell the reader that consumers will spend “four or more days managing the process of getting their vehicles repaired.” But they also go on to say that “drivers can now choose to receive their new ‘concierge’ level of claims service that reduces the time each driver spends on the claims/repair process from four days to about 15 minutes.”

Brilliant! What consumer in his right mind would want to spend four days when he can just turn everything over to Progressive and be done in 15 minutes? Progressive has positioned their service perfectly. And the service isn’t limited to just Progressive customers – it’s also available to anyone involved in a claim handled by Progressive.
They claim that, “With Progressive’s new service, a driver simply drops off the damaged vehicle at a service center and, in about 15 minutes, can leave in a rental car, assured that a claims representative will handle the process from beginning to end and that the repairs will be guaranteed.” They also claim that without a Service Center, drivers have to spend several days doing everything themselves — arranging for alternate transportation, getting repair estimates, finding a shop, getting updates, inspecting the repairs, etc.

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They also use careful word tracks when it comes to their relationship with the body shop. Their press release and company-supported news stories say, “A Progressive claims representative prepares a repair estimate and contacts an auto body shop based on its track record of providing superior service and ability to begin work promptly. Both Progressive and the shop reach agreement on the cost of the repairs; the shop then transports the vehicle from the Service Center to its facility and the repair work begins. When the work is finished, the vehicle is returned to the service center where representatives from both Progressive and the body shop inspect the quality of repairs. Once satisfied with the repair quality, Progressive calls the customer and asks him or her to return to the Service Center where, together with the claims representative, the customer inspects the repairs. The customer then leaves with a written guarantee on the repairs that both Progressive and the body shop stand behind as long as the customer owns the vehicle.”

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Brilliant! They’ve outlined a level of service and a simplified process like it’s unique to their packaged service when, in reality, it’s what every decent body shop in America provides for their customers every day. But they did it with diplomatic flare. Only the most cunning marketers know how to state the obvious in such a way as to make it sound new and different to the consumer.

If body shops employed even basic public relations and marketing principles to what they offer and do every day to satisfy customers, their message could sound even more appealing to consumers. But they don’t.

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The Body Shop Dilemma
The dilemma lies in how the body shop is positioned — its selling proposition. Keep in mind that no consumer on record has ever woken up on a beautiful Saturday morning, looked over at their spouse and said, “Honey, let’s go collision repair shopping and maybe even get some body work done today.” It has never happened — and never will — because no one ever wants a collision repair. They may need it, but they never want it.

Therefore, body shops are selling something no one ever wants to buy. This isn’t exactly a strong sales and marketing position. In fact, it’s the foundation of what has made retail marketing so difficult for collision repair businesses.

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Under the current business model, a body shop markets to gain what’s referred to as “top of mind awareness” — that is, hoping to be chosen if and when a consumer finally has a NEED for what they sell. It’s similar to a dentist waiting for tooth decay or a doctor waiting for flu victims. But marketing a product nobody wants to buy can be a tricky and costly proposition, often missing the mark.

Without an alternative, body shops are left waiting and hoping for a storm or fighting for work that might magically or tragically appear.

Because of the challenge of retail marketing, many shop owners bypass it completely and rely upon luck to get business or they turn to other sources to gain their volume, including wholesale relationships like dealers, fleet and insurer referral programs.

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The next stage in the marketing and sales process in today’s body shop world is equally unorthodox. When the motorist finally does reach the shop’s door, he’s usually taken through an awkward estimating and sales process where little selling is actually done and an overwhelming amount of service in one form or another is offered in a reactive mode. Also, the estimate is confusing and written in body shop code – using R&I, R&R, LKQ, etc.

In addition, many of the services that shops have in their arsenal are only offered if requested. Some are required by the insurance community, but others are part of the shop’s unique service offering, such as pick up and delivery services, express service, rental car arrangements, complete cleaning or post repair detail, upholstery repair, etc. Regardless, most are certainly never marketed, packaged, valued or organized into a selling process or proposition.

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Fact:
More than 50% of all claims are steered to DRP shops.

Possibility:
Insurers may be able to direct as many as 72%.


Shop owners continue to construct buildings with great curb appeal, put up signs and dress up their waiting areas, but the fact remains – they’re still selling a service that no one ever wants to buy.

Selling Something No One Wants
On the other hand, insurers like Progressive have employed a variety of techniques to take advantage of this sales and marketing anomaly. To the same consumers, they’ve sold an indemnity and created an annual annuity. In fact, Progressive and a few others have gone much further in recent years. They’re now using highly effective product positioning, public relations and several other low-cost marketing techniques to completely gain control and ownership of the consumer.

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Let’s examine how they do it: At least in theory, most insurers offer the unsuspecting consumer a choice. They use careful word tracks through phone responses, advertising, press releases, news stories (fed to the media) and more – all done to position their referral programs and companies as consumer advocates that “assist the consumer in making a preferred choice.”

Shrewdly, insurers avoid anti-steering laws by offering policyholders “direct-repair program” as the choice – not the shop as a choice. Once consumers elect to use the insurer’s “convenience” program, they essentially abdicate their choice, handing it over to their new best friend – the insurance company. Why? Because they have the marketing promise and expectation that the process they’re about to go through will be far less stressful.

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Adeptly, insurers market these programs as a consumer benefit. And most consumers will take the path of convenience, especially with the alternative being a far more daunting process. Who would choose four or more days versus just 15 minutes? Consumers also fear they might face a rate increase or be canceled by their carrier.

Regardless of how the programs are positioned, insurers have gained the results they’re looking for – an overwhelming percentage of consumers going where they want and shops killing themselves to get a piece of the referral volume. Each year, more consumers opt to use their insurer’s program. It started as a trickle in the early 1980s, and now more than 50% of all claims are directed or steered through one program or another. And research suggests that insurers may actually be able to direct as much as 72% of those involved in an accident. Meanwhile, shops either go along or are left out.

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As we all know, insurers have created large networks of shops that are willing to comply to nearly anything. Insurers have forced shops into concessions that have wiped out profit margins and raised the complexity and inefficiency of shops. They also force shops into buying products and services, adopting systems and implementing processes just to be a part of their referral network and to gain access to the consumer.
But again, without complete analysis, no one knows which is more costly or complex – retail marketing or wholesale marketing following today’s business model.

Effectively, insurers have created two highly valuable groups:

  1. A consumer group willing to use their network of shops, and
  2. A network of shops willing to repair their customers’ vehicles for less and according to their requirements.

In comparison, the body shop has nothing different or interesting to offer except being the low-cost provider – because everyone promises quality and service. They don’t have a product consumers want to buy, and they don’t offer anything new or interesting.

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Retail marketing is complex and expensive and requires more expertise than the average shop owner has. Insurers now control consumer choice by offering packaged convenience.

What Shops Can Do
At this point, you might conclude that there are no good answers for the independently-owned collision business. But that’s not the case. There are lessons to be learned from other industries that have gone through similar situations, and there are also lessons to be learned from the insurance industry.
Because many repairers view insurers as the evil empire, it might be a challenge to view insurers, instead, as an example of what repairers can or should do. However, insurers have gained phenomenal success employing a few basic marketing principles in the automotive physical damage world. Insurers are learning to use the consumer’s basic anxieties, fears and stress as a marketing edge.

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So what might the possibilities be if repairers employed some of the same tactics and business strategies and leveraged the same tools as insurers?

If you follow the examples that successful insurers have employed, you would create your own DRP of sorts and direct your past customers to return to you. You could offer assurance rather than insurance and “CARE” versus collision repair. Currently, shops offer all of the conveniences that Progressive’s Concierge Program offers, but shops don’t promote it, market it, sell it or even have a name for it. But they could.

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However, no matter how large, a single shop could never develop and execute a program as effective as an insurance company could with all its marketing acumen and capital. But a collection of shops could. What if one qualified shop in every community across the entire country joined forces and offered consumers the same thing that Progressive offers in its Concierge Program?

If they did, the approximately 2,500 shops would be within 20 to 30 minutes of 95% of the U.S. population. That’s right. Just 2,500 to 3,000 shops are all it would take to cover the entire country – and they could easily handle nearly $8 billion in total annual sales. And these best-in-class businesses would be in position to execute a stronger strategy and a more effective marketing campaign than any insurer.

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While Progressive would have 50 locations – possibly 500 eventually – the premier shops working together individually would have more than 2,500 that offer convenience, expedited service, rental car handling, pickup and delivery, VIP treatment, towing, car care and other complementary services.

But this can happen only if the best body shops are willing to see each other as partners and not adversaries.
In pockets around the United States, groups of shops already execute strategies similar to this. Groups in the Northwest have been marketing together since the late ’80s, and other groups have also sprung up around the country. All have met with some level of success. But the key is to reach critical mass. And you need at least 37% of a market to have critical mass.

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The body shop has nothing different or interesting to offer except being the low-cost provider — because everyone promises quality and service.



For example, you can have 37% market share in a city like Sheboygan, Wis., with a population of 40,000 if the shop is performing $5 million or more in gross sales. A group of 12 shops covering the greater Detroit area could also represent 37% market share by working together, but as individual businesses, collectively offering the same packaged and quality of service (CARE). This is no different than when an insurer has 26 to 60 shops across Atlanta that meet their demands and service requirements so they can send their insureds to any one of them, knowing they’ll get the required service.  

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But with only limited numbers in limited regions, the cost of collective marketing has been far too expensive to reshape consumer habits. Even with national programs that have been around since the early 1990s, local groups and rural shops have resented and resisted contributing to a national marketing campaign that was promoting someone else’s brand rather than the company name.

If we look outside the industry, however, we can find examples of how groups have overcome these same challenges. ACE and True Value hardware provided a national brand to complement the locally owned and operated store. Both are co-ops. However, there’s a difference with these models since both are retail-style businesses and collision repair is a service business that offers a reactionary product.

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Regardless, like Ace and True Value, the body shop group would have to be national in scope. In addition, these shops would have to reposition, reinvent and transform their product/service offering in the minds of the consumer into something more desirable – convenience, peace of mind, VIP treatment and expedition, along with
possibly car care and accessories.

Just like Progressive is doing with their Concierge Program.

Car care and accessories are worth looking into. These are regularly consumed products, not just purchased once every seven years or so like collision repair. Considering that SEMA and the aftermarket and accessory segment of the auto industry has grown by more than 8% per year for the last five years, adding car care products and service to your core business may be prudent.

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After assembling and identifying the best-in-class group nationally and repositioning the shop’s selling proposition, the next challenge would be to get all of the locations to offer a consistent service and deliver a consistent message. Further, the shops would be well-served to develop some cooperation with insurers, dealers and others so the consumer isn’t caught in the middle. But even then, shops would be faced with executing an advertising and marketing campaign. Most likely they would need to create or hire an advertising and public relations firm to execute it for them.


Body shops are selling something no one ever wants to buy.


Now, we get to the big question: How would a group of body shops pay for a professional, sophisticated advertising and marketing campaign? National campaigns take hundreds of millions to do effectively.

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The answer is less challenging than you might think. A complete set of tools would have to be developed and used by all of the participating shops. They would need training, word track and messaging, all of the various marketing and advertising tools wrapped around one central message – but a message that promotes the local shop, not just the national name. Like in politics, all marketing is local.

If shops employed a turnkey and comprehensive approach, the central coordination might not be all that daunting. Also, if each shop in the collection of 2,500 to 3,000 continued to spend 2 to 5% annually on forms of marketing, they would be collectively spending $100 to 300 million annually. And, if they leveraged their collective buying power, they could easily gain discounts and rebates that would offset that cost. Once again, examining Ace and True Value, they earn enough in rebates to offset all their marketing and still have a hefty return above that each year.

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But all this is based upon a few elements that have never been overcome in the industry with independent body shops thus far. This entire plan is predicated on shops working together, believing in their own ability, not waiting for someone else to do it for them and being willing to regain ownership of the customer. Then and only then would body shops get the keys back – along with the ability to unlock their potential and control their future.

Ironically, you need look no further than insurers and their DRPs. Progressive’s bold move to leave the shop in the background may well serve as the perfect model for shops to use to regain ownership of their customer and to reinvent their business and industry into one that fits consumer needs, wants and desires for the decades ahead. 

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Writer Scott Biggs is currently the CEO and founder of Assured Performance Network, a shop-owned co-op founded in 2004 representing approximately 5,000 independently owned collision repair businesses in the United States. Biggs is the former producer and host of BodyShop Video Magazine and president of Business Development Group. He has received many awards and recognitions including Industry Achievement, Hall of Eagles, Most Influential Leader of the 20th Century and more. He has toured thousands of shops and delivered more than 850,000 hours of management education to the collision industry. His organizations have provided marketing, technology, management services and consulting to thousands of body shops worldwide since 1984.

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