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‘Til Death Do Us Part

Not all DRP marriages end in divorce. For this Chicago shop owner, DRPs have benefited his business and boosted his bottom line – making it easy to put his bachelor days behind him.

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When my father opened our family business in 1976, he knew the importance of good relationships between collision repair facilities and the insurance industry. As a former State Farm adjuster, Dad knew success came from a business based on honesty, competition, a well-trained team and technology. Since my brother, Phil, and I took over the shop in 1993, we’ve continued to build on the foundation of quality, service and trust our father established during the early years in the business.

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One of the most important factors in our success is also one of the most basic: We run the shop as a business, not just as a place that fixes cars. That approach has led to several important developments during the past 10 years. For example, we stay up-to-date on computer systems and software. Another major step came when we joined the CARSTAR franchise network in 1990. Perhaps one of the most important elements in our success is that we believe strongly in our direct-repair program (DRP) relationships with insurance carriers.

Why I DRP
DRPs can benefit everyone involved. For insurance carriers, they can mean controlled costs, better customer service and faster repair time. For the repair facility, DRPs can provide a more consistent flow of cars to the door. We can also react to our customers almost immediately.

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With DRPs, we take a “one-stop shop” approach with our clients. They come to us for an appraisal. Then we can get authorization from the insurance carrier, order parts and repair the car. It used to take at least three to five business days for the insurance adjuster to look at the car so the shop could get approval from the carrier to start repairs – and this is still the case at many non-DRP shops.

In terms of revenue, DRPs have had a huge impact on our business. Before the major carriers introduced DRPs, we stood at around $3 million in sales, had 20 employees and closed around 70 percent of our estimates. Today, we have more than $4 million in sales, 30 employees and a 75 percent closing ratio. That’s a direct result of DRPs.

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Before we began our DRP relationships, lots of red tape surrounded getting a supplement on needed items for repair. In general, writing estimates and supplements was a slow and laborious process that allowed a lot of money to be left on the table. Systems weren’t as efficient as they are today.

Today, however, we have the ability to write thorough estimates and supplements so we can get paid for the work we complete. The system works on an audited trust between the insurance carrier and us. Many may think this is an open ticket to cheat or steal from an insurance company. Not true; a professional business wouldn’t jeopardize its future for a few dollars here and there. Insurance companies send out claims auditors to review files with us to check for any mistakes and/or assist with the repair process. I believe we’re working hand-in-hand with the insurance carrier to provide the best service and quality repair for our mutual customer. As long as the main focus is to satisfy the customer, the system will continue to improve and prosper.

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It Takes Trust
Like all mutually beneficial business agreements, DRPs involve supply, demand and mutual respect. Insurance carriers wish to provide customers with service and quality repairs, so they prefer doing business with repair facilities they know and trust.

Insurance carriers are giving more and more customers the option of choosing a facility from their pre-qualified list. That means less shopping around for estimates and more one-stop shopping, with increased sales for the store. Given a choice between waiting for an adjuster or trying to get multiple estimates, most people will choose the path of least resistance.

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Carriers depend on shops to repair their insureds’ vehicles properly and cost effectively. The relationship begins with quality repairs and reliable systems, but it’s based to a large degree on confidence in our reputation and business practices. Basically, the carriers know our code of ethics and standards. They trust us. They also know DRPs can help lower their costs per claim. For example, with our production efficiency and proper use of today’s technology, we can reduce the number of days the customer needs a rental car. In turn, the insurance carriers will save on rental-car expenditures because the entire repair cycle is shorter.

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Meeting Challenges Head On
In addition to impacting revenue and helping insurance carriers save on repairs, DRPs can affect many other aspects of a shop’s business. To participate in our DRPs, we decided to upgrade our technology by adding more computer workstations and extra people trained to work on the computerized systems. The technology helps us document and track every aspect of the repair – from start to finish – and keep the carrier and our shared customer fully informed at every step of the way. Documentation of files is also extremely important and very challenging to those who are poor record keepers or haven’t fully familiarized themselves with their management system.

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Another challenge is determining the correct number of staff. It takes careful planning to get the right balance between the number of techs, estimators and front office staff and the amount of business that comes through the door. Before a repair facility begins a DRP program, I think it’s best to conduct a self-assessment and ask some tough questions.

  • Are we prepared to handle the additional business?
  • Is our staffing sufficient to provide immaculate documentation and record keeping?
  • Do we have the capital to invest in the systems and additional staff to deliver the level of service the insurance carriers will expect for their customers?

Another challenge with DRPs is that you have to be prepared to repair cars more efficiently. How? You must be able to track your store’s cycle time so you can identify and correct any problems. You can never rest on your past successes and must always improve your systems. One way to achieve that is through education and training. It may sound like a cliché, but knowledge is power. Many times we forget that it’s more than just fixing cars; it is – and always will be – a business. Our decisions need to be based on sound business practices.

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The best way to handle challenges is to prevent them with planning and communication. If you always keep the customer’s needs as your top priority, most challenges will be resolved. It also helps if you’re willing to change with the times, thinking outside the box to find solutions for staffing or system needs.

The Bottom Line on DRPs
Yes, there are times when I disagree with my insurance partners. But the better educated a shop owner is about the repair process and how to run his business, the better position he’ll be in to deal with adjusters who come into the shop.

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For example, I had my technicians document the repeated instances when an aftermarket (A/M) bumper cover for a particular model Honda didn’t fit. After enough occurrences, I informed my insurance partners that my shop would no longer use A/M covers for that particular model – and they didn’t have a problem with it.

Everybody respects knowledge. And the more knowledge you have, the more ability you have to get the job done correctly.

The bottom line on DRPs? They’ve been good for my shop’s bottom line.

DRPs can be productive and profitable. They can also help increase sales and professionalize your business. And if you want to grow, DRPs allow you an opportunity to do that. Being a part of DRPs puts you in a position where you have to identify deficiencies in your operation and overcome them. To accomplish this, you’ll learn new, better ways of doing business.

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Writer Guy Maniscalo owns and operates Avondale/Orsahl CARSTAR in Chicago with his brother, Phil. Maniscalo has been involved in the collision repair industry since 1978. He’s currently an advisory board member for Triton College’s collision repair program, a member of the Albany Park Chamber of Commerce board of directors and a member of CARSTAR’s National Marketing Fund Board.

An FYI on DRPs

  • About 45% of respondents to BSB’s 2000 Industry Profile are on DRPs – up from 36% last year.
  • Since becoming involved with DRPs, 55.6% of respondents say their profit margins have increased.
  • A whopping 91.6% of those on DRPs say they believe they’re better off due to their DRP involvement.
  • 93.8% of those on DRPs say they can repair a vehicle to pre-accident condition.

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