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Your profits are…if you learn to upsell!

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We look at upselling as frosting on the cake,” says Dick Strom, owner of Modern Collision Rebuild in Bainbridge Island, Wash.

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And Strom’s not the only one. Shop owners across the country have found that upselling is a smart way to make money – especially since this money comes out of the pockets of consumers, not insurers. It’s an opportunity to make extra money repairing scratches, dings and other non-accident-related mishaps while vehicles are in your shop for insurance work.

Upselling is also a smart option for customers. Even though they spend money out of their own pocket, they save money at the same time. How? Because paint matching and mixing will have already been specified for the insurance-related repair. For example, a vehicle in your shop may have a light front end hit that requires painting the left front door. But look more closely. The door may have a parking lot ding or two. Why not upsell the customer so you can remove the dings and then re-paint the door?

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Kevin Caldwell, owner of AutoBody by Caldwell in Laguna Hills, Calif., preaches upselling a job to its maximum. Caldwell says the opportunity to upsell exists in every job that comes through the door, but many shop owners fail to take advantage of the opportunity. “The real reason [most shop owners] don’t upsell is they’re scared to take the initiative,” says Caldwell. “They’re intimidated by the customer, the insurance company or the situation”

But Caldwell says that not upselling customers is a disservice because you’re not giving them full value for their money. Why wouldn’t customers be willing to pay a little extra if it would beautify their vehicle and restore its value?

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The problem is, too many shop employees never even ask – in part because they’ve never been trained to. But it’s never too late to start …

 

Show Me the Money!
Shops such as AutoBody by Caldwell are much too busy to entertain a separate profit center – such as spoilers, wings or ground effects – so add-on profits are ordinarily upsold on a job-by-job basis. This all but eliminates inventory stacking or specialized sales training that might be required for a profit center.

But can you really make money upselling? Shop owners doing it say, “Yes!”

“Though we don’t take full advantage of upselling opportunities, it isn’t unusual to upsell from $100 to $1,000 per vehicle – but remember to make a profit on every part of the upsell,” says Strom. “When I first started out in this business, I’d do all kinds of freebies trying to impress customers. As a result, when they had something frivolous, they’d bring it to me to be repaired for little or nothing. But when they needed serious collision repair work, they’d take their car to my competitor – the one who charged for everything. I soon made the connection, and started making a living.”

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If there’s money to be made, then why do so few shop owners train their staff in upselling opportunities? Strom says because it requires shop owners to think “out of the box.” It’s not what they’re used to.

“The average shop owner has been so used to giving away freebies for so long – just to convince customers to do their insurance-paid business with this shop – that he can’t imagine making any profit on additionals,” says Strom. “If a shop owner needed a plumber’s services and then decided to make some alterations or add some additional hose bibs to what the plumber estimated the costs to be, the shop owner would expect the additionals to cost extra – and would be surprised if a supplemental bill wasn’t added.

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“Oddly, though, when the shoe is on our foot, many shops resort to cost shifting or ‘throwing-in’ extras. This might be fine in some cases – like old scratches within the repair area, etc. – but in most instances it isn’t. The way we approach upselling is in being very specific concerning the area to be repaired. Our estimates spell out the exact location on the panel we’re contracting to repair. That way, the remainder of that panel and the rest of the vehicle are fair game for upselling.”

 

Timing Is Everything
While Caldwell says upselling is a profitable area for shops, he stresses how important it is to “ask the right person, with the right vehicle, at the right time.” For example, if the ding is removed, will it be of significant value to the customer? A vehicle with 170,000 miles might not be the best candidate for a cosmetic upsell, says Barnett DuBose, owner of West End Autobody, in St. Louis. “A lot of our work is repeat customer or word-of-mouth referral,” he says. “The fine line between upselling and being ‘pushy’ may disappear entirely with the wrong client.”

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Strom agrees. “Through many years of quality repairs and satisfied customers, we’ve been privileged in that we can usually pick and choose our jobs and upsells. If the car is an ‘old beater,’ don’t waste your time and reputation on it.

“You’ll have to decide which jobs are right for you. And experience will tell you if you can make any profit on a particular vehicle.”

Once Strom has decided someone’s a candidate for upselling, how – and when – does he bring up the subject? “There’s no point in trying to upsell a potential customer on extra services until you’ve landed the collision repair contract, though mentioning other services you’re capable of performing at that time might help push the customer toward dealing with you. Remember, they’re busy people, and the more necessary things they can accomplish at one location at the same time, the more attractive you look to them.

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“With experience and through [customers’] words and body language, you’ll learn to ‘read the mind’ of potential customers. If they’re impatient to get to the mall while you’re writing their estimate, don’t irritate them by offering other repairs or services. Rather, tell them you have a few suggestions you think they might be interested in, and ask them when would be a good time for you to speak to them. Consideration for others isn’t often practiced in our industry, but practicing it goes a long way toward selling.”

How do Strom and his employees segue into the specific upselling items? “We have a fluorescent green sheet – which is impossible to lose in the file folder – on which we note any existing scratches, dings, dents, rust, etc. We usually fill this out in the presence of the customers or soon after they drop off the vehicle for collision repair. We then inform customers that we’ve noted these, and let them know what it would cost to repair these items at the same time. For an additional old ding on a door – a door the insurance company is already paying to be repaired and painted – we know insurer-generated estimates normally only say ‘repair rr door’ – without specifying what part of the door is to be repaired. So we inform the customer that, unless otherwise specified in the insurance estimate, ‘Your insurance is only covering the cost of the recent damage, but for an additional $55 plus tax, we can repair that older ding damage at the same time.’ But don’t give it away, unless you’re so inclined.

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“Remember, the insurance representative didn’t figure in one penny more than he actually figures it will take to lure you into doing this repair. If you want to make/maintain a profit on that job, don’t give away the extras!”

 

Upsell Options
Which items are most likely to be candidates for upselling? Here are a few mentioned by the shop owners interviewed:

4 Cosmetic: dings, scratches, rust-outs, sun damage and stains.

4 Fit: poor panel fit, hood line, door and trunk-lid problems, inferior quality sheet-metal fit from a previous job that “begs to be replaced just so that the quality work you’re doing won’t clash with the character of the car,” says one shop owner.

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4 Paint work: bad matches, crazing, chalking, general paint maladies such as dull clearcoat and/or blending errors that make the current repair a chore to complete along industry guidelines. (In some of these cases, an overall re-paint is something to consider upselling to the customer. Caldwell says he frequently suggests this.

During a recent tour of Reliable Toyota, Lexis and BMW in Springfield, Mo., all the techs I spoke with said upselling for undercoating restoration was a part of just about every repair procedure. Upselling a vehicle that’s in for a lower structure repair to a complete undercoat – if not factory or dealer provided – would also be a good idea. Many vehicles are candidates for undercoating upselling after a post-collision inspection reveals the start of corrosion on the underchassis.


Trained to Up Your Profits
Most shop owners who regularly upsell have, at the least, discussed the importance of upselling with their employees. Some even offer training.

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“Training estimators to recognize upselling opportunities is part of our program,” says Kevin Smith of Lou Fusz Chrysler in Kirkwood, Mo., adding that the program is part of a management training exercise presented to department heads, who then train individual employees.

“We work with our eyes open,” says Gary Sonntag, service manager for Wicke Auto Body in St. Louis, a complete paint and body shop/full-service mechanical facility. “We ask customers if they’d like a ding or dent repaired while the vehicle is in the shop for other collision-related service. If they want the work done, we’ll estimate it, show them any area of savings and then proceed if they want us to. If they decline any of the recommended add-on repair, we don’t mention it again.”

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Says Strom: “All our employees know we work as a team and know that missing incidentals eventually costs them in lost income. They’re always looking for upsells and letting the front office know of them. Since we also do quite a bit of mechanical repair, they’re always looking for belts, hoses, water pumps, tunes, lube-oil-filters, exhaust, etc., opportunities.

“Remember, the more necessities customers can accomplish at one location, the better you look to them. A caution: If you find a need for mechanical work on a collision-damaged vehicle in your shop, inform the customer of this and ask if he has a favorite mechanic. If he says he doesn’t or if his mechanic is someone you don’t have a reciprocal referral agreement with, he’s fair game for upselling. But always ask first. You don’t want to ‘bite the hand that feeds you’ and create bad will with your neighbors.”

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The Down Side of Upselling
Rick Halopoff, owner of Little Johns AutoBody in Downey, Calif., was reluctant to do this interview because he says his facility really doesn’t do a good job upselling. “Upselling is a customer service,” says Halopoff. “It’s something we all need to concentrate more on.”

Halopoff says he’s tried incentives to motivate his estimators to upsell and has been puzzled until recently – when he and his senior estimator had a heart-to-heart – as to why his incentives didn’t work .

The estimator told Halopoff that because of insurance company direct-repair programs (DRPs), the turn ratio of jobs has become a significant factor in the repair procedure, making it more difficult to upsell. For example, Halopoff says to consider a vehicle with a dent in the hood that needs repaired and re-painted. But the hood also has some stone chips. Because the insurance company won’t pay to strip the hood to remove the chips, Halopoff says a shop may be forced to fix the dent and re-paint the hood while leaving the chips in the hood.

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“‘Forced’ to paint over the rock chips. Who forced them?” asks an insurance company executive. “We don’t owe it, so the shop should look to the customer for the upsell or … [for the customer] to accept the repairs as owed by the insurance company.”

Why shouldn’t the insurer pay to have the chips removed? “Stone chips in the hood are old, unrepaired prior damage,” says the insurance executive. “The hood was damaged before the accident that caused the dent. Assuming the dent isn’t in the area of the rock chips, then the insurance company owes to repair and paint the dent and to put clearcoat over the whole panel. That includes the rock chips. But the painting of the hood from the dent doesn’t put color over the rock chips [because] the insurance company doesn’t owe to repair the rock chips.”

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Caldwell agrees it’s not the insurance company’s responsibility to pay for upsells. “If there’s additional damage, everyone here tells the owner it’s his responsibility to pay for it and that we can’t add it to the bill.”

But many shop owners, including Strom and Halopoff, say it’s not that easy. “What’s always mystified me is why insurers won’t stretch the rules just a little to make the job look extra nice, which ultimately makes them appear less like Scrooge – as they’re commonly thought of,” says Strom. “But by the rules, they only have to restore the vehicle to pre-loss condition, so the conscientious repairer is left with making the best of a bad situation, like repairing dents with pre-existing paint chips surrounding it – about as attractive as a teenage girl’s perfect button nose surrounded by zits. The insurer knows the conscientious shop will fix the paint chips for free or cost them out to the customer, so the insurer is automatically off the hook. But the paint chip repairs often involve more time and materials than the insurer-paid dent repairs, so someone has to pay for them or the shop would have been better off not taking on the job.”

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So why not upsell the job so the vehicle owner pays for the stone chips?

“Upselling is the right thing to do,” says Halopoff, “but in reality, fine lines are drawn as to what can and cannot be done to repair the chips in the hood – and the turn around time can become crucial. If the DRP estimate says we have a day and a half to complete the job and we sell add-on work, we’ll go over the time allotted and then all kinds of difficulties arise. This may include the customer having the rental car an extra day and other [repercussions] that wreak havoc on shop and insurance company relationships.”

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But if the situation is handled correctly, upselling shouldn’t wreak havoc on anything, says the insurance executive. “The problem described is pretty clear to me. Some shops don’t want to take responsibility to upsell rock chip repairs [or anything else] to the customer and are unwilling, unable or simply ignore the fact that the extra repair time is the shop’s responsibility to work out with the customer.”

Many shop owners interviewed for this article disagree, saying upselling isn’t just between the customer and shop owner. Though they’d like to upsell, they say they find themselves in an administrative “meat grinder” perpetuated by the very system that feeds them work. Turn ratios and insurance company restrictions dampen an estimator’s enthusiasm and can place a shop that’s upselling in a bad light with its DRP designator.

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“The customer is being punished by the current system,” says Halopoff.

Not so, says the insurance company executive.

“Insurance companies and our customers want faster turn times,” he says, “but that’s only one side of that issue. Shops that control their turn times are more profitable, so faster turn time is good for both of us. But controlling turn time is a real challenge for shops. They have a difficult time managing their processes, and many of them blame their process and profit difficulties on insurance companies.”

The executive says it’s not insurance companies’ fault shops don’t correctly handle the upsell process.

“Let’s look at the upsell process,” he says. “The insurance company and shop agree on the dent repair costs and hopefully discuss the rock chips. The insurance company should be the one to tell the customer rock chips aren’t going to be paid for. This doesn’t occur as often as it should and when [the insurance company doesn’t] have that conversation [with the vehicle owner], we leave the shop to do it – and that’s not fair. The insurance representative should explain to the shop and customer that [the insurer paying for rock chip repairs would be] betterment and isn’t owed. The shop is then free to discuss this issue with the customer.

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“The shop now advises the customer that it will cost [this amount of money] to repair the chips. Since the shop is already charging the insurance company for color match and clearcoat, the actual extra cost to the customer will be [this amount]. The customer’s inconvenience of an additional number of days for repair will also be the customer’s responsibility.

“Where the shop’s process breaks down is the estimator is uncomfortable having these conversations and uses the insurance company as the scapegoat when talking to his owner/manager. The owner/manager doesn’t give the issue any real thought and all of a sudden, we have a friction issue.

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“The insurance side is very clear. We owe for the accident-related damages. Anything else is between the shop and the customer.”

 

Sold on Upselling
For every shop owner across the country who upsells to boost shop profits, there are probably 19 who don’t. (There’s nothing scientific about this figure. I’m guessing based on how hard it was to locate shop owners to interview for this article.) Is this lack of upselling occurring because there’s not enough money in it? Absolutely not.

As with anything, it’s up to you to determine if something fits your particular needs. Upselling may or may not be for you. But, for the shop owners I spoke with who are upselling, it’s proven profitable.

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“Since most of the work shops do is insurer-paid and regulated, upselling is the only chance we have to make a profit at a better percentage of profit,” says Strom. “As long as you can convince the customer that he needs your services and that your estimate is fair, honest and reasonable, the sky’s the limit when the customer is paying.”


Writer Bob Leone, a retired shop owner and contributing editor to BodyShop Business, is ASE Three-Way Master Certified and is completing qualifications as a post-secondary automotive instructor in the vocational-school system in Missouri.

 

“If the DRP estimate says we have a day and a half to complete the job and we sell add-on work, we’ll go over the time allotted and then all kinds of difficulties arise,” says Rick Halopoff, owner of Little Johns AutoBody in Downey, Calif., about why his shop doesn’t upsell. “This may include the customer having the rental car an extra day and other [repercussions] that wreak havoc on shop and insurance company relationships.” Upselling shouldn’t wreak havoc on anything, says an insurance company executive. “The problem described is pretty clear to me. Some shops don’t want to take responsibility to upsell rock chip repairs [or anything else] to the customer and are unwilling, unable or simply ignore the fact that the extra repair time is the shop’s responsibility to work out with the customer.”

 

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Overlooked Profits
Buck David, owner operator of The Car Place in Taney County, Mo., was in the process of installing a ramp-style lift in his facility when I interviewed him. David told me he’s a veteran dealership paint/body expert who decided to go it alone in his own facility. He says an area that’s sometime neglected within the autobody realm is the undercar systems that become an issue as a result of a collision. His purchase of an exhaust bender and some inventory will address the damage almost always done to exhaust systems during a moderate to heavy crash. Engine mounts break shoving exhaust parts out of position, creating leaks, noise and other conditions. Many body shops currently send exhaust work out the door, while others make a feeble attempt at getting things back in order. Look at your typical repair order for a collision; exhaust parts are hardly ever shown in the report. Not every car will need exhaust work, but a lot do. Many are being shuffled through, and the profits in such cases are lost to subsequent repair shops down the road.

 

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Upselling Tips for Non-Insurance Work
by Dick Strom

How do I upsell a customer who’s having non-insurance-paid work done? Since these people aren’t normally as liberal with their money – since it comes out of their pocket – they’re a little more difficult to upsell. The best (mechanical) example I can give is that we do electronic wheel alignments.

When a potential customer comes in with a “Thrifty-Lube” (or whatever) newspaper clipping for “wheel alignment: any vehicle: $19,” I explain that no one can perform an accurate and thorough wheel alignment for that price and that it’s a “come-on” to get the vehicle into the shop so they can find other, often unnecessary, “needed repairs.”

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I explain the process involved in proper wheel alignment, the benefits of doing it right the first time (tire wear, etc.) and that we’d be happy to take them back and show why we recommend doing the job. We assure them we won’t perform services they don’t need – but make them fully aware of any potential problems. Integrity, honesty, necessity and sincerity are the keys to successful upselling.

Upselling in a non-insurance collision repair situation is similar, though they often only want minimal repairs done. In such cases, we take the position that “part of the pie is better than none of the pie” (and is often more profitable than all of the pie). I often make more profit doing “quick repairs” (pulling out and hand straightening a fender, bumper, etc.) than I would if I did the whole job insurer-paid. Normally, on an older vehicle, if you can pull out and hand straighten panels to the customer’s satisfaction and replace a sidelight/ headlight, etc. to make it safe and legal for one-third to one-fifth of the cost of full-blown repairs, they’ll go for it.

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And this job won’t normally tie up your painters and paint booth and can often be performed by your less experienced techs, under occasional supervision by the more experienced ones. We’ve often found these to be very profitable.

But first let the customers know what it would cost to do the job to pre-loss condition (say, $3,000) then present your alternative repair idea (will be acceptable but not perfect for $600-$1,000) and let them decide what’s right for them. I often offer to do it for the lesser amount, with the option that if they don’t like how it turned out, we can revert back to the pre-loss, full-figure if they so desire.

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