We feature some of the best columnists in the industry including Toby Chess, Rich Evans, Tom Franklin, Mike Causey, Dale Delmege, Walter Danalevich and Lee Amaradio.
We have contributing writers from different regions of the country: Ed Attanasio, David Brown, Chasidy Sisk and Rachael Mercer.
We also have guest columistslike Richard Steffen of the CRA, and David McClune from CAA.
Collectively they represent a unique perspective with hundreds of person-years of experience. Let us know what you think, by posting responses to their columns.
To read Lee's columns prior to last January search "Amaradio" on this site from the home page
David M. Brown is a native of Philadelphia who has lived in Arizona for 30 years. He writes about subjects he is passionate about, including the car industry. A father of two, he is mentored by his border collie/pointer, Haylie, who is much more concerned with thrown tennis balls than with a beautifully repainted Aston Martin.View items...
Walter Danalevich, AAM, has owned Santa Barbara Auto Refinishing in Santa Barbara, California, since 1979. He enjoys sharing his shop management tips with other shop owners and would like to hear about yours. Contact him at firstname.lastname@example.org
See also his shop website: www.sbautobody.comView items...
The "Insurance Insider" is a corporate-level executive with a Top 10 auto insurer in the U.S.. Although he needs to remain anonymous, he will answer questions emailed to him in future columns. Got a comment or question you’d like to see him address? Email him at Auto.Insurance.Insider@gmail.comView items...
Rich Evans is the owner of Huntington Beach Bodyworks and an award winning painter and fabricator. He offers workshops in repair and customization at his facility to share his unique talents. He also appears on a new show on Speed Channel, Car Warriors. See his Twitter (left) and Facebook (right) feeds for more on Rich's active projects.
For contacts and design samples visit www.huntingtonbeachbodyworks.com
Larry Williams is an innovative, award winning parts manager who has been managing profitable parts departments for over 30 years. He recognizes the importance of OEM parts management to collision repairers and now works as a consultant to the industry. He can be reached for consultation at email@example.com.View items...
Business Beat is a new column launching May 2012 in Autobody News. It will focus on investment activities in the automobile and collision industry and will feature guest columnists on a regular basis. Opinions herein are strictly those of the author. Autobody News accepts no responsibility for investment actions taken or not taken based on this column.View items...
David Luehr is the owner of Elite Body Shop Solutions, LLC a collision business consulting firm based in Nashville, Tennessee. He is a 30-year veteran of the collision repair industry and has served on several industry association boards across the USA as well as leadership positions with companies such as Manheim and ABRA. David is an expert in Body Shop Operations and specializes in Lean and Theory of Constraints methods. Email him at firstname.lastname@example.org
In my article The Process of Winning (see Autobody News, June 2014 edition or in my column section of the Autobody News website) I briefly explained why it is important for collision shop leaders to reward the vital behaviors that contribute to a proven process being carefully followed instead of only offering incentives for end results.
In this article I am going to expand on this idea as well as challenge the thinking on what a good bonus program should look like. Let me be clear about one thing, this article is not referring to technician commission systems, but instead the bonus, or incentive plans that are used as an attempt to motivate managers, estimators and other administrative staff.
When it comes to technicians I have conflicting views on commission systems, but mainly support them unless they are tied to a bad bonus plan. I will illustrate my points by beginning with a story.
Once upon a time, a body shop owner that I worked for approached me about creating a new employee bonus program for his company. “What is wrong with the bonus program we have now?” I asked. He told me “Every time someone doesn’t make bonus, they are ticked off at me!” Then he confided, “If the estimators come close to meeting their sales and CSI objectives I usually give them some money anyway as a kind gesture, I want my people to be happy, but they still don’t seem to appreciate it.”
After spending considerable time interviewing the employees of this sizable MSO, there were several things I discovered.
1. Almost every admin employee had a slightly different bonus plan than the next guy or gal.
2. Many admin employees said they had given up trying to reach the benchmarks and felt they were set too high.
3. All admin employees felt that they didn’t have enough control over the factors leading to their bonuses, thereby making it “unfair.”
4. Most employees complained that company leadership changed their bonus plans often, sometimes two or three times a year. Some employees said they felt like the bonus plans would change whenever it was convenient for the company to “bilk” them out of their money.
5. Employees acknowledged that the bonus plans caused motivational silos which caused them to sometimes perform well at things they are being measured for, but poorly at those they were not being measured on.
6. When pressed a little, most of the employees said that the bonus plan was more of a de-motivator than a motivator!
So it seems the boss was right! The employees not only were unappreciative of his “kind” gestures, many were absolutely fed-up and ready to look for another job! How could something intended to motivate the employees have the complete opposite effect? With so many problems in play, it was difficult to determine which employee complaints were justified and which were just lazy employees looking for an excuse. Either way, it was clear the current admin bonus plan was creating a lion’s share of the discontent.
Although it took me several years of failed incentive programs to figure it out, I now know there are several forces at play here that can make these systems fail miserably.
Here’s what the boss unknowingly did wrong.
● Employee bonuses made up too large a percentage of overall wages, so if employees didn’t make bonus, they didn’t have enough money to pay their bills. Understandably they felt punished.
● A handful of the employees felt that management was not paying them what they had agreed upon when hired.
● Created unrealistic benchmarks for people to reach without considering market fluctuations and unforeseen circumstances.
● Held people accountable and incentivized only on end results such as outcome KPIs.
● Jeopardized the whole system by breaking the rules and giving out partial bonuses to key people.
Even though the boss did several things wrong, many pieces of his bonus program closely resemble those found in many collision businesses in this country. Results-based admin bonus programs are extremely common in many industries because on the surface they seem to be fair and just. Who could find fault with a system that is as old as time and that pays people based on the results they produce? I’ll tell you who. The millions of hard working people that are negatively affected by this madness every day! If you think that I am being overly dramatic, ask yourself this question. What are we trying to accomplish by offering a cash-based incentive program? What is the goal? Although there could be many goals, most would list the following two most basic and worthy goals.
1. Motivate the employees to get results, KPIs, Sales, etc.
2. Attract and retain good people
If these are your goals as collision shop leaders, are you happy with the results your bonus program is contributing towards reaching these goals? If so, congratulations! Everyone else may want to read on.
Solution #1 - Become Process Driven
What behaviors are we really trying to influence?
If the goal is to produce good results, then management needs to look at the individual tasks that make up the processes. So if a shop has crummy processes, then wouldn’t it be unfair to hold people accountable for the results produced? Since it is the individual tasks of the process that determines the outcome’s success or failure, then individual task execution should be where management looks closely for the vital behaviors to take place. Let me give you an example.
Blueprinting a vehicle is a very important process to achieving desired results. If people fail at Blueprinting, there is a good chance that CSI and cycle time metrics could suffer. The guy doing the Blueprinting probably knows this fact whether or not you are giving him a bonus. The question is this: Does the guy doing the Blueprinting know what specific tasks are involved to ensure a consistently accurate repair plan? What vital behaviors does he need to execute?
1. Review vehicle check-in sheet
2. 100% meticulous disassembly
3. Photo documentation
4. Separate good parts from bad parts on table
5. Use group sequenced arrow down method in estimating system
6. Load parts cart, separating good/bad parts
7. Verify Blueprint accuracy on printed estimate to repair
8. Go over completed Blueprint with technician
If the Blueprint guy properly follows these eight steps, one can expect a consistent quality standard every time. So if management wants to incentivize him and change his behavior for the better, they would want to tie these eight specific tasks to his incentive, not some outcome he has limited control over like cycle time or gross profit. Yes he has some control over cycle time and gross profit, but he has ALL the control over following the proper process in Blueprint. Use your own creativity; what would you do to ensure that all the vital behaviors of Blueprinting were being followed? What could you do to reward him or her?
Solution #2 - Identify What Truly Drives Motivation
What is truly important to our employees?
The reason most bonus plans fail is that they actually demotivate the staff! In Daniel Pink’s book, DRIVE, he states: “The best use of money as a motivator is to pay people enough to take the issue of money off the table… But once we’ve cleared the table, carrots and sticks can achieve precisely the opposite of their intended aims.” Pink is right. In fact, scientific studies have revealed that when you use rewards expecting to gain the benefit of increasing another person’s motivation and behavior, they often incur the unintentional and hidden cost of undermining that person’s intrinsic motivation toward the activity. This problem is severely compounded when management gives employees a bonus for routine work, and then takes it away from them later on while performing the same work. This causes the employee that once was happy to perform his job at his regular pay, to now be discouraged and unappreciated performing the same job.
So what can leaders do to motivate employees? From the dozens of studies I have read there is one important thing that appears on every list. People want to be RELEVANT. Everybody wants to feel that what he or she is doing will make a difference. If leaders want to have a motivated work force, start there! Top leaders figure out how to tie employees’ values to vital behaviors that will then produce the desired results you are after. There will never be an incentive program that can make up for the lack of proper management and leadership! There are many ways to connect to employees’ intrinsic needs and thereby motivate them. Here are a few suggestions:
● Give small tokens of appreciation such as $10.00 gift cards for properly following key processes.
● Make the workplace a safe environment for everyone to contribute their opinions and ideas freely. This will help people become relevant.
● Read these books, available at Amazon..
▪ Drive—Daniel Pink
▪ Influencer—Patterson, Grenny, Maxfield, McMillan, Switzler.
● Leaders need to listen to people carefully. What are they actually saying? It may not be what you think you’re hearing.
● Praise work being done correctly more often than you may think necessary. Praise from someone not known for offering it is much more powerful than you may realize.
● Punish those that violate your company’s values.
● Make relevance more important than monetary rewards.
● Consider re-evaluating bonus plans to be more in-line with employee values and critical processes, or just eliminate them altogether and pay people what they are worth.
● If you insist on a bonus system, make sure the bonus is 10% or less of overall wages.
Many readers may not like or agree with these “soft skills” being used in place of the old dependable bonus plans that we are used to, but we are not living in the old days any longer. When holding on to these antiquated ideas, it is easy to see why many in our industry find difficulty understanding the new generation of worker and what truly motivates them. When leadership does not provide the employee with what they are truly hungry for intrinsically, eventually it becomes only about the money for them. In other words, because many lack the necessary leadership skills, they use extrinsic motivators instead to get the job done and often with mediocre results. As Daniel Pink pointed out “The best use of money as a motivator is to pay people enough to take the issue of money off the table.”
This article is rooted in behavioral sciences that are factual not merely my opinion, however, it is my opinion that the era of the iron-fisted manager is nearing its end. Those that embrace modern leadership skills have the best chance to prevail.
We’ve all heard the term but what exactly is a Millennial? Born between 1981 and 1996, Millennials are represented by 86 million people, which means they’ve outpopulated the Baby Boomer generation by seven percent. There are more 22-year-olds than 53-year-olds on the planet right now and by 2018 it is estimated that the Millennials will be outspending the Baby Boomers by a large margin.
My stepdaughter is staying with us this summer, so I am getting a firsthand view of how these Millennials live. One thing I noticed is that they eat a lot and text a lot and ignore me with a passion. They’re also very in tune with all of the latest technology and social media and are extremely adept at rolling their eyes and saying things like “whatever” and “it is what it is.”
Some find them to be entitled and downright rude, but no matter what your opinion of them is, Millennials are a very significant segment of the market, and that’s why any consumer business should be at least remotely interested in what they’re up to. So, why should the collision industry care about this age group? Because they have money, they drive nice cars and just like everyone else—they get into accidents.
After years of studying Millennials, marketers and ad agencies all over the world know full well that the Millennial generation isn’t just a bunch of entitled kids with smart phones snapping selfies and chasing down the latest Groupon deal. In fact, businesses that aren’t pursuing Millennials will soon be missing out on a major consumer opportunity from a generation with an expected $2.45 trillion annual spending power by 2015. Body shops should be marketing to Millennials right now, because they’re the consumers of the world’s, both today and tomorrow.
The problem is that most owners of leading ad agencies and marketing/pr companies are in their 40s and 50s and they’re still trying to use techniques that worked back in the Madmen days. But, in order to cater to the Millennials, the powers-that-be have to re-invent themselves once again and devise ways to appeal to these 20-somethings. I recently took a two-day seminar about social media and most of it was dedicated to advertising and marketing to Millennials. The class was taught by a Millennial, so the information was both pertinent and useful.
More and more companies are recognizing the value of marketing to Millennials. By using these five tips to re-calibrate your marketing, public relations and advertising efforts, you’ll be able to tap into this increasingly powerful generation.
1. Don’t Talk Down to Them
I was talking to a Millennial one day about a world without personal computers or the Internet and he looked at me like I had just emerged from a cave. As the most educated and savvy consumer group in the world, Millennials know what they want and are very skilled at finding it all by themselves. Now, collision repair is obviously not an impulse buy and the Millennials will treat it as an unnecessary expense, like Obamacare or parking tickets. But, in the end they don’t like to be corralled into doing something, so branding and advertising to this group may be more important than ever. They’re not the type that is going to just blindly pick one body shop from the list their insurance company shows them. They will want to do their due diligence and ask around, as well as referring to the shop’s web site, Yelp page and other assorted social media.
2. Don’t Camouflage Your Message
“Be real,” is something the Millennials want to tell their parents and the new word I keep seeing everywhere is “transparency.” (Back in the old days, if you called somebody “transparent,” it meant they were not genuine, but now I guess it means exactly the opposite.) My stepdaughter has seen the media change and evolve and has been bombarded by literally millions of ads during her 20 years on the planet, so she can’t be fooled, cajoled or directed by advertising. The Millennials want the facts now and don’t want to sit through your long descriptions or veiled messages. Their time is limited and they’re juggling 1,500 things simultaneously and that’s why studies show that Millennials will value honesty and a straightforward approach when it comes to advertising.
3. Strengthen Your Presence Online
Millennials are comfortable buying things online and that’s why brick and mortar businesses are moving toward the Internet more all the time. Unfortunately, you can’t get a fender bender repaired via the computer, but much of the groundwork can likely happen there. And that’s why it is important to have a good web site and some presence on Facebook and Instagram, for example, because these Millennials care about it and may use one or more to make their buying decisions.
4. Millennials Communicate All the
Time…with Each Other
This generation is more connected than any group in history, because they have so many ways to do it. They also rarely live alone and have numerous roommates in many cases, so word-of-mouth (or text or video or photo bomb) is more valuable to advertisers who understand this. The old days of creating a “buzz” is always beneficial, but now it’s more concentrated and it all moves so much more quickly. Come up with a shorter, more concise message, so that the Millennials can grasp it fast and disseminate it to their friends and associates seamlessly. It’s called “going viral” and if you can get achieve it, you’ll be a success—Millennially speaking.
5. Quality is Still King (or Queen)
With today’s technology, bad service and poor quality can’t be swept under the carpet anymore. Anyone can find your competitors online within milliseconds and we all know that bad news travels faster than good news. Companies that take the time to provide convenient, Millennial-friendly services and quality products will be continually rewarded with positive recommendations, via the spoken word, smartphones or laptops. Either way, Millennials are demanding better service and higher quality while possessing the power to influence others, so listen to what they’re saying and start concentrating on this demographic more. Whether you’re enamored or not with their attitudes or behavior, they’re a huge market and you can’t deny it any longer.
Shop owners with a shop in a metropolitan area see many vehicles with minor dings, dents, scratches and more, all around the city. Many of these drivers have tolerated these imperfections on their vehicle for weeks, months and possibly even years. Why haven’t they done something about these eyesores? Maybe the discomfort of driving around with these flaws simply hasn’t been great enough to motivate them to fix them. Or maybe they imagine the cost, not only in terms of money, but also in considering the inconvenience of being without the vehicle while it’s being fixed, is too great to bother.
If a shop mainly relies on insurance or dealerships for work, this may not be an interesting marketing move. But if a shop seeks to bring in new customers and add to a database of marketing targets, this could be a real opportunity to increase the shop’s volume and potential volume of business. In general advertising a collision repair shop is mainly done to make a shop’s name, location and reputation broadly known. When viewers of the ad may not have an accident for three or more years in the future, getting an immediate response is only a peripheral intent of the ad. But the advertising campaign I’m proposing here, aimed at a great many drivers with minor body damage, could produce an immediate volume of responses if handled right.
The proposed ad should offer a “Ding Day Special.” The two vital aspects of the ad must be that it will be low cost, and with very little time commitment. For the bold shop owner, the ad could also offer “No risk—your money back if not completely satisfied.” Some owners might hesitate on this one, but statistically the no risk offer increases responses significantly. An additional attraction to be offered by the tech-savvy shop would be an on-line inquiry and approximate estimate for potential customers. The prospective customer simply uploads a photo of the damage and the shop gets back to him or her with an approximate repair time and cost.
To make the “Ding Day” routine work well, a shop must commit significant resources to getting vehicles completed and out quickly at reasonable cost. The real profit should not be in the limited scope of the minor repair. Instead it should be viewed as a sales opportunity. This is a chance to collect many customer information forms filled in with vital marketing information. It has to collect information on all vehicles owned by the customer’s family and employer and any other vehicles in need of repair. It should have his or her insurance agent and possibly organizations the customer belongs to that could be marketing targets. Filling in of the form can’t be simply handing it to the vehicle owner, leaving him or her to omit many important marketing bits of information. The estimator or a well-trained front desk person should make certain most of the requested information is captured. And this is just step one in capturing this vital sales opportunity.
While it may be possible to talk the prospect into bringing in another vehicle that needs repair right then and there, this could be shortsighted. In order to keep the turn-around time short, it could be better to solicit work on other vehicles with follow-up calls. If the customer was pleased with a quick turn-around, the estimator should get a welcome response when making the follow-up call. This call would also be an appropriate time to ask for permission to call the customer’s business and social organization connections to make the shop known to them. This tactic has worked well with Amway and Avon solicitors and builds an ever-expanding network of related individuals for marketing purposes. When there is reluctance to pass along phone numbers, these days asking for an e-mail address or even Facebook connection could get an easier response.
Perhaps the greatest difficulty getting this tactic to work is the problem of where to advertise and how to reach the greatest number of prospective customers. Today print ads have limited value as people turn away from printed newspapers and get their news on-line. TV ads are generally too expensive, but radio ads could be a real possibility in some areas. On-line ads are essential.The ad has to be direct and simple. It should start with the key question: “Are you tired of living with that ugly dent, ding or scratch on your vehicle? For a limited time we are offering a very low-cost, fast turn-around repair to restore your vehicle to its original beauty. And we’re located close enough for you to drop your vehicle off in the morning and pick it up, possibly as early as noon. Call us or e-mail a quick photo of your damage and we’ll give you an approximate estimate immediately.”
If the collision repair industry does not get clearly focused on what the mission is, it will be doomed to dance to whatever tune the insurance industry wants. Probably something like that old AC/DC hit, “Highway to Hell.”
Bill Clinton was elected president of the United States because he kept the country focused on the economy. (His slogan, “It’s the economy, stupid,” became famous. To win in their ongoing economic struggle with the insurance industry, collision repairers have to concentrate on the car owner. “It’s the car owner, stupid.”
Collision repairers are too busy tripping over their own swords to realize that pleasing the car owner every time is a key to survival. Instead, many are more worried about pleasing the insurance companies. They claim that since it’s the insurance companies who are writing the checks, it’s the insurance companies they should be satisfying. Ultimately, though, it’s the car owners who write the checks. They, after all, pay the insurance premiums.
I predict that in another 10 year, the American public is going to wake up and realize how monstrous a financial institution the insurance industry has become.
– excerpted from editorial by Sheila Loftus, editor of Hammer & Dolly published by the Washington (D.C.) Metropolitan Auto Body Association, July 1994
CIC’s “Research and Development Committee” is continuing its exploration of a ”new body shop operating model” to improve customer service and “cycle time” – the length of time between the accident and the time repairs are completed and the insurance file is closed.
At the meeting in July, committee chairman Randy Stabler said the average repair claims process is 10 days – including four or five days before repairs begin. His committee, he said, is looking into ways to reduce the inefficiencies before repairs actually begin, including the current estimating process.
“All of the things that are bottlenecks in the repair process are a derivative of an inaccurate estimating system,” Stabler said. “The back-end repair process is never going to be efficient and accurate if we don’t start out with an accurate blueprint.”
Among his committee’s initial recommendations are:
- Improve the estimating systems so that they create that “blueprint for repair” in plain language easily understood by technicians and vehicle owners.
“If the estimate is more than just an accounting of what we’re going to charge or pay to fix the car, I think we’re going to have faster cycle times, happier consumers and lower overall costs for everyone,” Stabler said.
- Reduce inconsistency in parts names and labor terminology used by the estimating systems and vehicle manufacturers.
- Eliminate confusion and inefficiencies by having insurers distribute their pricing guidelines.
- Stop insurer “micro-management” of each individual repair charge.
“Can you imagine someone going in for surgery, and the doctors finding something else that needed to be done but not doing it because they had to stop and call for authorization?” Stabler said. “That’s not an efficient model. ‘Pull it and we’ll come back and see the damage after it’s pulled’ is a flawed notion. That in the long run does not save the insurer or consumer money.”
– As reported in The Golden Eagle. It was at least five years before the “blueprinting” aspect of “lean processing” was being widely discussed in the industry, and still 15 years later it is far from universally adopted by shops.
industry (July 2004)
The Collision Industry Conference (CIC) “Information Technology Committee” reported that rekeying estimates that shops could be receiving electronically from insurers is costing the industry an estimated $17 million or more each year.
Based on a survey of 44 shop owners at a previous CIC meeting, the committee believes that about 28 percent of the 9 million auto claims require rekeying of estimates, which takes an average of 21 to 33 minutes per estimate. Assuming a wage of $20 per hour for the shop employees rekeying the estimates, “that basically says there are 2.52 million estimates that are rekeyed each year by body shops, costing a minimum of $17.64 million,” Cindy Schnier, co-chairman of the committee, said.
–As reported in Autobody News, July 2004. In 2013, CCC Information Services and Mitchell International launched services that enable a participating insurer to enable shops not on that insurer’s DRP to download the insurer’s prepared estimate, eliminating the need for the shop to rekey the initial estimate.
Shop owner response was mixed last week to the announcement by State Farm that it was no longer requiring its Select Service shops in California and Indiana to use OEConnection for electronic parts ordering.
Debbie Moore of Diamond Collision Services in Avon, Ind., said that despite some glitches with the system over the past year, it has eventually worked well for the shop.
“We’ve been using it on all our orders, not just State Farm jobs, and will continue to do so at least for now,” she said.
But a Southern California shop owner who asked not to be identified said State Farm’s decision came at an ideal time; his shop’s server had just crashed and he now wouldn’t have to reload the OEConnection parts ordering software on the replacement computer.
“It’s kind of been a pain, and some of my dealers really didn’t want to mess with it,” he said of the parts ordering system. “You almost always had to do follow-up phone calls (to the dealer) with it, so if I have to do that anyway, I can do without it.”
State Farm’s George Avery said although the insurer was “suspending” the requirement to use electronic parts ordering and had no plans to roll such a program out nationally, State Farm saw the test as valuable because it demonstrated electronic parts ordering “has value.” He noted the Select Service agreement still gives the insurer the right to require electronic parts ordering.
“We encourage the repairers to use it if they would like,” he said. “It works. It has advantages. Now that the test is done, we know moving forward that we have already tested that functionality.”
State Farm began the test of electronic parts ordering in two markets in 2007, with a half dozen automakers offering the insurer parts discounts through the program. The program was rolled-out in 2008 to all Select Service shops in the two states, but the number of automakers offering discounts continued to decline until State Farm halted the discount portion of the test earlier this year.
– As reported in CRASH Network (www.CrashNetwork.com), July 20, 2009. State Farm subsequently said it seemed inappropriate to seek OEM parts discounts at a time when automakers were struggling economically and in some cases filing bankruptcy. But it saw enough potential benefits to electronic parts ordering that it sough proposals from companies to develop an electronic parts ordering system – which led to the launch of State Farm’s mandated use of PartsTrader in 2012.
PartsTrader proposed state limits on use of non-OEM parts, and challenging the automakers’ patent designs on crash parts were all being discussed when non-OEM parts manufacturers and distributors met recently in Austin, Texas.
The Automotive Body Parts Association (ABPA) allowed only members in the room during discussion at its convention of the association’s pending lawsuit challenging the validity of six of Ford’s design patents on collision repair parts. But proposed federal legislation that would reduce how long automakers can use design patents to prevent other companies from producing replacement crash parts was among the topics discussed at the event by Louisiana tax lawyer Cassie Felder, who is running for Congress.
Felder, a Republican who believes in tax reform and repealing the Affordable Care Act, told attendees at the ABPA event that having grown up in her parent’s Baton Rouge business, Felder’s Collision Parts, she has a good understanding of the issues facing the non-OEM parts industry.
“This industry hasn’t had a real friend in Congress,” Felder said. “For many of you who have been to the legislature, who’ve been up there trying to get some of these bills passed, fighting against some of the things that affect you, there aren’t a lot of real friends to the industry there, not a lot of people there who really understand this industry. And so it’s really important for you to pay attention to this race, and I’m asking for your support in this race.”
One of the issues Felder mentioned she would go to Congress understanding is the “PARTS Act,” an ABPA-supported bill that would slash automaker design patent protection from 14 years to just 30 months.
Felder also discussed the “devastating” impact that automaker parts price-matching programs have had on her parent’s business and others in the non-OEM parts industry. She said she drafted the lawsuit that Felder’s Collision Parts filed in 2012 against General Motors, alleging that General Motor’s “Bump the Competition” price-matching program was an illegal predatory pricing scheme designed to drive non-OEM parts distributors out of business. (A U.S. District Court judge dismissed the case in April, but Felder’s Collision Parts has filed an appeal of that decision. See Autobody News June 2014 issue.)
Felder asked ABPA members to support her campaign to represent Louisiana’s 6th Congressional District. She is seeking financial contributions (www.cassiefelder.com) both from individuals and through business political action committees.
“Obviously there are a lot of issues that are going to be affecting my district,” Felder said. “But this industry has been so important to me and my family, that this was absolutely one of the industries I wanted to target.”
State legislation related to non-OEM parts was also the focus of another presentation at the ABPA convention in Austin. Ray Colas, director of government affairs for LKQ Corporation, told the non-OEM parts suppliers that the body shop industry seems reinvigorated.
“PartsTrader is something that has motivated them, not only through legislation but also litigation,” Colas said. “With that momentum, they’re throwing us under the bus as well.”
In the past, Colas said, most of the legislative challenges to aftermarket parts came from automakers.
“But the body shops have really taken it over,” he said. “Now the automakers are supporting the body shop association initiatives.”
Colas talked about a number of bills his company successfully lobbied against, including one introduced in Maryland last year that would have prohibited the manufacture, sale or installation of a counterfeit or substandard airbag.
“Some of you may wonder: Why are we concerned about airbags? There are no aftermarket airbags,” Colas said. “Well, that’s true today. That doesn’t mean that in the future they may not exist. So we want to protect that market today in case in the future there is an opportunity for that. We don’t want to be restricted from selling any alternative part.”
Colas said after a “long, drawn-out fight” and “a very, very close call,” aftermarket parts supporters were able to convince Maryland lawmakers this year not to pass a bill that would require insurers to pay for new OEM parts for repairs to vehicles manufactured within the previous three years.
“Jordan Hendler (executive director of the Washington Metropolitan Auto Body Association, which backed the Maryland legislation) has done a great job educating these legislators, meeting with them year after year,” Colas said. “It’s something we really want to keep an eye on.”
A lawmaker in Iowa also needed to be “re-educated” about the aftermarket parts industry, Colas said, after he introduced at the behest of body shops a bill that included a provision similar to the one in Maryland. Colas said that lawmaker’s district includes an LKQ facility.
“We got there and told him, ‘Hey, you’re really going to affect our business,’ ” Colas said. “This is how many jobs we have in your district.”
Colas said the Iowa bill also included provisions prohibiting an insurer from recommending a shop without also telling the customer they aren’t required to use a recommended shop, and from requiring a shop “to use a specific vendor or process for the procurement of parts or other materials.” Colas said those provisions will likely be included in a future piece of legislation.
“There will be a bill that’s reintroduced, but it will not include the aftermarket parts restriction,” Colas said.
Ken Weiss, director of business development for PartsTrader, also spoke at the ABPA convention, just days after his company completed national roll-out of its system, now reportedly used by more than 7,500 body shops and 8.500 parts suppliers. Weiss said that by the end of this past April, parts lists from more than 700,000 estimates had been put out for quote through PartsTrader, and more than 1.25 million orders totaling more than $450 million had been placed through the system.
Weiss said although State Farm “is a little bit restrictive with regard to aftermarket parts,” he expects non-OEM parts orders through the system to increase as shops use PartsTrader for non-State Farm jobs.
He cited a number of benefits that PartsTrader offers suppliers, including “increased sales opportunities and fewer parts returns.” However not everyone at the ABPA convention agreed with Weiss on this last point.
“We have not noticed a lower return rate on (parts ordered through) PartsTrader versus phone calls versus faxes versus anything,” Bob Petty of Collins Collision Products in Loveland, CO, told Weiss. “Our return rate is higher than it’s ever been in the history of the company.”
Petty also asked if returned parts are taken into account in the fees PartsTrader charges to suppliers, which are based on average monthly sales. Weiss said they are, provided that parts purchased through the PartsTrader system are also returned though the system.
“We all know the games today where repairers will buy multiple parts, sometimes just to get a receipt that they can show somebody else, and then return the part,” Weiss said. “With the PartsTrader system, you can only buy a part once unless you return it. Then you can buy the part again from another supplier. So we think that will avoid some of the games and will help bring down the returns.”
Weiss was asked if there’s a way for a shop to bypass the system to return a part.
“Only if you let them,” Weiss told the parts distributors. “If they want to return a part, you need to tell them, ‘You bought this through PartsTrader; you need to return it through the system,’ so you get credit for the return.’ If they don’t want to return it through the system, then, I hate to say it, but they are probably up to no good.”
I received a call last month from a dear friend of mine on the West Coast. I’ll call him Paul here, but that’s not his real name. His voice was shaky and he was clearly upset.
Paul told me that one of the big MSOs had recently acquired a shop just down the street from him and at first he wasn’t too concerned, but now he was extremely concerned. My friend has always ran a very good shop, so I asked him what he was so worried about to which he replied, “I hate to admit it, but these guys are better than I thought and I am losing business to them!” You see Paul’s biggest DRP provider put his new big MSO neighbor on the same program even though they are only a block apart! What’s more, Paul was told by his DRP coordinator that unless his shop improved its KPIs, his new neighbor was going to be receiving the lion’s share of the business.
Paul’s story is not an isolated one. Knowing Paul, he will figure out a way to compete and win, but he is going to need some help.
Everyone in the collision repair industry knows how challenging it has become. DRPs are demanding more, Consolidators are growing faster than ever, and profits are shrinking. The shops that are serious about competing in this game need to quickly improve their position in the marketplace by performing at unprecedented levels. This document is intended to show the reader that many of the advantages provided to large MSOs can be afforded to any shop serious about transforming their business through using an outside firm to provide many of the services.
Organizations like Service King, ABRA, Boyd Group, etc. have systems in place that give them a very strong presence in many major markets in this country. These systems allow for consistent and predictable results in quality and customer service. These systems when combined with the footprint of the consolidators, gives them a very lucrative “seat at the table” with all major insurance carriers.
While each MSO is slightly different in their approach to centralized resources, this is a generalized list of advantages that large MSOs have over the rest of us…
■ Assurance of DRP affiliation when opening new locations
■ Centralized Human Resource Departments
■ Centralized Accounting
■ Centralized Customer Call Center
■ Centralized Load Leveling
■ Centralized Management of I-CAR Gold Class
■ On-line training, Learning Management Systems, and testing
■ Self-managed DRP with centralized audit teams
■ Marketing Teams
■ Safety and Environmental Compliance Teams
■ Proven workflow systems and accountability to make them work
■ Mass advertising and name recognition
■ Ability for employees to help other locations when needed
■ Stability and benefits are attractive to potential new-hires
■ Buying power
Most small collision repair businesses must attempt to perform many of these functions, but are rarely able to perform all of them well, if at all. To remain profitable typical shop owner/managers must perform many of the functions that shop managers at large MSOs don’t have to deal with. The time that a typical shop manager would spend performing many of these functions is spared to the large MSO shop manager thereby providing them time to ensure that processes are being followed, quality and cycle time standards are being met and in many ways acts as an “auditor.” With these disciplines in place, it becomes very difficult to compete with these guys.
In order to perform all these functions that are required, you would need to hire people that are experts in Insurance DRP Relations, HR, Accounting, Customer Relations, I-CAR Gold Class, Marketing and Advertising, Safety and Environmental Compliance, Admin Workflow Systems, Change Management, Lean, etc., etc., etc. I would bet in most collision repair businesses, at least one or more highly paid people would need to be hired to perform all of these functions which are currently not being performed well or at all. That could equate to $5,000 - $15,000 a month, plus benefits to hire who is needed to get all this stuff done! This of course would be considerably more if you have multiple locations needing these services.
Solutions can be provided by an outside firm at a substantially lower price and be performed by experts that will ensure these functions are performed precisely. So in other words, you could get many of these functions at your shop performed both better and cheaper than trying to do it yourself in-house.
Is it actually costing you money by not using an outside firm? In many cases, yes! Training & Coaching has been proven to increase a shop’s Key Performance Indicators substantially. Coaching and Training provided by qualified outside sources can have an immediate positive impact on both KPIs and return on financial investment. Even a modest 5% increase in productivity at a shop producing $100,000 in revenue can yield an additional $2,000 in gross revenue which in many cases is enough to pay for the outside services. There are many cases of shops experiencing significant gains in productivity and profitability that never would have been possible with the assistance of outside experts. Don’t expect quality outside services to be cheap, but look at it as an investment with a favorable ROI.
Do your homework when hiring a business coach or any kind of outside service, these folks in many ways become a reflection of your business and will have an impact either positive or negative. You must be able to trust them much as you would a new employee, so don’t feel you need to hire the first one that comes along.
The old saying that the “Definition of Insanity is doing the same thing over and over and expecting a different result” is exactly what many shop leaders continually do. It doesn’t have to be this way. Quality of life for stakeholders at body shops doesn’t have to be so bad. We all need help, and there are resources available to provide support.
Business Coaching & Consultants
● General Business Consulting
● Admin Workflow Processes & Implementation
● Learning Management System
● Leadership Coaching
● Training Clinics
Online Human Resources
● Hiring Programs
● Performance Evaluation Process
● Employee corrective action
● Legal Advice
● Centralized Call Center
● KPI Management & Reporting
Safety & Environmental Compliance
Marketing & Advertising Solutions
I-CAR Gold Class Management
Associations, Buying Groups &
If you would like more information, or a referral to a capable service in your area, feel free to contact me at
You’re the owner, estimator, painter, front office person, receptionist, marketing director, technician, and detailer. Oh, and I also forgot janitor, psychiatrist, and a shoulder to cry on. As a marketing person, I wouldn’t know how to write an estimate or paint a fender, so why do you insist on trying to do it all when it comes to your marketing, public relations, and advertising? Wearing too many hats means you’re doing too much, and marketing should be the first hat to remove from your busy life as soon as you possibly can.
In some cases, you may already have someone in your crew that can help you in your marketing efforts. Maybe one of your estimators or front office people can play a role in your marketing scheme. One body shop took a newbie office assistant and turned her into a confident and extremely efficient marketing professional, and now she does all of their email marketing, blogging, social media, and online advertising. All it took was one day of training and she was up and running and ready to take on the world.
Without a strategized plan and an annual marketing budget, you’re shooting in the dark, and the first casualty could be your business. Too many body shops get fat and happy when the cash flows in, but all of a sudden—wow, the competition comes to town or they lose a DRP and jump into panic mode. One body shop owner freaked out when three MSOs moved into his city, so he borrowed $50,000 and asked me where should he spend it? Use it for your retirement, I said, because marketing is something you do all the time—not just in emergency mode.
Marketing moves quickly, and if your competitor is working faster and harder than you are, they will obviously capture more market share. There are only so many car accidents in your area every year, so why is the shop down the street fixing 150 vehicles monthly while you’re doing half that? Maybe because they’ve made their marketing a priority while many of your marketing projects are sitting in a constant state of limbo. “We’ll get to that next week…next month…next year,” and then it never happens. Marketing is not a part-time thing reserved for evenings and weekends, it’s fast-paced and ever-changing, and that’s why it needs to be full-time and on the front burner.
If a marketing company says that they’ll get you ranked number one on Google within one month’s time, listen to what your father used to tell you—“If it looks too good to be true, well…” Some so-called marketing agencies can get you involved in what they call “black hat tactics” while promising you the world, which can lead to Google sanctioning you and shutting down your website. If any company promises you anything—get it in writing and don’t pay them until they deliver.
Too many business owners (not just body shops) develop a “checked box” mentality when it comes to their marketing efforts. “We updated our website, created a blog, and did some SEO, so we’re good.” Well, maybe you’re good right now, but how about three months from now? Just by checking things off on your marketing to-do list doesn’t mean you can stop or slow down. New content should be added to your site all the time to enhance SEO. Your blog needs new articles, photos, etc. on an ongoing basis. I hate to see a collision blog that hasn’t been updated since 2012, for example. Marketing, advertising, and public relations is not a start-and-stop thing, and that’s why you should never even look at the finish line.
You have some nice cozy DRPs that bring you tons of business, but if they make up more than 80 percent of your total revenue, you’ve got too many eggs in one basket. What happens if you fumble a couple repairs and suddenly you’re no longer the insurance company’s flavor of the week? A healthy balance between DRPs and non-DRP business should be close to 50-50, but too many shops don’t get it until they get the axe. By continually hammering away at the big three—marketing, public relations, and advertising—one DRP won’t be able to make or break you.
If you’re DRP-dependent, you might want to do more consumer marketing and advertising, such as radio and TV broadcast, outdoor advertising, direct mail, online advertising, and social media. You can continue relying on your DRPs, but when times change and the DRPs are harder to attain, you’ll be in a better place and more prepared for a life with fewer DRPs. Plus, it all works together to brand your business, so that when consumers do have a choice, you’re on their radar.
Perform your due diligence and talk to a lot of marketing experts before choosing which way to go. But once you find the right company or individual, let them do their job and step aside. Too many body shops owners listen to everyone about marketing—their wives, girlfriends, the postman, and the guy at the deli down the street. Hire the right people and let them perform. Sit down with them every three to six months to check the results of their work and re-assess things at that point, but don’t jump the gun when you don’t see instant results. Marketing takes time, like fine wine—but in the end, you’ll start seeing positive results because solid marketing is an investment and not an expense.
Learn as much as you can about marketing, advertising, and public relations and then pass it on to the people who will actually be doing the heavy lifting. If you’re knowledgeable, you won’t have to take advice from people who read something somewhere and aren’t afraid to share it with you. You need to be the final arbiter when it comes to your marketing. You may not have the time to do it yourself, but at least you’ll know what’s going on. The paint companies, professional organizations, and marketing firms offer classes, training sessions, and seminars all the time and many of them are free, so be a sponge and suck up as much of this information as you can because knowledge is power.
The association representatives at the Society of Collision Repair Specialists (SCRS) Leadership Conference meeting were in unanimous agreement on one issue: insurer involvement in parts purchasing. A resolution, passed unanimously, recognized the right of insurers to pursue programs they view as cost-saving, but called for the insurance industry to consider repair industry concerts when developing any such program.
The resolution listed some of the industry’s concerns regarding insurer involvement in the ordering or purchasing of parts, specifically that:
—as reported in Collision Expert
How much more money can the insurance industry squeeze from collision repairers? Try $2 billion to $4 billion. That’s the figure presented in an article called “Achieving World-Class Claims Performance Using Innovative Supply Chain Management” in McKinsey’s Property-Casualty Insurance Annual.
How could the insurance industry realize this savings? By creating super direct repair programs.
“In general,” the report said, “channeling more repair volume to fewer network participants leads to better prices and other concessions.”
David Friedman, one of the authors of the report, amplified the point.
“Let’s say State Farm says to their DRP providers, ‘We think you’re the best of the best and we’ve got a new higher-grade program where we’ll channel even more work to you, and we’ll have less inspection.”
—As reported in The Golden Eagle. By mid-2000, State Farm was piloting a “Select Service” program with Sterling Collision shops (prior to that chain being owned by Allstate) in several markets; the program eventually replaced the insurer’s “Service First” program, significantly reducing the number of participating shops.
Tom McGee would like everyone in the collision industry to ask themselves two questions: What led you to get into this industry, and did you ever expect when you started out to be doing what you’re doing now?
McGee, the CEO of I-CAR, posed those questions to about 60 people attending an I-CAR “industry forum” in Chicago, IL, as a way to introduce his concept for some websites to help attract more young people into the industry.
“Nobody ever explains the career opportunities,” said McGee, who said he’s now the head of an international training organization but started out in the auto body “hobby class” in his high school. “I use the example of touring the DuPoint lab and looking at people who used to be technicians now working in the chemistry area in product analysis. Guys who worked in the stall next to me at my first job out of college now work for GM and Daimler-Chrysler. Did I expect them to go there or me to go here? No. But we don’t show parents what these opportunities are to allow them to understand that kids can make a good career and living in this industry.”
McGee, drawing on his own experience as the father of three kids, ages 7 to 12, suggested that I-CAR develop age-based websites that would include such interactive activities as racing and other games, drag-and-drop customizing of vehicles, trivia and printable coloring books that would give kids reasons to visit the sites…The sites would let kids tinker with cars “virtually,” and also help them see that collision repair skills can lead to rewarding careers not only within shops, but also with paint companies, information providers, and insurers.
—As reported in Autobody News. I-CAR launched two such websites in 2005. CollisionCareers.org is still live, though it is fairly static and offers little in the way of career path “stories” as it did in the early days. CollisionKids.org is no longer an active site. McGee left I-CAR in 2008 and is now with the Automotive Training Institute.
Tony Aquila, CEO of Solera, Inc. (the parent company of AudaExplore), told the 250 IBIS attendees (shops, insurers and vendors from about two dozen countries) that businesses moving forward can take one of two roads.
“I think you can just focus on ‘faster, better, cheaper,’ but to me, that’s a dead-end,” he said. “It really doesn’t take you anywhere, because eventually, you can’t make it that much cheaper, and you start to erode your profitability, then you start to lose your enthusiasm and vision, and everything kind of unravels. Or you can focus on what we believe, which is ‘faster, better, more valuable.’ Focus on high-value things that allow you the opportunity to innovate. Because then price is not the issue. It’s about the value you are delivering. We make no bones about it: When we do something, we want to get paid for it because we’re doing something high-value.”
Aquila was asked how his company’s shop customers can use that concept when they feel continually squeezed by insurers.
“If the customer is saying they want cheaper, then I would argue to my people that we’re not doing a good enough job providing more value,” Aquila said. “When you focus on just price, the value curve is out of the equation. That means innovation is not happening. You’re not giving them more services. When customers say to me, ‘We need it cheaper,’ then I immediately think: What do I have to do to add more value so they stop talking about cheap. Because cheap sucks. It’s not good for any of us. What we need to concentrate on is how do we get the waste out of the process.”
—as reported in CRASH Network, June 29, 2009.
Recently, the president of the local California Autobody Association (CAA) chapter renamed his shop. It had been J & L Body Shop for many years, but he chose to rename it Fix Auto Sun Valley. Obviously, he chose this name to reflect a relatively new relationship with the Fix Auto organization. But there may have been a deeper reason for the renaming. When all a prospective customer has to judge a shop is the name, a name like J & L really says nothing about the nature or quality of the shop. And this shop name is typical of many shop names that just reflect the owner’s name or names. But even those shops that intend to convey some degree of quality in their name—like Elite Auto Body, Precision Auto Body, Superior Auto Body, Supreme Auto Body, Ace Auto Body, etc.—are so commonplace they are no longer noticed. The effect can be the exact opposite of what was intended. Ideally, you need to create a name with a trademark image that no one can ever mistake as someone else’s! And that image has to convey quality and uniqueness at a single glance—not an easy task.
In my first article for Autobody News, I’m going to write about winning. That sounds simple, you might think, but there’s a problem: Everything you know about winning is wrong. The moment of triumph, the congratulations, and the final score—those are the basic components of winning. Right? Wrong! If this surprises you, you are not alone. Until I learned the true secret to winning, I thought I knew all about the subject. I was totally wrong. I had a lot to learn. Now I’ve discovered the real sources of success, in both business and sports.