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 email@example.com
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 firstname.lastname@example.org.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 email@example.com
Although the Independent Automotive Damage Appraisers Association (IADA) was forced to move the location of their 46th Annual Vehicle Repair Conference to the Lord Baltimore Hotel, located at 20 West Street, Baltimore MD 21201 at the last moment, the conference was successfully held on June 18-20, 2014 as “an educational tool for our members and the industry,” John Williams, Executive Vice President of IABA explains. “For guest speakers, we have experts in various fields relating to current methods of repair as well as what to expect from manufacturers in the future. Our expectations for this event are to promote our association and members as professionals committed to exceeding industry expectations as well as providing our members an educational and social venue to network with clients.”
According to Williams, “attendees were very pleased with both the location and the agenda. Our event always focuses on education and training as well as being a social event for members and guests, and it is important because it provides members with an opportunity to train and remain a viable force in the industry. This year, our conference exceeded expectations. We try to build on what we learned in the past to make our next event even more dynamic.”
Registration for the conference began on Wednesday, June 18, at 1PM and continued until 6PM when IADA held their Welcome Reception followed by exhibitor showcases which concluded at 9PM. After breakfast on Thursday morning, IADA President Leo Maki’s Welcoming Address served as the opening to the event.
IADA planned an exciting agenda filled with informative seminars led by nine industry leaders. Around 8:30AM, the educational seminars began with Wayne R. Schaumburg’s “An Illustrated History of Baltimore,” followed by “Best Claims Practices” which was presented by Harvey Lightstone, Vice President of the Directory of Claims and Risk for Management Claims Professionals Liability Insurance Company. Before lunch, Jim Aulby, Vice President of Claims Protective for Sagamore Insurance, discussed “Heavy Equipment Estimating.”
The seminars resumed at 12:45PM with the Highway Loss Data Institute’s Senior Vice President Kim L. Hazelbaker’s “New Technology of Electronics in Vehicles.” Thursday’s lectures concluded at 4PM with “Investigating Fuel System Contamination” as presented by Jeff Lange, President of Lange Technical Services LTD. Attendees then enjoyed a two-hour break which gave them a chance to visit exhibitors before attending the President’s Reception and dinner banquet.
On Friday morning, Dan Oscarson, Vice President of Global Marketing Insurance Auto Auctions, explored “Marketing Salvage in a Global Economy.” He was followed by CIECA Executive Director Fred Iantorno’s “Getting It Done for the Industry.” The final presentation, “Aftermarket Truck Parts,” was led by Donald B. Cameron, President and Founder of Dawson Truck Parts. After their closing remarks, IADA’s conference culminated with their membership meeting.
“Our 46th conference went well, even after facing the challenge of relocating to the Lord Baltimore Hotel at the last moment due to unexpected issues with the hotel we had contracted with. Our conference has always focused on education and training; this year was no exception!” Williams recalls, “our conference started with an excellent presentation by a local historian speaking about the history of Baltimore, and attendees were amazed to learn how Baltimore’s history helped shape many industrial and cultural advances we enjoy to this day. Attendees were given a glimpse of future vehicle technology as well as a look at the past to learn how far vehicle technology has progress and what to expect in the future.”
In regards to the valuable information provided at the conference, Williams also notes that “a presentation on Global Salvage was of great interest to learn how salvage vehicles are being purchased in the US, then shipped in cargo containers with available parts to repair included with each vehicle. Vehicles that would not be put back on the road are repaired in many third world countries due to cheap labor and a shortage of vehicles. Vehicles we take for granted are a luxury in many countries since few have options such as air or other power options.”
IADA was first founded in 1947 as the Independent Appraisal Plan (IAP) with a mission “to offer an unbiased automotive specialist appraiser to assess vehicle damage and establish a fair cost of repair,” Williams recalls. That same year, IAP was approved by the Association of Casualty and Surety Companies and the National Association of Mutual Companies. In 1964, the IAP reorganized and was reborn as the IADA, a national not-for-profit trade association.
Currently, IADA has 98 members in 43 states who employ more than 600 appraisers in over 400 service locations. Over the past 15 years, membership in IADA has increased around 15%. Williams details their membership process: “in order to apply for membership, applicants are required to have five years’ experience in the industry and owned and operated an appraisal firm for the past two years. We conduct a background investigation on all applicants, followed by a site inspection requiring the applicant to prepare a professional damage appraisal. Our Board of Directors then vote on the applicant.”
Though obtaining membership to IADA seems somewhat involved, the cost-savings benefits offered to members makes it well worth the effort. For starters, E&O/GL insurance is provided under a blanket policy and is included in membership dues with no additional charge. Members receive discounts on estimating software from all three providers plus discounts on CarFax, NADA Online and Old Cars Price Guide reports. IADA members are also listed on the association’s website as well as in their annual service directory, around 7000 copies of which are distributed throughout the industry. In addition to the national marketing supplied, members have the opportunity to attend IADA’s national conference which provides them with useful educational seminars as well as the chance to network with other IADA members.
Still, IADA strives to continually add new member benefits in their efforts to attract new members. They also continue to promote educational and training seminars at regional and national events. The association works toward securing new business for their members by “upholding the integrity of the association and being consistent with our honesty policy to enhance our position with the public, insurance industry and automotive repair businesses,” Williams explains. “Our current goal is to recruit new members who have an interest in joining a professional organization dedicated to serving the industry with truly ‘Trained Professionals.’ Our members take pride in delivering professional, unbiased damage appraisals. Our goal is to treat the consumer the way we would expect to be treated if we had a claim.”
Regarding challenges currently facing the industry, Williams notes, “DRP programs have impacted our volume of business to a great degree. While DRPs may be a good concept for smaller losses, I feel some carriers’ attempts to completely control the repair process, no matter how large or small the loss, is a mistake. Having owned and operated an appraisal firm for 24 years, I enjoyed a great working relationship with repair facilities. Preparing an accurate appraisal and securing an agreed price with a reputable shop is quickly becoming a lost art. The industry is losing qualified appraisers at a rapid pace. Many of our members had second, third and fourth generation family taking over their businesses, but we are no longer seeing as much of that.”
PO Box 12291
Columbus, GA 31917
On Saturday, July 26, Wheels to Prosper shops across the country gave away 15 vehicles to deserving people in their communities. Dino DiGiulio, owner of Body Best Collision Center in Sonoma, CA, and founder of Wheels to Prosper, notes that it is “mind-blowing to be able to change people’s lives in this type of way” and wonders “how big it could be if we got all the shops in the country involved?”
This year, Body Best awarded their car giveaway vehicle, a 2004 Saturn L300, to Irene Morgan. DiGiulio’s son, Chance, helped Body Best’s technician with the body repairs as his senior project, which his father proudly reports received a grade of “A”.
In 2010, DiGiulio took a public relations class at Management Success, and he admits “I didn’t realize how important it was until I took the class.” When the topic of car giveaways came up, DiGiulio thought it seemed like a practical way of giving back to the community. His friend, Jody Gatchell who owns A & J Collision Repair in Conway, AR was involved with a similar concept through Recycled Rides, and when DiGiulio saw an emotional video about a giveaway recipient, he knew he had to do it.
After acquiring information about the program from Gatchell, including how to organize a car giveaway, DiGiulio began planning Body Best’s first Car Giveaway with the initial intention of donating two to three vehicles yearly. Rather than choosing a person in need, DiGiulio put together a committee to choose a winner, enlisting the aid of a diverse panel of public officials and community leads to select a deserving individual. Early on, DiGiulio decided to choose winners who deserved a vehicle, rather than simply donating to someone in need, because “need is always there,” he explains. “We wanted to help people who help others. Everyone has to do their part, and this is my way of volunteering. By helping this person, he or she can help so many others.”
Gatchell suggested Wheels to Prosper as the name for DiGiulio’s giveaway, and Management Success advised DiGiulio to secure the name and website, helping him build the site. The idea behind Wheels to Prosper was to establish a program to help shops begin the process of sponsoring car giveaways, and when he pitched the idea for a national giveaway to 30 shops in hopes of getting more interest in the program, 11 shops signed up that same day. “We laid out some parameters and established a process, including marketing – there’s a lot of marketing you can do for free because people want to help,” DiGiulio states.
In the four years since its inception, Wheels to Prosper has increased to include 34 shops donating around 25 cars annually, but the program is growing consistently; DiGiulio hopes, by next year, 100 shops will participate in Wheels to Prosper’s annual giveaway because “Jody and I cannot do as much alone as we can when we involved the entire industry. Wheels to Prosper is all about telling shops how easy it really is.”
Though Wheels to Prosper is expanding to include non-Management Success shops, shops interested in participating in the program need to acquire approval from DiGiulio and the program’s administrator, Jim Anderson, because they want to elicit involvement from shops committed to giving away at least one car each year. Anderson, owner of Anderson Automotive in Marion, IA, did a giveaway called “Wheels of Change” several years before DiGiulio began his program, but Anderson joined Wheels to Prosper’s board as their administrator because he wanted to be part of something bigger.
Participating shops pay a one-time fee for inclusion on Wheels to Prosper’s website, but this provides a place to promote their business as it generates traffic back to the shop’s website; DiGiulio estimates receiving around 100 visits to his shop’s website annually through the link from Wheels to Prosper. He states, “it demonstrates that you actually care about the community. It’s a little about business but not really – it’s mainly about how many people are impacted by the donation.”
Wheels to Prosper does not hold any type of contest to determine their winners. Instead, they solicit stories from community members about a person who deserves to win the car giveaway, and a panel of judges reviews the stories to select a winner. “The difference between Wheels to Prosper and other giveaways is that it’s about who is deserving,” DiGiulio explains. “There’s always a need, but we want to help someone who is helping the community, so our winners are always majorly involved with volunteering efforts.”
In May 2011, DiGiulio held his first giveaway, awarding a car to a five-person family run by a local woman who is very active in her community. “She always thinks of everyone before herself. Even though she didn’t have the means to buy a car, she was still actively volunteering in the community, so we rewarded her efforts by giving her a car which allows her to help others even more.”
Gatchell held his giveaway in July 2011, and DiGiulio held a second giveaway that same year. Afterwards, they decided to choose a consistent date for the annual giveaway, electing the last Saturday in July at 12PM CST. Ultimately, the goal is for all Wheels to Prosper shops to hold their annual giveaway on the same day each year.
While the participating shops acquire the giveaway vehicles through various means, Wheels to Prosper requires the donated vehicle to be in good shape with less than 100,000 miles on it in hopes of servicing the winner for at least five years without any troubles. DiGiulio’s first giveaway was a salvage loaner with low mileage, and for his second giveaway, he purchased a vandalized car that just needed a new paint job. No matter how the vehicles are acquired, the Wheels to Prosper shop makes any collision and mechanical repairs necessary before donating the vehicle to their deserving new owner.
Thus far, nearly 50 cars have been given away through Wheels to Prosper with a few more giveaways scheduled to take place in October. A film company is currently in negotiations to develop a 12-part miniseries on a shop sponsoring a giveaway, and DiGiulio is optimistic about the publicity that such a program would provide for Wheels to Prosper.
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In the collision repair business, the only time the shop makes money is when the technician is actually working on the car. So for a shop to optimize profitability, systems must be put in-place to ensure that wasteful delays are eliminated. Some of the more common delays are.
■ Techs wandering around looking for parts, fasteners, or information
■ Missing, damaged, or incorrect replacement parts
■ Waiting for approval and parts on supplemental (missed) damage
A great way to reduce or eliminate such delays is through the process of damage analysis or “blueprinting.” Blueprinting is one of the most important processes a shop can implement to reduce or eliminate delays and can have a dramatic effect on important KPIs such as cycle time, customer satisfaction and profitability.
Since my recent column about how the returned phone call is a lost art, I received several emails and even some phone calls about the subject. It seems that unprofessional phone manners are rampant in all industries, including collision repair. So, I decided to call the doctor and get more advice about the topic that I can pass it on to our body shop readers. The doctor is Nancy Friedman, a keynote speaker/author and the founder and President of Telephone Doctor Customer Service Training in St. Louis, MO.
Friedman has appeared on the Oprah Winfrey Show, Today Show, CBS This Morning and Fox News and has spoken in front of groups of automotive professionals, including Big O Tires, Carstar, Goodyear, Tuffy, Grease Monkey, Tire Pros, the Alliance of Automotive Service Providers and a wide range of other auto dealerships and automotive-related manufacturers. She’s been a featured speaker at SEMA for seven years and will be there this year again as well. Fittingly, I called Friedman on the phone and she called me back—promptly—for this interview.
Q: Hello Nancy. Why is there such a problem nationwide with people who don’t seem to know how to act on the telephone (or care)?
NF: Anyone can answer the phone effectively, if they’re properly trained. I don’t care what their title is; it does not matter if they’re the president or a tech. There are a lot of top-level managers out there who don’t know how to answer the phone. The problem is that most employers point at the telephone and tell their people to smile and be nice. They don’t put any emphasis on that part of their business, and untold millions of dollars are left on the table as a result. We believe in a simple phone answering approach and uniformity is crucial. I don’t care if you have 3 or 300 people answering the phone—you need to have everyone doing it the same way. Some companies are able to have 1–2 people answering their phones, but for small body shops, that’s not always possible. You would you hire a technician and not train them to do their job, so why not train someone on the phone? This is not surgery or rocket science and we do have some very useful tips we offer to our clients, but most of what I teach is just common sense. Most of the body shops we work with use our online training (www.ServiceSkills.com), which contains a lot more than just how to answer the phones, such as conflict resolution, management skills, leadership skills—it’s a full-service training and any employee that has to deal with the public on even a semi-regular basis should go through this training.
Q: How bad is it, because I personally encounter bad phone protocol almost every day?
NF: No, you’re right, it’s bad. Before I go to speak at any company’s conference, I do some mystery calling, to find out how they answer the phones and sometimes I am surprised how bad it is. With many phone calls, your company has one shot to get that business and by fumbling that first interaction on the phone, it can cost you money and most of the time you’re not even aware of it.
Q: How about those companies that leave callers on hold for long periods?
NF: People ask us, how long is it okay to leave people on hold and we tell them that it’s not how long you leave someone on hold, but how you handle it when you’re busy. In the reality of today’s business world, people are going to have to be put on hold and it’s not avoidable in many cases. The important thing with people on hold is communicating with the person on the other end of that phone line. Let them know how long you think they will be on hold. “I have one other caller ahead of you and it should only take 2–3 minutes.” Full disclosure goes a long way, believe me. If it’s going to take longer, ask them if you would prefer to take a message and call them back. People get upset when they sit on hold without any updates or interaction, so if the person answering the call can check in, that’s preferred. But to say, “I’ll be back with you in a second,” well usually that ends up being a big fat lie, because nothing takes a second.
Q: How about my pet peeve, the unreturned phone call?
NF: People ask me all the time—Nancy, what do you think about people who don’t return phone calls or emails and I tell them—not much. With an e-mail, it’s even easier to respond. All you have to do is give them a one-word answer if you’re busy. It boggles my mind when I find out that some people never return phone calls. Assuming what people want is always a mistake, because you can’t find out what someone wants until you communicate with them. How many people have lost out on opportunities because they made assumptions and never returned a phone call? Countless.
Q: Some companies have their phone people using scripts. Do you recommend this?
NF: We used to give scripts to people to read over the phones, but we found out it really doesn’t work, because these people aren’t actors and it sounds too rehearsed. Plus, it’s scary for them to have to memorize it and we always want people to sound natural on the phone. So, we give them talking points and allow them to say it their way and it works very well.
Q: Give us a takeaway that we can use, Nancy—one tip that can make us to be better on the phone.
NF: The #1 mistake is that people are not friendly enough on the phone. It’s that simple. It’s not with just auto body shops, it’s across the country. But, once companies find out that there’s money connected to that phone call, people suddenly get friendlier. It takes specialized training and a specific mindset to achieve, but once they realize the value in handling the phones properly, the light goes on! I tell people to start smiling before answering the phone, even if it’s forced smiling, because it improves the voice quality and energy to prevent emotional leakage. A phony smile is better than a real frown, I tell people. Negative audibles like the “big sigh” or verbally chewing gum are the first steps toward poor customer service, so continually let your customers know that you are “delighted” to help them first, to set the stage, before telling them negatives, if any exist.
Recent government data (see sidebar below) show that for a 5-year period ending early this year, the overall cost of autobody repair barely exceeded inflation over that same period (with the price of auto insurance rising even more during that period).
But have shop labor rates—excluding the parts and other costs that make up overall repair costs—kept up with inflation? Some shops say there has been no change in the “prevailing competitive labor rate” in their market for three, four or even five years.
Based on data from CCC Information Services, comparing national labor rate averages in 2013 to those averages in 2006 shows that for the most part, labor rates (when looked at on a national basis) aren’t keeping up with the overall U.S. inflation rate for that time period.
Take the national average rate for mechanical labor in the U.S., for example. In 2006, the average mechanical labor rate was $67.56, according to CCC; by last year, the average had increased about 14 percent to $77.04. But that’s about $1 less than the average would need to have been last year just to equal overall inflation since 2006.
Body and paint rates increased about 11.4 percent over the period, compared to an overall inflation rate of 15.6 percent; that meant the national average body rate for last year ($46.12) was about $1.74 less than it would have been if body labor rates had kept up with inflation since 2006.
The news was even worse for frame labor rates, which rose just 10.2 percent over the period, making last year’s national average ($52.43) more than $2.50 lower than it would have been if it had kept up with inflation.
If there was any initially-positive news for shops in terms of rates versus inflation it involved paint materials. The national average rate for paint materials last year was $26.64, according to CCC. That’s up about 19 percent from 2006, making it about $1 higher last year than it would have been had it only kept up with inflation. But most shops say their costs for materials has outpaced inflation by even more than that from 2006 to 2013.
Labor rates continue to vary widely market by market throughout the United States, so have rates in some markets kept up better with inflation than they have in other markets?
Similar comparisons to inflation can be done using historical labor rate data provided by shops. One shop in Northern Virginia, for example, reported a body labor rate of $28 in 1999; the shop owner felt certain that an increase that averaged about $1 year (to the current labor rate of $44) couldn’t have kept up with inflation. But in fact, if adjusted only for inflation since 1999, the shop’s labor rate today would be about $39.84, more than $4 less than the shop’s current rate.
The news was less good for a Portland, Ore., shop whose hourly body and paint labor rate has risen from $40 in 2002 to $48 this year; adjusted solely for inflation since 2002, that shop’s rate would be $52.71.
That shop’s paint materials rate has just kept up with inflation (though again, paint prices have likely outpaced inflation), but its current frame rate ($52) is $7 shy of keeping up with inflation since 2002, and its mechanical rate ($75) is $10 less than it would be if adjusted just for inflation.
To the south of Portland, the current mechanical labor rate ($62) reported by a shop in the Eugene-Springfield area in Oregon is actually running ahead of inflation over the 15-year period. But the other labor rates in the market haven’t kept up with inflation. Frame labor was $44 per hour in 1999, meaning it should be $62 now to have kept up with inflation; the shop reported a $55 frame labor rate currently. The shop’s current $50 body and paint labor rate is about $4 less than it should be if it had been adjusted only by the overall inflation rate since 1999.
Rates reported by an Iowa shop in the Quad Cities area are a bit closer to keeping up with inflation since 1999. At $58 per hour, the current body and paint labor rate is $1.77 lower than had it risen 42.3 percent (as overall inflation has) from what it was in 1999. Frame labor rates are also about $2 behind, but the paint materials rate has actually risen 50 percent since 1999, putting it almost $2 higher than it would be based solely on inflation.
A shop outside of Newark, N.J., had body and paint labor rate data back to 1989; with inflation, the $30 labor rate in 1989 would have grown to more than $57 today, which is about $10 more than most insurers there are paying today, according to the shop.
A shop in a smaller community in north central Pennsylvania had data showing its body and frame labor rate is up 4.3 percent since 2011, and its frame and mechanical rate is up 3.8 percent; all of that falls short of the 5.4 percent rate of overall inflation since 2011.
Check your own rates
Want to do your own comparison? All it takes is historical information about your labor rates going back three, five, 10, 20 or even 30 years. Gather that data and then find one of the many online “inflation calculators” (for example, www.usinflationcalculator.com). There you can indicate the oldest year for which you have data, enter one of your labor rates for that year, and hit calculate. The website will show you what the inflation rate has been since that year, and what you labor rate would be today if it had been adjusted based only on overall inflation in the United States.
A driver improvement course authorized by the DMV in California tells us there are five basic emotional categories: HAPPINESS, SADNESS, FEAR, LOVE and HATE. The course goes on to tell us the way these emotions are expressed can determine our driving performance, either temporarily or permanently. The course notes that emotions can color our behavior and, when out of control, cause us to do unintelligent and even dangerous things. In fact this truth not only applies to driving a car, but can also apply to making any intelligent decisions. One of these is deciding where to take a vehicle after an accident.
People generally come only when they and or their vehicle have suffered damage. For the driver this may include shock and pain. They come to have something fixed. They come when they are in a highly vulnerable state. They often come when they are caught up in the powerful negative emotions that follow pain of loss. If you are lucky, by the time a car owner comes to you, he or she will have already moved beyond the initial shock and disbelief brought on by the accident.
Most buying decisions are emotional decisions. Most choices of repairer decisions are emotional decisions arising out of one particular emotion: FEAR! Why do damaged car owners go to the body shop suggested by their insurance company or agent? Because they are afraid the work won’t be properly guaranteed. Or because they fear complications that won’t be covered by their insurance, that may cost them out-of-pocket money. Fear also motivates people to go to shops referred by their friends, their attorney, their usual mechanic and just about anybody else they think will prevent them from getting burned as they shop for a service they generally know very little about.
It is at this point in the customer’s life that a shop estimator steps in. How he or she handles this prospective customer determines whether or not the vehicle is left at the shop to be repaired. It’s likely that few estimators realize the emotional consequences of what they say and do at this point. And the fact that more than half of these prospects may be women puts an even higher importance on the handling of emotions. A team from Cambridge University led by Professor John Suckling has found key differences between the brains of men and women. In women, parts of the brain linked to the emotions, calculating risks, and the ability to listen were more prominent. In men, on the other hand, the areas of the brain tied to motor skills and co-ordination were denser and larger. In general, this indicates that women are better listeners, while men take more risks. I’ve interviewed estimators in a number of shops. I found that a female estimator often had a better closing ratio, especially with female customers. Men are apparently more likely to talk while women tend more to ask and listen. Training estimators in listening skills could increase a shop’s volume and profitability.
Fear and anxiety often come about because of a lack of understanding. A vague pain in the body can cause all kinds of wild speculation about what might be going wrong, but once the pain has been diagnosed and a remedy has been prescribed, most fears will be alleviated unless the pain is truly related to a life-threatening condition. Similarly an engine noise or other inexplicable noise in a customer’s car can raise all kinds of fears about serious problems until the exact reason for the noise is known and the necessary repair specified. Educating a car owner still suffering from the shock of a recent accident may not be an easy task, but it can be by far the most effective sales tool to ease the person’s fears and doubts.
An old proverb says: I hear, I forget. I see, I remember. I do, I understand. When fear or anxiety is present, solid contact and sensory perception will have a much stronger impact than words. Perhaps this goes back to childhood when we frequently fell and bruised ourselves. At those times, a loving mother held us, rubbed the sore spot or kissed the injured part. While there were probably words of reassurance, the physical touch is what we most remember as alleviating our shock, our pain, our fear and anxiety. It might be a useful sales tool to have a damaged part (like a fender or hood) and an identical perfectly repaired part set up as a demonstration prop. As part of doing an estimate and selling the job, it could be useful to have a prospective customer touch the damaged part and the repaired part to really feel the difference in paint finish, points where welds had been made, dents filled, etc. Prospects coming away with a solid sense of having touched an expertly finished end product should be less fearful of having work done where they have actually “experienced competence.”
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.