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
Shops repair vehicles and insurance companies reimburse insureds for their loss. That is a simple explanation as to what happens after an accident. So how is it possible that something so simple can be so confusing, challenging and rife with accusations of impropriety?
A while back I was sitting in a body shop waiting area, waiting to present a new product. I watched a potential customer pull up in a relatively new BMW. He came in and took a seat. Front desk people were handling paper work and one customer. Estimators were busy in another room. The guy waited for about 20 minutes and got up and drove off. Most people hate to wait, but even more than that, they hate to be ignored. I wasn’t a customer. I was there to make a sale so I didn’t mind waiting. But this guy was clearly a good potential customer and his business was lost because of an enormous sales error.
The modern automotive garage first appeared in the 1920s and, in addition to parking cars in them, inventors began to utilize them for different purposes. Walt and Roy Disney started making cartoons in a Hollywood garage in 1923 and in 1938. William Hewlett and David Packard rented their own garage space in Palo Alto, CA. Apple Computer started in a garage and bands like Metallica and Van Halen were originally formed in garages. World-changing innovations take shape every day and many have happened in a garage. That’s why it’s appropriate that SEMA has a Garage-Industry Innovations Center, a facility where tomorrow’s new products will be developed today in this state-of-the-art facility.
Twenty-six years old and already a reality TV show star? For Body/Paint Tech Keenan Hons, his 15 minutes of fame happened fast and randomly. One day, he was working at a body shop and the next day he was on Fast ‘N Loud (Discovery Channel), a hit reality show starring motor mastermind Richard Rawlings and mechanical prodigy Aaron Kaufmann, as they search up and down through Texas and surrounding states for forgotten and derelict classic cars to buy and restore at their Gas Monkey Garage in Dallas, TX. In each episode, Richard, Aaron and his crew work day and night to finish a classic car and deliver it to auctions with the goal of making money and turning heads. But the same question seems to come up every time they do a build—will their blood, sweat and beers translate into cold hard cash?
Every body shop owner in the country wants to be green. Just ask them. But, are they willing to commit to a total green approach in every aspect of their business? Changing some light bulbs and installing low-flow toilets are positive things, but how many shops will really invest significant time, money and effort to be as green as they possibly can?
After a non-drivable car gets towed into your shop, how long do you generally have to wait to get a signed authorization from the customer to tear-down or begin work on their vehicle?
Would that customer be more apt to sign the form more quickly if they didn’t have to come to your shop in order to do so?
And could getting customer signatures more quickly in some cases allow you to start and finish work more on their vehicle more quickly, potentially improving your cycle time and cash flow while reducing rental car costs?
The Indiana Auto Body Association (IABA) was founded at the beginning of 2004 by a group of forward-thinking shop owners and vendors with the mission of promoting “professionalism and consumer awareness of the automotive collision repair industry in the state of Indiana.” Near the end of 2004, IABA’s Board of Directors asked Tony Passwater to fill the role of Director for the association because they felt it would be best to engage someone who was not a shop owner or vendor to grow the organization for the future. Passwater notes that, at the association’s conception, “it had been almost eight to ten years since the last association had folded, and the timing was right.”
IABA was founded on a multi-faceted Code of Ethics. This code dictates that their members conduct all business practices in a lawful and professional manner. They must also recommend only proper collision repair procedures and explain to the customer why these repairs are required to correct the collision damage the vehicle suffered. Other items contained within the code of ethics include: offer the customer a price estimate for the work to be performed, obtain prior authorization for all work, notify the customer when promises cannot be kept, furnish an itemized list for all parts and services, exercise reasonable care of the consumer’s property during the repair, maintain a system to settle customers’ complaints, cooperate with all established consumer complaint mediation activities, maintain a high quality level of repairs, and cooperate in a good business manner with insurer representatives and make a sincere effort to provide affordable service to the motoring public.
According to Passwater, IABA’s short-term goals include growing IABA to the largest state association in the midwest and providing tangible benefits to members, as well as informing consumers that they have the right to choose the collision repair facility that works on their vehicle and educating them on how to choose wisely. These goals contribute to the association’s long-term objectives of protecting consumers from steering and improper repairs and of providing a resource that improves the professionalism and unity of the collision repair industry as a whole.
Some of IABA’s current projects focus on attaining these goals. In addition to trying to maintain and improve data privacy, they are also struggling to eliminate double taxation on some paints and materials. Additionally, IABA supports members pursuing short-pay lawsuits as they try to establish standards for collecting funds on operations performed that insurers refuse to compensate shops for completing.
Passwater notes that IABA is also involved in “stopping insurer-mandated programs that interfere in the industry’s business,” such as PartsTrader which he sees as “tortious interference that only benefits the insurers to fuel their greed... it is extortion and tactics used by the Mafia.”
In mid-September, IABA hosted six meetings across the state, which were attended by over 325 shop owners, managers and industry vendors, to discuss issues related to insurer-mandated programs, such as PartsTrader and American Family’s APU Solutions. Attendees were fearful of what insurers are doing to the industry, and many felt hopeless about doing anything to circumvent these programs. Panel discussions served to inform participants of the options available for stopping these programs as well as to educated them on the actions being taken on local, state and federal levels to eliminate insurer interference in the collision repair industry. The panel consisted of Lloyd Bush of Bush Collision in AL, Marvin Windham of Benchmark Chrysler in Birmingham AL, Steve Plier of C.A.R.E. in Hoover AL, and John Mosley of Clinton Body Shop in Clinton MS. A webcast of the panel discussion can be viewed at www.IABAlive.com.
IABA has committed itself to using whatever actions are necessary to prevent this form of extortion, whether the means are legal, legislative and/or related to public awareness. The association has come out in support of SCRS’s position on PartsTrader and similar programs because “the IABA believes, as other associations and leaders have recently stated, that all repair decisions, vendor selections, and business processes should be left to the collision repair professionals who work on these vehicles, and have been entrusted by the vehicle owners to make correct repair decisions regarding their vehicles.”
IABA recognizes that such programs are not designed to improve efficiency or to benefit the consumer; these efforts seek only to increase insurers’ profits and to allow insurers to establish more control over the collision repair industry.
In late October, IABA organized a nationwide petition to stop insurer-mandated parts procurement programs, and they are encouraging their members and other collision repairers across the country to sign it by visiting www.1963ConsentDecree.com. Their email blast, sent on October 24, explained, “To make change happen requires action, but it often begins by the smallest of actions. History has shown that changes begin not by the war to end all wars but by the individual battles that define the injustice and dedication to the need for that change by those willing to accept the challenge.” They plan to use this show of support to regain control of the industry.
In addition to the challenges imposed by these type of programs, Passwater lists several other challenges facing the industry which need to be addressed for the benefit of the collision repair industry as a whole: labor rate suppression, the manipulation of estimating systems and databases, the unequal enforcement of current EPA and OSHA laws, and “improper repairs due to new technology and the inability to purchase the training and equipment needed to repair the vehicle properly.”
Though IABA has not taken an official stance on the PARTS Act, Passwater believes “OEMs should be afforded the same protection as any industry for their investment in technology and innovation.” Regarding the Right to Repair, Passwater’s opinion is that “everyone needs the information equally to repair the vehicles today.”
In the beginning of 2013, IABA also implemented a comprehensive consumer-focused member benefit entitled “A Shop You Can Trust.” According to Passwater, “this program is available to IABA members that meet the qualification process. It includes a consumer focused website listing (www.aShopYouCanTrust.com), and three additional optional programs that are designed to eliminate steering and create customer loyalty. It has co-branded materials with the Better Business Bureau available. A webcast about the program is available at www.IABAlive.com.”
Covering the entire state of IN, IABA currently consists of 105 member shops, plus 15 supplier sponsors. IABA has designed numerous benefits to attract members, and according to Passwater, “with our affiliation with SCRS and ASA, they are even greater. Our greatest benefit is our partnership with Associated Insurance Agencies. They have saved our members thousands of dollars yearly.”
Still, there are always challenges inherent for any industry association to maintain operations, Passwater admits. “As with any state association, we constantly struggle to match time focus on dollars available. Even though we have tangible benefits that outweigh our members’ yearly dues, we still have only 10% to 12% of the shops members and much less for industry-related vendors and suppliers.”
PO Box 532364
Indianapolis, IN 46253
I knew this one shop owner who was obsessed with the new. He wanted to be out in front of other shops in every way possible: superior equipment, better trained personnel, and of course, innovative marketing. He was always trying new things with his marketing but this got him into some serious trouble. While he was concentrating on the new, another shop grabbed one of his DRPs, and another one replaced his position as authorized repair shop for a major dealership. With his intense focus on the new, he forgot about what I would call, “maintenance marketing.”
No one likes to be taken for granted—especially high volume sources of business for a shop. This shop owner assumed his rapid cycle time, his use of used and aftermarket parts, and his always giving priority to the DRP vehicles would be enough to hold on to that DRP forever. Any recently divorced husband or wife could have told him this was a faulty assumption. One might provide a good home, high quality food and clothes and abundant money to a spouse and yet lose that relationship due to a lack of real attention. This shop owner might have saved that DRP with something as simple as an occasional call and very personal lunch with the DRP decision-maker. The dealership decision-maker would probably have required more elaborate contacts and more frequent communication. Sadly he neglected both of them at a significant cost to his shop.
As important as it is to maintain close relations with referral sources like insurance companies and auto dealerships, perhaps the most important source of business to keep in contact with is prior customers. As times have changed this has become a trickier business. Young customers will generally be in touch with the Internet, Facebook, Twitter and other social media sites. This provides an obvious way to stay in touch and pass along shop improvements in equipment, technology, personnel training, and elements of specific interest like color matching. Older customers may now be conversant with the Internet and websites but possibly less so with social media. This could make updating these customers a bit more difficult. But he bigger question is, how are the shop marketing people to know which customers fit into the young or older category without specifically asking customer age on the information form?
Old customer info forms generally asked for birthdays and anniversaries to send targeted greetings. Newer forms probably also ask for an e-mail address, but how many now ask for Facebook, Twitter and other social media designations? These info forms are often neglected in shops already, but in this new high-tech age such neglect can be a costly marketing and sales omission. Insurance companies are frequently combining and consolidating, sometimes forcing customers to change companies. With steering still going on, either directly or indirectly, a shop has to counteract insurance company efforts to force old customers to go to the new company’s preferred shop.
A shop’s best hope for retaining these customers is a steady stream of information about the shop’s superior ability to deal with the rapid changes in vehicles. Promoting the shop’s ability to handle electric and hybrid vehicles, vehicles constructed with lighter weight materials like plastics, aluminum, magnesium, and other special metals can reassure the customer that this continues to be the best shop to come to. This message can easily be gotten out through the website and social media, but those off that track can still require old methods of communication. With the cost of postage stamps continually rising, direct mail can be costly. E-mail is by far the best if a shop can be sure its message doesn’t wind up in a spam file. For the shop’s best old customers, it would be appropriate to make a phone call periodically if only to ask the customer to check his or her e-mail for the latest update, and of course to ask about the condition of the customer’s vehicles..
In yesterday’s world, a shop could employ a marketing guy or gal to make the rounds and keep in touch with referral sources and customers. Today’s world calls for a marketing person with intimate knowledge of social media and especially effective e-mail management. E-mail tracking can tell whether or not a specific e-mail has been received and opened. Today’s astute on-line marketing professional should note if some of those messages have not made it to the recipient and tag those for a phone call. A lack of adequate attention destroys many kinds of relationships. For most shops, referral sources and prior customers are the gold that keeps things running and maintaining an ongoing marketing effort to keep them happy should be the shop’s top marketing priority.
How often have you heard the expression Time is Money? It’s a phrase that applies to many businesses but—as it pertains to body shops, insurance companies and vehicles owners—it is only half of the equation. In this industry, time equals money and customer service.
It’s much more expensive to find a new customer than to retain an existing one. As insurers we are aware that the time it takes to repair an insured vehicle is directly tied to the insured’s CSI score and retention rates. Low cycle time equals high CSI, so we need to focus on reducing cycle time.
Here’s what I mean. Although customer service can’t be defined by an algebraic equation, it’s safe to assume that cycle time is less than or equal to customer service. (I promise I won’t reference algebraic equations for the remainder of the article.) The important idea is that the less time it takes to repair a vehicle, the greater the customer service is. That’s because, even when the vehicle owner rates customer service poorly in terms of the repair itself—or the handling of the claim, the overall score is going to be better when the repair is done quickly.
Also, if you can get repairs through your facility faster, you can move more repairs through the same facility and you make more money. For the collision repairer, reduced cycle time equals increased sales equals more money. Increased CSI increases customer-driven repeat and referral business. Therefore, reducing cycle time translates to increased collision repairer profitability, CSI, and customer referrals and repeat business.
I am not suggesting that shops should sacrifice quality just so you can get the customer’s car back sooner. But I am pointing out the importance of managing cycle time. The importance of cycle time goes far beyond the dollars saved in rental car expense. It also goes beyond the fact that if you repair the car quicker, you can get another car in the shop.
For insurance companies, there’s another factor: open claim liability. The longer a claim is open, the more likely the claim will increase, for a lot of reasons. Paying and closing claims quickly reduces open claim liability, and that’s additional motivation on the insurer’s part to push for reduced cycle time.
Body shops tend to think that this is just part of the game for insurance companies, that we are just imposing our will on hapless shops to save a few dollars on a rental car. But if you remove yourself from that “us-against-them” posturing and think about something other than arguing with insurance companies, you will realize that this just makes sense.
We are all in business to deliver a service to the customer. You just happen to repair cars; we simply provide coverage in the event of a loss. But the bottom line is that delivering customer service is a more important business proposition than anything else the shop or insurance company does. In the highly competitive insurance and collision repair markets, retaining policyholders and getting repeat business will make the difference between survival and prospering.
The challenge for insurance companies is that we are beholden to the time that body shops take to make the repairs. With few exceptions, the time it takes for you to repair a vehicle is solely dependent upon your shop’s management and operational efficiency. Although you may think it’s an insurance company goal to manage your shop, it isn’t. We don’t have enough manpower or systems to manage your business for you. Instead we need shops to be conscientious about cycle time. Better cycle time equals high customer service scores which equals greater policyholder retention.
It is frustrating as an insurance executive to realize that we lose policyholders because the customer was dissatisfied with the length of time it took to repair their vehicle. I realize that insurance companies can adversely impact cycle time with outdated processes or lack of trust (though I’m sure many of you will email me to point this out). But the fact remains that there are tens of thousands of body shops in the industry. A small percentage of you understand what I am saying. And an even smaller percentage actually take action to ensure that cycle time and operational efficiency are dominant in all phases of your facility.
The greater percentage of body shops repair cars at their own pace because, after all, they don’t owe anything to the insurance company. They proclaim that they are repairing the car the right way and you just can’t rush such things. If you are one of those short-sighted people, please don’t repair any of my customers vehicles. But for those that want to survive what is going to be a continual reduction of shops in the United States, please keep reading.
The moment you are notified that there is a claim, we are starting the clock. Why? Because we are doing that internally with our own staff. We are monitoring and assessing every step of the claim process. The stopwatch starts the moment you are notified of the claim, and only stops when the customer is handed back their keys.
The days of measuring cycle time by the number of days is gone. Insurance companies are measuring cycle time by the minute. We can no longer tolerate working with shops that aren’t driven to improve their efficiency and cycle time—especially when your competition down the street understands the rules of engagement and how to win.
I know that all shops aren’t created equal. Fortunately, we are getting better at identifying the “haves” from the “have-nots.” If you aren’t keenly aware of the cycle time in all phases of your operation, your fate will be sealed because your customers won’t tolerate it. Time is money. Customer satisfaction and retention is driven by how long it takes you to repair the car.
The Insider is a corporate-level executive with a Top 10 auto insurer in the U.S.. Got a comment or question you’d like to see him address in a future column? Email him at .
“My time away from the industry this year made me more aware than ever that many of the people who keep telling us how we can improve the claims process, improve parts ordering, improve productivity, improve turn-around time and cut car rental costs don’t know the first thing about how our shops operate or half the steps required to properly repair a damaged vehicle. Computers and software programs are great, but computers don’t take the nuts and bolts out of a fender, and they can’t comprehend the fact that a left door can’t be replaced with a right door, even if the part numbner on the invoice is the correct part number.
“It seems that many insurance companies—and some shops—have bought into the promise that one or another computer system will solve many or all of their problems. There is always one direct repair program or another telling shop owners that something will greatly expedite the claims handling process…All these promises sound great on paper or in panel discussions, but they don’t do the repair work.”
► from a column by Bobby Johnson, at that time the owner of B&J Collision in Jefferson, Texas
PPG has done a comprehensive study of over 2,000 collision repair facilities. Here is a snapshot of some of the statistics:
The average labor rate: $34 an hour.
Average gross profit per hour per technician: $45.63 (top 25 percent), $32.57 (middle 50 percent), $19.69 (bottom 25 percent).
Labor efficiency (hours sold versus available hours): 154 percent (top 25 percent), 118 (middle 50 percent), 82 percent (bottom 25 percent)
PPG’s Rich Altieri said it is likely that repair opportunities will continue to decrease. His prediction: By 2006, 40 percent of today’s shops will cease to exist. If the collision industry is a $24 billion business, 24,000 shops doing $1 million a year in sales would take care of the market.
► As reported in Hammer & Dolly. Indeed in 2006, there were about 36,000 shops, 40 percent fewer than the 60,000 Altieri said there were in 1998. (Last year there were about 34,500.) The average labor rate nationally last year was $45.43, up 33 percent since 1998, but below 41 percent cumulative rate of inflation during that period; to keep up with inflation, the national average last year would have had to have been $47.89.
Collision repairers who are part of State Farm’s “Select Service” or “Service First” direct repair programs have been lauding the insurer for the way it administers its claims management process for vehicle repair. It’s a process that technicians and shop owners are saying puts trust in collision repair professionals.
Repairers have often been frustrated with how insurers handle the claims management process. For years they have argued that many insurers are overly involved in the process and don’t let repairers do their job without telling them how it should be done. But State Farm is taking a different approach.
“To put it simply, State Farm is letting the experts—collision repair professionals—do what they do best,” says Don Keenan, owner of Keenan Auto Body in Clifton Heights, Penn. Keenan said State farm respects its Select Service collision repair shops’ experience and expertise and “as a result, we’re freed up to do the best possible job.”
The Society of Collision Repair Specialists earlier this year issued a press release praising State Farm for what the organization is calling a “professional approach to claims management.”
“I have received countless calls from members commenting on the positive relationship with State Farm, SCRS Executive Director Dan Risley said.
► As reported in Auto Body Repair News (ABRN). The most recent national survey allowing shops to rate insurers with regard to reimbursement policies and claims handling efficiency still found State Farm at the top, but with a score of 64.8 (out of 100), down from 93.4 in 2003. In 2003 it had a nearly 30-point edge over its closest competitor. Now two other insurers are within 4.2 points of knocking State Farm out of the top spot. SCRS this past year has been among the most vocal critics of State Farm’s implementation PartsTrader, and Risley, now with the Automotive Service Association, wrote to State Farm in September saying the insurer’s mandated use of a vendor “that solely financially benefits State Farm is more dictatorship than partnership.”
Minnesota shop owner and NACE chairman Darrell Amberson said (at the event’s opening sessions) that the collision industry should also be paying close attention to increased efforts by automakers to gain design patents on crash parts, which could limit competition from non-OEM parts manufacturers. He said that while design protection is a “fundamental right” for any industry, it could also drive up parts costs, also leading to more total loss vehicles.
He called on the estimating system providers to bring more automation, sophistication and automaker information to the systems to help them evolve from being “just a guide to a tool that could be used to blueprint jobs.” The systems, he said, currently are too incomplete and subject to interpretation.
“Can you imagine a world where we didn’t have to spend so much effort negotiating, debating (and) looking for non-included operations? I think whether an insurer or repairer, we could probably increase our life expectancy if we didn’t have to deal with this,” Amberson said, drawing laughter and applause from the crowd.
Overall, Amberson, despite the struggling economy and the specific challenges the collision repair industry faces, is optimistic about the opportunities for those shop owners who embrace new technology and processes, diversify their business, and think of themselves as business people, not repairers.
► from Autobody News coverage of the 2008 International Autobody Congress and Exposition (NACE)