We feature some of the best columnists in the industry including Toby Chess, Rich Evans, Tom Franklin, Mike Causey, Dale Delmege, Walter Danalevich and Lee Amaradio.
We have contributing writers from different regions of the country: Ed Attanasio, David Brown, Chasidy Sisk and Rachael Mercer.
We also have guest columistslike Richard Steffen of the CRA, and David McClune from CAA.
Collectively they represent a unique perspective with hundreds of person-years of experience. Let us know what you think, by posting responses to their columns.
To read Lee's columns prior to last January search "Amaradio" on this site from the home page
David M. Brown is a native of Philadelphia who has lived in Arizona for 30 years. He writes about subjects he is passionate about, including the car industry. A father of two, he is mentored by his border collie/pointer, Haylie, who is much more concerned with thrown tennis balls than with a beautifully repainted Aston Martin.View items...
Walter Danalevich, AAM, has owned Santa Barbara Auto Refinishing in Santa Barbara, California, since 1979. He enjoys sharing his shop management tips with other shop owners and would like to hear about yours. Contact him at firstname.lastname@example.org
See also his shop website: www.sbautobody.comView items...
The "Insurance Insider" is a corporate-level executive with a Top 10 auto insurer in the U.S.. Although he needs to remain anonymous, he will answer questions emailed to him in future columns. Got a comment or question you’d like to see him address? Email him at Auto.Insurance.Insider@gmail.comView items...
Rich Evans is the owner of Huntington Beach Bodyworks and an award winning painter and fabricator. He offers workshops in repair and customization at his facility to share his unique talents. He also appears on a new show on Speed Channel, Car Warriors. See his Twitter (left) and Facebook (right) feeds for more on Rich's active projects.
For contacts and design samples visit www.huntingtonbeachbodyworks.com
Larry Williams is an innovative, award winning parts manager who has been managing profitable parts departments for over 30 years. He recognizes the importance of OEM parts management to collision repairers and now works as a consultant to the industry. He can be reached for consultation at email@example.com.View items...
Business Beat is a new column launching May 2012 in Autobody News. It will focus on investment activities in the automobile and collision industry and will feature guest columnists on a regular basis. Opinions herein are strictly those of the author. Autobody News accepts no responsibility for investment actions taken or not taken based on this column.View items...
David Luehr is the owner of Elite Body Shop Solutions, LLC a collision business consulting firm based in Nashville, Tennessee. He is a 30-year veteran of the collision repair industry and has served on several industry association boards across the USA as well as leadership positions with companies such as Manheim and ABRA. David is an expert in Body Shop Operations and specializes in Lean and Theory of Constraints methods. Email him at firstname.lastname@example.org
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)
As I start to pack for my annual pilgrimage to SEMA, I’m thinking about all those overloaded shopping bags carried through the exhibit halls bulging with what we know in the business as the advertising specialty. Anything emblazoned with your company’s name: pens, scratch pads, key chains, calendars, baseball caps, mugs, bags, foam footballs, clocks, and bottle openers—is called an ad specialty. Although some simply know them as “swag” or “chotchke,” other people call them “things that sit around my office.” I’m guilty of enabling my hoarding tendencies this way. We’re so used to seeing them that it may be a surprise to learn that the automotive industry is by far the largest user of these promotional items.
Some people (including me) delight in collecting pens and baseball caps while others argue that most ad specialties end up in the roundfile and then the landfill. What will future civilzations think about us when in the year of 2220, archeologists dig up tons of coffee mugs and refrigerator magnets that say “Bill’s Body Shop” or “Tom’s Auto Collision”? Will they laugh and point out ad specialties as a token of our society’s eventual demise?
Many companies use them as an effective form of branding and advertising, particulaly for businesses that have infrequent contact with their customers, like body shops. If you’re a body shop and spending a significant amount of money on ad specialties, you should always ask yourself ‘are they a good use of my advertising money?’ Have you ever encountered a customer who actually said, “I saw your name on a desk pad and that’s why I brought my car here.”
The Advertising Specialty Institute (ASI) is the largest media, marketing and education organization serving the $19.4 billion promotional products industry, with a network of over 25,000 distributors and suppliers throughout North America.
ASI’s CEO is Tim Andrews and I had a chance to talk to him recently about the power of the ad specialty and how automotive repair businesses can benefit from using them.
“For impressions, ad specialties are by far the most cost-effective form of advertising out there,” Andrews explained. “Every time someone sees your name on a pen or a key chain, that’s called an impression. During lean economic times, ad specialties are an ideal solution for smaller companies that need to get their names out there, but they can’t afford other forms of conventional advertising. Ad specialties are remembered and kept and many of them are used by people for many years, based on our research.”
Getting a high-quality ad specialty and personalizing it for your current customers is also a great way to further strengthen your position with your customer base, Andrews says.
“For your return customers or top influencers in your community, personalization is a unique way to really connect even more with your most-prized contacts. If someone has a t-shirt or a pen with their own name on it, they will logically keep it for a much longer period of time. It creates additional value and the impressions derived from a personalized ad specialty can be ten times higher, in some cases.”
Also, instead of buying 2,000 cheap plastic pens, for example, maybe purchase a smaller number of higher-quality pens, in order to keep them in the hands of your customers longer.
“The more they use that pen, your brand name and logo will remain further in the top of their minds, which means your efforts will grow exponentially,” Andrews said. “An inexpensive pen or key chain might get discarded after limited use, but if the end-user values it and sees it as being special, it will remain on their desk and in their possession for a much longer period of time. It just makes sense.”
The products that leave the most positive impressions and those that recipients keep longer are: outerwear, shirts, recognition items (awards, plaques), caps/headwear, flash drives, health and safety products, desk/office accessories, and bags, according to Andrews.
ASI provided several statistics that are worth noting when making decisions on promotional products.
● Nearly nine in ten (87%) recipients of promotional merchandise can identify the advertiser on the item.
● Over one-half (52%) of the time, ad specialties leave a more favorable impression of the advertiser.
● Promotional products deliver the same or a better ROI than other forms of media.
● 81% of product recipients indicated that an item’s usefulness is the primary reason to keep it.
● There are nearly 8,000 different automotive-related promotional products currently in ASI’s database.
● The automotive industry buys more promotional items than all of other consumer product companies combined nationwide.
● Study results show that most people own approximately 10 ad specialty items on an on-going basis and hold on to them for an average of six months, a far longer time period than any other traditional form of advertising.
What’s your ultimate goal in giving a pen, hat or key chain away? Who’s your target audience? Are you trying to reach out to prospective customers? Or, are you staying in touch with your VIP clients, those who seem to get into more accidents or have higher-end vehicles? Are you doing a campaign targeting your vendors, insurance agents, local community leaders or organizations?
It all comes down to finding your target market and continually branding. Many automotive-related businesses use ad specialties as one of their main forms of marketing. For example, glass replacement companies often distribute scratch pads, desk calendars, and other items to auto body shops. Since most body shops frequently work with several glass replacement companies, it’s a good idea for them to keep their name and phone number in front of them. Car dealers often provide license plate brackets to their customers with the dealer’s name and logo—nine times out of ten the customer never thinks about it again, but the dealership is being advertised to everyone who sees that new car and thinks about buying that model for themselves.
So, as I run around at SEMA, loading up on pens, hats, key chains, scratch pads and any else I can get my hands on, I will be thinking about the power of the ad specialty. Ad specialties are a useful form of branding and that’s why they’ll continue to be an integral part of the marketing and advertising efforts of almost every body shop in this country today.
Recently, for example, a company that manufactures and sells these items sent me a nice little key chain flashlight with my name and company printed on it. It’s something I might actually use, if I can find room on my already overloaded key chain.
A few years back I attended a management-training seminar put on by Kepner-Tregoe, Inc., a prestigious management consulting company based in Princeton, New Jersey. The principal speaker noted that the company had completed a follow-up survey to find out how many companies had implemented the costly plan and procedures they had developed for those clients. Sadly, they found that only about 20 percent of their clients had put more than a few of their recommendations to work, and many had simply put the entire package on a shelf and forgotten about it. This tendency to put new projects on the shelf is common to many kinds of business, and the collision repair industry isn’t immune to it.
Many autobody industry publications have had articles on body shop marketing for years, often describing spectacular business gains made by specific shops using one marketing strategy or another. And yet I seldom see these strategies put into action by shop owners that I know read the publications. I can only conclude that there are too many things on a shop owner’s “to-do-list” to allow him or her to focus on a new marketing strategy. There are only 24 hours in a day, and even less than that in a typical workday. Finding the time to introduce what might be a complicated new marketing strategy can seem nearly impossible.
Back around the year 2000, I heard another speaker named Al Secunda who had an interesting new approach to getting a difficult project under way. He had written a book entitled The Fifteen Second Principle (Berkley Books, 1999). Simply put, he suggested committing to spending at least 15 seconds on the project every day. When he spoke I thought that 15 seconds seems like a ridiculously small amount of time. What can you do in 15 seconds? At the very least, he said, you will find out if you care enough about getting it done to spend a few seconds, or you will find out that you don’t even care that much. And if you do care, even a few seconds are enough to focus on at least one step you can take to further the project.
Once into a marketing project, you will often discover that there are previously unrecognized reasons why you didn’t want to take on the project. For one shop, the idea to put up some new signs ran squarely into a city’s legal prohibition for certain kinds of signs. This meant working around the prohibited ones to find those that would be acceptable. Another shop owner decided to begin a prior customer-calling program to dig up some return business or referrals. This project flew in the face of employee resistance to phone soliciting and required some re-training and even recruiting new personnel. With a new project there is always the possibility of running into what can seem to be insurmountable obstacles, but without taking a few moments to consider it, nothing will ever be done.
Probably the most frequent barrier to getting a new project under way will be the resistance of people needed to do the work. A manager at United Health Plan once said, “Unless the pain of not doing something is greater than the pain of doing it, most people will choose not to do it.” Of course that suggests punishing people for not taking action, an unwise approach to getting those projects under way. But in the real world of many body shops competing for limited repair jobs, failing to implement better marketing strategies can subject one to the real pain of a lost job. Probably a better motivational strategy is to give the people expected to do the work the current repair volume numbers versus the potential jobs that can come from the marketing initiative, but this can’t be done in 15 seconds. So what can?
Many body shops in the U.S. are enamored with Toyota’s lean production philosophy, based on kaisen, the concept of continuous improvements. When focusing on continuous marketing improvements, small incremental steps may be best.
Marketing genius Jay Abraham, in his invaluable book Getting Everything You Can Out of All You’ve Got writes, “It’s amazing how few companies ever test any aspect of their marketing and compare it to something else.” Abraham suggests experimenting and always testing a small sample before committing to a major marketing expenditure. Just devoting those few seconds every day to evaluating a marketing initiative could save a shop owner a lot of wasted money and perhaps zero in on one that really brings in the business!
A good example is calling prior customers to see if there might be more need for repairs now, or perhaps a referral to a friend or family member. So what’s to test? A wrongly worded phone call could annoy the prior customer and do more harm than good. But some carefully planned test calls could reveal what approach works best. And an astute shop owner might put this test together in just a few seconds. It’s worth a try.
Environmental concerns have become a major priority in the collision repair industry along with removal and reutilization of recyclable material. The Automotive Recyclers Association (ARA) is playing an increasing role in this movement.
Since it was established in 1943, ARA has been the only trade association representing the automotive recycling industry. It is dedicated to efficiently removing and reutilizing automotive parts as well as seeing to the safe disposal of inoperable motor vehicles. ARA has expanded to represent approximately 1250 companies through direct membership, plus over 3000 additional companies worldwide through their affiliated chapters in 43 states and 14 other countries.
A while back several new shops opened in my area. When I asked what they were doing about marketing, almost everyone said Yellow Pages and 800 number first. Some had bought into advertising mailer packages and others local magazine ads. Naturally some were focused on putting together a presentation package to send to DRP coordinators in the hope of getting insurance work. Some were also going around taking business cards to agents. Almost no one was doing any direct solicitation to get immediate jobs in the door.
It occurred to me that many shop owners believe there is a general marketing setup that everyone should include right away. It seems no one takes into consideration how marketing should differ depending on the stage of growth and development of the shop. I’ve always viewed the development of a business much like the developing stages of a trade professional: Beginner, Apprentice, Journeyman, Professional, and Leader. At each stage, both professional procedures and marketing procedures must change too.
I know of one leading body shop that runs no ads, does no phone solicitation, has no program for contacting prior customers, and has no DRPs. It is allied with multiple dealerships and has an estimating office at many of them. It employs a full-time marketing professional to maintain optimum relationships with all of the dealership principals. A shop at a lesser level of development couldn’t survive this way.
A beginning—and even what I would call an “apprentice” shop—is also unlikely to do phone solicitation. If it is just starting out and has no customer base, it won’t have a program for contacting prior customers. And it is unlikely to have DRPs at this point. The beginning shop owner needs to focus on one target public at a time. Dealerships and DRPs may be great sources of volume business, but competition is keen for these sources of business and pursuing them can be a waste of time unless the owner has friends in high places who can help get a deal. A better use of time would be direct selling: Going to mechanical shops, commercial firms, government agencies, charitable agencies, and other organizations that use vehicles that will require body damage repair from time to time is much better idea. The key principle at this point is to concentrate financial and personnel resources on specific contacts that can bring in immediate, actual work.
I would consider a “journeyman” shop one that has survived the initial critical phase — that eliminates many beginners — and is now getting organized for the long haul. Building a base of repeat customers should be primary. Gathering in-depth information from each new customer opens the door to follow-up calls, mailings, special offers, and probing for referrals. Some limited ads may be appropriate but should not take financial resources away from commission or bonus plans that encourage estimator/salespeople to tap the customer database and referral sources for immediate new business. A shop at this point is not yet completely secure. Marketing resources can’t be wasted. Broad, long-term projects like a website and social media sites are necessary but should not take away from directly focused job-mining efforts.
The well-established professional shop is in a position to employ a wider range of marketing efforts. A steady flow of repeat customers and probable referral sources like DRPs and dealerships ensure sufficient cash flow to afford name-recognition marketing. A lesser shop would be foolish to waste money on ads that do little more than keep the shop’s name in the public eye, but at the professional level, it’s possible the owner is considering opening other locations. At that point name-recognition is essential. This might include radio and TV ads, sponsoring sports and other activities, and participating in professional groups like the Chamber of Commerce.
The leadership shop markets itself like any outstanding professional shop, but takes it a step further. The owner is likely to hold an officer position in an autobody trade association and be involved in making industry advances through CIC meetings and other venues. This is not to say that shop owners at earlier development stages shouldn’t participate in industry forums and activities. But the collision repair industry is highly competititve these days and marketing is a very costly activity. Ad salespeople with expensive promotional schemes are beating at the door all the time. Until a shop is very well established, every marketing move must produce a real job coming in the door. When enough of those jobs are sure to come, there will be plenty of time to play with those expensive ads and promotional schemes. But until that happens, it would be wise to recognize what stage of development a shop has really reached and employ marketing resources appropriately.
Anyone who has been involved in repair for any amount of time knows how frustrating it can be when insurers refuse to pay the full amount billed for a repair. Many repairers count their losses and move on to the next vehicle, but Mark Schaech Jr., co-owner of Mark’s Body Shop in Baltimore, MD, refuses to take this insult lying down. While he and his partner, his father, would prefer to avoid the necessity of taking legal action, he’s definitely “not taking it anymore!” Schaech knows this is a common problem that shop owners face, so he’s glad to share his experience and advice with collision repairers across the nation.
In May 2013, Schaech won his first short-pay lawsuit against GEICO for $392.95. Since then, Schaech won a case against State Farm when the insurer filed a replevin lawsuit (replevin is a legal remedy for a person to recover goods unlawfully withheld from his or her possession) against him, claiming his charges for storage were unreasonable and not competitive within the market area. Mark’s Body Shop was holding a car while awaiting payment, but when State Farm settled with the car’s owner and took title, they refused to pay Schaech. The repair contract was the deciding factor in Schaech’s victory, playing a huge role “like it does in any other case,” according to Schaech, who added that “it is so important that your documents are in line.” In addition to being paid the full amount owed, Schaech was also reimbursed for his attorney’s fees. He feels the victory was very important since a loss would have given State Farm, and possibly other insurers, precedent for refusal to pay on total losses.
Schaech credits the CCRE (Coalition for Collision Repair Excellence) for his knowledge of such legal actions, noting that “the first time I heard of a shop taking control of their business was at a CCRE meeting.” He followed that up by hiring an industry consultant, Barrett Smith, of Auto Damage Experts and a good Maryland attorney, Anthony DiPaula to support his efforts to take control of his own business. He is also grateful to all of the “attorneys fighting a successful fight.” His next case involved an assignment of proceeds, ammunition he obtained from industry lawyer Erica Eversman, but it doesn’t stop there! Schaech is currently pursuing numerous lawsuits, including one involving an older claim of two short-pays from GEICO and a similar suit against State Farm.
The lawsuits that Schaech is currently pursuing are older claims since he has not had any recent problems with GEICO, which he attributes to his successful case in May. Most insurers are paying his operation costs, though labor rates with insurers refusing to pay his full labor rate continue to be a problem. The one exception he notes is State Farm who always leaves a short-pay, but for now, the customers are paying the difference. Schaech is not taking any additional assignments of proceeds at this time as he has several in progress.
Schaech notes, “I would say that 90% of the time, insurers in our market refuse to reimburse our customer for their entire repair bill. These short pays are for reasonable and necessary rates and procedures required to repair our customers’ vehicles to pre-loss condition to the best of human ability. It seems that the larger the carrier, the worse the behavior. It seems like as opposed to fairly paying claims, these carriers would prefer to spend those dollars on advertising campaigns.”
Regarding what may cause him to hesitate before filing a lawsuit, Schaech admits that it can be expensive and time-consuming to sue an insurance carrier, especially when the short-pays are small amounts, but one way to combat that is to pile several claims into one case, making it more efficient. His ultimate goal is to handle these cases on his own; as he attends the trials, he is educating himself via his attorney in hopes of being able to handle future suits in small claims court on his own. “All I will have to spend is time which I’m more than willing to do in order to ensure my customers are being taken care of,” Schaech notes.
The short-pay lawsuit in May was the first that Schaech actually pursued to trial. Because these types of cases are new to the Maryland court system, “it takes a bit of educating the courts that we are contracted by our customers to provide a proper and safe repair and do not have any contract with any insurance companies. But the misconception is that, because the insurance company is paying the bill, they have a right to inject themselves into the repair process when this is simply not the case. Because we are the experts, we carry all of the liability associated with the repair. We are the ones who have to provide a warranty to our customers and stand behind the repairs. We are the ones who know our cost of doing business. Therefore, only a shop can know what to charge for a given repair. The duty of the insurance company, by contract, is to make the customer whole, not to control the price or dictate the repair methodology, all while not sharing in the liability for those repairs.”
Though most insurance companies insist that they don’t pay for certain operations or that a shop is overcharging, Schaech insists, “the collision repair community knows that these are word tracks that insurance adjusters have been trained to use for years, and in most cases, these carriers do pay for that, and the shops that are asking to be compensated are not the only ones asking for these operations and rates.”
Schaech was happy when the judge ruled in his favor: “It felt good that the Judge got it. I also feel confident that the courts will continue to find in our favor as courts are in many other states all over the country. It takes a close look at the law and the insurance policies to realize that determining the cost of repairs and the repair methodology is not the business of insurance. In many policies, the insurance company has the option to take the customer’s vehicle and repair it themselves, but if they chose that option, they would have to accept all of the liability that goes along with the repair which is why they do not select that option.”
As a proud member of CCRE and SCRS, Schaech strongly encourages other collision repair experts to stand up for their rights. “I would encourage other shop owners to know their state laws and get a good attorney to work with. There are many shop owners across the country who have been forced to go legal, and these repairers have been an inspiration and have always made time to answer my questions and lend advice. There is unbelievable support available to those who want to learn.” Schaech’s desire to become more involved has also led him to become involved with the Washington Metropolitan Auto Body Association (WMABA) where he sits on the Board of Directors.
Schaech also assures other shop owners that the trial itself was not very difficult. “It was easy for us to explain who the expert repair professional is and who decides what the Final Bill should be, and the judge agreed that because GEICO doesn’t know our costs, they cannot possibly determine what we are able to charge.”
It is also important to note that Schaech’s lawsuit has not really affected his relationship with GEICO or any other insurers. His problem isn’t with the individuals that he deals with but the company’s policies on handling claims.
Schaech also takes issue with his state’s laws regarding insurance companies breaching contracts and how this affects consumers’ rights.
“If a Maryland Insurance Company breaches their contract with the policy holder, and the consumer wants to hold them accountable in a court of law, the consumer is not able to recover attorney’s fees in our state. This really inhibits consumers from taking action, even when it is obvious that they are in the right… I wish the carrier would spend some of those billions of dollars they spend on marketing to properly compensate consumers for quality and safe repairs. I see a lot of poor repairs that have been completed in shops who were not properly compensated for repairs, and this is a consumer problem, especially as it relates to consumers’ safety and the value of their vehicles.”
When asked what measures should be enforced to prevent the necessity of short-pay lawsuits, Schaech notes, “If insurers would get back to the business of insurance, selling policies and paying claims, and stay out of the collision business, we would not have to go this route. The reality is that, by law, consumers have the right to choose the body shop that they feel will do the best job, and by contract, the insurance company is supposed to indemnify the policy holder when there is a loss. So, I say ‘just pay the bill Mr. Insurance Company.’”
In 1975, Schaech’s father opened Mark’s Body Shop in a two-bay garage. After six years of refinishing cars through high school and college, Schaech managed the family business from 1999–2002 when they moved into their current 17,000 square foot facility. At that point, Schaech Jr. became his father’s partner.
Though Mark’s Body Shop repairs approximately 1000 cars annually, grossing around $3 million in sales, they do not participate in any DRPs, but that wasn’t always the case. “There was a time when we participated in as many as five DRP programs, but over the years, these programs developed into bargain basement repair programs. We were asked to use more aftermarket and junk yard parts which we find to be a lower quality alternative to new OEM parts. We were instructed to utilize remanufactured wheel and junkyard suspension components which we believe to put our customers in harm’s way. Finally, we were asked to work so cheaply that it became difficult to invest in new equipment and training which is imperative to repair today’s modern vehicles.”
To shops that are currently facing difficulties obtaining full payment on repairs, Schaech offers the following advice: “There are numerous organizations and individuals in our industry who really care about consumers and repair facilities. These leaders are only a phone call or email way and willing to provide sound advice when a shop owner or consumer needs some sound advice.”
“The reality is not all shops are the same; we all have different costs, different levels of quality, different equipment and training, different certifications, and different fixed costs. It just doesn’t make sense that we can all work for the same price.”
Mark’s Body Shop
4025 Mortimer Ave.
Baltimore, MD 21215
A proposal was introduced at the Collision Industry Conference (CIC) in Denver to develop a third-party evaluation of how shops are reimbursed for refinish and other materials.
Steve Nadler, the owner of Painters Supply Company in Denver, distributed a 2-page memo suggesting that a national certified public accounting firm be hired to study the materials reimbursement issue. Nadler said this study could address the accuracy of such practices as basing materials reimbursement on paint labor hours, and establishing “ceilings” or “caps” on material charges.
No data has been identified that can be used “to support the present reimbursement methods,” Nadler’s memo states.
He suggested that a CIC subcommittee be formed to develop a request for proposals for the study from the nation’s top CPA firms. Nadler said that this step would provide the industry with estimates of the cost of the 1- to 2-year project.
“I could say it’s not going to be $5,000. I don’t think it would be $500,000,” Nadler said when asked for some projection of costs. “On a full-fee basis, it might be anywhere from $100,000 to $150,000. But that’s purely speculative on my part, and depends on the scope of the project.”
Joe Landolfi of Kemper Insurance said the study may put to rest an issue that has been hotly debated in recent years.
“We have listened for quite a while about paint materials reimbursement practices,” Landolfi said. “This may be a chance to finally (establish) some definitive explanations and patterns.” But Rick Tuuri of ADP said his company is all too aware of the expense and risk of undertaking such a research project. ADP completed a massive revamping of its paint labor system several years ago, only to meet with unprecedented industry resistance.
“This is just my personal opinion, not the ADP company line, but it just seems to me that you can spend an awful lot of money studying something to find an answer that nobody really wants to hear,” Tuuri said.
- The project, at least how Nadler outlined it, does not appear to have ever moved forward.
Jack Gillis of CAPA perhaps best summed up a demonstration of non-OEM parts at the Collision Industry Conference (CIC) in October when he said, “Not one of our better days.”
The demonstration, arranged by the CIC Parts and Airbags Committee, involved installing several non-OEM parts, including a hood and fender that bore the CAPA-certified sticker, on an undamaged 1994 Toyota Camry. Fit and other problems with the parts were obvious, and after the demonstration Gillis said neither of the parts would be listed as certified in the next Certified Automotive Parts Association (CAPA) directory.
The fender, he said, had been decertified earlier in the week because of more than 20 complaints, including one the week of the CIC demonstration that was the second complaint after the manufacturer had supposedly fixed earlier problems with the part.
—Test fits of parts continued at CIC meetings over the next two years; OEM parts generally were found to score higher in attendees’ evaluations of fit and finish, but occasionally non-OEM parts were rated as equal to—and in one case, better than—the OEM.
In a special 2-year study of the autobody repair industry, the California Department of Consumers Affairs’ Bureau of Automotive Repair (BAR) documented that, in nearly half the transactions it studied, consumers were charged for parts and labor they didn’t receive.
The BAR inspected 1,315 vehicles that qualified as part of a pilot program mandated by legislation. Of those, 551, or 42 percent, had parts or labor listed on the invoice that were not actually supplied or performed. The average dollar amount of overbilling was $811.93.
“We’re disturbed by the pattern of problems we found in some shops,” said BAR Chief Patrick Dorais.
– As reported in Autobody News. While the “42 percent” statistic received a lot of attention, the National Auto Body Council (NABC) noted (in the article) that the vehicles inspected were not randomly selected among all those repaired in California but rather were vehicles brought to the BAR by owners concerned about possible fraud. “Considering the way the sample was skewed by the BAR’s methodology, it is more surprising that 57 percent of the repaired vehicles showed no problems at all,” Chuck Sulkala of the NABC said at the time.
At least six shops in the Temple, Texas, area (about 70 miles north of Austin, population about 60,000) each notified State Farm they no longer would participate in the insurer’s Select Service program.
Mark Holladay, manager of the Don Ringler Chevrolet body shop, said the final factor contributing to his decision was what he viewed as State Farm’s unwillingness to postpone a training class (on how to process total losses for State Farm) that the insurer was requiring the shops to attend at a time when Holladay and his five technicians were working 60- and 70-hour weeks repairing vehicles damaged in a recent hailstorm.
“All we asked from the very beginning was that we be allowed to postpone this (class) for a month or two until things kind of got worked down after that hailstorm,” Holladay said. “We were all just at our max. We were told straight up, it was just, “No.”
He said he has not seen any significant change in the amount of State Farm work the shop is doing. “I think it was a good decision,” Holladay said.
Gene Sneed, who along with his wife Barbara, owns and operates B&G Collision and B&G Paint & Body in Temple, also removed his two shops from the Select Service program. This summer, he and about eight other shops in the area began jointly sponsoring newspaper ads urging consumers to use the shop of their choice.
“They will promise you the world in order to persuade you to go to one of their direct repair or network shops,” one of the ads states about insurers. “Don’t be steered wrong.”
—from CRASH Network (www.CRASHnetwork.com), October 6, 2008.
Even though the Internet is continuing to explode and cable TV advertising is flourishing, radio is still alive and well and more body shops are using it, according to people who know—such as: advertising agencies, media buying companies, radio stations and body shops themselves.
According to Kantar Media, there are nearly 5,000 AM stations and roughly 9,000 FM stations in this country and last year radio advertising dollars increased by 8 percent at the national level and 3 percent locally. While the collision industry is always looking for new forms of advertising and marketing, the word out on the street is that good old broadcast radio is still a viable form for body shops, both MSOs and independents.
Phil D’Angelo is a sales manager for three radio stations in northern California (KUIC, KKIQ and KKDV) and has seen how radio advertising has worked well for body shops in his regions. “We currently have five body shops advertising on KUIC in Vacaville, CA, and they’re happy with the results,” D’Angelo said.
“Radio is more popular now, because it offers so many options for companies of all sizes. For regional companies, you’re going to get more bang for your buck with radio, as opposed to other forms of advertising or marketing. People wake up in the morning with the radio; drive to work with the radio and listen to the radio all day at work, so radio travels everywhere and some people listen to it 8–10 hours and more every day. Also, we’ve discovered that the Internet and broadcast radio work hand-in-hand, because radio creates demand and the Internet fulfills that demand. If they hear you on the radio and then see you online, there’s a good chance you’ll get them as a customer.”
D’Angelo had to learn the collision game in order to better serve his body shop clients, he explained. “When we started working with body shops, we discovered that their business model is unique, because from what they’ve told us, 80% of all the work comes through the insurance companies. So, the advertising we’ve designed for them conveys a specific message, but branding is also a big part of it. We want the body shop’s name to be in the listener’s head.
In the radio business, we call it the consumer’s ‘top-of-mind awareness,’ and it’s very important in the collision repair industry, because getting your car fixed is not an impulse buy. So, when people do get in an accident, they’ve already heard the shop’s name over and over on one of our stations and that’s who they will mention it to their insurance agent.”
Chuck Jessen is the owner of PreFab Ads in San Francisco, a company that licenses professionally-produced TV spots to body shops on an exclusive-by-market basis. These commercials have appeared on 260 local television markets throughout the country and several have won international advertising awards and have been featured on such national TV programs as “Reel TV” and “World’s Funniest.”
Jessen is currently producing a series of radio ads to add to his menu of offerings, because his clients are asking more and more for 30 and 60-second spots they want to air on local stations. “Some body shops are switching from TV to radio, so that they can target their customers more specifically,” Jessen said.
“In the bigger markets, the cost of TV advertising is prohibitive for many independent body shops with modest advertising budgets. If you’re paying to advertise to a certain market and a large majority of it is out of your area, it doesn’t make sense for any regional business to advertise outside that area. With radio, body shops can get more saturation and coverage in smaller to mid-size markets, so it’s ideal for body shops that draw customers from no more than 10 miles away.”
Radio has a captive audience and Jessen knows from his 30 years of experience what types of radio ads will work in any market, he said. “People are in their cars a lot and commuters aren’t going away any time soon. We’re producing several different types of radio ad, including humorous and instructional. With our TV ads, we already know humor works and community service type themes are always well-suited for the collision industry. We produced a radio ad that conveys an anti-texting message and it gets good reviews, because it’s a warm and fuzzy type of ad that listeners will find useful.”
Sharon Wicks is the president of Silicon Valley Media Consulting in San Jose, CA and has seen a recent spike in her clients’ interest in buying more radio advertising time, she said. “Radio is thriving, because it just makes sense for regional businesses that can’t afford a heavy television advertising schedule. Radio has gone full circle and now it’s back in a big way, especially for companies that value a highly targeted approach.”
Wicks has seen more and more of her clients asking about Pandora Internet Radio, an automated music recommendation service that plays musical selections of a certain genre based on the user’s artist selections. The user then provides positive or negative feedback for songs chosen by the service, which are taken into account when Pandora selects future songs.
“Advertisers like Pandora, because it is more targeted than conventional radio,” Wicks said. “Pandora has specific demographic information about every one of its users, so you’re getting exactly who you want to reach. When your ad runs, it appears in a pop-up banner-type ad with audio that can be either 15 or 30 seconds in length. Either way, it’s less invasive than a 60-second radio ad and of course, it’s paired with a visual, which gives it more impact.”
Rich Villanueva is the marketing manager at Michael J’s Body Shop, Inc., with three very busy locations in San Jose, CA. After much planning and research, Villanueva decided that radio was the best plan for this burgeoning regional MSO, for several reasons.
“We found a local FM station (KEZR) that offered a package we were very comfortable with, so we hired an advertising agency (Kilburg & Associates) that does ads for the San Jose Sharks NHL hockey team,” Villanueva said. “We decided to go with humorous ads and almost immediately we received a lot of positive feedback. We’re basically doing branding with these radio spots, rather than doing promotions. Since this is our first radio schedule, we want to get the name out there and connect the dots with our audience.”
Michael J’s had their agency produce seven different ads to run in rotation on KEZR and is now going to create more ads to leverage the fact that one of their owners is a woman. “We’re targeting women with these new commercials, because they represent a large portion of our customer base,” Villanueva said. “Jamie Ryan is one of our co-owners and she’s a great spokesperson for what we’re trying to do. In these ads, we position her as an expert and an advocate, especially for our female market. The message is we will treat our customers well from beginning to end, by providing them with a stress-free, non-threatening environment when they bring their car to Michael J’s.”