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
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.”
It wasn’t so long ago that all shops were created equal. If you had tools, four walls and a sign, you could be a body shop. Actually, I should remove “four walls” from the list; there were many “shops” repairing cars that didn’t have one wall, let alone four.
At any rate, the qualifications to repair a car didn’t include special equipment or training. Starting a body shop business required not much more than proclaiming that you were a body man.
At that time, thankfully, direct repair programs were virtually non-existent. I can’t imagine what we would have done during that time period if direct repair programs were prevalent. How would an insurance company identify which shops to refer their customers to?
Even though shops have evolved significantly since that time, the same dilemma exists for insurance companies today: Which shops do we refer our customers to? Without having the intimate knowledge of your shop or your competitors, finding the most qualified shops in a market is as about as easy as developing a national health care plan.
Why does an insurance company care where their insureds have the vehicles fixed? There are a lot of reasons. The cost of the repair is a motivating factor in finding the right shop, although it no longer is the most important. Back in the early 1980s when there were more than 70,000 shops in the United States, price was the biggest concern. Customer service wasn’t even on our radar. The quality of the repair was assumed to be no better or worse at one shop than at another down the street. In fact, the biggest concern I had with a shop was determining whether or not the dog in back lot was chained up so I could write my estimate. Everyone was assumed to be able to perform a proper repair.
For the younger generation reading this, it’s probably difficult for you to understand what I’m talking about. To put it in proper perspective, some shops would need to wet down the dirt floor before painting a car. It wasn’t uncommon to see shops pulling full-frame vehicles with anything that was stationary. And one of my personal favorites was watching the old-time body men use a torch. A torch in the late 1970s and early 1980s was about as useful as duct tape.
The industry has changed dramatically over the past few decades and the unprofessional, uneducated shop owner has been replaced. Professional, educated and astute operators have taken the industry to the next level.
Now customer service is religiously the topic of conversation. Insurance executives are facing increased scrutiny and pressure to improve customer service scores. Policyholder retention is the lowest the industry has seen. Insurance has become a commodity where price is the single most motivating factor to consumers. There are intense battles happening between the Top 10 carriers for policyholders, as evidenced by the marketing dollars being spent.
Ironically, our biggest challenge isn’t finding new customers; it’s keeping the ones we have. Retention is directly correlated to customer service. Unfortunately, the collision repair facility and insurance company typically share a common fate relative to customer service. If the customer likes the shop, more often than not, the customer will like the insurance company. Conversely, if they don’t like you, they don’t like us. Thus, the importance to us of finding the right shop to repair our insureds’ vehicles.
Repairing vehicles today poses a significant challenge to the collision repair industry as well as the insurance industry. Collision repair shops need to make significant investments in training to remain current with the latest technology and repair methodologies. We recognize that this is critically important to a safe and proper repair. There are still over 40,000 shops in the U.S. How do we find the shops that are the best trained and have invested in their people?
The new and specialty equipment required to properly repair many of today’s vehicle should help foster a reduction in the number of shops in the industry. The days of opening up a shop with a tool box and a sign in front of the building are a distant “bad” memory. The challenge is eliminating those shops from the marketplace. We don’t want our insureds’ vehicles in shops that are ill-equipped.
Collision repair shops need to work closely with insurance companies and state and national regulators to eliminate the “haves” from the “have-nots.” Those that have the equipment and training must survive while those that “have-not” should not. The insurance industry can’t do this alone. We need help identifying the “haves.”
The industry continues to evolve and the upper class of the industry is growing exponentially. The middle and lower tier shops are shrinking. It would be our desire to increase the pace of this, with the thought that the surviving shops would be better trained and equipped. The sooner we eliminate the “have-nots,” the better it will be for everyone in the industry.
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 .
Over the past six years, the age of the average collision repairer has increased to 38.7 years old, which means many repairers will be retiring in the near future. In turn, this creates a dire need for entry-level repairers, and in anticipation of this crisis, the Collision Repair Education Foundation has taken the proactive step of supporting training programs for future repairers. Brandon Eckenrode, Director of Development, believes this is imperative because “the more actively engaged the industry can be with the high school and college collision programs, instructors and students, the brighter the industry’s future will be.”
to read a PDF of this story with photos go HERE
Established in 1991 to develop, promote and distribute a curriculum program to ensure entry-level employees received training on needed skills, the Education Foundation continued to sell curriculum and provide educational support through various programs, such as CRIN and the Training Alliance, until 2008 when curriculum sales and support moved to I-CAR, allowing the Foundation to focus exclusively on acquiring and distributing donations to schools and students in the form of scholarships and grants. Now, the Foundation is a purely philanthropic organization with the sole purpose of raising money to support and educate future collision repairers. Though I-CAR still plays a key role in allowing the Foundation to operate as a four-person organization, they changed their name in 2010 to distinguish their organization from I-CAR as a way of clarifying that I-CAR training tuition fees do not support the Education Foundation.
Their mission is “to secure donations that support philanthropic and collision repair education activities that promote and enhance career opportunities in the industry.” According to Eckenrode, “it’s a full circle from support to staff- the collision industry provides monetary and in-kind donations to the Foundation, which are then distributed to high school/college collision programs, and these donations help assist in providing the best technical education possible for the students, and then these students are ideally hired into the industry.”
The Education Foundation’s current goal is to educate the industry on who they are and who they support, in addition to getting more industry members involved in order to raise the level of support they provide. Eckenrode hopes that they will help place entry-level students in a more organized way in the future, in addition to providing a higher level of financial support. They’ve already begun to educate guidance counselors on the industry, teaching them about the great career opportunities students can find in the collision repair industry. According to Eckenrode, “through an increase in support, specifically with monetary donations, we can fill in the gaps within these instructors’ collision budgets and ensure that they have all of the proper tools, equipment and supplies needed to teach the students.”
Eckenrode is the sole full-time fundraiser for the Education Foundation, focusing his efforts on locating supporters within the industry as well as working in communications to inform the industry of the Foundation’s efforts. When asked if his work is rewarding, Eckenrode notes, “Rewarding doesn’t fully describe the work for me. I believe we are ‘facilitators of this industry’s generosity,’ and when you hear instructors get choked up because you were able to send them a box of safety glasses for his/her students or get to inform a student that they are the recipient of a $5000 scholarship, it makes you proud of our industry for making that possible.”
Eckenrode fondly recalls their Cintas technician shirt project when they provided promotional shirts to students attending NACE several years ago. The project led to the distribution of nearly 10,000 shirts, and he has been amazed to hear how this “uniform” has transformed students’ attitudes, giving them a sense of professionalism and pride. As such, he hopes to expand the program even further.
Melissa Marscin serves as the Foundation’s Director of Grant Programs, distributing the donations received, whether those donations are in-kind product donations, school grants or scholarships. Distribution plays a vital role in their mission as they strive to ensure that received support is distributed where it is most needed; their application process is critical in providing information on where support is needed and what exactly the need is.
Marscin says, “I have the best job in the world because I am able to give out scholarships and grant funds to deserving schools and students. And the best part is that I am able to directly see that my work is helping to improve the collision programs which, in turn, help to produce better entry-level technicians for the industry. It is extremely rewarding to have a student or instructor call me and say ‘thank you’… you really never realize how much of a difference you are making until you receive those notes and speak to the instructors or students in person, and then hear how the Foundation has changed their life.”
When Marscin was asked for an example of a rewarding experience, she said, “my favorite story is one about a recent $3 million donation to the schools which included basic things like sandpaper. The donation came late in the school year, and one of the instructors who received the items said he literally had no budget left for supplies this year, and he was worrying about how he would finish out the school year. Then, this box of materials showed up, and he said he felt like he won our $50,000 grant! It’s amazing what a difference a small item like sandpaper means to schools, especially with their budget challenges. The Education Foundation has been called Santa more than once, and it is always a great feeling to see that we are making a difference.”
The Collision Repair Education Foundation receives donations from industry supporters nationwide, and both products and monetary donations are then distributed to high schools, technical schools and college collision programs, instructors and students in all 50 states. All segments of the collision repair industry, and any outside entity as well, are invited to donate products and scholarship money to the Foundation. Eckenrode encourages such donations; “donated tools, equipment, supplies, and other materials greatly assist collision school instructors who are working with very minimal budgets. In 2012, we raised a record $4.9 million, and we are tracking slightly above (3%) that amount half way through 2013 so far.”
In 2013, 126 schools applied for the Foundation’s “Ultimate Collision Education Makeover” grant, a huge increase from the 72 applications submitted last year. Marscin believes this grant is very important because “as school budgets continue to decrease, schools need a way to supplement their budgets, and the Makeover is a perfect solution to this. The winning schools get $50,000 worth of tools, supplies, and equipment for their collision program, and we have hundreds of smaller prizes to help schools get supplies to better teach their students. Every school that applies does get some donations out of this program, so it is beneficial for every collision school to apply!”
Any school offering a collision repair program is eligible for grants by filling out an annual survey that helps the Education Foundation collect important data on trends and statistics within the industry.
According to Eckenrode, “the Collision Repair Education Foundation plays a vital role within the industry as we are supporting its future professionals. The more actively engaged the industry can be with the high school and college collision school programs, instructors and students, the brighter the industry’s future will be… Supporting the schools, instructors and students is vital, but we also need to collectively do a better job in showcasing this industry as a great career choice to students/ parents at an early stage in their education.”
It’s easy to make a monetary, tax-deductible donation or in-kind product donation. Simply visit the Foundation’s website, or email Eckenrode who invites “any and all industry members to reach out to us to help them find a collision school program in their area and get involved. The industry taking an active role with their local schools assists in these students being able to graduate as efficient, productive entry-level workers.”
Why would a collision repair facility want to support the Collision Repair Education Foundation? Eckenrode’s answer is simple; “to donate to the Foundation is a re-investment in the industry’s future.”
Collision Repair Education Foundation
5125 Trillium Boulevard
Hoffman Estates, IL 60192
I received a fair amount of feedback from devout readers about a previous column on parts and materials. For those who didn’t read (or don’t recall) that column, I addressed shops’ profit centers. I said shops need to quit whining about State Farm and PartsTrader and instead focus on the profit centers they do have control over. (Go Here for previous story.)
Because I’m not solely focused on pointing out the obvious, I also added a few tips as to how shops can improve their profitability on paint and materials. One suggestion, for example, was to reduce the amount of theft in the shop.
Apparently, my tips for success were not welcomed by all readers. In fact, a few readers took me to task in e-mail responses to the column. Although they were upset with my comments, they also were astute enough to ask for help. I appreciate them taking the time to write, and I offer the following suggestions in response to some of their questions.
Here’s an excerpt from “Laura,” who wrote from a shop in a Mid-Atlantic state. “Our rates for paint materials and labor that insurance companies pay us haven’t increased in 10 years or more,” Laura wrote. “As you know, paint and material prices have increased tremendously over that period of time. What are your thoughts on this? What are our rights against insurance companies so that we may protect our bottom line?”
Your situation is one that is very familiar to shops around the country, Laura. There are a number of markets across the United States that haven’t seen a labor rate or paint and material increase in years. These areas are usually in states with regulatory issues that create barriers to increased shop unity. Unfortunately, if your shop is one of only a few in these areas requesting an increase, you will NOT get one. If you are in a market populated with unknowledgeable shops that are still operating as if it’s 1980, your shop will suffer.
There a few solutions to your problem. You can choose to remove yourself from any direct repair programs and charge whatever rate you believe is fair. Since that can be a risky endeavor, you can take a different approach. I would recommend requesting rate increases in a professional manner. Request a meeting at your shop. Explain why the increase is necessary. Show the insurer the investments you’ve made in your shop and employees. Last but not least, show them the “product” and service your customers receive that they can’t get down the street for the same price.
“Tom,” from a dealership in the Northeast, also wrote to me after my paint and materials column.
“How do insurance companies determine when the paint and materials reimbursements need to be raised on the estimates they provide” Tom asked. “Every time 3M or DuPont or PPG sends a notice that they are raising their prices, I ask them (by email or, if I can reach someone, by phone) to make sure they let the insurance companies know that they are raising their pricing.”
Insurers, Tom said, will in turn only honor a shop’s higher rate “after much complaining,” and many shops complaining. Then the insurers make it appear they are doing the shops a favor by raising the rate at a later date, all the while ‘complaining’ that THEY are losing profits. Is this how it works, in your professional opinion? It seems that the real theft here takes place from the time of the (supplier) increases to the time the insurance companies raise rates. They seem to be the thieves, not our employees, as you seem to think the problem is.”
Well, Tom, insurance companies determine the paint and material reimbursement rate by using an algorithm developed by an engineer in mathematical computations. Not! Of course I am joking. Sadly, most if not all insurance companies only raise their rates when shops “complain,” as you state above. That isn’t a joke. We aren’t in the business to give money away. Unless you ask, you aren’t getting.
We don’t receive any documentation from the paint companies. I’m sure they would provide it upon request but we really don’t care. Years ago when gas and paint and materials prices were rising like the tide after a tsunami, we watched from afar as those near the beach were swept away. Unfair yes, but it’s not our problem. We see those increases only when they are reflected in the rates shops say they need to charge us. Unless a large number of shops in a geographic market submit for an increase, we aren’t increasing our reimbursement rate.
I concur, Tom, with your assessment that we revert to pointing to employee theft or waste as the reason you aren’t profitable. Old habits die hard, but there also is a lot of truth to that statement.
My first glimpse of malicious competitors was seeing a runner for one body shop remove a competitor’s business cards in an insurance agent’s office, and replace them with his own. In a highly competitive market, some shops may be striving to steal other shop’s business when the number of jobs in the area is declining. In addition to the straightforward attempts to push a shop out of a dealership deal in order to gain the authorized repair center designation, I’ve seen some shops stoop to discrediting a competitor in every way possible. Sometimes signs are defaced, taggers sent to put an ugly image on a shop’s fences and exterior, and more. If you spot someone taking photos of your shop or vehicles parked in your lot or in the vicinity of your shop, get that person’s name and file a police report at once.
These days a common malicious practice is placing phony complaints against a shop on Yelp and local referral websites. One shop suspected a competitor of having a vehicle brought into his shop and deliberately sabotaged to create an insurance company and Board of Auto Repair complaint and a vicious story to be sent to the press and put on-line. The shop owner suspected he was under attack when an anonymous tip also sent OSHA inspectors into his shop for supposed code violations. Anonymous complaints are most difficult to defend against, but even a complaint by someone giving his or her name could still be someone connected to a competing shop. One shop that was broken into resulting in the loss of numerous radios, GPS systems and more, suspected a competitor of either arranging the theft or at least providing information on how to get into the shop at night.
How far will a malicious competitor go to undermine a shop he wants out of the way? In the famous fictional industrial espionage tale, “Willy Wonka and the Chocolate Factory,” author Roald Dahl has the evil Slugworth trying to steal Wonka’s secret recipes by bribing young visitors to get them from the Oompa Loompa sweets maker. Do body shop owners have trade secrets? Could a competitor squash a shop’s marketing strategy efforts if he knew them in advance? Hacking into a company’s computer system may be the most modern way to steal trade secrets, but experts say most thefts still occur the old fashioned way, by sneaking into a company’s offices and making off with classified information.
Ira Winkler, a top corporate security analyst, in his book “Spies Among Us: How to Stop the Spies, Terrorists, Hackers, and Criminals You Don’t Even Know You Encounter Every Day,” Winkler estimates American companies lose as much as $300 billion a year to pirating, counterfeiting and other corporate theft. He says inside jobs are another tried-and-true method. We just saw an example of that when several people were busted as they attempted to sell Coca-Cola secrets to rival cola giant, Pepsi. Could a competitor pay off an employee in his target body shop to report on planned marketing activities? How could a shop owner defend against a devious attack of this nature?
One news article reports that experts say the best defense against corporate theft is to thoroughly vet employees who have access to sensitive information. Then make sure that that information is secure. If a breach occurs, report it to law enforcement as soon as possible. Corporations often hire a security analyst to perform simulated espionage to test the company’s security system. While few shops have the kind of sensitive information that a competitor might try to steal, there are many more basic ways to mess with a shop’s marketing and to try to discredit their image.
Where it is still common for accident victims to try to get three estimates, I’ve heard of a shop owner deliberately sending a prospective repair customer to the worst two other shops he could think of, where he could be sure the customer would get a high or faulty estimate. Some have mastered the fine art of tactfully bad-mouthing the competition to instill enough doubt about their integrity and reliability to eliminate them from the running.
A shop owner I know was stunned when he lost a couple of dealership deals he had for many years. He simply wasn’t prepared for the aggressive attacks on his quality that were made. Just running a shop is a full-time job and that doesn’t leave a lot of time to be policing business relationships and marketing maneuvers. But in a highly competitive business environment, it’s naive to assume all competitive moves will be honest and above board. Thomas Jefferson said “Eternal vigilance is the price of freedom,” but, in a body shop, constant vigilance may well be the price of survival.
Every time I talk to body shop owners about social media issues, they invariably bring up three things: Yelp, Facebook and how to defend their reputations online, in that order. They either smile or frown when they mention Yelp, look perplexed when they discuss Facebook and then get plain mad when they talk about how they’ve been wronged online, normally by their competition or a former disgruntled employee.
Recently, the marketing manager of a large MSO told me about Autobody-Review.com, a consumer web site designed specifically for reviewing body shops and described it as ‘Yelp meets Reputation Defender with enhanced SEO.’ I polled some other shops about the service and the feedback was substantial. So, I contacted the company’s President/CEO Chuck Nixon to learn more about Autobody-Review.com and why it’s created a buzz.
ABN: Shops are very concerned with Yelp, because they claim that many of their reviews are not written by real customers. Tell us why your product is different from Yelp?
CN: Autobody-Review.com is unique in that we connect to repair facilities’ customer databases. We gather reviews through two verified processes. Upon completion of the repair performed on the customer’s vehicle a delivery status message is delivered to the client allowing them to enter a review on their positive and negative experience with that company. The ease of using it is the key. The customer completes a paragraph or more conveying their true sentiment of the experience and then it’s scored by our proprietary sentiment engine giving the comment a Google approved Star Rating. Many of our clients are gaining insight into their customers’ experience and ultimately measuring the final performance which did not align with what was being reported to non-verified review sites such as Yelp. This created request for us to create a truly verified customer review site. It all comes down to verifiability and accountability, two things lacking with Yelp.
ABN: Search Engine Optimization (SEO) is a huge concern for body shops, because they hate seeing their competition ranked higher than them on Google or Bing. Tell us about how your system maximizes SEO for your subscribers?
CN: Not only does our system gather and preview verified reviews about a facility but we also provide social media interface allowing a facility to push reviews directly to their Facebook business page, Twitter and soon Google+. These plug-ins are designed to push reviews to the shops’ page when consumers are most active on social media sites. This increases the facilities engagement score as well as social media SEO ranking. We also back link the facilities business website to their Autobody-Review business landing page. This two-way back linking, along with our current daily traffic and other blog back linking, helps to drive the facilities’ own back linking initiative. Lastly we provide a website widget allowing the facility to post their rotating reviews directly on their own business website. This widget is designed in a manner that is providing web crawlers to find new content on their page. All of these connections and back linking help to drive not only the shop Autobody-Review landing page SEO ranking but also their own sites SEO ranking.
ABN: Big-name MSOs are signing up for Autobody-Review.com in large numbers, but can independent shops can reap the same benefits from your site?
CN: Many MSO’s through our system have identified that larger isn’t better with SEO ranking. Since the release of Google’s most recent update (they’re calling it Penguin) local search ranking is vital. The same applies to Bing and Yahoo. So we advise both MSO’s and independent facilities to focus on local initiatives. We advise large brands to create individual Social pages as the Search Engines are designed to respond best to local traffic. We recommend that each facility create and connect to local listing pages such as Google+, Yahoo and more. As the search engines continue to change, they still tend to support local listings and activity. This means that the larger brands no longer have an advantage. Independent shops through verified review sites such as Autobody-Review.com now have the ability to compete with the big boys.
Now large MSO’s are joining at a high rate, because they see that Autobody-Review.com is driving local traffic in a manner that their corporate strategies in the past have overlooked. Our consultants provide new insight that is valuable to both independents and the larger chains.
ABN: Another aspect of your system allows users to verify shops’ certifications and awards. Some shops list certifications on their sites and in many cases they’re not current or valid. How are you going to be able to verify these certifications from groups like I-CAR, ASE and all of the car manufacturers, for example?
CN: We’re 100% committed to providing only verified reviews, and that also includes verified industry certifications. We’re connected with companies such as Verifacts and I-CAR and they’ve given us a direct feed to their verified list of approved facilities. This allows us to add and remove certifications and ensure that consumers are accurately informed of the hard work and investment an organization has made into their training.
ABN: How do you aggregate all of the “true” customer reviews for your subscribers?
CN: All reviews are scored through our natural language sentiment engine and then displayed directly on our site. Both good and bad reviews are displayed. This transparency provides a verified and reliable source to help them make a better educated decision when selecting a body shop. We not only collect reviews but we also provide an integrated proactive alerting system helping the facility to improve their future results and reviews.
ABN: Tell me briefly the history of your company and what you have planned for the immediate future?
CN: Our company started in the business of providing proactive communication through an opt in text messaging solution. We created a unique two-way message system that supported a lean process indicative for many service businesses. Through the insight we gained front the two-way communication we quickly realized we were gaining and providing insight to body shops about their consumer experience throughout the process that had never been available in the past. This quickly gained the attention of many leaders in not only the collision industry but insurance carriers nationally. Our customers’ customer satisfaction scores were skyrocketing. We then formed a relationship with CCC and Mitchell International which provide us the ability to interface directly with facilities Management systems. About a year later CCC approached us to exclusively license our status software and integrate it directly into their workflow and estimating platform. We then created an integrated electronic CSI solution deliverable through both email and text messaging. This led us to create our proactive sentiment engine which mines and provides early insight into the customer experience. Our proprietary sentiment alerting and scoring system allowed us to discover that our customer where provide valuable insight and eventually true reviews directly from actual customers. This is what led us to develop Autobody-Review.com.
Autobody-Review.com also features articles designed to improve your shop performance. See, for example, Five tips to prevent a bad online review for your auto Body shop.
In a unanimous vote, the Automotive Service Association (ASA) Collision Division Operations Committee rejected a proposal by CCC Information Services to have ASA endorse the new CCC Collision Center Connection program.
The CCC marketing program requires a shop to pay $499 verification fee to sign up for the program. The business is then charged a $30 to $50 referral fee for each insurance claim directed by CCC to the shop.
“Quite simply, the costs for adjusting a claim are the responsibility of the insurer, and this attempt to shift this burden to the repair facility is clearly not in the best interests of our members, the consumer or the repair industry,” said Bob Anderson, chairman of the ASA committee.
“ASA has been involved in extensive industry research that concludes that the claims handling system utilized today by most insurers is archaic and inefficient,” Anderson said. “This (CCC) referral program in its current form does little to alter the status quo. Since this third-party intervention does nothing to streamline the claims handling process, it is likely that even more friction (costs) will occur.” — from Automotive Dateline
A court ruling in West Virginia gives that state one of the strictest laws in the country regarding parts used in collision repair. Judge Charlie King wrote in a court opinion that insurance companies must pay for new OEM parts to fix body damage on newer vehicles. King ruled that repairs on vehicles still covered by a manufacturer’s warranty and less than three years old need to be made with new factory parts.
“I think it’s a real good decision for consumers in West Virginia,” Assistant Attorney General Doug Davis said. “If you get into a wreck in a car, insurance companies can’t force you to accept junkyard parts.”
The ruling apparently settles a heated dispute among insurance companies, automotive recyclers and the state Attorney General’s office. The case was brought to the court by a consortium of insurance companies that wanted a judicial interpretation of s state law. That law requires the use of “genuine crash parts,” and the insurance companies contended that this included new parts and OEM parts taken from wrecked vehicles. The state Attorney General’s office challenged that interpretation.
► A judge in West Virginia last year issued a injunction against Liberty Mutual to force the insurer to stop using remanufactured, reconditioned and used parts in violation of this state law; the judge also ordered the insurer to release the names of vehicle owners who had their vehicles repaired with salvage parts.
Allstate Insurance Company and Sterling Collision Centers have filed a lawsuit challenging the new Texas law prohibiting insurers from purchasing further interest in collision repair shops.
In the pleading, Allstate claims that HB 1141 “stops dead in its tracks a promising, market-based mechanism for improving customer satisfaction, providing efficient, cost-effective auto collision repair services, and eliminating incentives for waste and fraud in auto repair estimates and actual repair work.”
Allstate asserts that forbidding insurers from acquiring, expanding, supporting or promoting its interstate network of Sterling collision repair shops is a violation of the corporation’s protected free commercial speech.
The real purpose of HB 1131, according to the lawsuit, is “to turn the American business model—where competition brings out the best—on its head by protecting and insulating local Texas autobody shops from having to compete with Allstate’s (or any other insurance company’s) own collision repair operations.”
► As reported in Autobody News. The legal battle over the Texas law lasted until 2008 when the Texas Supreme Court rejected Allstate’s request to consider the insurer’s challenge to the law. ASA’s Bob Redding predicted that other states, which had previously considered legislation similar to that of the Texas bill, would pass such restrictions on insurer-owned shops after the Texas law was upheld, but none have. Unlike other larger MSOs, Sterling has added relatively few new shops since 2008.
Following a similar decision by State Farm back in June, Allstate announced this month it would no longer specify full-body sectioning (or “clips”) on its estimates.
“Furthermore, only when a collision repair facility is confident that a full-body section is the appropriate repair, has the proper training and equipment to facilitate a quality repair, and has the approval of the customer or claimant for such repair, will the adjuster authorize it,” the Allstate policy states.
Allstate’s Tech-Cor research center developed full-body sectioning procedures in the 1980s, but the insurer now says “changing vehicle construction techniques” and “the varying metallic composition of some modern vehicles may prevent collision repairers from facilitating a quality repair” using such procedures.
As with State Farm, Allstate had been pushed on the issue of clips by Pam Pierson of Princeton Auto Body in Princeton, Ill. Just days before Allstate’s announcement, the Alliance of Automotive Service Providers of Illinois said that based on Pierson’s efforts, it had appealed to Illinois State Representative JoAnn Osmond to ask the state Attorney General to provide a legal written opinion on the use of full-body sectioning.
► from CRASH Network (www.CRASHnetwork.com), September 22, 2008
Social networks such as Pinterest, Instagram and Tumblr are rapidly gaining momentum as content distribution tools and becoming more and more attractive for B2B purposes, including within the collision industry. When new forms of social media get hot, others fall off and disappear—so how do we know which ones are gaining while others are failing? While many body shops use one or more of the aforementioned sites, smart operators can gain an advantage over other body shops that don’t know about them or care.
Let’s examine Pinterest first, because it seems to be the best known one on this list. Pinterest is a virtual scrapbook that enables businesses, organizations and individuals to organize and share images. Users can pull videos, photos, drawings, paintings, etc., anywhere from the Web on Pinterest and other members can re-pin the images elsewhere within Pinterest. Users can organize their Pinterest pages by categorizing content on their own boards.
The obvious goal is to generate new leads and referrals to your shop by using Pinterest. More than 20% of the people who use Facebook use Pinterest daily. Women use it more (72%) and are joining it more than men (2-to-1) which is ideal for the collision industry, because more women take their cars in for repairs than men do. Pinterest has a dedicated iPhone app that gets approximately 250,000 downloads every day. And most Pinterest users are between the ages of 25–54 and earning $60,000 annually, right smack in the middle of that highly-desired demographic sweet spot where they have money and can afford to pay their deductibles.
Sure, Pinterest is used by a lot by artists, musicians, photographers and creative types, but more and more companies of all types are using it for SEO, marketing, public relations and advertising purposes. Roger Henson from Advertising Business Consultants in Willow Glen, CA is a Pinterest expert and uses it for a wide range of his clients, he explained.
“When it comes to any of these emerging forms of social media, they offer a great opportunity, because in many ways, it’s virgin territory,” Henson said. “We’re always looking for the next thing, and that’s why we’ve recommended sites like Reddit, StumbleUpon, Tumblr and Pinterest well before everyone started jumping on the bandwagon. It’s all about getting as many sets of eyes on your brand and message as you possibly can, and Pinterest works for us and our clients, including several body shops who are getting track able results from Pinterest.”
Henson likes Pinterest because businesses can use it to attract traffic to their websites while sharing content, products, services and news, he said. “We’re constantly seeing great numbers and the site is growing in leaps and bounds (145% in the last 16 months). People spend more time on it then Facebook, for example, and we’re hitting a younger audience. In the collision repair business, it’s wise to engage these younger customers, because they are the future of your industry. Once you build that familiarity and establish some trust, the rest is easy.”
Tumblr is a micro blogging platform and social networking website that allows users to post multimedia and other content to a short-form blog. Users can follow other users’ blogs, as well as make their blogs private. Most of Tumblr’s features are accessible from the “dashboard” interface, where the option to post content and posts of other blogs that are of interest to the administrator can appear. Tumblr was recently purchased by Yahoo so expect to see some investment in the product.
Larry Sawyer, a social media maven and the owner of Da Bomb Media in Surprise, AZ. His job is to be up on all of the latest social media sites and he believes that Tumblr will be gaining popularity with businesses for a wide range of reasons, he said.
“Blogging is not going away and in fact, blogging is exploding and that’s why Google and WordPress are seeing huge spikes in membership,” Sawyer explained. “A body shop can share postings from other body shops, their vendors’ blogs and even local community blogs, to keep that level of interaction high. If you’re looking for another form of social media to use, I would suggest taking a close look at Tumblr. By adding it to your dashboard, you can be a part of Tumblr quickly and easily, especially if you already have a blog. By being involved in more social media sites, you’re building your SEO and get in front of more people on the Internet.”
Instagram is an online photo-sharing, video-sharing and social networking service that enables its users to take pictures and videos and apply digital filters to them. At the same time users are sharing them on a variety of social networking sites, such as Facebook (which owns Instagram), Twitter, Tumblr and Flickr. A distinctive feature of Instagram is that it confines photos to a square shape, similar to Kodak Instamatic and Polaroid images, in contrast to the 16:9 aspect ratio now typically used by mobile device cameras. Instagram is distributed through the Apple App Store and Google Play, and it was considered valuable enough to Facebook to be worth its billion dollar purchase price.
Jeremy Eaton is the marketing manager at Collision Repair Specialists in St. Joseph’s, MO. He’s always looking out for the newest social media to support his family’s burgeoning body shop and he uses all of Pinterest, Tumblr and Instagram because he knows they attract a younger customer that will drive for many years and probably get into at least a few accidents.
“We’ve been using Instagram for two years now to share our community events and many of the awards we’ve won,” Eaton explained. “It’s all based on photographs and other images and that’s why it’s ideal for the younger demographic (18-15 yrs.). They’re less into text and more into photos, because they get a more immediate response and have more impact.
Keeping your customer informed and engaged is always the key with any type of social media and we’ve had some very favorable feedback about our Instagram involvement. Some of our younger clients request that we use Instagram to show them the progress of their car as it is being worked on in the shop.”
By easily integrating Instagram into his other forms of social media, Eaton is able to connect everything together with just one click of the mouse. “We have Instagram on a dashboard with Facebook and Twitter, for example. It’s simple and doesn’t require a ton of time to manage it. People think it takes hours and hours to do these things, but if you do it right—you can get it done in minutes.”
The mobile aspect of Instagram appeals to Eaton and his customers, he said. “Everything is going to be done on smart phones eventually. Lap tops and desk top computers and even tablets are going to eventually become less prevalent, because people want the convenience of doing their computing anywhere and at any time. So, the fact that Instagram is geared toward mobility makes it an ideal form of social media for any business, including body shops of course.”
I was surprised recently to learn of a shop that still uses sales quotas. As a professional in marketing and sales, I am very familiar with quotas, and the pros and cons of the practice. It’s likely that the various sales reps that call on collision repair shops, selling everything from computer systems, estimating software and spray booths to frame machines, are expected to meet sales quotas. It’s also likely that at the end of the month when a rep is still way under his or her quota that some drastic measures will be taken to force yet one or two more sales. That’s just the nature of using a sales quota system.
But I had to ask what a collision shop sales person could do to close more business for the shop at the end of the month? Earlier in the month he or she could have gotten on the phone and called prior customers, or placed more follow-up calls to prospects who brought in their vehicle and didn’t leave it to be repaired. Or when the shop has dealership connections, the sales rep could push hard on the dealership service drive for collision work. But at the end of the month, the story would only be told with closed tickets. What could he or she do to push that up to meet a quota?
I talked to one rep who said the game begins when a customer brings in a car to be repaired. The aggressive rep on quota barely waits until the customer is out the door before he or she is on the phone to the customer’s insurance company to get an adjuster out to look at the car. If the company says five days, he or she immediately contacts the customer to call and push his or her insurance company to get out to see the car in three days or less. The rep also pushes for a quick teardown to expedite the parts orders and avoid supplements.
If the end of the month is coming quickly and some of that rep’s vehicles have still not been completed and closed out, the rush is on to find out why not. Delayed delivery of parts is a hard problem to overcome, but supplements are a different story. I was surprised to learn that a shop owner willing to work with this kind of quota pressure would permit a rep to go the customer to approve a supplement if the insurance company is holding back on it. When the job is completed if the insurance company hasn’t paid for the supplement, the customer will get the bill. Now the aggressive rep has to convince the customer that he or she will be able to collect back from the insurance company eventually.
So here we arrive at why few shops allow this kind of last minute quota pushing. A customer who is pushed to authorize supplements and collect back from his or her insurance company may not choose to use this shop again. It was obvious this shop owner put the highest value on quotas and profits, while another might do everything possible to not irritate a customer. I could see that this shop is highly profitable and capable of bringing in plenty of jobs without worrying about retaining every customer in the long run. I could also see why many shop owners would shy away from using quotas, but might there be a way to do it without irritating and possibly losing customers?
A long history of successful companies using sales quotas says they serve an important purpose. Sales reps are strongly motivated by sales contests, sales bonuses, commissions and more. Even the mention of quotas when hiring a rep will tell an owner whether or not this person can work with that kind of pressure. Many cannot and it’s best to determine this as soon as possible. The pressure of having to meet a quota will probably drive a laid-back employee crazy but an aggressive sales type will thrive on it and draw on a depth of ingenuity to bring in or close business that otherwise could have slipped away.
After this conversation about quotas, I asked a few other shop people whether or not they used quotas in their shops. No one else I spoke to used them, but there was often a greater emphasis on targets and team closing. It seemed to me that individual quotas could be difficult to manage in most collision shops, but given the new emphasis on lean processes and team production, I think there is definitely a place for some sort of target or quota system.
At first glance this might not seem applicable to a small, independent shop but perhaps that’s where it may be needed most to “light a fire” under sometimes complacent estimators and owners who now have to compete in a much more ruthless collision repair marketplace.