He advises collision repairers all over the world on marketing, the customer experience and how to generate more business by using his tools.
Q: Why do many body shops stumble when it comes to marketing and advertising, while others seem to push all of the right buttons all the time?
A: When I owned my own shop and business started to lag, I thought I could offset it by marketing my business aggressively, so I spent $100,000 on things like radio advertising, and it didn't even move the needle. I was shocked, so I brought in a lot of experts, and we tore the collision repair industry apart. We found out that when people get in an accident, it's an on-demand purchase, which is different from an impulse purchase, where people are motivated and engaged. An on-demand purchase is like finding out your house is flooded or you have diabetes---it's not an acquisition that you wake up in the morning anticipating. I've never heard anyone say, “Wow, I hope I get in a wreck today!”
Most marketing firms provide services to companies that sell products or services that fall into the impulse decision category, such as new cars, vacations, electronics---things that get people excited. So, if you're working with a conventional marketing company, they probably don't know enough about the collision repair industry to be effective. Their experience is buying media (such as print, radio and TV broadcast advertising) because that caters to the entire market. But, as a body shop, your customers are limited, so why are you wasting money to advertise to everyone?
In summary, remember that your customer does not want to be your customer, and secondly, there is a very small marketing footprint to get to that customer when they need you---all things I learned the hard way.
Q: Why is it dangerous for shops to rely heavily on their DRPs for the majority of their revenue?
A: Back in 2011, one of our major DRPs (28 percent of our total volume) contacted us with a "courtesy call" that was far from being courteous. They told us that they were going to give all of their work to a consolidator with 300-plus locations, so we lost nearly one-third of our business with one phone call. Every shop knows that this is an exposure spot for us, but we usually think that it will happen gradually or taper off over a 5--10 year period, rather than in 30 seconds.
So, after losing that big DRP, we started looking for ways to diversify our business, and one of them was fleet work. We charted it out and found out that customer pay has been growing. In 2008, it was 5 percent and today it's 20 percent---and there are a lot of reasons for that.
Our analysts are telling us that it will be around 30--38 percent by 2020 and eventually, the DRP system will go away altogether. There are a lot of reasons why the insurance companies can profit by eliminating their DRP programs, and they're starting to figure it out. So, we see a major shift in DRPs and a lot of this new technology (Allstate's new photo app, for example) is aiding them in this shift. In Canada, shops are very DRP-dependent, so we haven't seen this change there yet, but we believe it will happen there too within the next 3--5 years.
Another change we've seen is that now with deductibles going up ($500--$1,000 on average), the market will split and more cash-pay customers will emerge. In North America, 44 percent of all repairs are what we call Type 1 repairs, which require 11.9 hours or less to complete the job. With all of the new collision avoidance systems, we are seeing more and more of these types of repairs. So, many of these are now customer pay. If the consumer has a $1,000 deductible, for example, and the job is going to cost them $1,500, that's now within their threshold, so they're going to pay it rather than call their insurer.
Q: Experts claim that word-of-mouth is the best way to get new customers, but how can you manage this and reap the benefits?
A: The latest studies show that every happy customer has the potential to affect 4.1 other people around them. The challenge is how to get them to refer you. Extensive research shows that your average customer will only drive 15 minutes to get an estimate, but they will travel up to 35 minutes for a repair.
By harnessing the power of technology, you can get customers who are outside the 15-minute window to commit to a repair appointment and thereby expand your market reach. Studies show that 74 percent of customers make their decision based on convenience. All over the world, deductibles are on the rise, causing customer pay to be more and more common, so capture more work by making the estimate process easier, because ease of doing business is why 83 percent of people will go online to check out repair shops. Supply them with what they are looking for, and you will capture new business. Customers are afraid to make an insurance claim because they fear drastic premium increases. Capitalize on that by making the estimate process smooth and educational.