John Shoemaker of Virginia is an Air Force veteran with 23 years service in the automotive field as a technician, trainer and formal instructor, and with several additional years as a collision center director for a major dealership group, overseeing three collision centers in Virginia. Shoemaker is now a consultant with JSE, a company he created to share 35 years’ worth of automotive management experience to assist collision centers in improving operations.
During the 30th anniversary of NACE in New Orleans, LA, Shoemaker presented Negotiating for Success — a Look at the Negotiations Necessary to Keep Your Collision Center on Top.
Negotiations, Shoemaker says, not only affect profits, but is important in preparing a contract or business deal. To negotiate successfully, several elements must be in place during the preliminary stage of a business deal. Those elements include establishing a set of core values, being honest and ethical, maintaining a standard that meets industry and customer expectations, delivering as agreed and responding to the customer’s needs. What is non-negotiable is making a profit.
Are you a negotiator? You can be if you are confident, focused, able to stay on track and be unemotional. A successful negotiator will know the objective before he or she begins, be able to define the main issues and can focus on them one at a time. Negotiations will go much smoother if a win-win is determined. Always have supporting documentation as back-up, which can include manufacturers specifications, a complete damage appraisal and structure measurements. The person with the most information usually wins, says Shoemaker.
One of the first steps to take when entering negotiations is identifying the appropriate person with whom to negotiate with. Develop a rapport with that person and determine their focus. Finding a common ground will help you to capitalize on similarities and keep the conversation from getting confrontational. Verbal tone and body language is important. Keep your emotions in check.
It is important that you establish your repair standards up front. Have a complete damage appraisal prepared and itemize each repair step required. Document only the repairs required and isolate prior damage. List customer concerns.
Negotiating with Insurers
When dealing with insurers, review the entire appraisal and make a note of the ‘no’s’ but keep moving. Go back to the ‘no’s’ after reviewing the complete appraisal. Negotiate the repair first, then the labor, but do not negotiate your repair standard. Realize that you will not see eye-to-eye with an insurer. Their job is to negotiate the cost down because they have specific numbers to meet and they are protective of their bonuses.
Negotiating with Insurer DRPs
One of the best things you can do when negotiating with a DRP insurer is to develop a friendship and a rapport with the insurance adjuster and get to know the insurer’s agents. You want to create a good reference by ensuring the adjuster’s experience is always good. Promote your efficiencies and your customer service. But also make sure the adjuster knows what you want on their program. Agents are required to maintain training and this can be an opportunity for your shop to sponsor events. Having a manufacturer certification makes your facility more attractive to an insurer and helps establish credibility. Have space available for them to work. Use existing work to establish opportunity with the insurer. Look at the number of non-DRP repairs performed for the insurer and provide insurer performance reports for those repairs. This cements your abilities and proves a need.
Negotiating with Vendors
When negotiating with vendors, determine a retail rate for services, such as towing, alignments, and glass work. With parts suppliers, explain your needs and cycle time mandates. Find out what they need to get the correct part and incorporate electronic parts ordering. Give vendor complete order information to reduces parts errors.
Negotiate inventory levels by defining guidelines for out-of-stock parts and require them to search other dealers. Establish a process for parts returns and coordinate order cut-off times. Set a different time for each vendor. In addition, define the delivery process and specify that only complete orders are delivered. Identify inspection requirements and negotiate parts price differences. Parts price differences are the #1 cause of supplements, Shoemaker says, while insurance companies strive for zero supplements. Set a reasonable dollar amount for a price matching estimating system and establish guidelines for higher amounts. Set a performance measurement tool in place to manage system reporting; to track parts returns and delivery delays, to identify damaged or wrong parts and the frequency.
Negotiating with Paint Suppliers
Explain your needs to the paint supplier. Define the paint level required and the flexibility you need in your paint line. Understand their distribution capabilities and specify your delivery expectations.
Negotiating with the Vehicle Owner
Determine your customer’s need, identify their concerns and communicate to the customer so they know you understand them. Work to resolve the situation, not to sell. Provide a solution, but make sure you understand the complete situation before answering too quickly. Be flexible. Educate the customer on repairs required and write a complete damage appraisal. Is a complete repair needed and will aftermarket parts fit their need? It is easier to remove items than to add items later. Discuss a specific time for the repair and determine their transportation needs. In regards to payment, who is paying for the repair? Is it being processed through a third party? Is the customer aware of the deductible? Assist with claims processing and remember that vehicle owners don’t deal with this everyday. Help them to understand the process and be their advocate if necessary.