Friday, 31 March 2006 09:00

Another perspective on State Farm Select Service program

Written by Lee Amaradio, Jr.

It amazes me how quickly some of us are ready to throw State Farm under the bus. Have we forgotten how much we loved doing business with State Farm up to this point? Perhaps the problem is not State Farm, but with the collision industry itself.

Let's look at the new Select Service program and some of these so-called outrageous demands made by State Farm. Are they really asking for anything that we haven't agreed to do for their competitors? State Farm is not the first insurance company to demand guaranteed cycle time or rental car reimbursement. We in the collision repair industry are just upset because they are choosing to equal the playing field.

If you're going to complain about State Farm, you better include all your DRP programs. State Farm is just following our lead, as we have trained the insurance companies we do business with how to treat us. State Farm isn't bad; they are doing what any good business would do. They see us giving concessions to their competitors and they want the same treatment. If my paint vender starts selling paint products to the guy down the street for less than he is charging me, I'm going to let him know that he had better lower my price or I'll change suppliers.

There is not a single demand in the State Farm Select Service agreement that I'm not doing for at least one of my other DRP accounts. State Farm just requested they get anything we give anybody. As a businessman, I respect them for this.

Whose problem is it?

So is this State Farm's problem or ours? It's ours. If we as an industry wouldn't have agreed to just about anything just to get more cars to repair, we would have a different situation. So what are we doing now? We complain about it. In my life I have yet to see complaining solve anything. Very little ever gets accomplished by complaining.

Change takes action, focus and determination. So before you get mad at State Farm go look in the mirror and ask yourself, what it is you're looking for? Then come up with a plan on how you're going to accomplish it. This is how things change; not by complaining and repeating the same mistakes. Our industry is in a crisis and we must shoulder part of the blame. The sooner we realize that each of us needs to do our part individually and quit blaming the insurance companies for our problems, the better off we will be.

I suggest you pick up a copy of "Who Moved My Cheese" - a short book you can read in about an hour. It talks about some mice in a room full of cheese. They are happy having all the cheese they can eat. The point of the book is that the mice finally eat all of the cheese; its gone; there is none left. Even though they are starving, the mice are afraid to leave the comfort of their room, thinking the cheese will return.

Finally a couple of the mice decide to leave the room rather than starve to death. They venture off into the unknown and although frightened, finally discover another room full of cheese. They are ecstatic and eat cheese until they are bursting. Soon they realize this room has more cheese than the other one and there is more than enough for everyone, so they decide to go back to tell the others.

They make the long journey back to the old room where the cheese is gone and tell the others they found more cheese. Expecting the others to follow them and get some of the cheese, they are surprised hear that the others are too frightened to leave the safety of their room - to take risks to get to the other room; they will continue waiting because they are sure their cheese will return. Well, the other mice leave them and they eventually starve to death because their cheese is gone and never returns.

The cheese is gone!

The point I'm making is - the cheese is gone! If we want to find our profits again we need to rethink how we do business. We need to take charge of our DRP agreements and demand the rates we need. We need to look at our profit and loss statements and do what State Farm has done by shaking things up. They demanded something without any concessions and they got it! Why don't we do the same thing? Why don't we equal the playing field and charge everyone equal rates? This is the way it should be.

Why do we have different rates for different companies for the same work? This doesn't work in any other industry, how can it work in ours. I have ten different profiles for ten different companies. We should have one rate for everyone with no exceptions, just like State Farm has demanded. The rates should be increased to meet our profit guidelines, all concessions, if any, should equal to all. This would go a long way towards leveling the playing field between the insurer and the repairer.


In business for 26 years, Lee Amaradio, Jr. is the president and owner of "Faith" Quality Auto Body Inc. in Murrieta, California, a business with 65 employees. He can be reached by e-mail at lee@faithqualityautobody.com.