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Monday, 29 October 2018 16:14

CCRE’s Fall Seminar & Convention Teaches Body Shop Owners Another Way of Conducting Business

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Steve Behrndt presented on job costing during CCRE’s Fall Seminar in Atlanta. Steve Behrndt presented on job costing during CCRE’s Fall Seminar in Atlanta.

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On Sept. 28 and 29, the Coalition for Collision Repair Excellence (CCRE) held its Fall Seminar and Convention at the Embassy Suites at the Atlanta Airport.

 

According to CCRE President Tony Lombardozzi, “Attendees hailed from all parts of the country, including Utah and Alaska. The room held a full house of eager-to-learn collision repair shop owners and other guests who wanted to learn another way of conducting business in our industry. Many of them have realized that the present system is not working and is not a profitable method of operation.”

 

The weekend commenced with Lombardozzi’s opening introduction, followed by a presentation on how the industry ended up in its current condition, where it is today and where it is headed in the future.

 

He shared, “We spent a great deal of time discussing how we let go of the control of our industry and how we let insurers into the repair process.”

 

Lombardozzi’s “An Educational and Networking Experience with Industry Peers” began by focusing on who CCRE is, how it has influenced the industry and what its future plans will entail. Future plans include development of state-by-state programs to develop a systematic resolution of day-to-day business issues, a network of attorneys for assistance in business-related situations and consumer issues, continued educational opportunities for shops and the teaching of the importance of documentation as the group strives for collision repair excellence and the right to operate as independent business owners without being influenced by a third-party entity.

 

The presentation then continued to explain that the industry fell into this state through apathy, poor business management skills, inappropriate behavior, insurers’ influence and the industry’s poor image. Lombardozzi emphasized that the correct alignment of contracts is a repair shop having a contract with the vehicle owner while the vehicle owner has a contract with the insurance company. When the contractual relationships become a “terrible triangle,” the repairer loses.


 

Discussing insurer interference in the collision repair industry, Lombardozzi touched on hold harmless agreements that insulate insurers from liability, specified vendor purchasing, insurer supplements, the required use of crash guides for estimating and much more, predicting that the industry is in for an even tougher future if shops do not establish contracts with the vehicle owners directly, educate consumers, and remove the insurer’s third party influence from their businesses. One way to do this is by creating necessary procedures, for which attendees discussed some options.

 

Lombardozzi shared some rules and tips for everyone to follow to take control of their businesses.

 

He also advised, “Stop sharing information on social media, and quit bragging and boasting online; Big Brother watches everything! We are trying to solve a difficult puzzle, but the goal is attainable; if you learn the process, the pieces will all fit together. It’s time to begin making money, not just repairing vehicles!”

 

Next, Jeff Bryant of Autosport Body Works delivered a presentation on billing paint and materials using a cost accounting program.

 

Lombardozzi recalled, “One of the highlights of his discussion was how he discovered that almost 50 percent of the materials he was using were never being billed or accounted for. After using a P and M invoicing program, the shop’s profits on those materials being used increased substantially.”

 

Bryant explained that paint and materials are the cost of doing business, but that any costs incurred to produce repairs should be a profit center for the business.

 

He explained, “The rate per hour system has no real basis in reality and is not profitable, so why do we still use and accept it? Because the insurance companies like it because it benefits them. You will never win as long as you play their game by their rules on their field!”

 

Exploring the cost of the rate per hour method, Bryant walked attendees through some financial scenarios.

 

He shared, “The first year Autosport implemented paint and material cost accounting and proper collecting, the results were an additional $67,000 collected. A 6--8 percent increase is huge considering most shops operate on a less than 5 percent net profit margin.”


 

Bryant shared how to account for paint and material costs in the shop, how to account for allied materials and how to assist the vehicle owner in getting reimbursed from their insurer.

 

“You have to be willing to hold the customer accountable for the charges. It is hard to argue with facts, so make it factual and be willing to defend it,” he said.

 

The last presentation on Friday was “Managing Customer Expectations: CCRE Guide to Implementation,” delivered by Shane Coker of Cokers Auto Body in Alabama.

 

He “discussed his new method of business and front office management that has made it easier and more relaxing for him and his family while at their facility. He also discussed the many documents and forms he has created and shared those documents with all those in attendance, and additionally, word tracks and proper nomenclature of operations were discussed,” Lombardozzi shared.

 

Coker began by asking, “What does consumer choice mean to you? What should it mean? It’s not just about choosing your shop … It’s choosing in everything!”

 

He went on to talk about scheduling your day, refusing to negotiate with the insurance company and the value of educating the consumer.

 

“If the customer ‘hears’ what the insurer may say beforehand, they are prepared to counter, plus it builds credibility for the shop when the customer is prepared for insurance company attempts to steer,” he said.

 

Moving on to integrating customer forms, Coker talked about estimate authorization, including pre-qualifying the customer, recording the vehicle owner’s intentions, the level of repair and how the entire conversation with the customer presents an opportunity to educate them, even if they choose not to repair at your shop. He went on to discuss disassembly, diagnosis and the repair contract, which “sets the rules of the repair and expectations for payment, protects the customer and shop and explains the contract of insurance is between the vehicle owner and insurer. The repairer is not party to the contract of insurance.”


 

After discussing how his shop now handles interactions with insurance companies, Coker advised, “Start with one or two customers each day, not everyone. Don’t kill yourself in the beginning by trying to educate everyone that comes through the door. Learn your script; become comfortable with your techniques and materials, find out what your customer wants and decide if you can deliver. Long-term, we need to separate the shop from the insurance company by taking control of our shops [and] educating customers so they become advocates of our shops and make the insurance company irrelevant in our businesses.”

 

On Saturday morning, Steve Behrndt of Crawford’s Auto Center in Pennsylvania presented “CCRE Job Costing.”

 

Lombardozzi explained, “Steve presented a job costing program that provided the reasons for using this type of system and how it could be implemented in even the smallest size shop. Knowing your costs will allow you to know what price to sell your services for and be profitable at doing so.”

 

Asking how shops determine hourly rates and how they know the cost of doing business, Behrndt encouraged attendees to engage in job costing on each and every repair order.

 

“Every other industry realizes the need to job cost. Manufacturers need to calculate labor, materials, administrative, research and development costs, as do other businesses, to find their gross profit,” he said. “Why not body shops, or do we not want to know? Not wanting to know seems to be the normal reaction in the industry because we have been programmed to accept less, but the answer is right in front of us ... If you continue to do what you’ve always done, you will always get what you always got.”

 

He questioned how shops can know that estimating databases are accurate if they do not job cost. In order to know an employee’s actual wages, shops need to track an employee’s individual labor tasks and then calculate their true labor cost, which includes their hourly rate as well as all benefits.

 


 

Discussing the difference between an estimate and a repair order, Behrndt identified an estimate as a third-party’s supplied document, which is “a guesstimate of damages sustained, a rough calculation only.” He also emphasized that automated estimating programs are only guides.

 

“These programs do not write repair orders,” he said. “They are only guides! The first step in taking control of your business is realizing you cannot operate your business profitability following an estimate prepared by a third party. The second step is to eliminate the third party’s estimate from your business, and the third step is knowing you cannot use an estimate as your final invoice. You cannot job cost by estimating, and you cannot estimate your job costing.”

 

Reiterating that it is possible to make a profit in the industry, Behrndt told attendees that it begins with job costing each and every job. He explained how to calculate a shop’s average gross profit by tracking every order, including labor tasks performed, all parts utilized in the repair, sublets, mark-ups, return items and sales tax amounts.

 

He said, “We want to help shop owners grasp the importance of tracking expenditures and become more profitable by helping you understand the true costs within your business vs. your operating costs.”

 

Behrndt walked through examples and calculations to show how many shops operate at a financial loss. He talked about a variety of ways to track technicians, and he concluded by elaborating on the importance of accurate, complete documentation.

 

The final presentation, “Autosport Testimony and Customer Expectations,” was delivered by Shey Knight and Bryant, who shared their experiences working for Autosport Body Works, a former DRP shop that they eventually ran according to the CCRE philosophy.

 

Lombardozzi noted, “They discussed how to meet your customers’ expectations and listen to what they are really asking of you. They discussed repair contracts and other documents that are in use at their facility and how these documents and processes have made them a more profitable business.”

 

Autosport Body Works became a DRP for State Farm in 2001. The business enjoyed increased business and a good partnership until State Farm started expecting more and more for less money.


 

According to Knight, “Our ‘partnership’ with State Farm started to look more like a dictatorship, and we started to hate the business we once loved.”

 

Despite the belief that it was the way the industry had always been, Knight and Bryant believed there had to be a better way. So, they started talking to other shops and got involved with CCRE to create a system that worked for them.

 

Bryant shared, “So, what’s the problem with our industry? We all have different ideas and practices, but instead of working together, we fight amongst ourselves. We are all too busy to take the time to step out of our business so we can work ON our business. We are all at different stages in running our business, but I urge you to take your first step in becoming truly independent.”

 

Knight and Bryant then went on to explain how they run their business. Vehicle owners contract with the shop, and insurance adjusters are not permitted to enter the shop or work areas; only after a vehicle has been disassembled and moved out of the shop can an adjuster sign in to see the vehicle on their lot. They refuse to accept insurer estimates and will not negotiate with the adjusters. Rather than write estimates in rates and hours, they bill in dollars, and they will not supplement insurer estimates; however, at the vehicle owner’s request, they will provide a Notice of Deficiencies.

 

Knight stressed, “The key to it all is the customer! You have to become customer-focused and remove the third party influence.”

 

The presentation continued to cover customer expectations, the customer service process, obtaining the commitment, rejecting excuses and keeping the customer involved throughout the repair process.

 

At the end of it all, Knight and Bryant emphasized that shops can get paid, saying, “Simplify. Educate yourself. Educate the consumer. Be persistent. Be patient. Get support. Have fun.”

 

The seminar concluded on Saturday afternoon with breakout sessions and open discussions on a variety of topics pertaining to the industry, and attendees shared their challenges and the solutions they had found.

 

Lombardozzi stated, “Judging by the feedback from those who attended, this was a very successful event for all.”

 

For more information on CCRE, visit theccre.com.