Suppose a shop that was repairing 100 cars a month, got 100 new referrals. And a shop that was doing 250 cars a month got 250 new referrals? With that kind of referral volume, the shops could double their business very quickly!
Are these numbers realistic? Take a look at how it might be done.
Really tracking business
In the body shop business, almost every new customer is sent to the shop by someone. It may be a referral from a friend, family member, neighbor, dealership, insurance company or agent. It's been my experience that very few shops really track referrals so they know exactly where every job is coming from. Even fewer make certain they reward every referral.
Suppose a shop takes this process seriously and really does identify every referral source to find a way to reward the referral. How far can a shop go with this process? Generally it's not acceptable to pay cash to agents or insurance personnel for referrals. It would also be crude to send cash to someone's uncle, sister or cousin for a referral. But everyone enjoys receiving tickets to a movie or for a free dinner for two at a fine restaurant. If that meant giving away 100 pairs of movie tickets or free dinners a month, could that really generate enough referrals to be profitable? You might be surprised how effective these simple rewards can be!
Even less costly rewards
Many car owners still buy auto insurance from an agent or broker. Out of 100 repairs a month, possibly 80 of those car owners obtained their insurance from an agent or broker. While it's highly unlikely that more than a few of those repair jobs were referred by the agent or broker, the fact that the car owner came to your shop opens up a way to connect to that agent or broker. Just sending a report on the repair along with a customer satisfaction statement to each agent or broker would establish a valuable connection. It would also increase the likelihood of a future referral from that source.
Sending 80 or 100 reports a month to agents and brokers could amount to a significant amount of paper work for front desk personnel or estimators. Not many shop owners might see the value in it immediately. But compared to other methods of advertising and marketing, this could be an extremely inexpensive way to build referrals. In those states where direct repair programs are legal (and desirable), this is also an excellent way to establish a track record of business volume with a specific insurance company's agents and customers.
Seeking dealership business
The process of tracking where business comes from obviously entails asking who referred the customer, plus asking for the agent or broker information. Another valuable piece of information could be finding out where your customer purchased his or her vehicle. If you find you're repairing a significant number of vehicles purchased from a nearby dealership, sending a report on each repair to the dealership principal can also establish your volume of business repairing those vehicles. This demonstrates your shop's familiarity with this make and type of vehicle, and should build confidence with the dealer that your shop would be an excellent place to refer business.
The numbers game
The reason so few shops take advantage of this simple reporting system is the amount of paperwork and administration involved. Shop owners are already drowned in paperwork, from estimates, repair orders, parts tracking, supplements, payroll and tax reports, and other required government and insurance reports. The idea of adding yet another layer of reports on top of this all could seem mind-numbing. The only way this can work is to treat it as a completely separate business activity.
Many of the large, successful shops I've visited have a full-time marketing person. Generally this person is already busy most of the time making live calls on agents, dealers, fleet managers and more. But there is a limit to how much can be accomplished with these repetitive live calls. In this day of e-mails and faxes (not to mention high gasoline costs), it can be more effective to use electronic media and the mails to maximize communications.
Even medium-sized shops that may not seem able to afford a full-time marketing person could afford an administrative person to generate this high volume of completed job and customer satisfaction reports.
It's just a numbers game. A massive bombardment of rewards for referrals stands a chance of doubling and re-doubling a shops business. The slight investment in shop personnel to execute the reporting necessary to get the job done is a minor expense compared to the potential profits to be made.
Tom Franklin has been a sales and marketing representative and consultant for forty years and is the author of the books, "Business Battlefield Marketing for Body Shops," "Tom Franklin's Top 40 Marketing Tactics for Body Shops," and "Strategies for Greater Body Shop Growth." His marketing company now provides marketing solutions and services for body shops and other businesses. He can be reached for questions or comments at (323) 871-6862, by fax at (323) 465-2228, or by E-Mail: firstname.lastname@example.org.