On the heels of last month’s report on Allstate’s acquisition of
Sterling Collision Centers, we bring you a report on Progressive’s
"Concierge" program, which proposes to streamline their
customers’ claims-handling experience and eliminate virtually all repair
facility-to-vehicle owner contact.Are Allstate and Progressive simply trying to improve their customer
service and enhance their unique value propositions to their customers? Or
as many concerned repairers believe, is this simply another effort to
control the collision repair industry? You can be sure the insurers’
motivation involves a little of both. Each program will shift the existing
balance of power between shops and insurers by reducing the independent
repairer’s role in the collision repair process. The level of success
the insurers achieve will determine the size of the impact.Allstate’s purchase of Sterling seeks to eliminate independent
repairers’ roles by referring work to Sterling shops. Of course, for
this to have a national effect, Sterling must dramatically grow beyond its
28 repair facilities. And in order for Sterling to perform any significant
percentage of Allstate’s $2+ billion of repair work in the United
States, the insurer will have to invest a vast amount of money to build or
acquire hundreds of collision repair facilities.Progressive has hit upon a cheaper approach<\m>don’t eliminate
the repairers, just their customer contact. Progressive will move more
work to repair facilities that want the insurer’s business on the
insurer’s terms. Eliminating the vehicle owners’ contact with shops
may reduce hassles for the car owners, but it also eliminates any
long-term marketing benefit for the repairers. Shops that are part of
"Concierge" now truly have Progressive as their customer, not
the vehicle owner. If Progressive is satisfied with the quality and the
cost, the shops will continue to receive referrals.The vast majority of vehicle owners who opt for the
"Concierge" program will not know which repair facility fixed
their vehicle. The big question is: Will they care? Progressive obviously
believes not. The insurer holds that the higher level of hassle-free
service far outweighs vehicle owners’ concerns regarding who actually
performs the repairs. Progressive handles all the details and guarantees
the work. And if vehicle owners really want to know who repaired their
cars, Progressive will tell them.While Progressive’s end-to-end service approach is new in the United
States, Australian insurer AAMI has run it successfully for several years.
Progressive’s Concierge is almost the exact same program as the AAMI
Valet system, with one key exception--in Australia, the AAMI brings
repairers in to the AAMI service center to inspect the vehicle and quote a
price. The low bidder gets the job. While U.S. repairers should be
thankful the Australian method of auction pricing repairs is not the route
Progressive chose for "Concierge," how long will it be before
some U.S. insurer introduces this type of auction system?In talking with shops participating in the "Concierge" test
program, most have stated little concern regarding the loss of customer
contact and are highly satisfied with the program. Keeping their repair
facilities filled is their most important concern. But this attitude is
strikingly short-sighted. Even shops with numerous DRP relationships and
outstanding insurance company relationships keep a firm eye on individual
vehicle owner satisfaction and communication for the long-term benefit of
their businesses.Progressive is either loved or hated by repairers. Those that love the
insurer cite the local claims manager as the reason. If this key local
insurance representative is reassigned, will the repairers be able to
maintain their relationship with Progressive? Will they want to? If not,
they could lose "Concierge" referrals with no opportunity to
secure a satisfied customer referral from their prior work.Finally, I must ask: When will repairers, their associations and their
suppliers become more active in building effective referral networks? They
have been slow to build and have had limited success in the United States
compared with those in other countries. A shop-owned and -managed network
would help move the balance back toward the repairer<\m>while
satisfying insurers’ needs for cost containment and cycle time
improvements. Perhaps, the moves by Allstate and Progressive will provide
the impetus needed for independent collision repairers to take a page from
a North American consolidator’s marketing book and those of shop
networks in Europe to implement their own marketing and referral network
programs.In talking with shops participating in the "Concierge"
test program, most have stated little concern regarding the loss of
customer contact and are highly satisfied with the program. Keeping their
repair facilities filled is their most important concern. But this
attitude is strikingly short-sighted.
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