As the new year begins, what strategies are you going to implement for 2007 and beyond to improve your business? I'm referring to increasing sales or market share, upgrading new equipment and even getting training and assistance.
I realize some wish to stay where they are and that progress, vehicle technology and business models should all stay as they are, but that simply is not going to happen. Every day someone will find a better way to do something, or determine they can benefit by operating their business differently.
When the business model begins to change it can be very uncomfortable. In the grocery industry in the 1960s and '70s, there were a great number of small stores across the country. The changes were hard when the "supermarkets" came to town. Many thought their customers would be loyal; mostly they weren't. Then "super-supermarkets" came in and the supermarkets were unable to compete.
Are small collision businesses doomed? No, but you must recognize changes or you'll have a hard time competing.
The customer-pay work segment has continued to grow significantly the last five years. How are you going after it? Financing options, promotions and special hours are all important. The ability to offer PDR, chip repairs and other alternate methods that will satisfy the customer's needs is critical. But, make sure your strategy provides a profit at the same time. Expanding service and product offerings also could be in your strategy if your market will support it. The key is to be truly customer-focused on their needs and not your wants. There's no, "If I build it, they will come" guarantee in America.
If you believe an insurer should only pay the bill and is not a customer, you must recognize it's not that way anymore. When a customer buys insurance, they're choosing a company to assist them through the perceived maze of vehicle repair.
So, if you plan to build stronger relationships with insurers, you need to understand their primary concerns and issues, which are cost, consistency and cycle time.
Cost will always be a key factor to insurers; they are in the business to make money for their stockholders. This is sometimes forgotten on our end, but profit is not a four-letter word.
Insurers attempt to follow key indicators tracked over time. Even though comparing severity straight across the board, shop to shop, is probably one of the stupidest indicators used, it's still a consideration. Costs also can be analyzed by the factors that control them — repair versus replace, alternate parts usage and paint to labor relationships. These, too, are misleading because they're often based on "what it is," and may not reflect the actual total cost or costs that have alternatives.
So what to do? As repairers, just do the right thing at the right time for the vehicle and the customer. Use the guidelines as guidelines and not as laws in your specific agreements. And, of course, document everything!
Consistency has been creeping up as a hot button for many insurers. For insurers reading this, keep in mind you cause most of the failures in this area yourselves. It's true there are several options available to ensure that agreed-to terms are followed. As shops, this is a key piece of technology and you will certainly need to improve these areas. But, when the rules change weekly, or differ between inspectors on any given day, there's no way to be consistent.
It is time as an industry to do something about this. As a shop, make sure you have the rules written down. This centralizes the rules so it is not just in one person's head. Otherwise, it's a nightmare when that person leaves, is out sick or on vacation, and you risk the loss of the account as a result. Software can be used to monitor this and profiles established in the estimating systems assist as well — but the rules must stay consistent long enough to record them.
Lastly, cycle time is critical to insurers. They understand that customer satisfaction is affected by the amount of time they are without their vehicle. Insurer costs go up as well, and then their reserves are excessive and investments are not maximized. Would you believe there are still shops that do not set target dates or believe they can? Keep in mind, as with anything, if you do not set a target to shoot for, you will not be able to hit anything — or even measure your effectiveness.
As shops, we are forced to guarantee completion dates. In order for shops to achieve better cycle times and be able to meet the expected target dates, the quality of the entire process must be improved. The vehicle receiving, estimating, pre-production steps (including parts), process of repairs (right equipment, materials and methods), quality of the hand-off process (QC) and communication will all affect the total cycle time. Breakdowns in any of these areas will adversely affect the target delivery date and cause cycle time to suffer.
For the most part, one of the greatest issues in improving cycle times is related to the supply chain. Being required to get a LKQ part shipped in sight unseen, only to find the one hour of damage reported must have meant it took one hour to create the damage, not to fix it, dramatically affects cycle time.
It's time this issue is recognized and consequences imposed on any supplier that doesn't meet expectations.When all parts are available when needed, and they're verified correct and in good condition, production is efficient, cycle time is reduced and the vehicle moves through the process almost effortlessly. Isn't this what we all want?
We must improve the supply chain's understanding of what we, as their customers, need — and then demand they deliver what our industry requires and the customer deserves. In 2007, if you work to improve this area within your market, I will bet your cycle time will improve drastically.
Creating your strategies for the future will take a commitment, and executing it will make your future.
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