Jeffrey's Auto Body: A Strategy of consumer awareness

This shop owner in North Syracuse, N.Y., is educating customers about their right to choose a body shop — and they're choosing his shop

If you happen to get put on hold when calling Jeffrey's Auto Body of North Syracuse, N.Y., you'll hear a message informing you about consumers' rights to choose where they have their car repaired. It's the same message the company has promoted in TV advertising since 1999 — and one that certainly has sunk in with customers. "Fifty percent of the people who come to us already know their rights as consumers in New York and know they want their car repaired by a company with no insurance industry ties," notes owner Jeff Lyman.

Lyman made the decision to pursue a strategy emphasizing consumer rights shortly after he reviewed his shop's financial results for 1998. "I had one of my best years in sales and I think I broke even," Lyman recalls. "At the end of the year, my accountant said, 'Your sales were great, but I don't know what happened.' It took about two weeks to figure out that our office cost was way over what it should be."

At the time, the company was on about six insurance company direct repair programs (DRPs) and had two office personnel dedicated to handling all the associated paperwork. Lyman advised the insurance companies that he would have to raise rates $2 per hour to cover the additional costs associated with their programs. In response, the insurance companies sent letters back saying they would have to sever ties.

As a result, Jeffrey's revenues dropped five percent to ten percent. In recent years, however, the shop has held steady on its revenue, which isn't bad news in a market like Syracuse that is losing population. Even better news for Lyman's business, "Today we repair fewer cars for more money," he says.

As president of a local body shop association, Lyman is very involved with legislative issues involving body shops. The organization recently commissioned an economic study of the New York state collision repair industry from 1977 to 2005 that generated some eye-opening results. As Lyman explains, "It showed that the labor rate, if it kept up with inflation alone, should be in the $57 range, and with additional expenses, it should be in the $85 to $95 range." But astonishingly, he says, "All of New York state averages $42 an hour." Lyman believes the unusually low rates are the result of unfair insurance industry control over the collision repair business.

Lyman has had some success in counteracting that trend, however, by using a New York state law to his advantage. When New York consumers bring their car in for collision repair, they are supposed to sign a document that appoints the appraiser to act as their designated representative to negotiate the repair with the insurance company on the consumer's behalf. For some shops, Lyman says, this is just a formality, as some insurance company programs leave little room for negotiation. But Jeffrey's takes the responsibility seriously — and uses it to its advantage. "We have a lot of success getting paid higher rates because of our ability to press the insurance company to negotiate and pay higher rates," says Lyman, who runs the estimating department himself. "We're not scared when they say, 'We'll find a backup shop' because as the designated representative of the claim, we have full control of the repair process. We are, in essence, the customer. If another shop agrees to do the job for a lower cost, they have to come back to us for a full inspection. We gladly ask the insurance company for three backup shops and we contact those shops and ask them to come over and inspect the vehicle at our facility and we show them why we're charging what we're charging. As soon as other body shops find out we're involved, they back off."

Lyman would like to see the laws involving the appraiser's role as the consumer's designated representative made even stronger. Noting that such laws currently have "no teeth," he says. "We're currently pushing for legislation in New York state that would penalize appraisers for not negotiating claims properly." He adds that such penalties could include the loss of an appraiser's license.

Another factor that attracts consumers to Jeffrey's is the company's rental car business. Noting that most insurance companies do not cover the full cost of a typical rental, Lyman says, "We use newer used cars so we're able to rent them most of the time for what the insurance company will pay for the rental."

The company also has a mechanical repair business. Although 90 percent of its revenues come from collision repair, the ability to do its own alignments, suspension work and frame repairs adds a measure of convenience.

Jeffrey's was founded in 1983 in its original location in East Syracuse and moved to its current location about five years later. Originally Lyman had a partner but he bought the partner out in 1999 and brought in childhood friend Todd Schmeiser to serve as shop manager, handling the duties that Lyman's partner previously had handled.

Although Schmeiser had never worked in a body shop before, Lyman says, "I knew he would be a great fit," noting that Schmeiser had a background in psychology, Lyman says Schmeiser has had a strong impact on employee attitudes. "We hire people for their attitude, not their ability. We don't look for people that have been in the business 20 years. We want people who can get along with other people and have a good work ethic. We have a human resources department within a small body shop."

With Schmeiser at his side, Lyman takes pride in his company's professionalism. "We still treat insurance companies professionally," he says. "As much as we don't like them, we treat them with respect."