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Changing the repair facility business model

Tuesday, August 7, 2018 - 07:00
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ATLANTA — As the collision industry continues to evolve, new business models are being considered that could change how shops interact with their industry partners and consumers.

Left to right: McDonnell, Irish and Stabler

Matthew McDonnell, owner of Big Sky Collision in Billings, Mont., presented “Future proofing collision repair” at the quarterly Collision Industry Conference meeting, this one in Atlanta at the Georgia World Congress Center, held in conjunction with NACE Automechanika 2018, Aug. 7-8. McDonnell, a member of the Insurer/Repairer Relations Committee, and panelists Doug Irish, president and CEO of AccuracyDriven4, and Randy Stabler, owner of Pride Auto Body, reviewed three potential collision repair facility models that could take hold moving forward.

With 80 percent of adults in the United States owning a smart device, there are opportunities to be leveraged to improve your overall customer experience and repair process.

There are advantages to leveraging mobile devices, including the ability to leverage still pictures and video. This can help shops to triage vehicle damage and complete an initial damage assessment faster. Mobile device usage also offers increased connectivity with the customer. We can use smart devices to deliver status messages and receive customer experience feedback.

However, the mobile device trend does offer some disadvantages. It may take a larger monetary investment to equip your shop with the devices, applications and technology needed to leverage the opportunities available. You also need your staff to adapt to these methods and buy in to their benefits. Bad photo and video quality can be problematic, and the customer is always a variable for standards in this process. Their ability to communicate, take photos, etc. will impact their overall impression of service and satisfaction.

Also, mobile communication cannot be your sole method of interaction with customers. Legacy engagement processes must be maintained and utilized based on customer preferences.

OEM-specific locations
In certain metropolitan markets, advantages of scale could be achieved by creating repair facilities dedicated to a single manufacturer.

There are the potential advantages of improved repair quality, improved cycle time and improved customer experiences. There is less, but more focused training on a particular OEM vs. all brands. This would mean fewer specialty tools and equipment as a repair facility would only need to be outfitted for a single OEM. And this method supports specialization and space needed for certain repair procedures, including scanning and calibration. This would also build strong alliances with dealers.

However, this method requires a major metropolitan market in order to operate, and a high repair volume would be needed to sustain the model. This may require vehicle pick-up and delivery to expand the customer reach. There is a dependency on insurer cooperation, and it may force a change in DRP referrals in order to ensure certain nameplates are going to the proper facilities.

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“There are a lot of efficiencies to be gained and training requirements would be much more streamlined,” said Stabler. “But everything has risk exposure. It is a more efficient model, but there are some structural challenges there.”

Large “off-retail” locations
Today’s technology, shared economy and changing customer expectations will allow a collision repair facility to expand in a local market without relying on having multiple locations. Large, off-retail locations can use crowd-sourced pick up and delivery to reach an expanded customer base while providing concierge-type customer services.

The advantages of this model include a lower, fixed cost and greater process consistency. There could be fewer front office staff and efficiencies to other stakeholders including parts suppliers and insurers. There would also be fewer locations for parts distributors, and a savings to the repair partners in terms of discounts based on volume orders.

“From a cost perspective, it is one of the best ways to expand your business without expanding that expense, headcount and that footprint. It is a great way to service the customer in today’s market,” said Irish.

However, the method is not without its potential drawbacks. It could mean larger towing expenses and new costs and logistics considerations associated with a valet pick up and delivery program. Shops would have less walk-in work due to less retail space, and customers would have less visibility to the repair process. Employee commutes could increase, and traditional productivity incentives would need to be reviewed.

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