Building a diverse customer base

Nov. 3, 2014
Diversity in the customer base at your shop is a key to business success for collision shop owners and managers.

There is an old saying that all of us know: “Variety is the spice of life.” That saying may be true with regard to certain aspects of life, but a slight variation is more in order with regard to the collision shop owners and managers: “Variety is one of the keys to success.”

By variety I mean diversity in the customer base that you build as your shop grows. This diversity could be varied Insurance company relationships, different economic class customers, different age groups, geographical differences, or even different types of repairs. As you can see, many different aspects can make up diversity in your customer base.

Expand your services
This industry offers a large amount of opportunity for all of the collision shops in any given area. Specialization of any type reduces the amount of available work in that area. What I mean is if you advertise or market yourself as a paint shop, you will likely work on, or at least attract, customers looking to do complete repaints on older cars, or dealer work, something along those lines. Although you may be capable of doing anything, especially collision, your marketing efforts have minimized those abilities, and pigeon holed you to only a segment of the available work, leaving the remainder of potential repairs to go to a competitor.

I want all the work I can get. My guess is you do as well. It isn’t good business to narrow the potential work that is available to you. If you further understand your close rate or capture rate is probably around 60 percent, you are really narrowing the chances you have for success. Simplistically, the average close rate for most shops is around 55 to 75 percent. Having narrowed your potential by marketing your shop to a smaller customer base, you stand to capture only 55 percent to 75 percent of that already narrowed potential sale. It doesn’t make a lot of sense to me.

There are the occasional shops that specialize in custom cars or restoration. That is a whole different animal, and doesn't apply to the normal collision shop. These are highly specialized operations that are really difficult to be successful in.  

It is important therefore, to be open to, and to market yourself as being able to do any type of collision related repair,  or painting. By doing so, you will have the ability to at least consider and “bid” for any type of work, allowing you to make decisions about what you really want to do on a case by case basis. For example, you may have a customer come into your shop looking to repaint an old limo. You write an estimate for ten thousand dollars, but know it will be difficult to finish in the time frame the customer needs it in. If you need the work badly, you might consider doing the job, and reshuffling other work to accommodate the date range. If you’re swamped, and cannot get to it, be honest with the customer. They may opt to have you do it anyway, just because of your honesty. They may also not leave the car, and go somewhere else. Either way, you might not have gotten the opportunity to even quote the repairs without opening up the possibilities in your marketing.

Also, you should consider doing value added services, like bed liners, custom stripping or window tinting. You don't have to actually perform these services yourself, but offer them to your customers, and sublet the work, through your shop.  Performing many different aspects of collision repair and painting will bring more  potential customers to the door. Try to become a one-stop shop.

Grow your list of partnerships
I am a huge proponent of diversification in the partnerships you develop with direct repair insurers. I currently work with at least 15 different DRPs. I know that sounds difficult, and it is, but being organized and understanding each different companies requirements, will keep you on track with each one. One great thing about working with so many companies is that you are exposed to many different types of customers. Someone that was hit, or is a claimant with one insurance company, may wreck again later, and come to you with the loss; based on the level of service and repair quality you provided them as a claimant. You may then have an opportunity to repair a car you probably would not have seen without this relationship.

Also, it is highly unlikely that every Insurance company you have a relationship will be slow at the same time. We all know that our industry has inherently an element of seasonality to work volume. In essence, work flow fluctuates up and down all the time. Although most companies experience spikes and slow downs at similar times, its almost impossible for all of them to be slow at the same time. When one company is down, the other ones may be up, keeping your work-flow more consistent. 

I think you should explore every DRP potential available in your area. This will require a little bit of original thinking. Fleets, ambulance companies, construction companies, cable installers, municipalities, are all fair game. Generally fleets offer programs for vendors that operate much like a DRP, but cost a percentage of the sales to stay in the game. Not all these companies are right for every shop, but I suggest an application be tendered, and then look at the details of the program, and then analyze the fit. Payment terms may be too long on some of these, affecting cash flow, so choose wisely. Again, you can always say no to the job, but at least you are getting the work to your door. Again, this goes back to exposure, and marketing. A fleet customer on a corporate repair, may become a customer for life, if you service them well. They will also tell all of their family and friends about your shop as well. I actually have long term customers originally introduced to us by a construction company contract that we enjoy. Basically, you have to look at these types of repairs with an open mind, and realistically. The repair process is still the same — you are fixing cars. 

Align yourself with others
There are tons of automotive related businesses available to the consumer. Used car lots, new car dealers, parts stores, muffler shops, independent mechanical shops...the list goes on forever. All of these shops, at one time or another, encounter customers that need collision repair, and on the converse, you run into customers that require the services of one of these other providers. Why not become partners and kind of scratch each other's back through referrals?

Think about this for a second. If you align yourself with a high-line import new car dealership, (provided you have the capability to repair these types of cars) are you not also expanding your customer base through economic class? Most high-line owners enjoy greater economic freedom, and can generally afford to get repairs done when others cannot. Most dealers do not have collision shops these days. However, many consumers drive right to the dealer when they wreck or damage their brand new baby. Why not have the dealership referring you, instead of the guy down the street? This is an area of huge untapped potential, especially if there aren't any or many opportunities for a DRP in your area. These relationships are sometimes difficult to maintain, as other shops try to undercut your pricing. Many dealerships are easily swayed by promises and price, so operate always from a standpoint of quality and integrity. It will win out over price in the long run. My shop gets work every day from several dealers, a few mechanical shops, our paint jobbers, and a couple auto parts stores. All of these referrals I would not normally get, if they were not coming from these sources. Once again, by working through these channels, I am  growing my customer base.

 Embrace technology
We have all been a part of the explosion in technology over the past few years. Some of us have looked at changes from afar, and some of us have been active participants. Embracing technology allows you to grow through its use, and with it. Younger consumers love technology. If you show your acceptance, and utelize all the technology has to offer in the collision industry, younger customers will gravitate towards your shop. I recently spoke with AudaExplore, about the programs they have developed utelizing technology to help grow your customer base. They offer a myriad of innovative programs designed to help you in this regard, that don't require a huge investment on your part. AudaExplore is a leading data-driven solution provider to insurance carriers, repairers, dealerships, fleet owners and suppliers. In order to build a diverse customer base, you have to provide an exceptional customer experience. These products help you do that through technology.

Others, like Frank Terlep, have been working in electronic marketing for years, and again offer tons of ways to grow through social media, and electronic methods. If you would like to contact Frank, or a represenatative from AudaExplore, email me and I will get you contact information for both. 

Make no mistake, to expand and diversify, you have to market your shop to every class of customer. That's how the diversification happens — through marketing. The awareness in each group has to be heightened by what you do as a shop owner an manager to cause it. Hoping for additional customers from the country club doesn't get it done, but marketing to that segment will. If you want to work on garbage trucks, go after a garbage truck account. If you want to do Rolls Royce, then pursue them as well. ACTION is what will get it done. Every customer wants the same thing; a quality repair for a fair price. If you prove you can do that for all segments of your potential customer base, your going to need a bigger shop. Here's hoping you need one soon.

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