I’ve said that part of what I believe shops will need to thrive and not just survive in the future are what I call the Three Cs: CSI, closing ratio and cycle time. These are all terms we’ve all heard for years, but they’ve come to involve some different things than they had in the past. I explained about the new role of CSI in a previous column; now let’s turn to “closing ratio.”
What we’ve tracked for a long time in terms of closing ratio is the percentage of estimates converted into sold jobs. If you write 10 estimates and get six of those jobs, you have a closing ratio of 60 percent.
That traditional definition of closing ratio is still important if you want to thrive. Sales training for your front-office staff is a must. I also think one of the keys is simple: follow-up with customers after you write the estimate. I recently worked with one MSO on a follow-up program for estimates, and we actually captured 20 percent of their lost jobs.
But we all know it’s too easy for that follow-up to fall through the cracks. That’s why I believe you need to have a standard operating procedure in place, and one or more people responsible for that follow-up.
I recommend that if you write an estimate for a customer who doesn’t immediately schedule repairs, follow up with that customer in 24 hours If you can’t get them to commit then, follow-up with them again in three days and then again five days after the estimate. If you’ve made three attempts with no luck, then turn your attention elsewhere.
But moving forward, if you want to thrive and not just survive, I think you will need to think about “closing ratio” more broadly than how we have in the past. It’s not just about capturing jobs; timing can be equally important.
Those involved in direct repair programs know insurers are very much interested in how long it takes your shop to get an estimate started after you receive an assignment. The reason for this is interesting: The insurance industry has found there’s a direct correlation between how long it takes to get the claim handled and how much they pay out in bodily injury claims. If I wreck my car and contact my insurance company who in turn sends you an assignment but it takes you three or four days to get in touch with me, that’s time when my back or neck might start hurting. Reducing the time before my vehicle repair is in-process and done helps contribute to quick claims settlement, which generally reduces overall claims costs.
So just as you need a good standard operating procedure for estimate follow-up, you need a similar plan in place to ensure assignments quickly lead to customer contact and getting that estimate under way. Non-DRP shops that receive insurer assignments through one of the estimating system programs that allow that should focus on this as well.
I can tell you that best-in-class collision repairers are contacting customers within 15 minutes of receiving an assignment; they have an assignment-received to estimate-state-date average of just 1.4 days. So if you’re one of the shops (and I’ve seen many of them) that is taking four, six or even ten days to start an estimate after getting an assignment, you need to step up your game if you’re going to thrive moving forward.
(Don’t know your average? At least one of the estimating systems can provide you with the data for your shop and show how it compares to the market average.)
How can you hit those kind of numbers? First, make sure you have a standard operating procedure in place and a designated person to make that initial customer contact when an assignment arrives. This is why MSOs are turning to call centers. It’s not just for calling customer with vehicle status reports. Those call center are also jumping on assignments and getting those customers scheduled in for estimates.
This is why you also see more shops offering mobile estimating. If an assignment arrives and the customer can’t get in for an estimate, the shop can go to the customer’s home or office to get that estimate underway quickly.
Next time: The new role for “cycle time” in helping shops thrive.
