How To Break Up With Your DRPs
Shop Name: Schoonover Bodyworks and Glass Owner: Mike Schoonover Location: Shoreview, Minn. Staff size: 14 (16 pre-COVID) Monthly Car Count: 161 (198 pre-COVID) Shop Size: 14,000 square feet Average Repair Order: $1,458 ($1,675 pre-COVID) Annual Revenue: $2.8 million ($3.9 million pre-COVID)
Mike Schoonover, owner of Schoonover Bodyworks and Glass in Shoreview, Minn., recommends shops rely on direct repair programs “as little as possible.”
Schoonover’s shop, which was once heavily-reliant on insurance companies to send work its way, has now removed itself completely from four DRPs and is profiting like never before. Though it was difficult, Schoonover says he couldn’t be happier with his decision and anticipates other shops will follow suit.
Schoonover says in mid-2019 some 80 percent of his shop’s work came from DRPs. At first glance, that amount of business may look like a boon, but Schoonover says his lot was often full of non-drive vehicles.
“Our estimators would spend half a day taking photos, uploading them, and filing condition reports to insurance companies,” he says, “only to find out the car was going to be a total loss.”
Schoonover says he was conscious of the increasing amount of responsibility his shop was taking on from insurance companies. He knew something needed to change, but he was a part of four DRPs and leaving each of them felt like too big of a risk to take.
Schoonover says he knew for some time that being a part of a DRP was not his first choice, but he says the problems continued to pile up.
“The only new customers I got were vehicles that were towed in,” he says. “Over the years, insurance companies saw DRPs booming, so the shops took on more responsibility while insurance companies closed their claims offices.”
Schoonover says the negatives overwhelmingly outweighed the positives, but it wasn’t until a particular repair in July of 2019 that he made the decision to leave all his DRPs.
His staff had been working to replace a windshield on a vehicle and per the OEM repair procedure, the vehicle’s front-facing camera needed to be recalibrated to ensure proper lane departure warnings. Schoonover says the DRP with which the vehicle came in told him he could not charge for the calibration.
“Instead,” he says, “they told me it would be OK for the customer to drive to the dealer and have the dealer perform the calibration.”
He says he was infuriated that the insurance company would allow a customer to drive a vehicle that had not been properly calibrated, and therefore, was not safe to drive. And then, it happened again.
After an almost identical situation occurred, Schoonover says he called the insurance company, “went up the chain to get answers,” and what he found was that they simply did not care.
“I knew I could no longer affiliate myself with insurance companies that were entirely price-driven,” he says.
Schoonover says he made the decision to remove his shop from all of its DRPs in August 2019. The process took almost two months to complete from the time he told the insurance companies he was done, to when his shop finished its last DRP repairs.
In choosing to make the move, Schoonover says his shop had to find new ways to keep customers coming through its doors, and more importantly, coming back.
In order to remain profitable, Schoonover says he focused on improving the shop's closing ratio, investing in the latest technology and equipment, and marketing. He says he has an annual marketing budget of $45,000 and has increased the shop’s online presence by sponsoring a local podcast.
Even before he decided to leave behind DRPs, Schoonover decided to bring calibration work in-house. The shop in late 2017 began replacing outdated equipment, spending around $65,000 to bring ADAS calibrations into the shop, which he says in the end will be his biggest investment.
Schoonover Bodyworks and Glass can perform ADAS calibrations from start to finish, on-site. Schoonover says calibrations were a big selling point for him because, while they are becoming increasingly popular on newer models, they also ensure passenger safety, and that’s what his business is all about.
In addition to calibrations, Schoonover says he can now charge for other services that DRPs wouldn’t pay for, including administration and storage fees.
Schoonover says the shop has also focused on customer service. It uses Podium, an interactive management platform, and CCC ONE, an estimating tool. He says he replies almost immediately to any request that is submitted on CCC’s forum, which has helped increase the shop’s capture ratio. Also aiding the shop’s 80 percent capture ratio is its strong online reviews.
“We focus on educating customers and we are very honest,” he says. “I don’t offer cheap paint jobs.”
Before leaving the DRPs, Schoonover Bodyworks and Glass employed 16 people.
“We kept adding staff and equipment to make the insurance companies happy,” Schoonover says.
But since leaving direct repair programs, he was able to cut a production estimator, an apprentice body technician, a parts person, and a detailer. Now, with a staff of 12, the shop is providing the same quality of service with a smaller payroll.
Schoonover says his shop had a record first quarter 2020, with gross profits trending 20 percent higher than when it was in DRPs. He says numbers subsequently dipped due to COVID-19. Compared to the first three quarters of 2019, Schoonover’s gross profits on overall sales are up 2 percent for 2020. Parts gross profits are up 2.4 percent compared to 2019, and labor sales are also up by 1.3 percent.
The largest increase he says he’s seen is in miscellaneous gross profit sales, which increased almost 7 percent due to additional fees for materials, supplies, storage, and more.
Schoonover says he had been wanting to “rip the DRP Band-Aid for years.”
Now that he has, he says his shop is more profitable and that he sleeps better at night knowing his guys are the ones making the decisions when it comes to vehicle repairs.
“I would suspect a lot of independent shops will pull the plug [on DRPs] because their profitability will go up,” he says.
What started as a daunting task turned out to be the greatest decision for his shop and its customers, Schoonover says.
“I strongly recommend shops deal with their own customers and own their market, not the insurance company,” he says. “I’m happy we did.”