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Cutting DRPs

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For a long time, Pat Weber struggled looking at invoices. Sales numbers, items sold, cycle time, touch time—he understood they were critical key performance indicators. He knew they determined the success of his shop, or, at least, they were how others would determine the success of his shop.

The issue, he says, was that he didn’t like viewing each vehicle as a pile of numbers, as just another entry for his profit-and-loss statement.

“Those are my customers,” he says. “The focus should be on each vehicle and what’s right for that particular customer. If you’re able to do that, and you’re repairing vehicles the right way—that’s what your business should be about.”

He didn’t want to cut corners, and he was tired of being asked to do so.

Since his shop, AutoSport Quality Collision Repair in Golden, Colo., joined two direct repair programs in the early 2000s, Weber had seen extensive growth in his business. But he also felt trapped by the expectations and number crunching of the insurance companies.

“The things they ask you to do when you get locked in with them, it’s like dancing with the devil,” he says. “I just felt, what they expected of me, it was compromising my quality, everything I stood for. I wanted to take back control.”

By 2009, he’d had enough. He dropped his DRPs, and sales dropped roughly 15 percent, from just over $1 million in 2008 to $850,000 in 2009.

The Backstory

It was maybe a little too easy to start a collision business when he first opened up AutoSport, Weber admits. 

“I probably didn’t have the experience to start up, but I did it anyways,” he says. “Hindsight is always perfect: I didn’t really know what I was doing.”

FULL BAYS, AGAIN: Business at AutoSport Quality Collision Repair initially took a big hit after cutting ties with DRPs, but a new emphasis on marketing ultimately drew in record sales. Photo by Crystal Allen

That was 1979, and Weber had to work furiously through the 1980s to keep his business going in Golden, a sleepy, foothill town 30 minutes west of Denver. 

“Everyone has struggles at some point, though, I guess,” he says. “It just took me a while to get comfortable running a business.”

Once he did, he says he was worried about getting complacent. His shop had slowly topped $500,000 in annual sales, then $750,000, and was starting to plateau in the 1990s.

And as his business changed, the industry did as well. Weber started looking at DRPs as a way to take advantage of the strong reputation he’d built and to bring in some guaranteed business.

He was approached by a number of insurers, but ultimately limited it to just two programs he felt would be the least intrusive.

His shop topped the $1 million mark shortly afterward, working under a new model that dedicated nearly 60 percent of the shop’s work to DRP jobs.

The Problem

It didn’t seem to take long before Weber started regretting his decision. Business had never been better—or more frustrating.

“When you get in these programs, they want their work to take up a good portion of your shop’s work,” Weber says. “They want that 50 to 60 percent workload coming from them, so you’re tied in. And that’s the way we felt: trapped.”

And Weber didn’t have the capacity to do much about it. His shop is 8,500 square feet, and he has nine employees. To keep the work mix large enough to make his insurance partners happy, he didn’t have the ability to bring in additional work.

He began to reach a point where he felt he had less and less control over his own shop.

“We were making more money, and we were doing just fine, but this wasn’t the way I wanted to be doing it,” he said.

He cut ties with the smaller DRP first, trying to gauge how it would affect his business. There was little impact, Weber says, as he was quickly able to make up the work with walk-in jobs he previously had to turn away.

As his business stayed steady for close to a year, Weber started getting more confident he could maintain his levels without his larger DRP, too. He cut ties with the insurer at the beginning of 2009. Within months, he knew it was going to be worse than he anticipated.

“This was right at the same time the economy really started to slide, so it was kind of a double whammy,” he says. “It was pretty obvious right away. Because we had relied on the DRP work for so long, we’d gotten pretty lax with our marketing. We just weren’t bringing in enough people to withstand that.”

Weber was able to make up some ground, but, overall, the shop’s annual revenue took a $150,000 hit.

The Solution

Sure, there were times when he wondered if he’d acted too hastily, Weber admits. “Maybe I was acting more on emotion than I thought I was.” Still, he was well aware that it wouldn’t be easy transitioning away from DRPs. It was a conscious choice.

It took him years to build his shop’s reputation and customer base, he says, and he now needed to do the same thing again, only quicker. The advantage he had this time around, though, was his shop’s stellar standing in the community.

He needed to leverage his reputation to get new customers, and he says he started with the basics.

Because he spent the last decade having work funneled to his shop through insurance companies, Weber says his business paid little attention to its web presence. He had an efficient website, but it did little to attract page views, and the business’s search engine optimization (SEO) was lacking. He hired a local SEO company to assist him, and he updated his website with an online review section through Customer Lobby.

STAYING TOP-OF-MIND: Pat Weber makes in-person visits to dealerships, insurance companies and mechanical shops in his area every two weeks, armed with cookies in branded boxes. Photo by Crystal Allen

He added in-shop practices to assist the effort, as well. He began collecting email addresses from each customer, and began emailing thank-you notes after the repairs were completed. With each note, he included a link to his review page.

As the shop’s web presence grew, Weber began focusing his marketing efforts to the other businesses in his community through an outside sales campaign. He started making in-person visits to various dealerships, insurance offices and mechanical repair businesses in the area, armed with boxes of cookies with his shop’s logo and phone number on them.

The boxes, he says, are from Collision Services. He buys the cookies at a local store, making the total cost roughly $5 per box, he says.

“The cookies are a great icebreaker,” he says, “and because we do it regularly—we make it to each business on our list every two weeks—they look forward to it.”

More than anything, Weber says, it gives him the opportunity to show them who he is, tell his shop’s story and, hopefully, gain customers through old-fashioned relationships and referrals.

The Aftermath

Even with the economy still slumping, Weber saw his revenue and car count rising over the course of the next two years. In 2012, sales topped $1.2 million, and his shop averaged 70 jobs per month—both highs for the business.

The numbers, though, don’t tell the whole story.

The shop has arguably the strongest SEO of any collision facility in the area, due in large part to the business’s stellar online reviews. AutoSport has more than 100 reviews with a total average of a five-star rating.

Weber has also been getting a steady stream of work from referrals from local dealerships and mechanical shops.

The Takeaway

AutoSport is a much stronger business today than it was five years ago, Weber says. And, maybe more importantly, it’s a business that Weber enjoys running.

“DRPs can be a great way to gain steady business,” he says, “but they’re not for everyone. You have to be able to run the business you want to run.”

He’s able to do that now, and he’s more successful because of that. Out of necessity, his shop has become more organized (they have daily morning meetings to go over workloads) and more focused on the quality and the service it offers customers.

“We can go back to worrying about what’s right for our customer and for that particular vehicle,” he says. “That’s what we make decisions on, and that’s what the business is all about—again.  

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