Increase Your Customer-Pay Work
Insurance issues are causing an increase in the amount of customer-pay jobs in collision repair shops. Many consumers have larger deductibles compared to past years, and others simply don’t want to file claims with risk of premium increases. So some are choosing to pay out-of-pocket, says Steve Trapp, collision services development manager for DuPont Performance Coatings. But due to a lack of professional sales skills and techniques, shops are only closing on about half of those opportunities and missing out on substantial revenue.
Trapp discusses a basic selling process that all shops can implement to improve customer-pay closing ratios.
The frequency of customer-pay work has dramatically increased. In the past, customer-pay jobs comprised 10 to 15 percent of estimate volume in shops, and roughly 5 percent of total repair volume. That has ballooned to 30 to 35 percent of shop estimates, and 15 to 18 percent of total repair volume.
The industry average closing ratio on customer-pay estimates is only 53 percent. That’s very low. Unfortunately, many shops don’t realize how much room for improvement exists because direct repair insurance work has skewed their numbers. Shops might have an overall closing ratio of 80 percent and think they’re doing really well, but forget that a majority of those jobs are insurer-referred. Those repairs are usually slam-dunks with high success rates. But insurance referrals also cause shop estimators to become lazy from a sales perspective when handling customer-pay inquiries.
Shops need to develop sensitivity and professional selling skills to land jobs from that segment of customers. People do not like feeling caught in sales situations, and get turned off from shops when they feel taken advantage of with high-dollar estimates. The best way to close on customer-pay jobs is to practice an advisory-based sales tactic, in which shop staff becomes known as trusted repair advisors rather than salespeople.
The idea of advisory selling is to make repair recommendations based on each individual customer’s specific needs—safety, financial situation and personal desires—rather than writing the highest possible repair bill. Shop staff must learn to sincerely put the customers’ interests first, and offer excellent repair advice based on those interests.
The first step in becoming a trusted advisor is to treat customers with genuine interest, rather than another number standing in line. Spend time communicating with customers—offer amenities such as coffee and take them for a shop tour. Get to know the customer before heading out to assess their vehicle. It’s critical to have office staff who have the ability to understand and care for customers.
The next step in becoming a trusted advisor is to offer repair recommendations based on what the customer wants. Some customers might just want a functional vehicle in which the least expensive, bare minimum repair would be acceptable, while others might be willing to pay more for an insurance-quality repair that will last.
Offer several repair options for customer-pay jobs. That customer segment tends to be price-sensitive, so it’s detrimental to write the highest possible estimate and present them with one option. That’s what causes people to shop around. Instead, provide them with at least three options to choose from in a “good, better, best” format.
Consider a chip repair, for example. A “good” recommendation is to fill the chip with paint. The chip will still exist, but the filling will prevent rust. A “better” option is to blend paint within the panel. The panel will have improved appearance, but the fix will eventually wear away within a few years. The “best” option is to complete the full, proper repair and clearcoat the entire panel.
Spend time discussing the pros and cons of each, including warranty differences. Describe the various techniques and processes used for each option, and explain why there’s a difference in cost. It puts the ball in the customer’s court to make a decision based on their situation.
After developing three repair options, make your sales presentation using your computer monitor. Don’t print the estimate and hand it to the customer. As soon as the customer has an estimate in hand, they feel they got what they came for and perceive the interaction to be over. You lose the customer’s attention once the estimate is printed, and are left without an opportunity to thoroughly explain your recommendations. Instead, turn the computer monitor toward the customer. Sit down with them and go through each of the three repair options line by line.
Customers paying out of pocket make repair decisions within 48 hours after receiving an estimate. Schedule a call to action before the customer leaves the shop. Identify a specific time to call and follow-up with them the next day.
This process of advisory selling does require more skill and finesse from a sales perspective. It’s hard work, but shops that have done it properly now have customer-pay closing ratios between 77 and 85 percent. Your shop can be much more successful with implementation of the right techniques.