How to Thrive in Today’s Industry
FenderBender spoke to five industry leaders and asked one simple question:
What one thing must a shop do to be successful over the next five years?
What came out of it were answers to some of the industry’s biggest challenges.
Here are their five big ideas that will shape collision repair for the next five years.
BIG IDEA #1
Solving the Technician Crisis
Elainna Sachire, president, Square One Systems Inc.
Hiring, training and retaining qualified technicians is an enormous problem in the industry, Sachire says. But she has the solution—and it comes down to a team-based culture within your shop.
This is an issue that will be crucial moving forward for the next three years, five years, 10 years, even longer. And it’s not something that we say, We’ll worry about that tomorrow.
You should’ve been worrying yesterday.
This industry—everything we do—is going to be dependent on our ability to find, hire and train the technicians we need to properly fix today’s vehicles and the vehicles coming down the road. That’s not an easy task. The average age of the technician is getting older, and there are fewer and fewer people each year coming through trade schools and technical colleges.
That’s not the actual problem, though. The issue really boils down to how we view our technicians, and how we handle our overall operations.
Let’s get this out of the way: The days of the subcontractor technician are gone. I don’t mean it’s going away; it’s gone. This industry is getting more and more difficult for collision repair businesses, particularly for the independents with two- or three-location operations. Shops don’t have a margin for error anymore; the company has to be almost perfect to compete with large consolidators and MSOs. Because of that, they have to focus on a team-based cultural operating model, including pay. It’s the best way to promote efficiency, achieve key benchmarks and create a culture where everyone benefits from the betterment of the business. It creates an environment where the staff is working for the betterment of the business, making company-critical decisions, and that’s due to how the staff performs, how they are paid and how much involvement they have in the shop itself.
And it leads to how we will solve our technician dilemma.
We need to grow our own technicians, and the only way to effectively do that without hurting the business is by operating with a team culture and a system built around that.
First off, hire on personality; don’t put as much emphasis on experience and skillset as we always have. Find the person who is the right fit for your culture and whose attitude and behavior fits the position they’ll be put in.
This isn’t about dropping the techs you have—this is finding new employees. Once you have these people in house, provide the training. You’re molding this employee into the exact technician or painter or estimator that you’ve been needing. And working in a team system, your staff is helping set that example and helping that person reach an efficient point. They’re going to help bring that person along, and that new hire will learn more quickly being in that type of an environment.
Using old models of operations, a new employee—hired on personality rather than experience level—will drag down the business, but it won’t affect the rest of the staff. In a team system, they’re more apt to pick each other up.
It’s certainly not an easy task to switch your team to a team-based system, but it’s the only way I see as being able to be successful in the future.
If you always do what you always did, you will get what you always got. And that’s not good enough anymore. We’re not finding new technicians the way we always have. It’s time to start looking somewhere else.
BIG IDEA #2
Run On Numbers
David Byers, CEO, CARSTAR Auto Body Repair Experts
Byers explains how, as the industry changes around you, there is one thing that will remain the same: the importance of running your business based on key performance indicators (KPIs).
KPIs are king. They are clearly what drive incremental business in the collision repair industry today.
We’ve seen this evolution—all of us have—from insurance carriers in recent years. Some are at the forefront of this, other carriers are at the tail end, but they will all get there eventually. The vast majority of insurance carriers are moving to this data-driven method of decision making.
And our industry needs to fall in line.
It’s not just about the insurers, either. Running your shop based on numbers simply makes good business sense. This is a more sophisticated industry than it used to be, and we need to operate using more sophisticated processes—and more sophisticated data.
I travel the country quite a bit doing what we call industry update events. We do it all over the U.S., and we meet with independent repair facilities. What’s interesting these days is we find that many of them are not as sophisticated as they need to be about what’s going on in this industry. As an example, I’ll ask them about their NPS number, and many of them will look at me and say, What’s NPS? That’s the single most important number for most insurance carriers, your shop’s net promoter score: It’s a measurement of how many of your customers are willing to refer your business. Yet, too many shops don’t track it, let alone know what it is.
Consolidation is the future, and there’s going to be a lot more of it. We feel there will be just a handful of branded players left in this category in a number of years. So it’s important for independents to realize what is happening.
It’s not that independents can’t be profitable—but they have to work much, much harder to be profitable than a larger company. The big players have the advantages, but we see the advantage in the business owner that relies on his or her shop as their livelihood.
The reason our franchise model is successful, the reason CARSTAR is successful is our owner/operators, the blood, sweat and tears of the franchisee who owns their own business and will do what it takes to be successful.
This is these guys’ livelihood, and, in the end, it’s going to come down to this focus on KPIs and running their businesses by the numbers.
BIG IDEA #3
Own Your Customers
Byron Davis, owner, Auto Body Specialties
Davis’ Springfield, Ore., shop has had back-to-back years of record sales growth, and is on pace for a third. He says that the secret—for any shop—is simple: Turn each customer into a lifelong customer.
I had an epiphany a few years back. I was tired of working so hard, grinding out each week, month and year to just meet the bottom benchmarks I wanted in my business. It just sort of hit me one day: I decided that I was either going to find a solution, or hand-grenade this whole thing and close up shop.
You can guess which I picked, and we’ve made a lot of changes since that day. But if there’s one thing that has contributed to our growth and success, if there’s one thing that I would single out to any shop in the country to focus on above all else, it’s owning the customer.
That’s it; if you focus on that, build your entire company around that concept, everything else will follow.
Direct repair programs are a great way to bring in business—we have 11 of them. But customers can switch carriers; they do all the time. You can’t own an insurance carrier, but you can own that customer who switches. You build those ties with customers to where they switch carriers three times in three years, but they took their vehicles to you for each accident in each of those years, that’s where your success will come from.
It’s a lot easier said than done, though, right?
In 2012, we grew by 18.5 percent, we had 22.5 percent growth in 2013, and we’ve already broken some records in 2014. That’s organic growth without adding space or adding technicians. And, if anything, we’re spending less on marketing now than we did before. It’s just that what we are spending is calculated and focused on our top revenue generator: our current customer database.
You can spend a lot of money to bring in a handful of new customers, but if you really treat that current customer great and you keep in touch with them afterward, they’re going to refer people to you. That could mean three, four, maybe five new customers just from that first person.
We focus on our customer experience in the shop. We’ve created a culture of communication with the customer. We have a specific greeting process, a specific phone-answering process. We walk the customer out during delivery, and I go over everything with them—everything from the repair process, the things we did extra, our warranty and our post-repair survey and review system. Just from that last part, our Google reviews have turned into a huge new customer generator.
This simple concept has turned around this business. It’s the basis for everything we do.
BIG IDEA #4
Develop a Culture of Learning
John Van Alstyne, CEO and president, I-CAR
As vehicle technology continues to change, Van Alstyne says shops have only one choice if they’re going to survive: adopt a learning culture.
This industry is not getting any easier for repair facilities. I’ve said it before, but we are facing a tsunami of technology coming at this industry, and the only way to possibly handle it is to create a learning culture within your shop.
There are three key things that we’re looking at on the tech side of things.
The first is the proliferation of new models every year. We’re looking upwards of 70 new vehicles being launched every year. You could see it at the Detroit Auto Show this year, and the L.A. show, too. Companies aren’t slowing down the pipelines, and as each model comes out, there are new structures, materials and technical content. That adds exponential complexity to the repair process every year.
Then you have the impact of new regulations, like the CAFE standards, that will significantly change the way vehicles are made. As fuel economy requirements increase, the vehicles must change. And this industry will still need to find ways to repair them. The 2015 Ford F-150 shed 700 lbs by going to mostly aluminum. Vehicles like that are just the tip of the iceberg.
Finally, the third piece is all the advancements in driver safety—the significant amount of technology that’s prevalent throughout the vehicle. Sensors, cameras, advanced control systems that talk to each other and must be calibrated—how are we going to deal with that?
The answer is to adopt a learning culture. There’s no way to repair these vehicles and deal with this technology if you’re not up to date on the components of these vehicles and the processes required for repair.
So where are we as an industry? I-CAR has been around 35 years, and, from our surveys, less than a third of this industry actively trains its employees. Less than a third. For I-CAR, we have about 5,300 shops involved in our Gold Class program. In a short estimate of 35,500 shops, that accounts for only 15 percent of the industry. Granted there’s other training out there—really good training from the OEMs and some other places—but we’re still the largest training organization. And we only have 15 percent.
Our data shows roughly 60 percent of the industry hasn’t taken I-CAR’s basic steel welding training. Ninety percent haven’t taken our advanced steel sectioning program.
It’s great we have training available, but we have a lot of work to do. The industry needs to understand that to survive for the future and to be able to repair the vehicles that come in our doors today, tomorrow and in the future, we have to train and educate ourselves. We must have that learning culture—or we’re not going to survive.
BIG IDEA #5
Set Your Own (Correct) Standards
Aaron Schulenburg, executive director, Society of Collision Repair Specialists
Stop waiting around for industry-wide repair standards. There isn’t an excuse for incorrect repair procedures, Schulenburg says. It’s time to take matters into your own hands.
There is a lot of talk in the industry about bridging the gaps in OEM repair information. It’s something we at SCRS are working on, something I-CAR is working on, something manufacturers are working on—a lot of people are working on this.
Everyone ultimately would benefit if every manufacturer provided structural repair documentation on every vehicle, and make it readily available to the industry.
And that’s a great cause, but what about the many OEMs that are already producing the information and making it readily available and accessible for the industry? Despite the availability, in many cases, our industry seemingly allows outside factors to influence how the vehicle is repaired. The consumer deserves assurance that when their vehicle is fixed, it is fixed in accordance with the available information.
There are repair facilities out there fixing cars the right way and who have adopted this culture of setting the standard for repair by adhering to the OEM procedures. But those people are in a marketplace that competes against itself: The shops not meeting those standards, or doing substandard repairs based on a lack of knowledge, make it harder and harder for those doing it right to get properly compensated for their work.
If there’s one thing this industry can do to stop this—one thing shops can do to be successful—it’s adopt a business model that puts the proper OEM repair procedures on a pedestal in their shops, and make the information, training, and equipment available to their technical staff to accomplish this.
There are so many resources out there in the industry that provide this information, whether it’s direct from the OEMs, through companies like ALLDATA, through I-CAR, or things like oem1stop.com or the OEM Collision Repair Round Table.
There is nothing that builds more confidence in a brand or a business than knowing that their final product rests on a foundation of adherence to the highest standard of repair with an emphasis on consumer education.
Repairing vehicles the correct way, you’re going to encourage quality-minded consumers to come through your doors and create a profitable business that raises the ceiling of industry expectation. In our members’ eyes, the key is to embrace the specialized craftsmanship that comes with being an expert in your field and be uncompromised in your focus on protecting consumers through properly executed repairs.