How to (Almost) Pop Your Shop
Think about growing your business, and a shiny new building often comes to mind. Then, economic reality hits. With credit markets shot, it’s hard to get financing for such a project. Not to mention the hard facts about the collision repair industry: the number of facilities in the U.S. is shrinking, from 45,000 in 2006 to 41,500 in 2008, according to data from The Romans Group. The shortest route to expansion is acquisition, but for shops that lack the credit or capital for that, is growth possible? In short, yes.
Most repair facilities are like balloons, say experts. That is, shops can almost always take more capacity. FenderBender talked to some of the industry’s most knowledgeable experts to find out the hard truth about how to grow in a tough economy. Very few of them discussed buying or building a new location. Today’s growth comes from within, and stays within, your facility. When your balloon is truly about to burst, and when the recovering credit market makes it possible to raise capital or get credit, you’ll be ready to expand into a new location.
To grow until your shop’s about to pop, experts say to focus on three areas: getting your processes up to speed through training, boosting your customer service scores, and marketing all the great things you’re doing to get more customers through the door.
“Today, growth comes from some differentiation in the market from your competitors, and what’s truly differentiating is cycle time,” says Jim Berkey, director of business solutions for PPG’s MVP program. “It’s tougher than anything you face, but in order to get more business, that’s what you have to improve.”
While there are plenty of strategies for decreasing cycle time, investing in employee training is one of the best, says Jeff Peevy, I-CAR’s director of field operations. Shops that realize the importance of this step to improve processes such as cycle time are the ones that are growing. Those shop operators say they finally realize that “you don’t know what you don’t know,” Peevy explains.
A sure way to keep cycle time high is to ignore the need for training, for example on the new metals manufacturers are using in cars. If you want to grow in an industry that’s making technological leaps and bounds every year, rejecting training is not an option, Peevy says.
“You start working on a car, and after [that], you realize you don’t know how to repair it properly. You’ve already torn into the car, and you don’t have the equipment or knowledge to repair it correctly. You’re left scrambling to try to figure it out,” Peevy says.
In shops that have been proactive about training, cycle time is lower because those employees know how to fix the car right the first time, Peevy says.
Employees aren’t the only ones whose training positions shops for growth; operators and managers should learn how to improve processes, too. Brandon Devis, A-Plus Network program manager for Sherwin-Williams Automotive Finishes, says the shops he sees growing are involved in 20 Groups.
“Collision repairers that are coming together on a regular basis and sharing their knowledge and resources with one another, sharing their full financials, and are no longer sitting on an island and being on their own, those are the shops that are growing,” Devis says.
Devis tells the story of one 20 Group member who’s added square footage to his shop and has undergone a complete remodel of his offices. This shop owner not only went to a 20 Group meeting himself, he sent his managers to their own separate 20 Groups—without him.
“That helps build those managers to where they’re a real asset to the management team,” says Devis, noting that some owners will bring their managers with them to an owners’ 20 Group meeting, but that’s not as valuable. In a manager’s group, “they get the opportunity to really blossom without the owner being there.”
The next step in growth is improving customer service. “Closing ratios and converting estimates to repair orders should be almost 100 percent,” says Devis. “Customers shouldn’t be leaving your shop without you winning the keys to the car. [Otherwise, they’re] going to the competition.”
The only way to grow, emphasizes Berkey, is to take business from your competition. That’s why customer service is so vitally important to a growth strategy, says Devis. “If shops are stagnant in their growth, I think they need to take a deep look at themselves and their customer service from an outside perspective. Figure out a way to differentiate yourself from the competition.”
And quality of work, Devis says, is not adequate differential. “You have to be faster and have a better CSI and offer services that differentiate you from your competition.”
CSI is a tough game these days, with different customer constituencies requiring different things from a shop. CSI can be a balancing act between improved processes, such as lowered cycle time and customer needs. Berkey tells of a client shop that, over the years, had developed a reputation for letting customers drop off their cars anytime, with no warning. This was great for CSI, but sometimes resulted in longer cycle times when more cars than could possibly be processed were dropped off all at once. When this shop took on a large DRP account, the insurer wanted low cycle times, and the shop had to modify its convenient drop-off policy in order to keep cycle time in check.
“Getting most DRP work is dependent on reducing cycle time,” Berkey says. “So they had to reconcile their business model with this DRP relationship.”
The insurance companies running the DRPs are customers, too. Although that’s an unpopular point to make, shop owners who want to grow through DRP relationships—and it’s difficult to grow without them these days—need to balance insurer needs against old-fashioned walk-in customer service traditions.
Shops that want to grow can learn a lot from, yes, insurance companies about customer service. Devis cites the concierge services some insurers use to help customers involved in an accident. “They’re really focusing on showing compassion and empathy,” Devis says, noting that shops should take a lesson from that. “There’s not enough training going on in body shops as far as customer service goes.
Technicians go through a lot of technical training in how to repair vehicles properly, but when it comes to customer service, that’s where I see it lacking.” (For more ideas on improving customer service, see the online exclusive Insites article “Hot Areas for Growth” at fenderbender.com/insites.)
So you’ve got your processes up to speed, and your CSI scores flirt with 100 percent. Now, to really grow, you have to bring more customers in the door. “You can increase the capabilities of the facilities all you want, but you’ve gotta have cars coming in there,” Devis says.
Growing shops are using tried-and-true marketing tactics as well as new ones tailored to the industry’s current needs:
• Develop a marketing plan, says Tom Hoerner, VisionPLUS program manager for BASF. Start with a market assessment, an official, formal process that examines your customer base to determine where to best invest marketing dollars. “A marketing plan doesn’t happen with somebody just waking up one morning and saying, ‘I’m going to put up a billboard.’ Focus your attention on your customer base, and know where it is and what it is,” Hoerner says. Marketing in a community where you have 40 percent penetration, for instance, ought to be drastically different than in a community where you’re new.
• Targeted marketing to the four different generations of customers is a strategy for growth, says Norm Angrove, senior manager of value programs for PPG. Social networking is one strategy for many of today’s marketing driven shops. “We are seeing some facilities looking at outsourcing the task to Internet-savvy marketing folks rather than trying to get a handle on it themselves,” he says.
• Growth shops market themselves to win DRP agreements with insurers. And you do have to market yourself. “Insurance companies are saying, ‘If you’re not on our list now, and you improve your performance metrics, you have to somehow let us know if you want to be the next in line,’” says Berkey, adding that some shops are having success with creating a glossy marketing flyer—solely for insurance companies—to describe their improved performance metrics. “You have to give them a reason to think of you.”
There’s no one-size-fits-all marketing strategy, says Angrove. Each shop must come up with its own unique plan. “Identify where the opportunities are, taking into account the realities of the marketplace, and find out where the opportunities lie. There is no magic bullet.”
And finally, for all these growth plans, you must put them into action, says Hoerner. “It sounds simplistic, but the next phase for growth is to work the plan.”