Knight on Beyond the Numbers: Why Labor Rate Surveys Don't Matter

Feb. 29, 2024
They fall short in capturing the essence of an exceptional repair shop and benefit only the insurance company.

In the world of auto collision repair, there's a constant buzz surrounding labor rates. It's a topic that often dominates discussions within the industry. Labor rate surveys are frequently conducted and scrutinized, with many believing them to be the ultimate benchmark for measuring the quality and value of auto body repair services.
However, delving deeper reveals that these surveys, while providing some insight, often fall short in capturing the true essence of what makes a repair shop exceptional. Here's why labor rate surveys don't matter, in my opinion.

Which Party Benefits from the Data?

First, it's essential to understand what labor rate surveys entail. These surveys typically involve collecting data on the hourly labor rates charged by various auto collision repair shops within a specific geographic area. The only goal that I see for this data is trying to use it to entice an insurance company to pay the shop. However, it has been proven repeatedly that insurance companies couldn’t care less…unless the data benefits them. Besides, if you are trying to get an insurance company to pay your charges, then you are asking the wrong party! While this information can be helpful in identifying trends and establishing a general pricing range, it fails to account for numerous factors that significantly impact the overall repair experience or the shop's actual ability to repair the vehicle correctly.

What Surveys Overlook

One of the most critical aspects overlooked by labor rate surveys is the quality of workmanship, equipment, technician training and even the quality of paint and materials provided by each shop. Auto body repair is a highly skilled profession that requires expertise, precision, and attention to detail. A shop may offer lower labor rates, but if the quality of work is subpar, it can result in costly rework and dissatisfaction for the customer. Conversely, a shop with higher labor rates may deliver superior craftsmanship, ultimately saving the customer time and money in the long run. It could also work in reverse order. Thus, prioritizing quality repairs over cost is paramount when assessing the value of auto body repair services. We all know that insurance companies use “labor rate” as the basis to determine if a shop charges too much, but labor rate is only one aspect of the cost of a repair.
Furthermore, labor rate surveys often fail to consider the level of customer service provided by repair shops, known as the “Repair Experience.” A positive customer experience can greatly influence perceptions of value and satisfaction. From the initial inquiry to the completion of repairs, interactions with knowledgeable and courteous staff can make all the difference. Factors such as clear communication, transparency, and timely updates contribute to a positive overall experience. While these elements may not be quantifiable in a labor rate survey, they are invaluable in fostering trust and loyalty among customers.

Surveys Don’t Capture the Full Scope of a Shop’s Services and Capabilities

Another limitation of labor rate surveys is their inability to capture the full scope of services offered by repair shops. Beyond hourly labor rates, shops may provide additional amenities such as complimentary vehicle inspections, shuttle services, or assistance with insurance claims. These value-added services enhance the overall customer experience and contribute to the perceived value of choosing a particular repair shop. Thus, focusing solely on labor rates overlooks the broader spectrum of benefits that a shop may offer.
Moreover, labor rate surveys do not account for the expertise and specialization of technicians employed by repair shops. Skilled technicians with advanced training and certifications command higher wages, reflecting their expertise and proficiency in performing complex repairs. While their labor rates may contribute to a shop's overall pricing structure, the value they bring in terms of technical competence and problem-solving capabilities cannot be understated. Customers seeking peace of mind and assurance in the quality of repairs understand the importance of entrusting their vehicles to skilled professionals, regardless of labor rates.
Additionally, labor rate surveys do not address the impact of investments in technology and equipment made by repair shops. State-of-the-art tools and machinery enable technicians to work more efficiently and effectively, resulting in faster turnaround times and higher quality repairs, thereby lowering claim cost in essence. While these investments may lead to slightly higher labor rates, they ultimately benefit customers by minimizing downtime and ensuring the longevity of repairs. Thus, considering the technological capabilities of a repair shop is crucial in evaluating its overall value proposition.

Why Your Participation Benefits Only the Insurance Company

Some years ago, my daughter was hit by another driver. The insurance company wanted to speak with my teenage driver and get a recorded statement. I took the call and refused to allow them to speak with my daughter or to allow a recorded statement.
Why? Because the information they would have obtained would have been solely for the benefit of the insurance company. The same applies when you participate in an insurance company's labor rate survey! You don't get to see the results and they will use it against you as they need to. Insurance companies have also been known to manipulate the data!
Twenty years ago, we worked with a programmer to develop a labor rate survey website known as www.realratesurvey.com. We had spent a lot of time and money developing that site, and just before its release I attended a body shop conference where I met someone smarter than me. I considered his opinion and paused on releasing that site…after a few weeks, I changed my mind about surveys and canceled the website's launch all together.

Why Does a Survey Matter?

In conclusion, while labor rate surveys may provide some insight into pricing trends within the auto body repair industry, they fall short in capturing the myriad factors that define a quality repair shop. From craftsmanship and customer service to additional amenities and technician expertise, there are numerous elements that contribute to the overall value proposition offered by a repair shop. Instead of fixating on labor rates alone, consumers are encouraged to prioritize factors such as quality, customer service, and technical proficiency when selecting an auto body repair shop. By doing so, they can ensure a positive repair experience and lasting satisfaction with the results. Lastly, if you determine that your shop needs to charge $80 an hour (for example) to make ends meet …and you participate in a survey and the “survey” says the average rate is $65… Are you going to lower your rates? Assuming you say no…then why does a survey matter?

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