Collision repair shops have been feeling the financial squeeze of shrinking margins and higher operating costs. But there are a number of ways for repairers to boost their profitability — if they can look beyond their core business of fixing collision damage.
In their Thursday afternoon presentation, “Closing Customer Pay Business,” Mike McDonald, national training manager at Sterling Collision Center in Natick, Mass., and Jean King, Sterling’s national accounts manager, outlined ways that shops can boost their revenues through better upselling and providing ancillary services.
“We have customers that come into our stores on a daily basis, and it’s expensive to get them in there,” McDonald says. “If they have needs other than just getting their collision damage repaired, then there are opportunities for us to sell other services. As an industry, we need to diversify and quit thinking about the business that we’re in as just a body shop that fixes collision damage or paints cars.”
According to McDonald, repairers have to be able to identify and qualify customers based on their needs. “If you can determine their other needs, then you can suggest things to them,” McDonald says. “With older customers driving older vehicles, security is important, so you can offer new batteries for sale, or battery testing services. Younger customers might be interested in pin striping.”
Other possible services that shops could offer include cleaning discolored headlights, detailing services, glass replacement, headliner repair, bedliners, wheel alignments, upholstery repair or window tinting.
“You have to be observant and look for opportunities to sell new services,” McDonald says.
He also pointed out that it’s not necessary to offer every service in-house. There’s money to be made by acting as a referral agency or outsourcing particular types of services.
“You can make money by subletting,” McDonald says. “In fact, I don’t encourage shops to start installing alarm systems or stereo systems. You can set up a relationship with a vendor that does that work, and you can both benefit from the mutual referrals.”
Paintless dent repair offers another opportunity for shops to capture extra business. “Often it’s much cheaper to have paintless dent repair done than to paint a panel,” McDonald says. “If a front fender or bumper is being painted, and you’re not getting into blending the door, you might be able to upsell them on paintless dent repair. Even if you have an outside vendor doing that, you can take a reasonable mark-up, make a profit and provide better service for your customers.”
This approach to increasing profitability will require shops to train their employees in effective sales techniques.
“One of the things we suggest is sending employees to sales training seminars and events,” McDonald says. “Selling is not hard. You just need to know how to read people, and understand their wants and desires. We need to quit thinking about the business as just being a body shop. It is a retail outlet. Customers have a lot of needs, so why shouldn’t we capitalize on those needs? If we don’t, they will go somewhere else to get them met. If we can capitalize on that, then we can profit from it.
“The claim counts are going down for insurance companies, and when that happens, the number of vehicles we have to work on goes down,” McDonald says. “We need to make the best of the opportunities we are given. We can’t just sit back and wait for the body jobs to come in, because they may not be coming.”
