MSO growth is often in the headlines these days, but there’s also a lot happening within MSO businesses as they respond to business conditions, changing insurer relationships and new vehicle and other technology. So as it has in the past, ABRN convened an “MSO Roundtable,” bringing together a panel to discuss some of these topics. Here are highlights from the discussion, which took place with the following panelists:
- Eric Horvath, co-owner of Legacy Autobody Group, which operates six CARSTAR franchise locations with 86 employees in Allentown, Pennsylvania, and the surrounding area.
- Ian Morton, owner of Fix Auto Tucson-Thoroughbred and Fix Auto Sierra Vista in Arizona. He has been in the industry for 27 years.
- Andy Tylka, second-generation owner of Tom and Ed’s Autobody, which has five locations in Northwest Indiana.
- Paul Vincent, co-owner of Advanced Collision, which operates two locations in South Carolina and a third one in Georgia.
ABRN: Let’s start with changes you made during the pandemic. Are there any that will stick? Are there things in hindsight you wished you’d done before the pandemic?
Andy: We’re doing monthly teams meetings with the managers. We never did that before. Having to do Zoom meetings or Teams meetings during COVID forced us to finally bite the bullet and do the same with video conferencing. In hindsight, we should have made sure all our production processes were being followed. We had slacked pre-COVID, like everyone does. The hardest part is sustaining processes, so this gave us the opportunity to make sure from ‘Day 1’ when we came back that we were doing all the right things again. I wish we had re-educated everybody on the processes, instead of realizing two months after we reopened that we were not doing them.
Paul: The biggest thing we’ve changed is how we advertise. We’ve had the conventional newspaper, Facebook. But we’ve really tried to hone in on the communities around us that drive our business. Anything from baseball teams, soccer teams, car clubs. We’ve even done parades now, local festivals. That seems to be doing a lot better for us than just regular old ads in the newspaper. It’s something that makes us stand out.
I agree with Andy on being better about keeping our processes in place. We had plenty of work, so if something got a little off-track, it was no big deal, we still had plenty of cars coming in and out. Once that volume shrunk, the room for error shrunk with it. The issues became glaring and brutal, to be honest. It really forced us to take a look in the mirror and set in stone the processes and the materials we use.
I think we’re going to come out of this much better than we went into it. It was a hard lesson to learn through COVID, but I think our business will be stronger for it.
Eric: The lesson for us was to get back to basic business principles. Don’t get lazy and complacent when things are going well and you get a hailstorm and a flush checkbook. Always have a healthy reserve so you can weather these types of storms. You never know when they’re going to happen.
We had a commitment to our employees all the way through that nobody was getting laid off, nobody was making less money. We had guys painting walls and cleaning, just to maintain that employee relationship. We found it was really important to do that.
Employees are like unicorns: You just can’t find them. So when these things happen, you really have to commit to…keeping your team intact. Remain positive because there’s so much negativity out there. You want to be that positive influence for your people.
Ian: During the pandemic, we started monthly calls with everybody on the team at each shop. I buy lunch, and we talk about what’s working, what’s not working. We went to a four-day, 10-hour schedule to make sure everyone had a Friday or Monday off, so they could be with their families without it costing them money. Heck, we didn’t have any work, so it didn’t matter to me.
In hindsight, I wished we’d been better at social and digital marketing. We had a pretty strong reliance on traditional in-person marketing to agents and dealerships. When they shut the doors, and were getting 10 times the emails they were before, that made it really challenging for us to connect with those agents and dealerships and service advisors. We’ve remedied that situation, but looking back, that’s what I wished we’d focused on before-hand.
ABRN: How about your relationships with insurance companies. What’s working, what’s not?
Eric: We participate in a lot of different direct repair programs, so we have those insurance partners we have to keep happy, and find that proper balance between our customers and employees and insurance partners. What I’d love to see them do more is allow the shop to manage the total cost of the claim. Like length of rental. Don’t question why a part is $30 more when we choose to use it because we can get it tomorrow, and keep that car moving, cutting the overall length of rental down by three days. Allows us to manage that process. We’re sensitive to the needs of the total cost of the repair.
Ian: A couple of insurance companies I work with have started to really pay attention to the OEM procedures. We pull those on every vehicle. It’s challenging as a shop owner to be put in between the OEM and the insurer. All we want to do is repair vehicles the right way. Safety above everything else. USAA is one of the insurers, at least in our market, that is starting to ask us about the specific safety inspection requirements, ADAS calibrations, and one-time use parts, and not fight us on what the vehicle needs, especially if it’s safety related. They’re saying they only want us to use OEM glass if there’s an ADAS system behind that glass. I like that. I wish more insurers were jumping on that bandwagon.
Paul: For us, it’s like roulette: It depends on the adjuster. The ones coming in-person that we’ve built a relationship with understand where we stand on OEM procedures, so it’s not much of a fight. The virtual ones? Much harder. Even when we provide them the documents. So that’s been the battle for us. The smaller and medium-sized insurance companies – AAA, MetLife, just to name a couple – if I show them the procedures, they’re good. No questions asked. That’s been nice.
Andy: With all these virtual estimates, we’ve realized that writing the estimate first and not waiting for the insurance company to write an estimate from pictures benefitted us. We’ve gotten in the habit of being able to submit the estimate to the adjuster. We couldn’t believe what a huge difference that made. Along with us training our staff on taking better pictures, and integrating video.
ABRN: On that subject, are there some new technologies, or new use of a technology, that you’ve implemented within your business in the past year or two?
Andy: Having links on our website for photo estimating for us isn’t a matter of writing accurate estimates; it was more about capturing the sale. We realized how many people going through insurance were interested in those types of estimates. So we used them to have a conversation with the customer before we would even write the estimate, to find out if they were going through insurance. If so, we’d just book them in for an appointment to write that first estimate at disassembly. We’re also almost done developing an intranet for all our staff to be able to access all our information: our SOPs, our passwords, our links. We’d been using multiple spreadsheets that were shared by everybody.
Ian: We found tools like BodyShop Booster to be very helpful. Like Andy said, the goal isn’t to write an estimate based on that system. It’s to get the customer in, drop off the vehicle, and write one sheet on disassembly. It helps us kind of triage vehicles through photos and video, and communicate with our customers via photos, video, text message. It’s allowed us to weed out some of the repairs that don’t fit our model, some obvious total losses, or some vehicles customers are driving that they shouldn’t be.
We also upgraded to a single-contact measuring system from Spanesi in our triage area. That’s been game-changing for us, being able to identify at disassembly the radiator support or apron that’s moved 3 or 4 or 5 mm, without having to put it on a frame rack or bench. Let’s say we have a vehicle hit in the rear, and we’re trying to check to see if the body panel is damaged. We can pull out the measuring arm and do measurements on that in five minutes. It gets used every day, multiple times a day, and we’ve been able to identify a lot more damage as a result.
Eric: One of the good things that I’ve found is tech logins to CCC. It allows the technicians to login [to CCC ONE] and add photos directly to a repair order. It’s great for in-process photos and documentation. As a DRP, we have to verify and document the repair, so having technicians have the ability on their cellphone to take a quick photo has been helpful.
ABRN: Let’s close with what you see as the biggest challenge facing your company in the next 12 to 24 months, and what you foresee doing to address it?
Ian: The biggest challenge that I think everybody is facing is talent, the ability to recruit new people into the industry. I always say if you’re not focusing on growing your bench, you’re going to be hurting. We’re lucky: We have a couple of technical schools in our area that we’re able to bring people in and start them off, coach them. They understand we want to grow, so they see the opportunity. We’re also focusing on OEM certifications. I think they’re going to become more and more relevant in how work gets to your store. I don’t think there’s been a tremendous amount of value in the OEM certifications so far, but as they start restricting more structural parts, I think they will become more valuable.
Andy: I really think we may have to centralize submitting supplements. This business has become so admin-heavy, that now we have to teach almost every employee at every location how to negotiate, prove proper repair procedures, and document. Another change we need to prepare for is knowing that total loss revenue isn’t going to be there anymore because total losses will be identified before they even hit our shops.
Eric: Our corporate office focus is on acquisition and growth. We’re finding it more challenging to find those targets that want to give us a yes. Or even a maybe. So we’re looking at brownfield, even at greenfield. All the opportunities available.
Paul: Like Ian, I feel like our biggest challenge is technicians, getting talented people. What we’re tried to offset that is an apprentice program. We set them up with a tool box, uniforms, anything they need to get started. If they stay and work for three years, it’s theirs. We have six currently. That’s been our saving grace this last year. They’re hungry and they want to learn it. We work with our local tech school. We go in and talk to all the students, either in mechanical or autobody or welding classes, just trying to show them what the possibilities are, the money they can make in this industry.
