Building business growth and survival in 2012 and beyond
I have spent a lot of time recently working with collision shops and industry groups on collision shop profitability and survival in 2012. Several key concepts keep finding their way to the top in every market, with every group. Times are tighter, and competition for every collision dollar continues to put pressure on the bottom line. How do we succeed and grow in the face of all the challenges that our industry faces?
I am going to highlight a few things that appear to be consistent across all shop sizes and locations. First, you need to own your customer: remember that experts say that one individual has influence over 4.2 cars owned by family, friends and co-workers. In addition, the latest industry numbers show that 87 percent of repairs come from repeat business or a referral. Considering this information, when was the last time you asked for a referral, marketed to your customer database or reached out to your customers' friends and family?
With collision repair numbers in the United States starting to rebound, and reported accidents up for the first time since 2008, the average repair order amount is moving up slightly after several years of small declines. Yes, people are driving a few less average miles due to the economy and fuel prices, but we do have more people driving. Will this be enough to reverse earlier negative trends?
I have been writing about using the estimating process as a closing tool while also building a profitable gross profit margin into the repair plan. I believe the two tasks are not on opposite ends of the same spectrum. To get your customer's car keys and land a repair job, you need to build value for both your personal "brand" and your organization as a whole. Simply put, you need to convince the customer that you are their best choice to care for them and their car.
This is the part of the collision estimating sales process I personally thrive on – building value in my organization for my customers. Estimators need to know how to mix the art, science and sales of collision repair in order to gain the customer's confidence, while getting their vehicle safely back on the road and building a life long client at the same time. Try and remove cost as the primary deciding factor by educating the consumer. After all, if all other things were equal, price would be the only deciding factor, But how often are all things equal in life?
On the face of it, all automotive collision repair work may seem the same, but you and I know that's not true. Who is going to explain that to the customer if you don't? Will all customers care how collision energy management works? No, but they will care if repairs are not done properly and if they could be putting their loved ones or themselves at risk.
Take a look at how you build an estimate and how you charge and document each procedure that protects the car owner's safety and long-term vehicle value. Could going back to the basics not only build a better and more profitable repair plan but give you the tools to get more keys? Remember that our industry is complex and what you do every day is a mystery to most of the people who walk through your front door. Think about why cars today are safer and the fact that the average economy car in 2012 is loaded with advanced metals, electronics and construction techniques that just a few years ago were limited to high-end luxury cars.
With the frequency rate for the average driver involved in automobile accidents continuing to rise from once every eight years in 2006 to once every nine years today, I hope my advice in this column illustrates the need to capture and cultivate every customer interaction as a major driver of not only your shop's growth, but also its survival.
Remember that you have the tools available to retain more customers in your front office toolbox, but you need to remember to use them for more than just writing an estimate: use them to get the keys.
Richard Forness is national account manager – West, for Audatex North America. He has 19 years of experience operating repair shops.