Rise to the Top

Sept. 1, 2020
If your unique differentiator is quality, you’re not alone.

What would happen if your business permanently closed today? Would your community even notice? This question, asked by Peter Thiel in his book, "Zero to One," has had my mind spinning recently.

I believe the question is worth a moment of pause and ponder.Businesses around us close all the time, especially in 2020. I’m sure you can think of a business near you that closed down recently. The first one that came to mind for me was a local deli/sandwich shop. I felt bad for the owners, and I will miss their chicken salad. But in reality, it won’t impact my life at all, there are plenty of other places to grab a sandwich for lunch.

A few years ago, my favorite sushi place closed for good. I am still heartbroken and I haven’t found a replacement. I used to eat sushi twice per week at minimum, and now it’s closer to twice per month, since that place closed down.

We need to become the sushi place.

So back to the question, would your community notice if your collision repair center closed, or would they just go to another shop in the area and not know the difference? According to Thiel, if that’s the case, you’re in a highly competitive business and that’s a recipe for disaster. Competition is good for the consumer as it adds choices and lowers prices. However, competition is not good for the business’s long-term prognosis or the bottom line. Competition as a bad thing is a foreign concept to me. I love competition. I played and coached college sports before I got into the industry. Competition is in my blood.

However, we now have a different type of competition in our industry, and it’s one I think is damaging. Currently there are too many competitive forces driving down the price of repair. There are a plethora of reasons that average severity should be on the rise, not decreasing. I know the industry has benefited from certain competition over the past decade or two. The lean movement was sorely needed, but I don’t believe efficiency is the No. 1 way to become more sustainable.

If we all keep doing the same thing, offering the same product to the masses, we will remain in a highly competitive environment, and that will make the struggle for survival constant. So, what’s the solution? Move away from a competitive product and toward a monopoly. The word “monopoly” has bad connotations. We think of the drug company that charges $10,000 for one treatment. So let me be clear: We need to move toward a monopoly. As a business moves toward a monopoly, the more people are willing to pay for its product. We do that by offering things other collision repair centers don’t.

I’m not talking about changing your product; I’m talking about making your business so unique that your community would miss it if it’s gone. Remember that sushi restaurant I mentioned? There are many sushi places in my neighborhood. But nothing was like that place in terms of quality and service.

What do you do that makes you so unique your customers won’t go anywhere else? Do you offer the highest-quality repair in your area? I had a very well-respected paint rep once tell me, “There are 35,000 body shops in the country, and they will all tell you that their quality is what sets them apart.” We know that just can’t be true. If your quality is what sets you apart, your community must agree with you.

Do you offer the fastest repair in the area? Amazon keeps selling more items because they can get them to us so quickly. Trimming your cycle time by one day less than your market average is not going to be enough to set you apart. If speed of repair is how you want to move away from a competitive market, I’d set your goal of trimming your cycle time by half.

It’s easy to convince ourselves that we are so unique and our customers know it. The likely reality, though, is that we are just another collision repair facility operating like our competition. If the market doesn’t see us as a unique business, then we’re stuck in heated competition fighting for every dollar. And the sad part is we will continue to work harder while not creating any valuable distance between ourselves and the rest of the pack.

Peter Thiel made another interesting point, that I strongly agree with, in his book. He said that businesses who are in a competitive environment lie to themselves and are convinced they are unique. He used the example of a new restaurant selling British pub food. There were no other restaurants in the area the offered that type of menu. The point is they were just offering lunch and dinner, the same thing that every other restaurant in the area was offering. Just because the food was different, didn’t take them out of a competitive environment.

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