As the business of collision repair continues to evolve, shop owners and industry consultants cite a number of management trends and techniques they see as keys to success in the coming years. Although none of the techniques are new or revolutionary, they either have not been widely used in the industry or, in some cases, are a return to business basics from which some may have strayed.
Negotiating more effectively
The change in State Farm's direct repair program (DRP) over this past year has led many shops to work to renegotiate other DRPs in hopes of not having to extend discounts to State Farm.
But Stacy Bartnik, director of field service for Carstar, said that is far from the only negotiating that shop owners must do today as part of managing their business. The shortage of qualified technicians, she pointed out, makes negotiating to hire and retain quality employees an ongoing need. And downward pressures on costs mean shop owners regularly need to negotiate to ensure that they are getting the best combination of price, quality, and service from their vendors, she said.
Bartnik said that because of those trends, she sees an increasing interest among shop owners in honing their negotiating skills. She offers this advice for using negotiating more successfully in managing your business:
Always think long-term. "Negotiations, if done properly, can build stronger relationships, and that's what you want to do," Bartnik said. Being overly aggressive or ruthless, or not bargaining in good faith, may bring short-term benefits but can destroy the longer-term opportunities you have with those on the other end of the agreement, she said.
Be prepared. There are a number of things with which you should walk into every negotiation, Bartnik said.
"You need to know your position: what your goals are, what you can offer, how it will benefit the other party, what your limits are, what you are willing to give up in order to get what you want," she said. "If you don't know your limits, you won't know when to walk away from a negotiation."
You also need to know as much as you can about the other party: their limits or goals, what's going to push them, etc.
You also need to know as much as you can about the other party: their limits or goals, what's going to push them, etc.
"That's part of why negotiating is about building relationships, because the more you negotiate with someone over time, the more you know about them," she said.
– Listen. Don't let your preparations lead you to prejudge a situation and presume you know exactly what the other party wants, Bartnik cautions.
"If you look at successful negotiators, they listen more than they talk," she said. "So stop talking and start listening. You will probably learn something."
Listening, she said, will help ensure that you have a clear understanding of what the other side is looking for, a key to making negotiations a win-win. She cites the example of a customer who comes back unhappy about something with his or her repaired vehicle. You can immediately cite a laundry list of the things you are going to do for them, or you can ask them what they would like you to do to address the situation.
"Probably 90 percent of the time, people will ask for less than what you're willing to offer them," she said.
– Don't take it personally. Always uncross your arms and legs when negotiating, face the speaker and make eye contact, Bartnik advised; this communicates openness and a willingness to negotiate honestly. If you feel yourself getting emotional, ask to take a break or move on to a less difficult negotiating item and cool off before returning to the sticking point.
Selling more powerfully
As executive vice president of True2Form Collision Centers, with 38 locations in four states, Clark Plucinski has a higher volume of work than most shop owners around the country. But Plucinski said one trend he's seeing cuts across shops of all sizes: an increase in customers paying for repair work themselves. And that, Plucinski said, is an opportunity for those who implement changes in how their business operates.
"We've seen it shift from being 5 percent of our business to being almost 30 percent," he said of customer-paid work. "That's now a major component in our marketing strategy. We need to be prepared to sell to the customer instead of just taking an order. Like much of the industry, we hadn't been doing very well at that. In part because of direct repair programs, we've been trained over the last 10 years to take the order, not to sell the job."Plucinski cites a number of reasons for the increase of customer-paid work, including higher deductibles and fear of higher insurance premiums.
But more important than the reasons behind the trend is how to make it work for your business. Plucinski and others said it comes down to another key management technique: "old-fashioned selling." Give estimators and your front-office staff the tools they need to ask for the keys, not just start a claims-handling process.
Some examples: Develop customer testimonials and before-and-after photos; offer financing options; explain how the shop's warranty may be better than that offered elsewhere; use videos or charts and photos to offer a virtual shop tour or explain the repair process or show samples of good and bad repair work; play up the shop's community activity and awards.
And remember that not everyone in your office will be good at using such sales tools. Consider posting signage in your office that will encourage you employees to sell by prompting customers to "ask about our warranty" or the other benefits of doing business with your shop versus one up the street.
Producing more leanly
Steve Sturken said an increasing percentage of work at Sturken Auto Body in San Jose, Calif., goes through "meticulous teardown," a process discussed in the PPG 20-group in which he participates. Rather than creating an estimate before teardown and supplementing it during repairs, the vehicle is torn down as much as necessary to get a complete estimate ready for insurer approval.
"The cars that do go through that process fly through here," Sturken said. "No supplements, no parts delays, no headaches, exceeding customer expectations, you name it."
PPG is among the paint companies helping its customers implement that meticulous teardown--also sometimes called "blueprinting"--as part of a new emphasis in the industry on "lean production." That is a decades-old process used to improve manufacturing processes that is increasingly being adopted in the collision repair industry. The key to "lean" is eliminating wasted movement and efforts--such as supplements and multiple parts orders--that don't add to overall quality and customer value.
At TGIF Body Shop in Fremont, Calif., Kathy Mello said she saw her employees spending far too much time looking for, and moving, cars on the 1-acre lot between the company's two buildings. So she said she worked with the staff to develop a layout for the lot and a color-coded vehicle numbering system that makes it possible to quickly spot a particular vehicle and should reduce the need to move two other cars to get the one needed.
Steven Feltovich, manager of business consulting services for Sherwin-Williams Automotive Finishes, said that for many shops, implementing lean production as part of shop management begins by "cleaning house." Too often, clutter and unnecessary items get in the way of production, he said.
And although lean is not about reducing work force, which actually can often lead to higher hidden costs, it does include ensuring that you have the right number of people in the right positions to operate efficiently. For example, one California shop owner, who asked not to be identified, recently said he cut back from 36 employees to 31. He said he determined that the higher staffing was based only the shop's best months–which meant he was losing money several months of the year. He has chosen to staff instead based on being profitable even in slower months.
Lean production also places an emphasis on repair quality, because such quality reduces the time and expense involved with rework, mistakes, delays, and inefficient use of equipment and materials. So although many shops do a final inspection of a repaired vehicle before returning it to the customer, Feltovich said that is far too late in the process to avoid the costs of rework. The lean solution, he said, is for quality expectations to be communicated clearly so problems don't occur in the first place or, at worst, are caught and corrected before the vehicle has moved on in the process.
