Thrive – don’t just survive – in the collision repair industry

This article, written by Mike Anderson, was originally published here.

It is important to position your business to thrive – not just survive – in the collision repair industry, and to do that requires a focus on three things — sales and marketing, production, and finance and human resources.

So now let’s start with sales and marketing. Some discussion I heard at several conferences this year gave me insights into some dramatic changes I see ahead for our industry in terms of how shops may get some of their work.

Many shops say when a insurance company refers a job to them, that’s a referral, but when an insurance company refers a job to another shop, that’s steering.

Well, regardless of what you call it, I think the automakers are very close to getting into that game. Several OEMs at the conferences I attended said their vehicles already have the technology to notify that automaker when the vehicle has been in an accident. Right now insurance companies are often the first to talk to a customer about vehicle repairs when they call to report a claim. But what if automakers can contact that customer right at the scene of the accident? They suddenly become that first point of contact.

A video shown at one of these conferences offered an idea of how it might work. Right after the accident, the automaker could speak to the customer through the car’s speakers, asking if they are injured, if they need medical assistance or the police, if they need towing assistance, if they have a shop in mind, even if they would like the automaker to contact their insurance company. All those arrangements could be made at the scene of the accident.

Rick Tuuri of AudaExplore dubbed this concept “virtual steering,” and I think it’s a term you’re going to continue to hear. A number of people I’ve talked to at car companies and insurance companies are convinced this is coming soon. One automaker even said they’re already doing it in other countries.

An insurer at one of the conferences laughed and said “good luck” to the automakers in terms of building a network of shops and other providers. But other friends of mine in the insurance industry said their companies are already in talks with automakers to become the “certified” insurer for a particular OEM brand.

Your first guess as to why automakers would be interested in getting involved in the industry in this way is probably that they want to sell more parts. But remember, they’re as likely to sell many of those parts no matter where the car is repaired.

I think their real motivation is protecting their brand by making sure their vehicles are repaired well and their customers are treated right. One automaker told me that 60 percent of customers who have to return to a shop after a repair because of a problem will sell or trade-in that car within a year – and of those, almost two-thirds will switch to a different brand of vehicle. So the automakers want to ensure their customers’ experience after an accident is a good one.

What does all this mean to shops who want to thrive, not just survive? I think first it means giving serious consideration to the automaker shop certification programs as part of your focus on sales and marketing. Direct repair programs aren’t going away. But I think it would be a mistake not to consider the role the automakers are going to play in the industry in the near future.

That doesn’t mean jumping into any OEM certification program blindly. Choose the ones that make the most sense based on your market. Paint companies and industry consultants often can help you understand the vehicle demographics in your area to know which certifications offer the greatest potential return on your investment.

Being financially able to make that investment is going to mean managing your money and cash flow well. People often complain about the costs of the required equipment, but remember, some of that equipment will be needed even if you’re not certified, just to repair cars properly.

And there also can be tax-advantage to reinvesting earnings back into equipment to help your business.