A Y F D & H
by Lucky Papageorg, AASP/MA Executive Director
It is often said – and proven – that if we do not learn from history, we are doomed to repeat it.
The collision repair industry has been plagued by this reality for decades. We are an industry in constant evolution, and evolution takes time. External forces drive these changes, and we are currently experiencing heightened pressure and transformation in how collision repair businesses operate. For a collision repair facility to not only survive but thrive, we must critically examine what has led us to this pivotal moment in the marketplace regarding the valuable services we provide.
To address any problem, we first need to identify its root cause. This means being honest with ourselves. Unfortunately, most of the issues we face are self-inflicted. We have been our own worst enemy. The good news is that recognizing this gives us the power to make changes that will enable us to move from mere survival mode to a thriving mindset. Many have already embraced a “new” way of running an independent collision repair business.
These forward-thinking shops understand that, like any successful independent retail business, core business principles must be followed. They have implemented Standard Operating Procedures (SOPs) and Key Performance Indicators (KPIs), and they study these metrics closely. By setting standards, you communicate to both your staff and customers that there are measurable levels of quality and satisfaction that must be achieved to maintain repair and customer service excellence. SOPs must be adhered to and enforced consistently throughout the shop environment. This includes everything from how customers are greeted and the claims information gathered to how they are kept informed and educated about the repair process and their specific vehicle. SOPs are crucial to a successful repair process. Various tools, from educational sessions to flowcharts, can help, but understanding the “why” behind procedures is what truly creates a cohesive team and effective work environment. Achieving this requires a significant investment of time and effort.
A major flaw in many average or below-average collision repair facilities is the failure to invest time and effort. Without such investment, you are either doomed to failure or doomed to struggle in mediocrity until you are forced to close. Unfortunately, many in the industry are already in this holding pattern, unaware that they are slipping further into decline. They might say things like, “I just need to survive another couple of years, and then I can get out” or “There’s nothing I can do; the insurance industry is too powerful.” This mindset makes us our own worst enemy and plays into the hands of the insurance industry, which relies on this attitude to maintain control.
Shops that have proactively changed their approach to how they view and promote themselves in the collision repair industry are moving from survival mode to thriving in their businesses. These shops attract technicians seeking employment because they are able to invest in their technicians and promote themselves as consumer advocates. They avoid advertising with phrases like “We work WITH your insurance company,” thinking that they are getting “free” advertisements from their insurance “partners.” In reality, these shops pay for this “free” advertising on every claim. They cannot charge a fair rate, get paid adequately for all OEM-required and recommended procedures or advocate for their customers without fear of reprisal. They also struggle to cover administrative expenses and other fees associated with total losses.
The constraints placed on less business-savvy shops hinder the progress of those striving to advance themselves and the industry. It’s known that less savvy shops are used to set artificially low labor reimbursement rates and “prevailing” practices. Insurers often address discontent by raising reimbursement rates minimally. This only serves to placate the less business-savvy shops, while doing little to address the underlying issues. Insurers also use these tactics to keep us divided. As an association, we recognize this issue and work to educate shops and consumers, bringing everyone together.
The title of this article –“A Y F D & H?” – may already have been figured out by some of you, who have already answered with a resounding “NO WAY” and are taking steps to ensure their business’s longevity. These shops have established that their posted labor rate is a fair and reasonable amount to charge and collect, regardless of what insurers may claim. Similar to medical professionals, these shops see themselves as the experts providing a valuable service by restoring collision-damaged vehicles’ pre-loss condition and they charge accordingly. As with the medical profession, we cannot afford to repair today’s vehicles and accept liability without proper compensation, and we must use “balance billing” when insurers fail to fully indemnify their clients.
I am not aware of any collision repair shop that has closed due to charging fairly for the work performed while balance billing for any shortfall left by insurers. However, many “body shops” have struggled or failed because they were afraid to charge appropriately or they could not, due to contractual restraints. Congratulations to those shops that have adopted balance billing and ensured protection with proper authorizations and documentation using the Forever Forms created by Attorney Sean Preston and his firm, Coverall Law. These are the shops that have answered “Are You Fat, Dumb and Happy?” with a resounding “NO!”
Insurers rely on collision repairers who do not understand their true business costs, do not know their real customers in the collision claims and repair process and do not recognize the benefits of being part of an association. They depend on shops that are acting as though they are fat, dumb and happy. Are they counting on you?
If you are not fat, dumb and happy, go to the application on page 7 and JOIN NOW!
Want more? Check out the October 2024 issue of New England Automotive Report!