Industry Insight with John Yoswick
—John Yoswick is a freelance writer based in Portland, Oregon who has been writing about the automotive industry since 1988. He is the editor of the weekly CRASH Network (for a free 4-week trial subscription, visit www.CrashNetwork.com). Contact him by email at jyoswick@SpiritOne.com.
What Role Should a Current Backlog of Work Play in Auto Body Shops’ DRP Decisions?
Shop Showcase
A national survey in April found specialized and OEM-certified in at auto body shops on average have a least five or six brands, minimum. work backlog topping four weeks, You need to know how you are gowith Ed Attanasio and during the Society of Collision ing to create your own customer Repair Specialists’ (SCRS) Repairer stream and own your portion of the Roundtable this spring, a panel was market in a smart way.” asked whether that “unique scenarSome collision repairers have io” in the industry should play into chosen locations with little street a collision repair business’ decisions visibility, Hendler said, lowering related to participation in direct re- their overhead because they knew with Ed Attanasio pair programs. direct repair referrals would bring Three association leaders and work to the door. two shop owners responded. “If you just shut those [DRPs] Jill Tuggle, who has been ex- off, you now have no customer visecutive director of the Auto Body ibility,” Hendler said. “There’s a lot Association of Texas (ABAT) for of pressure just to get rid of all your five years, thinks it should play into DRPs [without a plan] and think with Ed Attanasio a shop’s decision. you’ll be fine. I think that’s a dan“If there ever was a time that gerous trap for shops. We’ve seen you could test the waters on operat- that happen.” ing independently of those contracts, Aaron Schulenburg of SCRS it would be now,” Tuggle said. “Be- agreed each business has to evaluate cause you’re going to get work. its own situation. with Ed the Attanasio The work is there. You already can’t “I don’t think any one model is repair everything you have. If that’s right or wrong,” he said. “There’s a a business decision you have been lot of successful businesses up here toying with, now would be a good [on this panel] and in the audience time to do that.” and in our membership base that Other association leaders with have found success in every type of longer tenures with offeredStacey some caumodel.” Phillips tions to consider. He said the current situation “In order to do that, they have does provide collision repairers with to have alternative plans,” Jordan an opportunity to “prioritize where Hendler of the Washington Met- their profitability lies,” noting even ropolitan Auto Body Association large multi-shop operations (MSOs) (WMABA) saidwith of shops choosing that focus on DRP work are saying Stacey Phillips to exit DRPs. “I don’t think you can they are evaluating which of those programs offer the best fit. Ron Reichen of Precision Body & Paint, which is opening its fifth location in Oregon this year, said he sees too many shops operate based with Stacey Phillips on fear. “Fear is an emotion, and good business decisions aren’t based on emotion,” Reichen said. “We’ve always believed that calculated risk is Jordan Hendler said shops can end direct important. But the first part of that repair agreements, but first need to have a is ‘calculated.’ Do your research. Do with Stacey Phillips solid plan about how they can address the your homework. Is it a good fit for changes that will entail you? just sever those relationships. I think “I think the insurance carriers you have to have a solid plan for ei- have leveraged fear: ‘We’re going to ther marketing or getting into OEM shut you off and you’re not going to certifications. In our association, have any of our work.’ That’s a falthe most successful members are lacy,” Reichen said. “Even if you’re
a DRP model, you’re building relationships with that client base. Those clients are still going to come back
Social Media for Shops
SEMA Show Goes On
Oregon shop owner Ron Reichen said he sees too many shops making business decisions based on fear
to you. They may change insurance carriers two or three or four times in their driving history. So [the insurer] doesn’t own that customer, but you do. Even if you are a DRP model, work at owning that customer. Then you can wean yourself off of [DRPs] and not make decisions out of fear.
Media and Publicity for Shops Shop Strategies
“Would you [be happy with] 20% less work if you made 20% more on the remaining 80%? Of course. That’s a calculated risk,” he added. Andy Tylka was operating a six-location MSO in Indiana until recently, when two MSOs in other markets chose to sell their businesses to Tylka rather than to a national MSO. That expanded his company to 15 shops in 2.5 years. He acknowledged his choice to stay with a DRP model is, as it is for many shops, based to a degree on fear. “Because, obviously, growth results in loans,” Tylka said. “So if I’m not having customers come into my shops, I’m not paying these loans, and I’m responsible for 185 families.” He said collision repairers should recognize the current backSee DRP Decisions?, Page 44
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