In my previous article, I shared some foundational strategies for running a profitable collision shop, and one key point we touched on was the importance of understanding your customer base. In this article, I want to take that idea further. We'll dive into why knowing who your customers are — and what they need — can transform your shop’s approach to repairs, marketing, and growth.
Increasing your car count isn’t just about getting more vehicles in the door — it's about getting the right vehicles in the door. The customers you attract shape your shop’s services, team capacity, and even the layout of your physical space. When you understand your customer demographics, you can tailor your approach to align with their needs and expectations, boosting your shop’s efficiency and profitability.
For example, some shops excel in high-volume insurance work, while others find their niche catering to high-end, self-pay customers who prioritize quality repairs and personalized service. The better you understand your target audience, the more informed and profitable your business decisions become.
Getting started: identifying your core customers
A great way to start understanding your customer base is by tracking how people discover your shop. Think of this as more than just a marketing analysis — it’s a way to gauge what matters to your audience and the types of channels they rely on for information. Are they finding you through insurance recommendations? Social media? Or maybe they’re responding to a strong word-of-mouth presence?
Often, I ask clients, “Who comes into your shop?” Consider these three categories:
Who enters and requests an estimate?
Who goes forward with approved repairs?
Who leaves without committing to repairs?
This exercise provides an instant snapshot of your audience and helps you see patterns in the types of customers you’re drawing in.
Using shop management systems to analyze customer data
If your shop uses a shop management system (SMS), you may already have access to tools for analyzing customer demographics. Many SMS platforms can generate source reports that break down your customer base by payment type (insurance vs. self-pay) and service types. This data helps you see what your shop is known for — whether it’s small repairs, big hits, overall refinishing, or specialized services. If you notice that most customers come in for small repairs, ask yourself whether they’re aware of all the services you offer. There may be untapped potential to increase your average invoice by offering additional services that fulfill your customer’s broader repair needs.
Make sure you’re logging every job into your SMS for the most accurate information. This tracking might seem like an extra step, but the insights are worth it. The goal is to maximize revenue per vehicle and give each customer confidence in your ability to handle their complete collision repair needs.
Segmenting your customer base: wholesale, DRP, and self-pay
For shops handling a mix of customer types — wholesale accounts, direct repair programs (DRP), and self-pay customers — the challenge is to define your audience segments and cater to each one effectively. Each group has unique needs, and each has a different impact on your shop's profitability. Here’s a quick breakdown:
Wholesale accounts: These customers often prioritize quick, cost-effective repairs due to the lower profit margins in wholesale work. The key here is volume; to make this group profitable, you need a steady stream of high-quality, efficient work. Your team must have the bandwidth to process jobs quickly, without sacrificing quality. Marketing efforts should focus on showcasing your capacity for volume work and your reliability.
Direct repair programs (DRP): Like wholesale, DRP agreements come with lower profit margins and specific procedural requirements from insurance companies. Expanding your DRP work often means outside sales efforts as your team builds relationships with insurance partners and promotes your current contracts. For DRP customers, volume is also critical to offset the lower margin, so ensure your shop has a workflow that can manage high car counts without bottlenecks.
Self-pay customers: This group is often more profitable on a per-job basis but requires a different approach to attract and retain. Self-pay customers may be drawn to your shop through local advertising, Google ads, or community involvement, and they generally prioritize repair quality and trustworthiness. Knowing where your self-pay customers are coming from allows you to refine your marketing efforts — consider radio ads, online reviews, or community sponsorships if you’re looking to boost visibility with this group.
Each segment requires a tailored approach, and balancing these can feel like a puzzle. Start by assessing which group brings the highest profit or has the most growth potential, then adjust your efforts accordingly.
Gathering customer insights: surveys and feedback
One of the simplest ways to understand your customer base better is to ASK THEM! Surveys are invaluable for gathering insights directly from your customers, and there are several ways to implement them:
In-shop surveys: Ask customers to fill out a short survey while they wait for their estimate. Keep it quick — just a few questions about how they found your shop and what influenced their decision.
Digital surveys: Use your SMS or email systems to send out a survey to recent customers. How did we do? What could we do better?
This feedback helps you identify what marketing channels are working, what types of services your customers value most, and even where they think your shop could improve. Understanding these preferences means you can refine your service offerings, adjust your marketing, and continue growing the customer base that best fits your shop.
Increasing car count vs. growing gross income
For many shop owners, it’s tempting to focus on boosting car count to increase revenue. But car count alone doesn’t necessarily translate to a better bottom line. A higher volume of vehicles can strain resources if your shop isn’t equipped to handle the extra workload effectively.
Instead, focus on the big picture: a balanced approach to growth that considers both car count and gross income. A high car count might be the right approach for a volume-based DRP or wholesale shop, but for self-pay customers, the quality of repairs and customer experience can bring in more revenue with fewer jobs. Aim to match your shop’s capacity with the kind of growth you want to achieve, rather than solely increasing the number of cars.
Making informed decisions based on demographics
Ultimately, understanding who you’re servicing helps you better serve both your customers and your shop’s profitability goals. Knowing your demographic allows you to refine your service offerings, optimize your marketing efforts, and improve customer satisfaction.
Whether you’re dealing with a mix of customer types or focusing on a single segment, identifying what works best for your shop is an ongoing process. Keep tracking, learning, and adapting to ensure you’re aligning your services with the right audience!
In the end, a collision shop’s success isn’t just about counting cars — it’s about connecting with customers in a way that meets their needs and elevates your business.
More to come on profitability strategies next time!
