One of my favorite Saturday Night Live sketches in the late ‘80s was the two-part series “First Citiwide Change Bank.” “At First Citiwide, our business is making change” was its motto. That was the premise of the business, not to extend loans, but rather just to make change. “If you come to us with a $20 bill, we can give you two tens. We can give you four fives. We can give you a ten and two fives. We will work with you,” deadpanned SNL producer and sometimes actor James Downey portraying a bank service representative during the spot that was interspersed with customer testimonials of how the “change bank” got them out of a tight spot when they needed the correct change for bus fare or needed to make their money fold, not jiggle. (You might recall Downey as the principal judging the “academic decathlon” in the movie Billy Madison.) In the second spot later in the show, Downey answered the question we were all wondering. “All the time, our customers ask us: ‘How do you make money doing this?’ The answer is simple: volume.”
The dry delivery belies the absurdity of the zero-gross-profit business model. And yet, as some shops have found, the direct repair program promise of delivering volume comes at the expense of slim margins, greater administrative headaches, and more stress.
In my feature article this month, “Dumping Your DRPs,” Mohawk Collision Center General Manager Gerry Rosenbarker, one of two body shop managers I interviewed for the story, recalls how he simultaneously grew the business through DRP relationships while following OEM certification-prescribed repairs, growing his book of satisfied customers who returned on their own.
“Grow your business quickly with DRPs and use them like they're using you, and then cut them loose as soon as you can.”
We've recently heard from collision repair industry consultants and other leaders that shops have slowed. To name just a couple factors, car insurance rates, which went up an average of 20% (mine included) this year because of rising repair costs and more disaster-related claims, may have caused policyholders to be reluctant to file a claim and risk having their policy canceled. A mild winter in many places hasn’t helped demand, either.
That said, we have been featuring best practices of how to gain more revenue through marketing or increasing operational efficiency. “When the going gets tough, the tough turn pro,” was a favorite saying of my late mentor, Lance Buchner. If you have implemented some changes in your business you’d like to share with our readers, please drop me a line. We’d love to talk with you about them.
