More than a decade before it grew into the 12-shop operation it is today, Pennsylvania-based Keenan Auto Body noticed several small, independent shops in its market losing direct repair relationships (DRPs) with insurers. Corporate-owned chains and dealers with strings of several body shops were creeping into the market, and consuming those programs with savvy business propositions.
The invading companies had several new processes in place that made them capable of improving repair quality, boosting the customer experience and maintaining high key performance indicators (KPIs)—all of which ease the management of DRPs for insurers. Insurers started offering repair volume to the newcomers in exchange for consistent delivery on those promises.
Mike LeVasseur, president and chief operations officer of Keenan, says that’s when insurers started to closely measure basic KPIs, such as cycle time. Work referrals became highly dependent on performance level.
LeVasseur says insurance agents used to periodically call meetings with all of their DRP shops in local markets. They instructed operators on what was happening in the industry, and what they were looking for from shops. At first, insurers strongly suggested that independent shops replicate the MSO model, but it soon became an implied requirement to stay competitive, LeVasseur says.
Keenan, which only operated three locations in the mid-1990s, fired back with a marketing campaign targeting insurers and consumers to promote consumer choice when selecting a repair shop. Still, the company knew operational improvements had to be made to offer stronger business benefits to retain its DRP accounts. So Keenan concocted a business model of its own, hoping it would not only maintain, but also grow company market share.
GOAL » Keenan wanted to reduce the amount of oversight insurers had over its DRP accounts.
Insurers commonly visit shops to audit their KPIs and provide training to underperforming facilities. Keenan knew it could provide additional value to insurers by eliminating that need.
SOLUTION » The company installed a centralized management system that’s integrated with each of its shop locations.
LeVasseur says the system, called Nexus, allows for customized reports and the compilation of very specific data. Keenan also installed CCC Intellisphere and Fix Auto’s reporting network.
Now, they can measure their own KPIs in great detail. Company leaders have full visibility to each facility’s KPIs all the time, and they receive daily reports on the prior day’s performance.
“We can drill down hard and fast to identify trends,” LeVasseur says. “We can find trends that need to be fixed within a matter of days. It helps us keep our finger on the pulse of every location.”
The centralized management system also generates automatic KPI reports for insurers. For example, one of Keenan’s DRPs requires to be notified when jobs come back for rework. Keenan developed a “push report” that is automatically sent to the carrier, quality inspector and company leaders any time that happens.
From there, monthly manager meetings are used to discuss where improvements can be made, and the company does its own operational training—before insurers can offer suggestions.
GOAL » Keenan wanted to have one specific person in charge of managing each of its DRP accounts.
“Insurers really like having one single point of contact with companies, rather than several points of contact at each individual location,” LeVasseur says, noting it eases the management of their DRP shops.
SOLUTION » The company put a compliance manager in place.
LeVasseur says the compliance manager is tasked with insurer negotiations, and ensuring that all of Keenan’s locations are compliant with DRP standards and rules. The compliance manager maintains documents and profile pages for each DRP account, and updates the necessary shop employees any time program changes occur so insurers don’t have to.
The compliance manager also ensures that shop locations adhere to company KPI standards to proactively prevent insurer intervention. The company developed its own standards higher than DRP standards, so they still meet insurer benchmarks even if there is a slip in performance. A few examples: comebacks can’t be any higher than 6 percent, “would recommend” customer service index (CSI) scores must be at least 98 percent, and “cleanliness of the car” CSI scores must be a minimum of 95 percent.
GOAL » Keenan knew the company had to uphold consistent levels of quality to maintain high KPIs.
SOLUTION » Keenan established a 12-stage production process.
Each of the 12 stages, which starts with administrative processes and ends with quality checks, has 20 action items that must be completed on every job. Keenan spent $1,300 on signage to post job descriptions for each stage on the shops’ walls.
Keenan operates 12 locations, but LeVasseur says small, single location shops can outperform the industry’s giants, too.
Independent shops can compete at a high level, LeVasseur says, but they have to be proactively focused on improvement by monitoring KPIs and performance. They need to have some basic business infrastructure in place to make that happen—a management system, estimating system, and a financial management or accounting system.
According to 2009 data from The Romans Group, only 76 percent of shops have an estimating system, and 25 percent have a management system.
“It’s absolutely necessary to have these resources in place to remain competitive in today’s marketplace,” LeVasseur says. “It’s a major financial commitment, but you have to spend money to make money.”
LeVasseur says that helps pinpoint exactly what went wrong whenever a flaw is found in a repair.
GOAL » Keenan wanted an outside inspector to prove its quality.
SOLUTION » Keenan hired a third-party inspector, VeriFacts Automotive, to audit repairs.
LeVasseur says the inspector helps maintain solid KPIs by auditing for quality during repairs, rather than waiting until the end of the process.
LeVasseur says VeriFacts has regular training clinics with Keenan’s employees, and the company also hosts quarterly meetings to discuss KPI performance. Insurers are invited both as a way to show Keenan’s commitment to quality—the processes it has in place to make that happen—and to remain transparent on performance numbers.
GOAL » Keenan wanted to boost customer service, since KPIs are based on that just as much as repair performance.
SOLUTION » Keenan launched the “10 Yes Campaign.”
It’s a customer communication process that asks for feedback throughout the repair. With this process, which is similar to an ongoing customer service index (CSI) survey, the company has several touch points with customers to proactively cultivate performance feedback. That allows shops to address problems or questions during the repair, which otherwise would result in negative feedback and poor CSI scores at the end.
LeVasseur says that proactive feedback also helps to coach employees immediately so they don’t make the same mistakes with multiple customers.
Did it Work?
Keenan’s operational improvements are working. The company’s focus on self-management, quality, and customer service are impressing insurers and reducing their involvement during repair processes.
Now, Keenan has 18 DRP accounts, up from seven in the mid-1990s, and owns 65 percent of the market share in Delaware County, Pa., alone.
In the last 15 years, Keenan has added nine shop locations, including two it acquired in 2011. LeVasseur says the previous owners of those operations ignored the market conditions, made no operational upgrades and had no choice but to sell.
The company is experiencing record financial quarters so far in 2012, and has plans in place to open its 13th location this summer.
