In a previous column, I wrote about a gut-wrenching decision I made back in 2011 to part ways with a direct repair program that just wasn’t working for us. It was one of those decisions you make without knowing the real impact it may have on your future. The program at that point accounted about half of our volume (as I said, something I won’t ever allow to happen again). But the way it was managed had led me to the point of wanting to get out not only of the DRP but out of the industry entirely.
So what happened after we dropped the program? I won’t lie: The first couple of months were very tough. Sales were down. But that’s what prompted us to make some of the changes I’ve written about in another column, most specifically shedding a layer of management.
While we were on that DRP, I had managers on top of managers. We had production managers, office managers and a sales manager overseeing out facilities. We had a general manager in charge of everything. You would think with all these managers that I would not even need to be at work. But I was there having more meetings with managers than I could ever have imagined. That’s part of why I hated the business: All we seemed to have was meetings about problems.
So to account for the loss of that DRP, I scaled back that executive team. I didn’t need all those managers; I just needed to empower my people. A shop location doesn’t need a manager to decide when it’s appropriate to put a customer into a rental; everyone in the front office just needs to know our criteria for when that should happen, and they can make that decision themselves.
But the other thing I discovered in the process is that insurers know which shops have which DRPs. And when you decide to part ways with a program, you may become more attractive to other potential insurance partners that may not previously have been interested in having you on their program.
That’s exactly what happened to us. In our case, the word was out by summer that we’d dropped the one DRP, and by snowfall that year, we’d added a couple other programs that were a better fit. By the following year, our sales were higher than they’d previously been with that large DRP, and we’ve done nothing but grow ever since.
Even more importantly, it was a big changing point in my life. Under that program, I’d become a bitter body shop owner thinking this industry is horrible – and going downhill – and that no one can make any money in it. But after dropping that DRP, I realized I just had to make better choices. I had to be smarter. I had to choose partners better, those with the same values as I have. Whether it’s an employee or a DRP, I learned not be scared if the fit isn’t right and I need to make a change. That was all part of a really huge transition I made that year that got me to where I am today.
I share that story with anyone who asks me about getting on direct repair programs. Anyone can do that. But not every program is right for every shop. They are very different.
And it’s critical to be careful what percentage of your workload is accounted for by any one DRP. The programs will come and go. They just will. Local management can change. You can’t presume a program that works for your business today will do so a year from now.
But similarly, if you are making changes to your mix of DRP, do it very carefully. A program that’s killing you right now may change. So part ways without burning bridges. You’re still likely to be conducting repairs paid for by that insurer, so you don’t want a hostile environment. Be professional and just say, “At this time, this is not the right fit for us.” We’ve ended up back on some programs when 10 years ago we would have said that would never happen.
