David Kwasny believes that succeeding in the collision repair industry requires strength in numbers. To acquire the best economies of scale when dealing with all the insurers, vendors and customers, the former president of Crash One assembled a team of Chicago-area body shop owners in 2009 to create the PerformancePro Collision Repair Network.
Encompassing 12 independently owned and operated facilities, the shops are a team of collision repair leaders meeting various criteria related to performance and shop culture, Kwasny says.
"It's a scary time to be alone in this industry, and the locations are stronger working as a team than they are standing alone," he says. "By pulling together a group of high-performing business leaders, we get the best of both worlds – creativity, passion and independence along with stronger relationships with our referral partners and fiscal stability."
The terms referral partners and strategic partners apply to just about every aspect of the enterprise, including insurers, equipment and material suppliers, towing companies, recycling yards and anyone else who can assist by presenting top-notch service with a minimum of hassles.
"If you take an all-star paint supplier, jobber or recycler, they'll support you better," Kwasny says. "There's a friction cost involved when you align yourself with a substandard business. Make sure you line up with people who are very good at what they do. You're only as strong as your weakest link. If you pull together A-level people, you're going to rock the market. Strength in numbers gives us greater marketing presence. Our efficiencies come through shared best practices and standard operating procedures."
PerformancePro functions much like a 20 Group, Kwasny said. Shop owners and managers meet regularly to review performance data, brainstorm ideas, share best practices, discuss challenges and find ways to improve operations.
Becoming a partner
To become a part of PerformancePro, Kwasny looks for shops that meet a variety of criteria. They must:
- be professional;
- have solid relationships with the carriers;
- have high customer satisfaction ratings;
- be willing to partner with additional insurance carriers; and
- be open to new technology.
"We have access to demographic data and work very closely with our referral partners," Kwasny says. "If one of our partners is expanding, we look into the potential for growing our network in that market. We're always looking to find opportunities to provide new value-added services and grow into new markets."
Most of the shops in the network are referrals from industry partners.
"We walk in the door and say, 'We have a group of guys who are interested in partnering with you,'" Kwasny says.
But some decline, citing their longtime experience in the industry and a resistance to pursuing the latest industry strategies.
"We can't deal with someone who digs in their heels and says, 'I've been doing it this way for 50 years,'" Kwasny says.
Referrals from insurers are important for attracting repair clients, so the group works hard to build strong relationships and ensure the shops offer services needed.
Because the PerformancePro members are existing businesses before joining, each shop selects its own equipment and vendors, such as paint suppliers. Frame equipment is from Chief Celette, EZ Liner, Brewco Legend 360, Genesis Velocity, Hunter and Shark. Paint is supplied by DuPont Standox Waterborne and Sherwin Williams. Estimating systems are provided by CCC Pathways and Audatex.
Operating the business
PerformancePro shop owners and managers meet regularly to review performance data, brainstorm ideas, share best practices, discuss the challenges they're facing and find ways to improve their operations. The concept goes well beyond belonging to an association, where the price of admission can be merely paying the dues. PerformancePro also resists the pattern of battling with insurance companies.
"This isn't charging up the hill," Kwasny says. "There are many things we can do without throwing sand in each other's eyes. We get along in the sandbox."
A key challenge is that the cost of doing business is rising faster than the prevailing rates. Kwasny is addressing this by leveraging technology, streamlining processes and improving key performance indicators through the use of standard operating procedures, best practices and continuous improvement.
PerformancePro collectively manages more than 90 direct repair programs (DRPs), covering almost all of the major insurers and several fleets. The network continues to seek additional DRPs.
"We're always looking to grow all aspects of our business," Kwasny says. "We have collaborative relationships with the carriers. We sit down with them regularly to talk about how we can work together more effectively and efficiently to better serve the customer."
The network's average repair order is $2,243. Average cycle time is six days for the repair process and seven days for delivery.
Adopting lean production strategies – the process of eliminating waste – is a common goal. It's a moving target because everything shops do always can be improved. PerformancePro members are embracing lean practices and have a number of lean initiatives planned for 2011.
"It's a major undertaking to get and keep everyone on that path, but our team is working together to help ensure we continue improving every day," Kwasny says.
Several locations are using waterborne paint systems, and the rest of the shops are discussing making the transition with the paint companies. Environmentally, it's the right thing to do, Kwasny says.
PerformancePro is pursuing an AutoNetFix online approach, which Kwasny is reluctant to discuss until its planned national release in the second quarter of 2011. In beta testing, Kwasny describes the project as a proprietary, patent-pending performance-enhancing customer service program.
The challenges of maintaining profitable businesses require constant attention to detail.
"Technology has made vehicles and roadways safer," Kwasny says. "There are fewer accidents; when accidents occur there's a higher rate of total loss. As a result, there are fewer cars to fix. The repairable market is shrinking.
"There also are the external pressures that come from stricter environmental regulations, social communication patterns, and carrier and strategic partner requirements," he adds. "These impact our core business of repairing vehicles and serving the customer. Those shops with the capacity to absorb these pressures and stay focused on the core business are the ones that will be best positioned for success."
PerformancePro helps shops adapt to change and embrace new technologies that will help them succeed in the new environment. For example, using touch-screen technology when estimating will eliminate inputting hand-written notes into the computer. If a shop conducts an estimate with a clipboard and then types the information into the system in front of the customer, the customer is likely to wonder if the repair methods are equally behind the times.
In the Chicago market, the consolidators are growing, and most independents are losing market share, Kwasny says. The bigger the consolidators become, the more capacity they'll have to accommodate carriers' requests and meet the demands of the public. PerformancePro seeks to level the playing field so strong independents can compete.
For more information, visit www.PerformanceProCRN.com.
