2020 MSO Roundtable: Challenges, changes and the road ahead

Luke Salter

Luke Salter: Ten years ago, when you put an ad out for a tech, you’d have 10-15 qualified applicants knocking on the door. When you put an ad out now, you get maybe one or two. So over the last year I’ve been working with our local high school on starting a collision program. I’m working to make sure they have the proper equipment, the proper training schedule in place, and also trying to work with our local tech school so it will give the kids who go through the high school program some credits going into tech school.

Richard Fish: Picking up from what Luke said, we realized years ago that if we weren’t part of the solution as it related to technicians, we were going to be part of the problem. So at three of our locations we have a training team that consists of a lead tech, who is on salary, and two or three graduates from Universal Technical Institute or the local community college. The students will be in our program for as little as eight months or as long as three years depending on how quickly they evolve. We’ve graduated four technicians through that program. We do a lunch and ceremony, and I give them a $2,000 loan for tools that gets forgiven after two years. That’s been a real nice program, and nowhere near the economic strain that we thought it might have been given that they produce some real work.

Michael Macaluso: I think the biggest challenge is bundled around uncertainty. We’re an industry that thrives in some sort of predictability, whether in terms of claims volume or the seasonal cyclical nature of our business. The uncertainty around four or five different areas of the business right now is one of the biggest challenges that we all face. Uncertainty around supply chains, the economy and political landscape, driving habits. But I also take the approach that any challenge presents opportunities. Although we recognize the challenges that are there, we want to burn our calories on creating the right solutions, and capitalizing on the opportunity in the challenges that are there.

ABRN: Talk about a change you’ve made in your business in the last year or two, maybe not even pandemic-related, such as a new technology you’ve implemented.

Tim Cockrell: We’ve certainly invested in a lot of new equipment to do more in-house to expediate repairs and help margins. We’re not making anything on sublet a lot of the time. So we’ve invested in scan tools, and we’ve found that to be a pretty good marketing tool. We’re pulling up other codes for people while we’re doing that. We’ll let them know they have a bad oxygen sensor, for example. We’re also doing some mobile estimating, letting them see up front the type of service we provide. That’s been pretty popular. The other thing we’ve done is get some OEM certifications. One of my shops is in an area with a lot of high-end vehicles. Those folks are more concerned with the certifications than they are with where their insurance company tells them to go, which I’m pleased with.

Phil O'Connor

Phil O’Connor: I went to a conference last year and was introduced to Podium. We had the old stamp-and-postcard type of thing to receive feedback from customers. It worked okay, and we got a fair amount of them returned. But in this day and age, everybody is looking at online reviews. We really weren’t doing well in terms of the number of those. So we tried Podium in a couple of the stores just to see how it would work. I’ve been pretty happy with it. It makes it easy for them to do Google reviews, Facebook reviews, things like that.

Aaron Schulenburg

Aaron Schulenburg: I’d be remiss, when we’re talking about new technologies, to not talk about the technology solution we’ve released, the Blueprint Optimization Tool. It will essentially run your estimate through an audit tool to identify any potentially missed operations. The objective is to create consistency among different writers at your shop, or among your different stores. There are lot of other tools that exist out there that hold collision repair businesses accountable to somebody else’s metrics or rule sets. This is intended to allow a shop owner or network to establish what their own expectations are, and hold their staff and locations accountable to their own internal rule sets, to make sure they’re not unnecessarily leaving anything on the table.

Luke: Something we implemented since COVID: Every customer receives a flash drive that contains all the OEM documentation, the procedures we followed, along with all the photos that were taken throughout the course of the repair. It also includes all the alignment specs, and it documents the test drive that we did. Our customers seem to like that. Another thing we’ve implemented is BodyShop Booster. There’s a lot of post-repair marketing that you can do with it, such as ringless voicemail. Every customer who picks up their vehicle receives a ringless voicemail from me the day after. Thirty days down the road, they receive one from my production manager. Then at one year, they receive one from my father, who is a co-owner of the shop. You can set that up so you don’t have to physically do anything.

ABRN: If you had a chance to sit down for an hour to talk with the national claims manager at a Top 10 insurer, what is one thing you’d suggest they do to reduce costs and improve efficiency and customer service?

Tim: Rather than an hour, I think it would be better to have some kind of annual meeting to let there be some ongoing dialogue. Rather than being coached, it seems like we’re kind of being pitted against each other. I’d like to be able to sit with whoever is in charge and have a question and answer session on an annual basis.

Aaron: The one thing I would like to get insurers to understand: Focus more on removing the waste and costs associated with micromanagement and unnecessary engagement in the process, rather than trying to mitigate costs by removal of legitimate operations and line items.

Michael: Aaron hit it perfectly. My answer was going to be constantly working together to eliminate waste. There is unfortunately still a lot of waste in our processes in our industry. Time, money, resources spent on duplication and back-and-forth. I think we all benefit the more we remove those wastes. We feel collaboration is a better way to get there. I don’t think there’s a loser in that scenario. Everyone can win and benefit, most importantly the customer, who gets a better experience, and a quick, better repair.

Luke: ‘Required’ versus ‘recommended’ is a big issue. When you dive into repair procedures, some things say recommended, some say required. When presented to the insurance companies, we’re told, ‘It’s not competitive in your market. You don’t need to do that.’ Our repair planners are fighting that with adjusters every single day. Getting the insurance companies and the OEMs more on the same page about what is actually required to fix vehicles properly, while also keeping the cost of ownership down, is important.

Richard: I’m a believer in DRP as an effective way to do business. I know not everyone feels that way, but I do. So I’m kind of blown away when a carrier doesn’t recognize what they are supposed to bring to the table. Many of them seem to be overzealously focused on having a robust [number of] access points for their customers. So much so that they bring almost no value to the body shop getting only three to five cars a month. If I was guiding a VP of claims, I’d say: The carriers that deliver real volume are the ones that will get really active and motivated trading partners.

Phil: I’d need more than an hour. We have desk reviews by people who have zero knowledge of the industry, just [people who] know they’re supposed to chop this off and that off. I have some of my employees training some of these desk reviewers on just basic necessities. ‘Why do you anti-corrosive primer? You’re just fixing a dent.’ That was actually something we heard.

ABRN: Lastly, what do you see as some of the longer-term changes in the industry from the pandemic and current economic situation?

Richard: Every time our industry has had a very significant ‘character-building moment’ like this, there’s been a thinning of the herd, whether it’s dealership body shops abandoning the business, or just some of the weaker links not being able to survive. It’s not just the pandemic and the economic adversity that’s come from it. It’s also the technological obligations that body shops have to repair a vehicle the right way, in a defensible way. It’s becoming more of a challenge, more expensive. It’s putting a bigger burden on training. You’re going to have people who say, ‘I can’t keep up and feel good about how I conduct my business.’

Phil: I think shops will have an awakening. I’m forecasting we’ll survive this okay, but there’s a lot of shops that haven’t even looked at their balance sheets. They don’t know what kind of reserves they have for down the road. A lot of them got a PPP loan, but if they hadn’t, they probably would have been wiped out. I’ve looked at a lot of balance sheets for shops around the county and a lot of them are not very healthy. I think people are going to start to pay more attention to that.

Aaron: I think increased unemployment is going to provide more opportunities to fill the gaps in open positions within our industry. Like a lot of trades, our industry shined a bit through the pandemic because we remained going to work. If you’re a parent of a child finishing school, and you start thinking about where work really exists when things get tough, I think industries like ours and other trade professions rose to the top. I think that’s a potential positive outcome from this. But I have concerns about claims settlement practices like virtual appraisals, specifically around the quality of settlements that result from them. Not to mention that physical inspections provide better ability for consumers to be notified of damage that should inhibit driving the vehicle due to safety concerns. While virtual claims technology may appear to create convenience and efficiencies in the initial claims settlement process…we believe it’s a detriment to consumers. It was a great stop-gap solution in a unique time of mandated quarantine measures, but we believe it will lead to lower appraisals and more friction between the industry segments. We really believe consumers are best served by allowing trained professionals to thoroughly inspect and identify the damages in person.

Michael: We certainly feel consolidation will continue, and likely accelerate. The bottom performing 15 percent of collision repair facilities will likely be gone, and it will yield lots of work for the top-performing facilities. This is why our networks work so hard on operational excellence, and invest in training to stay ahead of industry advancements. The second point sort of ties in with previous comments, but I have a slightly different view. I think as customers change their buying habits throughout this pandemic to more of a digital experience, the contactless experience will only continue to grow. That’s not to say I’m a supporter or not a supporter, but I do think the digitization in various forms throughout the claims process is, for the most part, here to stay. Only because that end-purchaser of our services and of insurance, in all other aspects of his or her life, is buying more digitally. I think as an industry we need to be prepared for that and adapt.

Tim: I foresee OEM certifications becoming a big force in the next five to 10 years. It will provide an opportunity to get rewarded for the investment you’re making in your business. I think you also will see shops looking for other things to incorporate in-house, like glass work, to try to offset the decline in driving and claims, to find other ways to still get tires into the shop.