Did You Know? June 23rd, 2021

Here is a business tip.

I was driving down the street last week in Saskatoon and I noticed a car that was decked out with some flashy decals and a body shop logo amongst them. It made me think back to the 1980’s when I first worked at Parr Auto Body. We used free courtesy cars to gain an edge on our competitors and it worked – for a while! Eventually most body shops were providing free loaners to people that were at fault and did not have loss of use coverage. What was initially a competitive advantage turned into a millstone around our necks.

Don’t get me wrong, I get it why shops would offer free loaners, especially if your available work is sporadic like it is for some shops right now. That is precisely the reason I did it back in 1986, but here is what I found: if you offer “free courtesy cars” then everybody wants one. Why not? It’s free! Many times, people brought the vehicle back without refilling the tank saying, “I only drove it home and back, it sat in my driveway all week” Or it came back filthy or with damage on it – thank goodness we didn’t have photo radar back those days, I can only imagine how many tickets are assigned to courtesy cars these days!

At the height of our courtesy car days, we were spending roughly $40,000 a year, not sure what that translates in today’s dollars but I’m guessing it would be more than double. In any case back in those days we were making about 5% net profit and it did not take me long to figure out that I needed to sell $800,000 worth of work just to pay for courtesy cars!

I finally got sick and tired of being taken advantage of and started charging a modest fee for a “replacement vehicle”, I think it was around $10 a day. Immediately our loaners were cut in half! Now that it cost them money out of their pocket they could use their other car, or the in-laws truck! Like I said earlier, if it is free, everybody wants one!

I started focusing on delivering high quality work and a great customer experience. We developed a legion of raving fans by delivering not only a great job but by developing relationships with our customers. Even when we started subletting loaner cars to local car rental companies and charging them what the vehicle costs us, they didn’t even bat an eyelash.

To this day the only time we pay for a replacement vehicle is when we drop the ball and cause unnecessary delays for our customers. Think about it, even if you are making 10% net and spending $40,000 on loaners today you still need to sell $400,000 just to break even. Try charging a nominal fee for your loaners and see how many people really don’t need it. Even if you lose a few jobs – we did – keep track of how many dollars you lose and I guarantee that you will still be ahead. Right now, you are wearing yourself and your shop out just to supply a free loaner to somebody that in many cases just doesn’t appreciate it. (Teach your customers to buy Loss of Use coverage)

Think about it.

Kelly Hackman from Color Compass has been a terrific supporter of not only SAAR but the entire collision industry. I appreciate that he takes the time to offer tips to this newsletter from time to time and he has forwarded another one this week. Check out the document OEM Colors to Observe When Estimating. This is a BASF document but these colors will apply to most paint lines.

 Replacing Sound Deadening on vehicles has always been an easily forgettable labor and material cost that many body shops simply overlook. 

Not all sound deadening is the same, which means your repair plan may need to address the removal, application and materials differently from one vehicle to the next. From sheets that are pre-cut, some that require a template and cut to fit, to Liquid Applied Sound Deadening, masking operations and even specific products called for by the automakers, there are a lot of variables. Join Mike Anderson of Collision Advice (www.collisionadvice.com) and Danny Gredinberg with the Database Enhancement Gateway (DEG, www.degweb.org) as they talk through the non-included elements of sound deadening removal and replacement. 

SGI is currently rewriting all of its Master Service Agreements (MSA’s) to align itself with SGI CANADA. You are obviously familiar with their new SQARP agreement focused on automotive but if you repair the odd RV or semi-truck you may have to do so at the non-accredited rate if you do not meet their new requirements. Apparently, the information was sent out to shops that have completed these repairs in the past but I’m guessing some of you did not read it. 

Lyle Andrusiak sent me a couple of emails to clarify the situation:

“If the repair firm is applying for RV accreditation Category B or Commercial accreditation Category D, and has achieved accreditation through Certified Collision Care (CCC) and has provided us proof of that, then all they need to do is sign (and return back to us) the applicable MSAs.  However, if the repair firm is applying for RV accreditation Category A or Commercial Accreditation Category A, B or C, then additional documentation would be required due to the fact that there are additional, more specific requirements that must be met for those categories.”

Further to this Lyle added:

“It may be helpful to add in your communications that all repair firms that completed recreational and/or commercial vehicles for SGI since 2019 were sent the following communications highlighting the new accreditation agreements for recreational/commercial vehicles, and the repair firm’s responsibilities for being accredited:

  • Commercial Vehicles: sent out an accreditation readiness survey (identifying the requirements to be accredited) on July 16, 2020, and then, in May 2021 we sent out the MSA and instructions for submitting an application.
  • Recreational Vehicles: sent out an accreditation readiness survey (identifying the requirements to be accredited) on July 14, 2020, and then, in May 2021 we sent out the MSA and instructions for submitting an application.

 If a repair firm has not received the communications, please remind them to double check their emails (and Junk email box) for a copy of the communications so that they can get their applications in before they do any commercial/recreational repairs (to save them time while they are busy).”

It’s Talent-Poaching Season. 5 Ways to Keep Your Best and Brightest!

There is a great article from Scott Millar of INC. Magazine that really resonates with me. In fact, my son just got head hunted by another IT firm that upped his salary and benefits significantly to pull him away from a job that was paying already, in my mind, a very good dollar!

I ran into the same thing back in 2010 with my own staff. We switched from flat rate to straight time in late 2005, early 2006 and I basically had to develop my own staff from scratch. Just when they were all getting their journeyman tickets, different shops were looking to pay a few bucks more and take my home-grown talent! Well, I headed that off at the pass by bringing them on as partners in the business and it has worked out very well for all of us – maybe I will share more about that in a future newsletter.

Perhaps you don’t want to do something that drastic but you cannot ignore this potential threat to your business.

Take a few minutes to read Scott’ article here: