How much does it cost to write a supplement?
How much does it cost for a comeback?
Do you have SOP's for every task in your shop?
What is the average touch time by your techs?
Why is it important to have a computer in a tear down stall?

Get the answers to these questions at the ASA AZ meeting on Wednesday, December 9.

To download registration form: click here.

Here is good post for our blog, I found on Seth Godin's blog.

If you walk into a company-owned cell phone store to sign up for a contract, what are you worth?

 

Given the huge gross margins at AT&T and Verizon and the standard two-year contract, I think it's easy to figure on more than $2000 in lifetime value.

If you ran a business where a customer represented an additional $2,000 in profit, how would you staff? How long would you make someone wait? If staff costs $25 an hour, how long would that extra person take to pay off?

Few businesses understand (really understand) just how much a customer is worth. Add to this the additional profit you get from a delighted customer spreading the word--it can easily double or triple the lifetime value.

So, a chiropractor might see a new patient being worth $2,500, easily. And yet... how much is she spending on courting, catering to and seducing that new customer? My guess is that $50 feels like a lot to the doc. Instead of comparing what you invest to the benefit you receive from the first bill, the first visit, the first transaction, it's important to not only recognize but embrace the true lifetime value of one more customer.

Write it down. Post it on the wall. What would happen if you spent 100% of that amount on each of your next ten new customers? That's more money than you have to spend right now, I know that, but what would happen? Imagine how fast you would grow, how quickly the word would spread.

Here's how you'll know when you've really embraced this--a good customer at your podiatry practice (or supermarket or tax firm) walks out the door in a huff and you turn to your partner and say, "There goes $74,000."

Why Belong to ASA…

Posted on 08. Jun, 2009 by biggs in Uncategorized

Cycle time is a joke and a lie when used as a benchmark comparison between shops or as a accurate key performance indicator shop-to-shop evaluation tool. Sure, it can have value for an individual shop for internal comparison, but it is totally and completely inaccurate and misleading when used as it is today by insurers and others to compare the performance of multiple shops in multiple markets with a wide variety of repair types and work force. As it is today, it is damaging the lives and livelihood of thousands of businesses and consumers throughout America.

Can you imaging trying to synchronize watches with thousands of others to ensure timely coordination, but everyone uses a different definition of a day and has differing length hours, and even a different number of hours in a day? It is a ridiculous scenario, yet the collision repair and insurers employ measurements with nearly the same absurdity to evaluate and rank body shops. The result is thousands of lives are adversely affected and until now, no one has offered to improve the measurements or even acknowledge that they are arbitrary and ignorant.

The most ridiculous of all of the key performance indicators (KPI) that insurers and repairers use is “cycle time.” The collision and insurance claims industries have used a measurement of cycle time that contains neither consistency of how large a repair is or how many hours of repair time is applied. If one shop happens to be in a rural market where speeds are higher and hits are heavier, the cycle time will be far longer than in a suburban area where a shop specializes in lighter hits. According to industry and insurer cycle time measurements, one shops is far better performer, but that may be only because the measurements are inaccurate, illogical and insufficient.

The definition of cycle time even varies from industry segment to industry segment as it should, but again there is no factor that normalizes these units of time. Consider these varying definitions from a CIC task force committee charged with determining the definition and addressing this issue.

-Repairer Cycle Time: From the Time the Vehicle Arrives at the Repair Facility for Repair Until the Vehicle is Completed and Picked Up by the Consumer, (includes weekends). Commonly Referred to As, “Keys to Keys”.

-Insurer Cycle Time: “The Time From the First Notice of Loss to When the Claim is Paid”.

-Consumer Cycle Time: “From the Time of the Accident to the Time the Vehicle is Repaired and Returned to the Consumer.”

INVALID AND INACCURATE: To be used as a valid measurement, cycle times must include normalizing factors that will mitigate distortion and ensure consistency in application. In the case of cycle time of a repair, there are several factors that change the duration of the repair the most obvious is the severity of the repair. This is illustrated in today’s terms best by the dollar amount of the repair. Therefore, the most logical “normalizing” factor should be to calculate the number of days according to the overall dollar amount of the repair. For vernacular, the terms might be “repair days per repair cost”

SAMPLE CASE:

Consider this sample case of three shops with cycle times of:
Shop A = 10,
Shop B = 6, and
Shop C = 12.

From this data using today’s non-normalized calculations, shop B would have the best cycle time. On the other hand, if we add per repair cost factors, the results reflect a far different scenario.

Shop A = Average RO = $2,200 = 10 days = 4.54 days per thousand dollars
Shop B = Average RO = $1,500 = 6 days = 4 days per thousand dollars
Shop C = Average RO = $3,200 = 12 = 3.75 days per thousand dollars

You can take acception to the random sample numbers I used or disagree with any specific example, but the point is still valid and undeniable. A non-normalized measurement of cycle time does not accurately reflect efficiency either. For example, it does nothing to reflect how many repair hours were applied to the job since cycle time does not reflect how many technicians worked on the vehicle and how many hours were estimated on the repair. Therefore, another normalizing factor might be to how many hours of estimated repair time was used. This again would reflect a far different scenario than any arbitrary measurement of cycle time without any consideration for severity of damage or hours estimated or technician hours worked.

Isn’t it time for fix these inaccuracies and come to a common agreement surrounding consistent measurements? If and when they are fixed, these KPI’s will be valuable again. Cycle time will have meaning, consistency, accuracy and value. It will no longer be a joke or a lie, but become an essential measurement that could be the foundation for the most important aspects of making a body shop profitable and an relationship between insurers and repairs based upon logic and reason!

As of July 2009, those assembled at the mid-year Collision Industry Conference (CIC) voted to accept the condition that there should be a disclaimer when using cycle time by any group, entity or business. Here is the language accepted by the body:

Disclaimer: Cycle time is only one component of shop performance. The measurement of Cycle Time should be used in conjunction with other critical KPI’s to determine the overall efficiency and performance of a repair facility.

Normalizing the Variables

• Drivable vs. Non-Drivable
• Performance Relative to Your Market
• "Keys to Keys" vs. Production Time
• Specialized or Luxury Vehicles
• Possible Subsets for Each of the Definitions

Cycle Time Definitions

The Committee Identifed the Need for Three Different Definitions for Cycle Time:

• Repairer
• Insurer
• Consumer

The following are the definitions that we are recommending to the CIC body for approval.

Repairer Cycle Time: From the Time the Vehicle Arrives at the Repair Facility for Repair Until the Vehicle is Completed and Picked Up by the Consumer, (includes weekends). Commonly Referred to As, “Keys to Keys”.

Insurer Cycle Time: “The Time From the First Notice of Loss to When the Claim is Paid”.

Consumer Cycle Time: “From the Time of the Accident to the Time the Vehicle is Repaired and Returned to the Consumer”.

 

 

I found an interesting article, there are some good nuggets in there!

 

By John Patrick Dolan

Everyone uses negotiation tactics to get what they want, whether they’re haggling over the price of an item in a garage sale or discussing potential salary with a future employer. Most of the time, when you enter a negotiating situation you can expect the other party to use certain maneuvers to tip the scales in their favor. For example, you can expect a potential employer to offer you less money than they are actually willing to pay to give themselves negotiating room. And a buyer will usually act surprised at your stated price, no matter how reasonable it may be, to pressure you into lowering it.

Everyone uses these tactics, but that doesn’t mean that negotiations can’t be fair. Some tactics are acceptable, while others are downright sleazy. Tactics are part of the process, and you can use them and still maintain your negotiations on an honest level. In other words, the use of tactics doesn’t necessarily mean tricking or manipulating people.

Some tactics are simply tools to expedite the negotiation process; others are used to take advantage of the other person. To be successful in sales and business, you must be able to differentiate between the fair and unfair negotiation tactics so you can use the good ones to your advantage and deflect the questionable ones. Consider the following ten negotiation tactics and the methods you can use to deflect them:

Tactic #1: The Wince: The wince can be explained as any overt negative reaction to someone’s offer. For example, you might act stunned or surprised when your negotiating counterpart names their terms. This tactic tells your counterpart that you know your limits, which isn’t under-handed or dishonest. And wincing at the right time can potentially save you thousands of dollars. Keep in mind that when deals are negotiable, your counterpart will start high.

Of course, you won’t always be the wincer. Many times, especially in the sales profession, you’ll be on the receiving end of the wince. In this case, you can counter with the next tactic.

Tactic #2: Silence: In the negotiation process, silence can be your strongest tool. If you don’t like what your counterpart has said, or if you’ve made an offer and you’re waiting for a response, just sit back and wait. Most people feel uncomfortable when conversation ceases, and they start talking automatically to fill the void. Almost without fail, your counterpart will start whittling away his or her position when you use this tactic.

So what if you find yourself negotiating with a person who understands the importance of silence as well as you? Rather than wasting time in silence, restate your offer. Don’t make suggestions; just repeat your terms. This maneuver forces the other person to respond, and more often than not, they respond with a concession.

Tactic #3: The Good Guy/Bad Guy Routine: This sleazy tactic is often used in movies, where two detectives are interrogating a person who’s just been arrested. One detective seems unreasonable and inflexible, while the other tries to make it look like he or she is on the suspect’s side. This tactic is designed to get you to make concessions without the other side making any in return.

If you find yourself in a good guy/bad guy situation, the best response is to ignore it. Recognize this game for what it is, but don’t play along and don’t allow the good guy to influence your decision. The best technique is to let your counterparts play their game, while you watch out for your own interests.

Tactic #4: Limited Authority: This tactic is a variation on the good guy/bad guy routine, but instead of two people working over you, the one person you’re dealing with tells you that he or she must approve any deals with an unseen higher authority. Sometimes, this higher authority exists, but other times your counterpart will create this figure to gain an edge in the negotiation process.

So just because your counterpart tells you, “It’s out of my hands,” don’t automatically assume the person is being honest. In this type of situation, two options exist: one, ask to deal directly with this so-called higher authority; or two, test the limits of your counterpart. You may find that although the other person has used this tactic to force you into backing down, if you keep at him or her, you may get what you want.

Tactic #5: The Red Herring: This technique comes from fox hunting competitions, where one team drags a dead fish across the fox’s path to distract the other team’s dogs. At the bargaining table, a red herring means one side brings up a minor point to distract the other side from the main issue. Effective and ethical negotiators generally agree that this tactic is the sleaziest of them all.

When your negotiation process is bogged down with a minor problem, and your counterpart insists on settling it before they’ll even talk about more important issues, then you are probably dealing with a red herring. In this case, use extreme caution, and suggest setting the issue aside temporarily to work out other details.

Tactic #6: The Trial Balloon: Trial balloons are questions designed to assess your negotiating counterpart’s position without giving any clues about your plans. For example, you may ask your counterpart, “Would you consider trying our services on a temporary basis?” or “Have you considered our other service plans?” Essentially, these types of questions put the ball in your counterpart’s court, and the nice part about them is they aren’t really offers. They allow you to gain information without making a commitment.

When you’re on the receiving end of a trial balloon question, you may feel compelled to answer it thoroughly. To maintain your edge, resist this temptation and counter with another question. For example, if someone asks, “Would you consider financing the house yourself?” respond, “Well, if I did, what would your offer be?”

Tactic #7: Low-Balling: Low-balling is the opposite of the trial balloon. Instead of tempting you to make the first offer, your counterpart will open the process with a fantastic offer. Then after you agree, they start hitting you with additional necessities.

For example, say you see an ad for a product priced lower than other stores. But then after you agree to buy, the sales representative uncovers the hidden costs, such as shipping or installation. In the end you probably pay more than you would have at another store listing a higher price on the product. To avoid falling victim to this tactic, ask your counterpart about additional costs before agreeing to any deal.

Tactic #8: The Bait-and-Switch: Similar to low-balling, the bait-and-switch tactic should be avoided. Your counterpart may try to attract your interests with one great offer, but then hook you with another mediocre one. This tactic will almost always burn you, unless you can recognize it. If your counterpart were really able to offer a genuinely good deal, they wouldn’t have to resort to bait-and-switch.

Tactic #9: Outrageous Behavior: Outrageous behavior can be categorized as any form of socially unacceptable conduct intended to force the other side to make a move, such as throwing a fit of anger or bursting into tears. As most people feel uncomfortable in these situations, they may reduce their negotiating terms just to avoid them.

However, the most effective response to outrageous behavior is none at all. Just wait for the fit to die down before reacting, because emotional negotiations can result in disaster.

Tactic #10: The Written Word: When terms of a deal are written out, they often seem non-negotiable. For example, when was the last time you negotiated a lease, or a loan, or even a service contract that was typed up in advance in an official-looking document? You probably assumed these deals were non-negotiable, and for some reason most people make the same mistake of accepting terms that appear in writing.

The best defense against this tactic is simply to question everything, whether it appears in writing or not. You’ll inevitably run into some standard, non-negotiable documents, but it never hurts to ask questions. You may be surprised how many contracts actually are negotiable when challenged.

Better Negotiations in the Future: People have used these ten negotiation tactics for years, but that doesn’t mean they are always fair. So before you rush into your next negotiation situation, make yourself aware of these tactics and how they affect the process. When you learn the uses and defenses of these negotiation techniques, you can reach more mutually beneficial agreements and win more sales on better terms.

Read other articles and learn more about John Patrick Dolan.

[This article is available at no-cost, on a non-exclusive basis.  Contact PR/PR at 407-299-6128 for details and requirements.]

 

Best Regards,

Bill Park

 

We welcome your comments to our Collision Industry  Blog.  To submit a new comment email: info@asaaz.org your comments, include a title of your post.  Also indicate if you would like to include your name at the end of the post.  Your comments can be posted anonymously, please indicate that in your email.  All posts are subject to review and the ASA AZ staff may edit your comments.  No offensive comments will be posted.

If you have any questions, prior to posting feel free to contact Luz Rubio at 602-544-2600.

Most would agree that the Geico gecko is cute.  But for the vast majority of collision repair shop owners, managers and technicians, there isn’t much else that can be said about Geico that is positive.  Virtually every decision they make seems to be focused on one thing only, bottom line profits. 

 

Companies like Progressive and Allstate that once acted much like Geico does today, have changed their policies somewhat.  For the better.  They currently focus more of their energies on customer satisfaction than in prior years.  Along the way they must have determined that body shops play some small role in improving CSI.  Both Progressive and Allstate show increased flexibility when settling a claim.  Not that either is a shining example of fairness but at least they seem to be moving in a direction that is better for consumers and collision repair facilities.

 

So what does Geico do?  They refuse to recognize the first labor rate change in 5 years.  No matter that costs have risen dramatically or that every other insurer that I know of in this state has allowed for some increase. 

 

When it comes to steering, Geico is re-writing the book on this.  Estimates are that 75% to 80% of all Geico paid repairs are performed by shops under contract to them.  They will say almost anything to get the customer in one of their shops.

 

Untested structural aftermarket parts are no problem to Geico.  Apparently, consumer safety is not as important to them as profits. 

 

Is anybody out their as sick of this companies strong arming and arrogance as I am?  Few in this industry would argue that there are a lot of “fair” insurance companies out there.  But, in my opinion, if you made a list of Geico’s good qualities, you couldn’t fill up the back of a postage stamp.  There is nothing to indicate that they care one bit about what is necessary to properly repair a vehicle.  It is all about profits.  So what if they lose a few policy holders along the way.  The money they save by underpaying claims lets them run even more ads so that they can replace those customers that, because of a bad claims experience, figure out Geico does not have their best interest in mind.     

 

Personally, I have had it.  It hurts for me to tell customers that they will need to pay extra to cover what Geico refuses, but enough is enough.  They are the worst of the worst.  And if Geico has continued “success”, other insurance companies will follow in their footsteps.  It has always been that way.

 

What say you?  Am I the “only one”?     

The illusive means to understand company behavior by using a 'draw by numbers' methodology is a challenge all organizations face.  There is no doubt that company performance, consumer loyalty and client relations are developed and nurtured through the analysis of numbers; also known as 'performance metrics.' The inherent problem with metrics is that no matter how well run your organization is you cannot prevent the gaming of those numbers.  The moment you choose to manage by a metric, you invite manipulation.  Metrics are only proxies for performance, and thus should be treated as such.

In the following, I will describe five strategies that can allow an organization to better utilize the power of performance metrics.  These strategies are not exhaustive by any means, however, they will provide a top-level perspective that can build a long-term means to collect relevant data for decision making paramount to out-pace your competition.  Let's face it, if you cannot do that, good luck growing your business.

1) Evaluate your current metrics and ask:  Does your current metric provide a means for you to determine how you are competing in the market?  Can you or do you compare against industry benchmarks?  Do they provide a means to analyze how you will fair against your competition in the future?

2) Beating last years numbers is not the point, and today we can really see the value of that statement.  A performance measurement system needs to tell you whether the decisions you are making now will further your efforts towards the achievement of the organizational goals in the coming months.  The secondary question that arises is does your organization effectively communicate the goals?
     a.  You want the measurements to lead you rather than lag the profits in your business.
     b.  You need to evaluate the things that you say no to as well as those that you say yes to.

3) Avoid low quality data.
         a.  Avoid using a financial metric to compare a non-financial activity.  A good example of that would be trying to establish an ROI for (IT, HR & Legal).  This is commonplace from departments that are looking to justify there existence rather than being outsourced.  How are these casual links justified?  This requires a robust and qualitative approach that probably cannot be drilled down to a number.  Do not get caught in that trap.

     b.  Does your data collection capture the essence of the organizational goals?

4) Avoid gaming of the numbers.
    a.  o minimize gaming you need to diversify the metrics and create a holistic platform.  Here is an example:

   

                                                               i.

Use current income and cash flow statements.

 

                                                             ii.

Measure actions on emerging business activity (sales & marketing).

 

                                                            iii.

New business opportunities.

 

5) Sticking to the numbers too long is dangerous.  Although cash and growth are paramount to sustainability, looking at last week, last month and last year are dangerous.  As stated earlier, it is clear in today's climate that historical data is less relevant than it was say two to three years ago.  The focus moving forward has to be around profit and the relative position to your competition.
   
   a.  A one-size fits all strategy does not work, you need to know your customer, client and your competition. 

On Wednesday, July 29, ASA leaders met with Rep. Gene Taylor, D-Miss., sponsor of U.S. House Bill 1583, which would repeal the McCarran-Ferguson Act. Since 1945, insurance companies have had a "limited" exemption from federal antitrust laws that apply to most other industries ensured to them through an act of Congress. The McCarran-Ferguson Act provides that federal antitrust law applies to the "business of insurance" only to the extent that such business is not regulated by state law. The anti-competitive consequences of McCarran impact both consumers and small businesses that have to deal with insurers.

ASA supports H.R. 1583, which is co-sponsored by Rep. Peter DeFazio, D-Ore., because:

• Insurers have argued that this exemption allows them to keep insurance rates low. This is simply not the case. A competitive marketplace will only enhance consumers' options.

• The state insurance regulatory structure has failed for consumers and collision repairers. Without federal regulatory recourse, consumer and small business complaints are left to generally ill-equipped state regulators. After years of complaints, many states lag in addressing important consumer and small business property and casualty issues: i.e., consumer steering, insurer pressure to use inferior auto parts, paint caps, etc. These problems are increasing for consumers and repairers, not decreasing.

• State regulators are less likely to recruit top professional employees to oversee increasingly complex insurance products offered by insurers as well as deal with more complicated insurance issues that arise. Federal regulators have access to a degree of human resource and other capital that state agencies do not enjoy.

The Automotive Service Association is the largest not-for-profit trade association of its kind dedicated to and governed by independent automotive service and repair professionals. ASA serves an international membership base that includes numerous affiliate, state and chapter groups from both the mechanical and collision repair segments of the automotive service industry. ASA's headquarters is in Bedford, Texas.

ASA advances professionalism and excellence in the automotive repair industry through education, representation and member services. For additional information about ASA, including past news releases, go to www.ASAshop.org, or visit ASA's legislative Web site at www.TakingTheHill.com.

 

              It appears that the Collision Repair Industry in our state and some others has become completely controlled by the Insurance Industry and the shops that allow the continued deception of the American Public. The blatant disregard for the laws that protect and provide what little rights the average consumer and shop owners have is astonishing. I am in the court system on a regular basis fighting for the money that we have spent to properly repair a vehicle to its pre accident condition, that’s right, fighting for the money that the insurance companies are responsible for. The insurance companies have influence or lets just say “ Contributions “ in all areas of our state providing them with a blanket of protection to continue to deceive the general public. We all know what is going on and most are afraid to speak out against it, but would not hesitate to prosecute their neighbor if they stole from them. Oh I get it, the neighbor doesn’t own you like the Insurance Companies do therefore there is a reasonable “NOT” justification of some owners continued participation. I know that the list is long to sign on the dotted line and that there are many that can not wait to get into some of your positions and play this manipulative game agai nst the public, but keep this in mind those that are waiting are and will be willing to cut you out in any way possible to be able to sign that contract. There are no loyalties here my friends, none. The practice of underpayments, not paying for necessary procedures, not paying the posted labor rates and the many other things on the list is completely in direct conflict with the policies that are purchased on a daily basis. I have never heard on any insurance advertisement that “ The insurance companies have filled out a survey and all the participating general public should review and determine what they can charge for the policies in that market area” Do you see the rationalization of this.? The independent collision repair facility is involved in an all out war of survival and needs to be prepared to disclose all of these unlawful practices that are being brushed off as a common business practice. I understand that “No one said business is fair “but I also know that no one said that it is okay to be an accessory to the deception or manipulation of the general public for monetary gain, in fact I think that that could be construed as illegal. If your business model was built around the continued participation of the insurance industry for your longevity, then your more than likely to continue business as they instruct you and will cower when the big bad wolf comes into your office to review your files all the while hoping that they do not find anything that they could use to give you the boot or destroy your business. This industry has been completely compromised by the people that participate in the condoning of the well known tactics and manipulation of the public and the shops by the insurance industry, information providers and our elected officials. The Sad Truth of Our Industry in my opinion is that! We are playing against a stacked deck and some of the players are shuffling the cards for the dealer making it almost impossible to have a level playing field.