The promise of greater competition in the collision repair marketplace is an eventuality many subscribers take to heart. The expansion of direct repair programs, the emergence of collision repair consolidators, the growth in insurance claims volume and the increasing professionalism and sophistication of existing collision repair operators are just a few of the factors that are changing the competitive landscape.
Repair facility operators in both urban and suburban markets have reported vast changes in the competitive nature of their local markets throughout the past few years. Evidenced by new entrants to the collision repair business, the growth of regional and local multiple shop operations and the physical capacity expansion of successful operators, competition for repair work on the local level is being taken to extremes never before seen in the industry.
This increasing level of competition is making it necessary for collision repair shop operators who wish to continue to grow their business to find innovative techniques to manage the repair process in their facilities and market their operations to both consumers and insurers. These forward looking entrepreneurs aim to further increase their sales, their profit, and most importantly, the long-term health and viability of their businesses.
Over the next several issues, INSIGHT will address the key factors that collision repair shop operators must address to succeed if they plan to grow their business for the long-term and examine how these factors will influence both the repair and marketing processes in the modern collision repair facility.
The first step necessary to make before developing a program of change for your collision repair facility is to have a thorough understanding of the collision repair process and common measurements of the process. Examine each portion of the repair process and look at your operation thinking about each step a repair makes along the path from estimate to final completion of the job.
Chart 1 provides an overview of the collision repair process. As indicated in the chart, we have four major business processes performed by every collision repair facility, large or small. These processes include:
Each of these business processes includes many sub-processes or tasks which get the work done.
These following sub-process tasks are included for each process as outlined below:
Chart 2 on page 13 details INSIGHT’s Collision Repair Shop Scorecard. The scorecard provides a detailed list of indicators collision repair facilities can use to measure the effectiveness of their operations.
The scorecard covers the bare minimum information shops should track for each of the four processes covered above.
Under customer communications, shops should track the number of estimates each month compared to the same month the previous year. Month to month comparisons can also be made. Tracking the number of estimates, plus labor backlog figures and batting averages gives a good indicator of the effectiveness of marketing and advertising programs the shop currently uses. Also, tracking allows shops to judge the effectiveness of new programs they may implement.
Also included in the customer communications section of the scorecard is customer satisfaction indexing. CSI is crucial to determine the overall impression your customers have of your business.
The planning process can be measured by items such as YTD gross sales and profit versus projections and previous year indicators. Also, turnaround statistics, how many actual repair days- divided by flat rate days of labor sold, helps determine the overall effectiveness of improvement in the planning and repair production stages of the collision repair process.
The production process should be measured in terms of quality and efficiency. Quality measures include the amount of rework time and dollars performed both before repairs are delivered to the customer and post-delivery. Efficiency measures include the percentage of jobs that are released to the customer on-time, the average number of days that repairs are late and the ratio of clock hours to flat rate hours. The clock hour/flat rate hour measurement can be performed in total, by department, by technician or by another factor of the shop’s choosing.
Production development measures center around additional training for staff, equipment in the facility. and additional physical plant- whether a new store, new building, or an addition to the existing structure. Technician productivity, again, the clock hour/flat rate hour calculation, can give a good indicator of necessary changes.
Having a firm understanding of your current performance is essential to creating a plan to compete. Begin compiling the statistics covered in this installment.
In next month’s INSIGHT, we will tackle changes in the customer communication process that will be necessary to challenge your competitors in the changing market.
Reprinted from the February 1998 Issue of Collision Repair Industry INSIGHT.
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