| Study suggests ways to improve DRPs for shops, insurers, consumers |
by John Yoswick
November 2006
Some level of standardization,
guaranteed work and other changes to insurer direct repair programs
(DRPs) could give repairers the ability to offer such things as 24/7
customer service and new performance guarantees, a recent study of the
industry concludes.
“Look at the investments and the innovation
we in collision repair have brought to the relationship so far – and we
don’t have one guarantee that a car is going to show up tomorrow,”
industry consultant Beryl Carlew of Carlew & Associates said at the
Collision Industry Conference (CIC) in Las Vegas in early November,
where he presented the results of his firm’s research. “Do you think
for a minute if we had the work to the door, we had metrics that we
knew we could exceed, and we were rewarded for that performance, that
we wouldn’t entertain…the dreaded 7-days-a-week, might even entertain
24-hours-a-day as an industry opportunity.”
Carlew’s
presentation at CIC was based on a nationwide gathering of input from
shop owners around the country. More than 380 collision repair business
owners participated in meetings held in 20 North American markets to
gather ideas and opinions on improving DRPs. Combined, the shop owners
who participated had 712 shop locations and sales of $1.7 billion, or
an average of $2.4 million in annual sales per location, Carlew said.
Sponsors of the project included Coyote Vision Group, 3M,
Sherwin-Williams, BASF, Square One Systems, and Enterprise Rent-a-Car.
Carlew
said the discussion with shop owners at each session focused on “what
keeps you awake at night” about DRPs and what could be done to improve
the process for shops, insurers and consumers.
At CIC, Carlew
discussed a list of more than two dozen problems shop owners currently
see with DRPs. That list included concerns that:
• DRP
guidelines and the “weight” given to various key performance indicators
(KPIs) change frequently with little or inadequate written notice to
shops;
• discounts and other concessions are required without any guarantee of how much work the DRP will bring to the shop;
•
there is unfair competition from shops participating in the DRP despite
not meeting what the insurer has said are the criteria for
participation;
• choice of parts may be dictated by the insurer
without assuming any liability for the use of those parts and without
concern about the impact it can have on cycle time, repair quality or
customer satisfaction; and,
• feedback on performance is often inadequate or appears to differ from the shop’s own performance measurements.
The
130-page report that resulted from the meetings also offers a series of
recommendations to improve DRPs. It suggests, for example, that:
•
all guidelines and the weighting of various KPIs for a particular DRP
be posted to a secure website, along with established timelines for
when notices of changes will be posted;
• shops be allowed to
use a “blueprinting” rather than “estimating” system, dismantling the
vehicle sufficiently to determine all parts and repairs needed prior to
beginning repairs;
• if a particular part, regardless of type,
is not available within 24 hours, the shop be allowed to instead use a
part that meets quality standards and is more quickly available;
• shops should receive final payment on jobs electronically within 24 hours;
• regular reinspections of repaired vehicles be conducted, with results shared with the shop; and,
•
a clear and fair “corrective action program” is in place for dealing
with a shop’s failure to meet program criteria or performance
guidelines.
With such changes, Carlew said, shops indicated a
willingness to accept more detailed performance contracts, such as
contacting consumers by Noon of the day following receipt of an
assignment, seven days a week. But offering additional services or
discounts, he said, should be based on rewards for performance and most
importantly, an assurance of work.
“How can a carrier walk into
a shop and say we’re looking for DRP partners who can handle 100 cars a
month, and at the same time say, ‘We cannot guarantee you volume,’”
Carlew said.
He said the information in the report, including a
version of a sample performance contract, is now being shared with
insurance companies.
© 2006 Image Output
John Yoswick, a freelance writer based
in Portland, Oregon, who has been writing about the automotive industry
since 1988, is also the editor of the CRASH Network.
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