The MSO Project - December 2020

FORGING

EXPERT SAYS BULL MARKET

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INSURER RELATIONS

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DECEMBER 2020

TIME TO GROW MS O ow ner s on w hen they k new to ex pand PAGE 8

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THE MSO PROJECT | SEPTEMBER 2020

CONTENTS 8

14

F E AT U R E

Advertiser Index

8 | Growth Spurt

24

Accudraft

5

AutoNation

23

Industrial Finishes

Tips on how to cultivate relationships with local insurance agents

18

Pro Spot

16 | Balancing Acts

2

SATA/Dan-Am Company

The owners of three MSOs discuss their decisions to grow their businesses

BUSINESS BUILDING

14 | Important Ally

Tips on how to keep work evenly spread among multiple shop locations

20 | Customer Advocates WHO’S BUYING

GETTY IMAGES, FENDERBENDER ARCHIVES

4 | Acquisitions EDITOR’S LETTER

6 | What growth looks like in 2021 T R E N D S + A N A LY S I S

7 | The Market is Back?

Buyers still seeing collision repair shops as strong investments

Tips on turning your regular customers into loyal customers

Sponsored by

IDEA SHOP

19 | Acts of Kindness

Leading your employees with compassion helps build a healthy workplace culture

GROWTH PLAN

22 | Lemonade from Lemons

Capitalize on the positive changes that have happened at your shops because of the pandemic

SEPTEMBER 2020 | THE MSO PROJECT

3

WHO’S BUYING

ACQUISITIONS SEPTEMBER

GERBER COLLISION & GLASS ENTERS ARKANSAS The Boyd Group Inc., which also sells under the name Gerber Collision and Glass, has entered the state of Arkansas, with the recent acquisition of two collision repair centers.

The two locations in Farmington and Rogers, Ark., which previously operated under the name Northwest Arkansas Collision Center, are the latest acquisition for Boyd, according to a press release.

"We are excited to introduce our high-quality repair to another U.S. state," Kevin Burnett, COO of Gerber Collision and Glass, says in the press release. "The opening of these repair centers reinforces our brand and demonstrates our commitment to growth moving forward."

MITCHCO ADDS ANOTHER SHOP Florida-based MSO MITCHCO Collision Repair announced its latest acquisition in Brevard County. Rice's Body Shop is the fourth acquisition in seven months for MITCHCO. Running since 1974, Rice's Body Shop, located in Titusville, is operated by Billy Rice Jr., and his family. According to the press release, Rice's Body Shop has been the "go to" collision repair destination in Titusville for many years.

The MSO's press release also noted that this acquisition is "a great addition to [MITCHCO's] footprint in Brevard County on Florida's Space Coast."

4

FIX AUTO EXPANDS ACROSS PORTLAND AREA Fix Auto USA has announced another location in its growing network—Fix Auto Clackamas.

Located in a suburb of Portland, Oregon, the new facility is owned and operated by franchise partners Camille Eber and William Bray, according to a press release. Clackamas is the third location operated by Eber and Bray in the Portland area; they also run Fix Auto Gladstone and Fix Auto Portland East.

PROCOLOR BREAKS OUT PASSPORT Mondofix Inc., also known as Fix Network World, is bringing its ProColor Collision brand to the U.S. Recent research done by The Romans Group found that the size of the American collision repair industry is upwards of $36 billion.

ProColor, which was acquired

by Fix Network World this time last year, aims to provide repairers with pristine facilities and outstanding customer service. Upon crossing the border, ProColor plans to begin its network in California, Florida, Georgia, North Carolina, and South Carolina.

OCTOBE R

FIRM BUYS MSO TO CREATE NEW COLLISION REPAIR BRAND Susquehanna Private Capital, a private financial services firm, has acquired Brandywine Coach Works, a multishop auto repair operator, to form a new brand, Quality Collision Group.

THE MSO PROJECT | SEPTEMBER 2020

According to Private Equity Wire, Quality Collision Group, which is guided by OEM repair methodologies, will pursue strategic acquisitions of auto repair facilities and seek to leverage shifting industry dynamics to provide consumers with an innovative option in OEM-certified repair service.

Led by industry veteran Jerod Guerin, Quality Collision Group employs a team of 90 that operates across its four Pennsylvania locations. Quality Repair Group is currently seeking acquisitions of collision repair shops across the U.S.

CRASH CHAMPIONS COMPLETES 6TH PURCHASE Crash Champions recently acquired Fountain Valley Bodyworks, Inc., and its two locations in Orange County, Calif.

The acquisition of the two shops is Crash Champions' sixth purchase of the year, according to a press release. By the end of 2020, the MSO plans to rebrand all its shops to the Crash Champions name.

"After 45-plus years of building Fountain Valley Bodyworks into the powerhouse it is today, I knew our next chapter would involve partnering with a wellcapitalized MSO positioned for meaningful near-term growth," Dave March, founder of Fountain Valley Bodyworks, says in the press release.

With the most recent acquisitions, Crash Champions now has 25 shops in Southern California and 47 locations total spanning

California, Illinois, Missouri, Ohio, and Wisconsin.

N OV E M B E R

BALISE COLLISION REPAIR OPENS 6TH LOCATION Balise Collision Repair opened its 6th location yesterday in Hyannis, Mass.

The newest addition is the group's third shop in the state, according to a press release.

FIX AUTO USA ADDS FRANCHISE LOCATIONS Fix Auto USA announced the addition of six franchise locations across two U.S. states.

According to a press release, three new California franchise locations are Fix Auto Los Angeles— Koreatown, Fix Auto Santee, and Fix Auto Stockton. In Arizona the newest franchise locations are Fix Auto Avondale, Fix Auto Phoenix— City Center, and Fix Auto Tempe.

CCG WELCOMES 23 NEW LOCATIONS Certified Collision Group announced the addition of 23 new locations to its lineup.

According to a press release, the additional 23 locations were picked up in October, marking CCG's second largest growth month in 2020.

Marty Evans, the group's COO, says in the press release that the additions are "a continuation of our steadfast commitment to the independent, owner-operator who believes in OE Certified repairs and delivers industry-best customer service.”

CCG now operates more than 525 locations across 37 states.

®

EDITOR’S LETTER

Pushing Forward

WHY GROWTH IS STILL POSSIBLE There’s a quote I keep coming back to in this month’s The MSO Project main

ANNA ZECK Editorial Director The MSO Project

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THE MSO PROJECT | SEPTEMBER 2020

feature. It comes from former FenderBender editorial advisory board member Andy Tylka, the second-generation owner of Tom & Ed’s Autobody: “People are a family business for a reason. People work in a family business for a reason. And you don't want to change that feeling of a family business.”

It comes at the end of a story about growth and how to continue expanding operations. But it so perfectly encapsulates the real trick to MSO growth: not losing your identity.

There can be a misconception that MSOs have lost that “family feel.” That they’ve become corporate and too large to truly get to know their customers.

Of course, that couldn’t be further from the truth. If anything, MSOs have the best of both worlds: the resources of a larger corporation with the family feel of a mom-and-pop shop.

Throughout this year, difficult headlines have become near inescapable and on a local level, news of business closures (particularly restaurants) seem to hit every day. It’s not easy to be a surviving small business right now, let alone one that’s growing.

But growth right now is possible. Just ask the three shop owners profiled in our “How They Did It” feature (p. 8), which shares the inspiring stories of three shop operators and how each of them, presented with the opportunity to settle, changed course and pushed forward, positioning their businesses for seemingly limitless growth, expansion, and improvement.

And on a macro level, just look at the latest report published by Focus Advisors on mergers and acquisitions activity within the industry (p. 7). After a slowdown this spring, the market is back, prompting regional MSOs, in particular, to continue adding locations.

The message is clear: Growth is still possible and with all the resources at your disposal, MSOs are best equipped to do it. As we head into 2021, it’s time to refocus, re-energize and set goals that, by all accounts, we can achieve.

TRENDS+ANALYSIS

Report: Market for Body Shops Recovering Despite Pandemic

PRIVATE EQUITY, CONTINUED DRIVING SAID TO BE BOOST FOR MARKET FOR COLLISION REPAIR SHOPS

BY MIKE MUNZENRIDER

a buyer could move in and develop a regional presence.

Bigger MSOs in markets where they’re not competing with the regionals, Roberts says, are thus targets of private equity in two ways: someone big may come knocking, looking to acquire, or will come with a plan to expand the MSO.

TECH LAYOFFS CREATE OPPORTUNITY As the COVID-19 pandemic drags into the latter parts of 2020, it’s tough to come by many sure things. Focus Advisors Automotive, a mergers and acquisitions firm that works with collision repair entrepreneurs, though, in July made a boldly sure statement.

Last year saw a high level of interest from buyers of collision repair shops and MSOs, according to a Focus Advisors report published this summer. However, when the pandemic put a pause on the economy this spring, potential buyers and sellers also put things on hold, both wondering how far revenues could drop and for how long they’d stay low. Come July, a number of factors had combined to prompt Focus Advisors’ bold statement, as stated in its report: “The market is back!”

The report, written by Focus Advisors managing director David Roberts, who also co-founded Caliber Collision and was its chairman until 2003, lays out four reasons why collision repair shops are once more a hot commodity.

PEOPLE ARE CHOOSING TO DRIVE

Miles driven, per the report, continue to rise, with many forecasts expecting to see continued reliance on cars as people choose to drive instead of taking a flight or commuting on public transit.

“There’s just this huge amount of uncertainty out there and until people have confidence they can travel safely … I think we’re going to see a continued impact,” Roberts says in an interview.

As of the reports’ July publication, miles driven in the U.S. was only off 3 percent from February levels, with the expectation being that as the vacation rental market recovers, people will be choosing cars to get there.

LOTS OF POTENTIAL BUYERS

Regionals like Classic Collision, Crash Champions (with Pacific Elite), Joe Hudson’s and ProCare, according to the report, are backed by private equity and have marching orders to expand by buying up shops.

“There’s some very strong regional players out there who might not want to sell their businesses but they’ll have the opportunity to get money from a private equity firm to grow,” Roberts says.

Gerber and Caliber also remain as buyers and then there’s the outsiders—seven private equity firms are looking to enter the collision repair market, the report says.

Many have purchases in process and most are being helped by experienced operators, who are leading the acquisition.

SCARCITY OF TRULY GOOD BUYS

By the Focus Advisors report’s count, only about 28 percent of collision repair shops in the U.S., “are considered impactful enough to buy.” That’s fewer than 9,000 of the 32,000 or so shops in the country.

Rarer yet, the report says, are what it phrases as “quality MSOs”—the firm says there are about 125 multiple store operators with four or more locations in the country. Only one-third of those, the report says, are important enough that

A check on the 2019 collision repair purchase market, the report says, was a lack of available technicians and experienced shop operators.

Roberts says the collision repair industry is down 20 percent in revenues on the year, and between that and the end of the federal Paycheck Protection Program, techs and operators are being laid off and are reentering the job market. He says this new talent pool is a mixed bag—shops are letting go low performers alongside expensive, high performance workers— though the end effect, as stated in the report, is that, “It’s now feasible to develop a plan to enter the collision market and find sufficient talent.” The report adds this could make it easier for new private equity to enter the market, while making “platforms more attractive even if the owner operators wish to exit completely.”

The report offers a caveat: Buyers may structure deals differently than before in order to protect against a continued down market. It says full payouts may be contingent on shop performance hurdles that stretch through this year and into 2021.

Of all the factors, Roberts says, the biggest driver of the renewed market for collision repair shops and MSOs is private equity. He’s seen PE at work in his pre-Focus Advisors work, helping Caliber Collision raise capital of more than $120 million and acquire 37 shops, before it was bought by a private equity firm in 2008. “[Private equity sees] an attractive market in which they want to invest, that will give them a great return for some time,” Roberts says.

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By Lauren Borchart and Mandy Hay

8

feature

As

any MSO owner knows, opening an additional location does not happen overnight. Years go into searching for the right location and preparing your business for the expansion.

“When I opened my second location, I had been looking for a property to come available for about three to five years…

We had outgrown the space that we were in—there really was no more room to expand, so we decided to look into a different market.”

These are the words of Rick Stickland, who co-owns South of the Square Collision Centers located in Medina and North Ridgeville, Ohio.

FenderBender spoke to Stickland and two other owners asking them to share their advice on how they did it.

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A SOLID FOUNDATION South of the Square Collision Centers– two shops, on the lookout for a third In 1999, Stickland bought a building in Medina, Ohio, and opened a body shop with only one other person in his employ. Now, he and his wife, Susan, have two thriving locations in northern Ohio and are always looking for a place to open a third shop.

So, what’s needed in place when opening an additional location?

Stickland says that they are always looking toward the future, but in order to do this, any shop needs processes in place, people that they trust to do the work, and plans for progression.

Processes in Place “You have to have your original location running well and have processes in place before you should even think about expanding,” Stickland states.

These processes make sure that there is consistency within your business. Consistency means that each employee is doing the same processes for each project, and the processes in one location must mirror those of the other location or locations.

Having these guidelines in place sets an MSO up for success because the team must be able to work on its own and know what they are doing without the owner having to be at the shop all the time.

These processes set up a sense of uniformity within a business, but the people who do the work are the ones who really make the body shop run.

People That You Trust Stickland is not alone in his endeavors. He shares the load of running his business with a knowledgeable management team.

In 2011, Stickland hired a general manager to manage both the locations. His reason for adding this position?

Process Oriented Rick Stickland, who owns South of the Square Collision Centers with his wife, Susan, says having repeatable processes in place makes expanding less complicated.

“He manages and works in the shop while I work on the shop to focus on expanding the business, adding on to my current shops, and researching other locations,” Stickland says.

Another key person in the business is coowner Susan, who manages the shops’ finances.

Stickland mentions that his wife is a good equalizer, who reels him in when he wants to spend too much money. Because of her, he does not need to obsess over the accounting part of the business.

Plans for Progression Opening a new location is a lot like opening an entirely new business. It is a long process, and business owners must plan out every detail.

Stickland mentions that because you have processes already in place and you have built a name for your shop elsewhere, the transition can be smoother. However, with a new location comes new difficulties, and a multishop operation owner must be prepared for anything and up for the challenge.

Owners need to think about the market for body shops in different areas, how they are going to staff their locations, and how they are going to build their clientele.

Acquiring a staff in this way may seem easy, but there were still challenges that went along with it, such as teaching the team the processes and making sure that the new shop would get enough customers so they could pay the new workers.

SEPTEMBER 2020 | THE MSO PROJECT

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LESSONS LEARNED The Aureus Group– three shops Tom Bemiller, owner of The Aureus Group—the management company of three auto body shops in Pennsylvania—is not a car guy. He never had a particular interest in cars or repair, and hasn’t even owned a car since he was 17. But, after working his teenage years in a local repair shop, he saw an opportunity to improve the overall experience of the industry, and that hopeful vision drove him to his career.

In 2012, Bemiller opened Aureus Auto Body in Zieglerville, Pa. Since then, he has acquired two more locations underneath The Aureus Group company: Mercer Auto Body in Kennett Square, Pa., and Ed’s Auto Body in Brookhaven, Pa. His experience wasn’t as smooth as he hoped for, but the road bumps he faced have given him great insight into common mistakes to avoid, and tips for those looking to expand.

Navigating Customer Loyalty All of Bemiller’s shops were acquisitions of existing shops, and he quickly found that hanging onto that shop’s existing customer base was more difficult than expected. When he acquired his first location, he changed the name to Aureus Auto Body immediately, a move he retroactively regrets.

“Anytime there's a name change, it's very obvious there's an ownership change. And sometimes that scares people away,” he says.

On his second and third acquisitions, he kept the shop’s original names to offer some consistency to the customer base.

Importance of a Shared Vision The next factor of building off an acquisition to keep in mind is whether to keep staffing the original shop’s employees. Bemiller recommends keeping the employees, especially since acquisitions mean a quick turn around.

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One Team Tom Bemiller’s The Aureus Group has standardized its operations through one core principle: a shared vision, extended throughout the company.

But it’s important to be upfront about your vision right from the start. By being clear about your expectations and where you want the business to go, both parties will be happier and feel heard.

In his experience, Bemiller found that having these tough conversations at the beginning of the acquisition process is necessary for ensuring that you’re working with people who are willing to work hard toward common goals and improvement.

Gauging Stability “Make sure that you've got your foundation built—you've got the right people in the right

seats, and you've got processes driving results, not people driving results,” Bemiller says.

He advises those interested in expanding to be sure they have a strong base, both in finances and people, before moving ahead with an additional location.

And the same goes for finances. You have to be in a stable position financially so that you can operate a shop at little to no revenue for a while in the beginning, Bemiller advises.

“Do not drain all of your cash in order to open a second location. When you open another location, you need a large cash reserve,” he says.

“Because there's going to be a period of time where you’re operating unprofitably.”

TIPS FOR EXPANSION Tom & Ed’s Autobody– five locations, one new acquisition Andy Tylka, owner of Tom & Ed’s Autobody, knows a thing or two about family businesses, and the special connection they share with their community. Tom & Ed’s Autobody was founded by his father, and Andy is now in charge of its f ive locations and legacy.

Over the course of his career thus far, Tylka has expanded to five locations across Indiana, both through greenfielding and acquisitions.

But navigating a new location, especially if it’s a well-established shop, is filled with challenges. Tylka draws on his own experiences to offer up some sage advice for those looking to expand their shops.

hiring a regional manager, in order to better manage multiple locations.

“Self-managing people builds infrastructure.

Because self-managing people creates a predictable outcome. You know your people are going to do their job, you know you trust them, you empower them, and you know you’re not going to have to put out fires,” he explains.

Branding Consistency Speaking to why he prefers acquisitions over new buildings, Tylka states, “it's definitely worth the extra money to purchase that reputation and book of business and the people.

You don't mess with what works.”

Local businesses, especially family-owned ones, are so ingrained in the community, and have such a loyal customer base, that it’s important not to change a lot about them in order to be successful.

One of Tylka’s acquisitions is Riley & Sons in the Indianapolis area. It was founded in 1957, and has been a town landmark since. So, when acquiring an established business, be willing to be flexible and don’t rattle the cage.

“People are a family business for a reason.

People work in a family business for a reason.

And you don't want to change that feeling of a family business,” Tylka says.

Get the word out.

Tylka says a great f irst step if you’re considering another location is to start spreading to word that you’re looking to expand.

Get to know other shops and their owners, tell your vendors about your desire to expand—anything to get your foot in the door.

If people in the industry know you’re eager to expand, they’ll keep you in mind when opportunities arise.

“You want to be able to make random phone calls to shops to say, ‘Hey, is this something that you're looking at in a few years? Because if so, I would love to start talking to you,” he explains.

Don’t be afraid to delegate.

Organization is key when juggling multiple locations, and sometimes it’s just too much for one person. Knowing when to step back and delegate responsibilities doesn’t make you less of a leader, it makes you a great one.

Tylka recommends empowering your employees to take on responsibilities, or even

Know How to Grow Despite its growth, Tom & Ed’s Autobody has retained its family-oriented feel, thanks to slow, but steady, expansion.

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BUSINESS BUILDING

Improve the Customer Experience TURN YOUR CUSTOMERS INTO ADVOCATES FOR YOUR BUSINESS B Y M A N DY H AY

Imagine this: You have a great business. The people who work for you are incredibly knowledgeable and talented. You have a pretty good flow of customers, but they only come around when they need your expertise.

You’ve got a good thing going here, but you’ve been wanting to grow your business, and in order to do that, you need more customers. Sure, you can spend tons of money on marketing, but one of the most important tools you can use is something you already have: your regular customers.

Jay Baer, marketing expert and founder of Convince & Convert, a global firm that helps businesses optimize their customer experience, discloses the key to growing your business: focusing your energy on acquiring new customers, not just retaining regulars.

So, how can you turn your returning clients into advocates for your business?

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“Competency does not create conversation,” Baer says. “You doing exactly what someone paid you to do is not a story. … If you’re going to turn your customers into volunteer marketers, you have to give them a story to tell and that has to be something that they did not expect.”

This story, called a talk trigger, should be an operational choice that you make in your business that is created in order to spark conversation.

For example, Baer mentions that there is a restaurant in Sacramento called Skip’s Kitchen that offers a fun promotion to every customer that comes inside. After the customer orders his or her food, the server will lay a deck of cards face down on the counter and tell the customer to pick a card. If the customer picks a Joker, the entire order is free. Because of the reliability of this hook, the owners of Skip’s Kitchen have never spent any money on advertising.

Of course, this is an example of a restaurant, but in the automotive industry, you can be creative in order to create a story, too. One business leaves a 2-liter bottle

GETTY IMAGES

GIVE THE CUSTOMER A STORY.

of homemade root beer and a handwritten note in the vehicle for when the customer comes to pick it up.

The point is, when your business has a “story,” you don’t need to spend as much money on marketing, because the customers do it for free, Baer says.

“You just need to have enough courage to do something that the customer does not expect,” he says.

GIVE THE CUSTOMER A GREAT CUSTOMER EXPERIENCE.

Customer experience is a bit different than customer service in that the customer experience is the entire experience that the customer gets from your business. This includes the customer service received, the fixing of the car, and the cost. To improve your customer experience, you must improve your whole business.

Because it is so broad, Baer has three easy tips that are easy to remember, and have a disproportionate impact on the customer experience. When it comes to customer experience, remind yourself of three things: be quick, clear, and kind.

“How can you be 15 percent faster in the next 90 days? How can you be 15 percent more clear in the next 90 days?

How can you be 15 percent more kind and empathetic in the next 90 days?” Baer says. “When you take customer service from this big abstract concept and break it down like this, it becomes much easier to work with.”

GIVE THE CUSTOMER GREAT SERVICE.

Great customer service is also key to finding new customers and turning them into regulars. When it comes to customer service, a business owner must think most importantly about three things.

1. Understand that your unhappy customers are your most important customers.

“Out of every 100 dissatisfied customers, only five will actually complain. The other 95 will just disappear,” Baer says.

Because of this statistic, the people who do complain are incredibly crucial. Business

owners can learn a lot from that group of unhappy customers, and take steps to fix what was wrong and make it better in the future. This may even urge the unhappy customer to come back because you made the effort to fix that relationship.

2. Address all requests and complaints.

No matter how difficult the situation, the worst thing that a business owner can do, Baer notes, is to pretend it didn’t happen.

When answering a customer request, answer promptly and help him or her to the best of your ability. When answering a customer complaint, answer promptly and professionally. Even if you cannot help them, listen.

Sometimes you just need to say, “I hear you.

What can I do to fix it for next time?”

3. Create customer interaction in different avenues.

Baer emphasizes that business owners need to focus on interaction with customers in the ways that the customers prefer, not just in the ways you prefer. Interacting through phone or email are always good routes to take, but customer demographics and technologies are changing. Younger, more techsavvy people are becoming industry clients, so interacting via text, social media, or live chat are viable options as well.

GIVE THE CUSTOMER A DIFFERENT PERSPECTIVE THROUGH SOCIAL MEDIA.

Changing demographics means more communication through social media, but Baer says there are many ways that a business owner can use these platforms to create buzz for their business: 1. Spotlight your talk trigger. Remember the thing you do that starts a conversation? Nudge it. Post about it. This is an intriguing bite to share.

2. Talk about what’s going on. Do you have any news that you want to share?

Did your shop just win an award?

Highlight it on social media.

3. Spotlight your customers and employees. Social media should be more about people and less about business, and posting about the real people who

work for you or regularly visit you gives a face to the company.

4. Answer messages and comments. Social media, hence its name, is social.

When a client asks a question via comment or direct message, reply promptly.

5. Pick your platforms wisely. A good thing to remember with social media is that each platform tends to reach a different audience. Take a good look at your clientele. Most likely, there are people from all walks of life, because many people own—and crash—cars.

Facebook usually reaches the largest concentration of people, but if you have a younger customer base, Instagram may also be a good thought.

GIVE THE CUSTOMER CLARITY IN UNCERTAIN TIMES.

As the world begins to reopen following the global pandemic, there is a level of uncertainty that follows people everywhere. In times like these, business owners really have to focus on giving their customers clarity.

“You have to fundamentally rewire your relationships with customers. Any knowledge or relationship that happened pre-pandemic is no longer valid,” Baer says. “[Your customers] don’t know if you are open. They don’t know if they need to wear masks. They don’t know if they need to do anything special to drop off their car.”

Baer’s suggestion is to write down the top 50 questions your customers may have about your business right now. Once you have a solid plan and have figured out the answers, begin to get the information out to your clients and potential customers.

Post on social media, send out an email newsletter and put it on your website.

After something as big as a pandemic happens, business owners must adapt to the times. Some importance lies in making the customer feel comfortable, but it’s even more important to focus on reducing uncertainty around your business.

“Uncertainty keeps people’s money in their pockets, and so what you’ve gotta do is bridge that uncertainty,” Baer says.

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BUSINESS BUILDING

THE KEYS TO BALANCING WORK BETWEEN YOUR LOCATIONS B Y L AU R E N B O R C H A R T

Load leveling is key for keeping customer flow balanced and consistent, and it is extremely beneficial for keeping work moving efficiently. However, mastering it can be tricky, as the process is complicated and involves several moving parts. In order to clear up some confusion, FenderBender talked to two professionals—David Caulfield of Fix Auto Anaheim North in Anaheim, Calif., and Shane Steele of Elite Auto Collision in Norcross, Ga.—for their tips and tricks on mastering this process.

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BREAK IT DOWN BASED ON SEVERITY.

At Fix Auto, Caulfield always divides work among his shops based on the severity and estimated workload of the job, not the dollar amount or volume of cars. This ensures that the cars are in the right facilities with the correct specialists, making the process smoother and reliable.

“Those cars won't sit, it'll turn more frequently, and you'll be able to capitalize a lot more on profitability, you'll be able to improve all your KPIs—

GETTY IMAGES

Improve Load Leveling

customer satisfaction will go through the roof,” he says.

He describes the process as first deciding what your load leveling criteria is, and using that to determine whether a car is more fit for his heavy collision repair center or light collision repair center.

“You want to keep that facility that does the non-structural work moving cars in zero to three days. Then, at the end of the day, the heavy collision center is not disrupted, and the light collision center is not disrupted either. You really have a nice synchronous flow there,” Caulfield says.

Steele goes about load leveling in a similar way, dividing the workload by degree of damage on the vehicle, which distributes the amount of work more evenly among his six shops.

“We try to make the best decision possible and then, if needed, we'll just move it to another store that it’s really not going to impact in a negative way,” Steele says.

FOCUS ON SPECIALIZATION.

Hiring specialists that are experts in a particular step in the repair process is essential for quality repairs that move fast, Caulfield believes. By having staff members with specific skill sets, they are able to do their parts quickly, without needing any help. Caulfield believes more people need to become specialized in order for this to happen, and urges employers to “look into empowering people to become great at one thing.”

He suggests looking to dealerships and their segmentation for inspiration on this process, citing their emphasis on skill sets. This type of model can be implemented into collision centers to help move cars along quickly and ensure high quality work all around, Caulfield believes.

“They always segment into departments in the dealership: lube, front end, and heavy duty transmission. That’s so they have experts on each one of those skills, and they’re able to move much faster

and they load level between themselves, in essence,” Caulfield says.

DON’T DISMISS THE HEAVY COLLISION JOBS.

Shops often have a tough time dealing with heavy collisions jobs—they’re time consuming, costly, and overwhelming.

It may be tempting to pass these up for quicker-moving repair jobs, but Caulfield advises owners to take on heavy collision jobs, stating that they’re well worth the time they take, and they keep the load leveling balanced.

He warns that rejecting heavy collision jobs can throw a wrench in the whole repair process, leaving customers unsatisfied when a car is turned away.

Caulfield believes that putting too much emphasis on KPIs is to blame for the dismissal of heavy collision jobs. Doing this can actually make shops lose jobs, as they’re more concerned about a score than the service their shop is supposed to offer.

His advice for dealing with these large undertakings is to become more educated on heavy collision, and craft a team that can deal with them in the most efficient and effective way possible. With practice, these jobs will become easier and well worth your time, Caulfield states.

“We're constantly studying heavy collisions, constantly figuring out a way to attack it correctly,” he says.

So, don’t shy away from these bigger jobs. Taking them on is rewarding, and keeps the load leveling cycle balanced. As Caulfield says, when it comes to collision jobs, ”why be selfish?”

BE UPFRONT WITH THE CUSTOMER.

When it comes to load leveling, Steele believes the most overlooked aspect of the process is customer service. When a customer hands over his or her car to you, he or she is trusting you with something that is integral to daily life, so it is of the utmost importance that your customer feels secure in your

handling of it. That’s why keeping constant communication with the customer on the status of the car during the load-leveling process is crucial to providing great customer service. According to Steele, customers should be kept in the loop at all times during the process to ensure they trust your work and keep coming back.

“You’ve got the customer in your hands and you're giving it to another shop and even though you trust them, you got to make sure that you're following up with customer service because they’re ultimately still your customer, you're still going to deliver the car back to the customer,” he says.

At his shops, Steele and his employees cover all the bases when it comes to taking care of a customer during the load leveling process. They go as far as rounding up a customer’s personal belongings and mailing it to them, so that it’s one less thing for the customer to worry about. Steele believes being upfront about customer concerns, like how the transportation of the car will be paid for on the record, is necessary in the full schedule of load leveling.

“Most customers are totally fine with us load leveling their car but they want to know how you're going to move it. Are you going to drive it? Are you going to pay a wrecker? What's going to happen with their car? So, as long as you're upfront with all of that, they know what's going on,” he says.

The less a customer has to worry about during the process, the more receptive they’ll be to load leveling, and the smoother it will all go. Steele’s advice is to do everything you can to make the customer confident that you’re taking care of everything, even the little details.

“Typically, if we're putting on a record, we just take care of everything,” he says.

“We're going to drive it. We always fill the car up with gas and make sure it's ready to go so, if a customer gets in it, they have nothing to worry about.”

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2020 is Finally Done.

But We Never Stopped.

Thank you to all the technicians, managers and employees that kept working in body shops around the world during these unprecedented times. We want to thank the entire Pro Spot International staff and Distributors as well. When the world came to a stand still, they were there and ready to help out in any way they could. 2020 has not stopped us from providing the collision repair industry with the best equipment and service possible.

Wait until you see what we're going to do in 2021.

Spot Welding • MIG Welding • Riveting Systems • Dent Repair Systems Sanding Systems • Plasma Cutting • Plastic Repair • Aluminum Repair

IDEA SHOP

Leading Compassionately HOW TO LEAD WITH EMPATHY

What qualities define a good leader? A leader can be confident, goal-oriented, and decisive.

However, Sheryl Driggers says that one of the most important leadership traits is compassion.

Driggers is co-owner of Universal Collision in Tallahassee, Fla. Her expertise in business has allowed her and her partners to open two additional locations and build an incredible team of employees. Driggers leads the management team to create a healthy company culture by being compassionate toward her employees every day.

A S T O L D T O M A N DY H AY

BUILD RELATIONSHIPS WITH YOUR TEAM.

I recall a pivotal point in my leadership journey. After receiving three hotspot customer service surveys within two weeks, I emailed the entire customer service team letting them know that the situation was unacceptable and that they better fix it, now. Later in the day, I told a colleague about the situation and my swift response to it.

After a pause, he asked me if I thought that was the best way to handle the situation. I said, “Of course. They needed to know that the situation was unacceptable.”

However, he did not agree: “Sheryl, you realize how you talk to your team is how they are going to talk to your customers.”

I noted that I have provided many training resources and have systems in place for every situation, so something like this just shouldn’t happen.

He reminded me that business is not just about processes; it’s about people, and about developing relationships with them.

Because I had spent so many years chasing outcomes, I had begun to neglect the people around me.

After reflecting on this encounter, I decided to take the customer service team to lunch, not to talk about work, but to be intentional in developing relationships with each of them, as well.

This was the beginning of my learning to lead compassionately. Relationships take time, but they are crucial in creating a foundation of trust in the workplace.

EXPECT EXCELLENCE, NOT PERFECTION.

There is a distinct difference between excellence and perfection. For years, I was the perfectionist who walked into the shop and offices and pointed out everything wrong. What kind of tone do you think that set for the day?

For years, I didn’t celebrate wins because I always thought we could do better.

Once I became enlightened, I started noticing how many times I would walk into our shops and have those same types of demanding conversations with my team.

I had to make a shift—a shift from demanding perfection to striving for excellence. That does not mean I let things

slide. It does not mean I allow 90 percent customer satisfaction when we used to strive for 100. No, that is not it at all.

It is a shift that when there is a gap between performance and goals, we come alongside our team, coach them, empower them to grow, and reach our goals.

INTENTIONALLY OVER-COMMUNICATE.

Once upon a time, I thought the owners communicated well because we did with the six managers. However, we took an employee satisfaction survey and found out that some other team members felt left in the dark within the organization, so we began filling in the gaps of communication by launching weekly KPI meetings.

In these KPI meetings, we go over our KPIs and are intentional in celebrating our wins and talking about performance gaps.

Additionally, we deliberately ask our management team, “what are we going to go back and tell our team members?”

This conversation determines what decisions are ready to be communicated with the entire team and which are not, and allows us to make sure we communicate consistently.

I read a quote several years ago by author, speaker, and coach Jon Gordon: “Where there is no communication, negativity always fills the void.”

I have seen this play out in every aspect of my life. When people don’t feel communicated with, they will always assume the worst, which opens the door for negativity that is harmful to your company culture.

SEPTEMBER 2020 | THE MSO PROJECT

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BUSINESS BUILDING

Navigating the Insurance World TIPS FOR BUILDING A POSITIVE RELATIONSHIP WITH YOUR INSURER B Y L AU R E N B O R C H A R T

Insurance agents are someone you want in your court. Customers trust them, and will go to whatever shops they recommend, so it’s a good idea to get in their good graces. But navigating that relationship can be complicated and frustrating for both parties, so FenderBender talked with two experts on how to build and maintain a positive connection with your insurer.

Landon Thompson, vice president of field operations at Fix Auto, and a former Geico employee; and Dan Tharp, vice president of business insurance lines sales at Pearl Insurance, share their insider secrets to keeping insurers happy, and customers feeling secure.

PICK THE RIGHT LOCAL AGENT.

Having a positive relationship with your insurer starts with choosing an agent that fits your specific needs. But with so many options, it’s hard to know what to look for.

Tharp suggests basing the decision off of the agent’s specialization and experience rather than other factors, such as proximity and location.

“What should be the deciding factor out there is that your agent is qualified— that they have educational experience within the insurance business,” Tharp says.

He also advises shop owners to make sure that their agents have knowledge and practice in their specific areas of the automotive industry. This will ensure that your agent will provide you with the personalized guidance that fits your specific needs.

“I think it's absolutely critical that a shop owner deal with an agent that has insight and knowledge for their specific industry. If you're a collision shop you want an agent that had experience with collision shops. If you're a brake shop or a transmission shop, you want ones that have that particular experience,” says Tharp.

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CREATE A STRONG RELATIONSHIP WITH YOUR AGENT.

After choosing the right local agent, it’s important to keep an open line of communication with them in order to maintain a positive relationship. Your adjuster is your first point of contact for everything, so being upfront about everything going on in your shop will save you from complications down the road.

Another big mistake that is often made is prioritizing the insurance executives over your local agent. It’s important to remember that your local agent is the one who knows your shop best and will act as your advocate. Thompson experienced this first hand while working at Geico, where he often relied on the local agent to give his or her personal experience with a shop.

At Geico, he was in charge of adding shops to their plans, so owners were often very friendly and inviting to him in an attempt to get into his good graces. But after each call, he’d call the local adjuster and ask about their experience with that shop, which was often different from his

own experience. He always trusted the local agent’s opinion on a shop, highlighting the importance of creating a solid connection with them.

“You have to be upfront and show them that you can be a good partner, that's gonna make them likely to want to recommend you to their management team,” Thompson says.

In other words, don’t underestimate your local agent, and make sure you’re working closely with him or her to understand the expectations. Building and maintaining this connection is essential to staying in the good graces of your insurer.

“It's really important to manage those local relationships, even though an insurer across the country might have a certain set of standards, that local manager who's making decisions about who they're gonna put on and take off shop programs might care a little bit more about certain metrics than the other. So, understand what they need, what they're looking for, and tailor it to them,” Thompson says.

Have an open conversation with your agent so you know his or her specific expectations for you to make sure you start the relationship off on the right foot.

Thompson also advises shop owners to be honest about everything going on with the shop—even issues—so that the connection is grounded on trust.

BE WILLING TO COMPROMISE.

“I think there's a misconception from a lot of folks that believe insurance wants to arbitrarily lower the cost of repair. And that's just simply not true,” Thompson says.

Your insurer is there to help you, but in order for this to happen, you need to be willing to work with them and

GETTY IMAGES

compromise to find common ground. A common mistake shops make with their insurer, Thompson says, is being unwilling to hear their agent out, and automatically assuming the worst.

He suggests going into conversations with your agent with a more open mindset, and being prepared to listen to them and compromise to find an agreement you can both be happy with.

“They think because an adjuster comes in and says, ‘you're charging too much on this’, ‘you're asking too high of rates’, they allow that to turn into a negative conversation as opposed to understanding what it is they're really trying to accomplish.

If you try to find a middle ground that'll work for all parties, and if you take that mindset, very seldom are you gonna run into an issue where you can't come to an agreement that both parties can live with, even though it may not be exactly what you want,” Thompson says.

UNDERSTAND THEIR POLICIES AND THEIR NEEDS.

Insurance policies are notoriously confusing, but putting in the effort to understand them from the start will save you from frustration later on. Talking with your insurer to make sure you’re clear on the policies and procedures will help both parties stay on track since insurers have strict processes to which they have to stick.

“I've worked with probably 15 or 20 different insurance carriers frequently. I had to learn all of their different processes, and that's very hard to do. And it’s one of the big things shops don't do a good enough job of,” Thompson says. “Their processes have to be executed properly because they have regulations they have to follow for timeliness and documentation.”

Tharp recommends setting up more regular meetings with your agent to discuss policies. This way, both you and

your insurer are aware of updates to procedures and expectations. Keeping open communication will help avoid issues in the future.

BE PROACTIVE.

Not being proactive in discussing changes with your agent can lead to a cancellation, Tharp warns. So, make sure you’re keeping insurers updated with any changes you plan on making to your shop.

Your insurer wants to keep your business safe and protected, so don’t be afraid to include them in your decision making process.

“One huge mistake is not being proactive,”Tharp warns. “Many times I've been involved with a general repair shop that decides to add a carwash, and then they go ahead and build a carwash without talking to the carrier to see what their expectations are or certain things that they're looking for.”

SEPTEMBER 2020 | THE MSO PROJECT

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DJ MITCHELL GROW TH PL AN

Some Changes Should be Here to Stay

THE PANDEMIC IMPROVED CERTAIN SHOP PROCESSES FOR THE BETTER B Y DJ M I T C H E L L

For those of you all that do not know of us, my dad and I operate a small MSO in Florida called MITCHCO Collision Repair. We had an MSO in the past that we sold to a national consolidator. I stayed on for a while, but ultimately preferred working for myself. For that reason, my father and I opened MITCHCO Collision Repair.

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THE MSO PROJECT | SEPTEMBER 2020

As we started to make these changes and get used to them, something else came into our heads. Although there are still challenges to be faced regarding the coronavirus, I think we have begun to realize that a lot of things are going to stay changed. The way customers, dealerships, and insurance companies are doing business now is different than it was in the past, and in many ways it’s better.

Online photo estimates and online paperwork aren’t just safer in a pandemic, they’re also more convenient for the customer. I believe all the stuff shops “switched” to during the virus may stay put. Why would you want to come by for an estimate when you can take photos on an app? Why do you want to stop in the body shop and fill out paperwork if it can be sent to you and it can be filled out on your phone?

DJ MITCHELL is the vice president and co-owner of MITCHCO Collision Repair, a regional MSO in Florida. He also hosts a podcast for FenderBender’s The MSO Project.

E M A I L : D J M I T C H E L L @J H C C . C O M COURTESY DJ MITCHELL

We opened MITCHCO Collision Repair in February. We often get asked what we thought about and what concerns went through our heads opening right around the pandemic. I can honestly answer that question by saying a whole lot went through our heads.

First, we were of course concerned about the team and the business. How long would this last? Would we be able to stay open and have the employees earn a living? How long would we be slow? So, we pulled the team together (6 feet apart, of course) and had a conversation with everyone. Who wants to work, who wants to stay open, who wants to take off, etc. The answer we got from most of the staff was they wanted to continue to work. So, we put our heads together and tried to figure out the best way to keep everyone safe.

We sent out a set of guidelines to our shops that we began trying to follow, to the best of our ability.

Next, my dad and I examined what changes we thought we had to make in order to make customers feel safe, employees feel safe, and to keep work coming through the door. We set up a sanitizing area for the cars using our steam cleaner, we got our authorizations and other forms paperless, and we set up an online estimating tool with contact-free pickup and delivery if the customer wanted to use it.

Nearly every other industry has begun switching to a convenience-based process, but in my opinion, body shops were behind.

Most insurance companies have switched to more remote activities, which changes negotiations and how business is done. I feel shops will have to get better at documentation and photos, and they will need to improve overall negotiation skills. The days of the local adjuster trusting you or asking you to send photos and a sheet over may be long gone.

I think going forward that we need to stay strong and keep doing all the right things. Focus on margins where we can, but most of all focus on providing a high level of quality and great customer service. Business now is hard for everyone, but a business that can keep its quality and customer service up is a business that I believe will thrive going forward. Customers appreciate, now maybe more than ever, great customer service.

I know 2020 has felt a lot longer that it has been, but there are better things to come. The world will begin to settle down as we move our way towards a vaccine. People are getting used to wearing masks, social distancing, and navigating the world as we know it today. Keep your heads up, keep focusing on what you need to focus on, and don’t lose sight of the things that matter to you and your business.

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