Exploring New Business Opportunities for Collision Shops
From fleet management and glass installation to paintless dent repair, businesses are offering more to increase their marketability and profits.
It used to be not so common to find body shops offering additional services other than body work. But today, with the changing business landscape - driven by a tough economy - shops are looking for new ways to do business. For collision shops, popular services that they offer to complement existing business include glass installation, paintless dent repair and fleet management - to name a few.
In addition, according to ASA membership records, about 17.48 percent of collision members report they do some type of mechanical service work. Dustin Eckhart, AAM, general manager of Hernandez Collision Center, Savannah, Ga., and a member of the Collision Division Operations Committee of ASA, said his collision shop offers small, lower-priced mechanical repair such as oil changes, air filters, throttle body cleaning, tie rods and more. He said that while the mechanical repair sales amount to less than 3 percent of their gross sales, the fact that they offer mechanical services increases their marketing capability.
"We actually have a few fleet accounts that were at one time strictly collision repair only that are now collision, glass and mechanical repair combo accounts," Eckhart said. "We use these examples when marketing services to other potential fleet-type accounts."
Mike Anderson, owner of Wagonwork Collision Centers and Consulting, Alexandria, Va., and a member of the Collision Division Operations Committee of ASA, said that additional business services such as paintless dent repair and customization used to account for only 3 percent of his sales. Now they account for 15 percent. The increase is the result of a new business strategy that Anderson has been implementing. After reading a book that dealt with the topic of difficult customers, Anderson took away an idea from the book that he could implement. He created an "evidence manual," which his shop uses to upsell their amenities.
"For example," he said, "a hotel has amenities like blow-dryers, a pool, a workout room. Well, we decided to showcase the amenities that we offer through an evidence manual. Just today, we did an old damage walk-around and showed the customer her foglight and cigarette lighter weren't working. So we up-sold the diagnosis and repair for several hundred dollars."
Anderson also added that offering additional services has helped boost sales in a down economy and provide more "one-stop value" for his customers.
John Kimpton, co-owner of A Street Automotive & Collision in Springfield, Ore., is probably not the norm when it comes to mechanical shops. His business began originally as a mechanical business and now offers collision repair. He said it took him a while to break into insurance circles but he found that his collision services took off in the early 2000s while mechanical repair flattened out.
Like Anderson, Kimpton finds that his customers find value in the "one-stop" nature of having a single business offer both automotive services. And like Eckhart, he, too, services fleet accounts and finds that to be a profitable part of his business model.
He also points out an important asset that he has found in offering both types of services.
"Customers just want to see a familiar face and not have to start over," Kimpton says. "That is why referrals are so big in our industry. You want customers that do business with people, not price."
Of the owners interviewed for this article, all of them said to proceed cautiously if considering offering additional services.
Kimpton cautions those body shop owners who are considering adding mechanical work to their list of services. He suggests that they first get their feet wet by doing maintenance and service work first. "Research the customers and popular car makeup in your area before taking up computer diagnostics," he said. Lastly, he recommends investing in a good shop management system that is tailored for the mechanical side (please see the July issue of AutoInc. that features shop management software companies for mechanical and collision).
Anderson cautions that owners be savvy about the break-even point if they invest in equipment, materials or training.
"Many people invest in items like bed liners only to find out that their break-even [point] can't be accomplished quickly. It is better to find someone you can sublet that to who will do a professional job and you make a markup or profit on their services," he said.
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