SCOTTSDALE Ariz. — State Farm representative and internal consultant George Avery explained the insurers decision to reduce the number of shops in its Select Service program from more than 20,000 to 11,100. Avery said the goal was to overhaul the program, which was running over capacity, and to put it more in line with the direct repair programs operated by other insurers.

Shops that made the cut and remained in the program were top performers. Avery noted that when State Farm made the decision to go with its “high performers” it realized it was going to “part ways with good repairers.” Avery also noted that the program was still running over capacity, but State Farm had no plans to make further cuts. Instead, it planned to continue working with the high performers it had selected. Avery also noted that as shops left the current program for failing to meet standards, other shops would not fill their places.

Avery also discussed the status of State Farm’s parts procurement test program, which he said would continue throughout California and Indiana. On other issues, Avery said State Farm was taking the “most favored nation” approach towards repair cost discounts — choosing to ask shops for just the discounts they give to other insurers. “We just want a level playing field,” says Avery.

Finally, Avery noted that shops can impact the rates State Farm pays by completing a survey at www.b2b.statefarm.com. Repairers select the Repairer option and answer several questions that help identify them as repairers. From there, they can identify the rates they believe the insurer should be paying for materials and other areas. Both DRP and non-DRP shops can use the site.

Additional highlights of the Paint, Body & Equipment Specialists (PBES) Spring Conference, which was held May 12 to 14 in Scottsdale, Ariz., included a presentation on implementing change, a discussion on lean production (see video clip) and a discussion of relational and transactional business relationships.

If the number sequence 10, 8, 5 and 2 sounds like a football play then it’s all the more appropriately part of the presentation “The Two Minute Drill: Lessons for Raid Organizational Improvement from America’s Greatest Game” given by Dr. Clinton Longenecker, a business educator from the University of Toledo. Those numbers represent the 10 people who attend a conference on business change. Studies show that eight of those attendees pay attention while five attempt to implement the changes they see and two actually succeed implementing those changes 90 days later. Making changes is just that difficult. It’s also extremely important if a business wishes to survive. Longenecker’s solution is that businesses approach change with the same urgency football teams run a two-minute drill — the sequence of plays run during the last two minutes of a close game. What is the key to a successful two-minute drill? Quarterbacking, in other words, leadership. Effective leadership is the most important factor in implementing change.

David Dunn, owner of Dave’s Auto Body in Galesburg, Ill., and Masters Educational Services explored the differences between relational and transactional business relationships. Transactional buyers are more willing to barter over costs while relational buyers, as their name suggests, are looking for a personal bond to a seller. Dunn said those two buyers represent a 50-50 breakdown of all buyers. To help attract either, Dunn explained that shops must look at transactions from their customers’ viewpoint, from their experiences. 

Looking for an effective way to build relational customers? Dunn uses hot sauce. He purchases a special hot sauce from a small Southern sauce producer, sticks his shop’s name on the label then gives the stuff away in his market. Folks who like the sauce and want more need only drive to Dunn’s shop and ask. Dunn explains that the sauce brings them to his shop where potential customers can see his operation. When the time comes for these people to get collision repairs, they’re already familiar with his business — all for the cost of a $1 bottle of hot sauce.

Operators Dan Engeln, Mike Anderson and Darrell Amberson took center stage during the body shop panel discussion. Among the topics explored were insurer relations, new technologies and the future of the industry. While Anderson noted the morale of shops was at an all-time low, he Engeln and Amberson agreed that much better days were ahead for shops. The declining number of shops coupled with legislative initiatives that favor shops over insurers and the potential growth in dealer shops could restore the power shops have in the industry.