Tuesday, 28 July 2015 05:27

MSO Symposium During NACE Included Claims Management Models, Future of DRPs and Financing Options

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The MSO symposium held on Thursday, July 23 during the NACE show in Detroit brought together small, medium and large MSOs to learn about the state of the industry, upcoming trends and what to expect in the coming months and years ahead.

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Master of Ceremonies Mike LeVasseur, Market Vice President-Philadelphia of Keenan Auto Body, an ABRA Company, facilitated six individual seminars covering a wide range of topics: Claims Management Models; Insurer Panel on DRPs; Shortage of Qualified Employees, Developing Talent and Retention; The ABCs of Financing; and NPS & CSI.

Vincent Romans, Founding Principal and Managing Partner of The Romans Group, kicked off the symposium by providing up-to-date information about the industry.

“We continue to see the convergence of numerous and dynamic market influences impacting the collision repair industry today including things like a surge in technology, multimarket consolidation, corporate globalization and private equity’s impact funded by its available cash and inexpensive financing,” said Romans. “This, coupled with the high octane velocity of speed associated with change all around us, is driving the need for almost constant transformation, the kind that makes it difficult for all of us to deal with on a daily basis.”

He said there is a debate going on within the collision repair industry on how fast this consolidation is taking place.

“I suggest to you that it depends on which constituent group, which market segment you are in and the perspective that comes along with that.”

Claims Management Models This panel provided a global overview of what is occurring in the United States and abroad in terms of claims management models. Regarding new vehicles, such as the Ford F-150, Clint Marlow from Allstate Insurance Company talked about the importance of balancing customer choice with the ability to educate consumers.

Although Marlowe said they will not direct consumers where to go to repair their vehicles, “We are going to have a discussion with them around the uniqueness of their vehicles, some special repair techniques that may apply and some questions we feel strongly they need to ask their repair facility,” he said. When it comes to the data required to repair the vehicles, Mark Mandl, from Ford’s Customer Service Division, said it’s important to work with insurers in terms of repairability.

“Getting their feedback in repair does make a direct impact in terms of a vehicle coming out of the factory.”

Ron Doerr from Assured Performance Network, stressed the importance of looking at data from the shop user’s perspective as well to ensure vehicles are fixed properly.

“From the shop perspective, what I hear more and more is ‘it’s not just the information it’s the documentation that is valuable to us.’”

Looking into the future, Marlowe said five years out he foresees leveraging data even more to understand customers’ needs. This includes looking at social media to learn their preferred communication path.

“It’s a cultural change for us,” he said. Doerr said with more information available, “I think we’re going to see more transparency throughout the whole process. It can be seen so it will be seen.”

Insurer Panel on DRPs LeVasseur moderated an interactive discussion on the future of Direct Repair Programs. Attendees heard from several insurance companies and two MSOs first-hand some of the things that are working in the environment today and the challenges perceived. Insurers, which included Allstate, American Family Mutual, Progressive and State Farm, discussed what they are doing to ensure customers’ vehicles are being repaired at shops equipped and trained to perform the repair.

“One of the challenges is getting the right mix of shops,” said Danny Henderson of American Family Mutual Insurance Company.

Henderson pointed out that everyone wants high volume; however, it’s important to have a mix of high volume that’s controllable.

“You don’t want it too low, you don’t want it to be high; otherwise, it can have an impact on customer service.”

He said another challenge they are aware of, in particular with DRP shops, is how to have the correct balance of insurer oversight and shop self-management.

“That’s a challenge we continue to face and are working hard to figure out.”

Shortage of Qualified Employees, Developing Talent and Retention During this discussion, panelists talked about some of the ways they are finding, developing and retaining new talent, which can be a challenge for shop owners facing an aging workforce. One of the things panelists said they do is to demonstrate how the job is often unlike the reality shows they see on TV. This includes showing them that they are going to get dirty and be on the ground and many shop owners find that some of their new hires don’t like it and leave. It usually takes a couple of weeks to discover if a new employee has the right attitude, show up on time and are the right fit for the job. This gives shop owners the opportunity to find out before sinking in a lot of time and training. Participants recommended getting employees, especially students, engaged in the business as well as addressing how they are compensated.

“We hear from school instructors that other technical trades are facing the same dilemma of having an aging workforce. They are paying significantly more in their fields at the entry level,” said Brandon Eckenrode from the Collision Repair Education Foundation. “If we want to keep them in this industry, I think this is something that needs to be reviewed in terms of making sure it is competitive with the other trades; otherwise, we’re going to lose those students.”

The ABCs of Financing Four experts in finance and MSO development helped the MSOs in attendance understand the financing alternatives available. They shared the steps involved from growing their businesses to achieving liquidity. Guest speakers included an advisor who helps entrepreneurs, a lender who helps finance them, a consolidator who acquires them and the investment banker who manages the sale.  Romans said MSOs have three basic choices.

“They can grow and thrive, they can sell or grow to sell, or they can keep milking the cow,” he said.

The discussion centered on the first two. David Roberts, Managing Director and leader of the Automotive Services Group for FOCUS investment Banking, reminded attendees about the high-risk nature of the business. He said the risks and rewards are not always balanced; therefore, it is important to get things balanced so shop owners aren’t taking too much risk for the reward they expect to gain.

“They need strategies, plans, people, systems, knowledge, processes, capital and time,” said Roberts, who was also the co-founder of Caliber Collision in 1995. “Whatever direction you are going to go, whether you are going to grow and thrive or going to sell, those are the things you need.”

Courty Gates, President of Vesper International, discussed financing for smaller shops. He said it’s important to remember four things while going through the process of raising money.

“Be persistent, be realistic, be determined and tell a story.”

The other two panelists included Steven Beckett, Partner of Peninsula Capital Partners and Ken Hanley, Senior Vice President of Business Development for Caliber Collision Centers. NPS & CSI As MSOs continue to grow their business, maintaining high NPS & CSI scores often can become challenging, especially with multiple locations. In this session, panelists talked about what they are doing to improve and maintain their scores. In addition, they shared information about how turnover impacts the results and what they are doing to combat it.

Autobody News will provide more details of the MSO symposium in the September issue of our publication, as well as additional coverage of NACE-CARS events.

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