Thursday, 28 January 2010 11:58

Delmege --- How Do You Decide To Take On a DRP Relationship?

Written by Dale Delmege

We never had DRP relationships and have heard horror stories about them. But some days it seems we need to become a DRP shop just in self-defense. How do you make the decision?

For years DRP vs. non-DRP was supposedly a dividing line between opposed schools of operating thought. But “Should we be a DRP shop?” was always more about owner temperament than a business decision. A political mood isn’t a strategy.
    Today, the useful question is “Is there an available business mix of adjusted claims and DRP relationships which would make my business stronger?”
    Getting the answer is hard work, but indispensable for a seriously competitive repairer. Dozens of operators who traditionally wouldn’t have dreamed of a DRP deal in the 90’s have quietly added one or two very carefully selected ones. They have also politely declined many more than they added, a decision requiring discipline found only in facts. An even larger number who always had many DRP’s have gradually “weeded out” half or more of them, leaving just a few that met their needs. For either of these sets of owners the question “Are you DRP or non-DRP” is unanswerable and meaningless.
    Every market is different, and every insurer. Even with the same insurer’s standardized DRP terms, interpretation and enforcement can vary greatly from region to region, sometimes justifiably, occasionally indefensibly. How many cars can you expect? Don’t bother to ask. They don’t know, and couldn’t guarantee it anyway.
    But it’s essential to ask four questions:
● Exactly what discounts and allowances do you require?
● Exactly what will you or won’t you pay for in the repair? (Go over a closed file)
● What additional paperwork and administrative processes are required?
● How exactly will my performance be measured, rewarded, corrected?

    Never argue with the answers. Just ask and make notes. Read the agreement from beginning to end, and make sure it matches. If it doesn’t you’re entitled to ask why. (Obviously, anyone who can’t or won’t provide specific answers has saved you further work on this “opportunity.”) Now run several recent typical adjusted claim repairs against the DRP profile and look at gross margin dilution. You could be in for a surprise. Remember, all that insurer’s adjusted repairs you’ve been doing will now come under the DRP terms. Also ask yourself if you will have to add indirect labor for the admin requirements.
    In the last analysis you have to believe that the impact on your processes and the margin dilution (above the line and below) produces enough absolute dollars of net additional income from each DRP repair to be clearly worth it.
     When you look at it critically in advance (or afterward in the light of real experience), if it doesn’t make it, it doesn’t make it. But if it looks good, give it your uncompromising support. Unless or until they change the rules arbitrarily (in which case you courteously resign), be the best repairer in their local network. You will get cars from their underperforming alliances.

We have a very skilled and intelligent Production Manager with one fault that drives me nuts. When he occasionally needs to be corrected on some minor issue he simply can’t say “Thanks, I’ll take care of it”.  No mater how routine, he makes it intensely personal, and turns it into an hour-long soap opera.  He loves to debate, and he’s very good at it.
You’ve got yourself a subclinical drama queen, a not-uncommon species these days. Assuming he’s worth keeping, otherwise, the cure called for here is changing the transaction from a conversation to a drive-by. Never correct him while either of you are sitting down, in an office or standing still. A corrective direction is not a chat.
    First, mentally rehearse the point into twenty words or less, e.g. “Dick, please don’t leave the keys in the gate any more”.     Then, while he’s right in the middle of things, get the needle in and out in less than two seconds, keeping your voice level, and keep moving right on out of sight.
    Avoid him for at least an hour, more if you can, and then make the next contact upbeat and on an entirely different subject.  If he still absolutely insists on re-opening the point you must, no matter what, never, never say a single word other than the exact same words you said before, even if you have to say it several times. At some point, he should break the habit. If he can’t, and he isn’t a blood relative, replace him. Your organization can’t afford him.

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More in this category: « Ask Dale March 2010