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Monday, 23 September 2013 16:11

State Farm and PartsTrader Offer More Info on Roll-Out, Use of the System

Whether or not they participate in State Farm’s Select Service program, shops and parts vendors still have lots of questions and concerns about PartsTrader as State Farm continues its roll-out of the program. Here is some additional information addressing some of those questions that representatives of State Farm or PartsTrader have provided.

 

Roll-out schedule

PartsTrader rolled out in September in major markets in California, Nevada and Utah, and in October in Michigan and Ohio. It will reach major markets in Wisconsin, Illinois, Indiana, Kentucky and Tennessee later this year.

Vendor choice

Shops are not required to get price quotes from anyone beyond their designated preferred dealer. In fact, Partstrader’s Dale Sailer said, the system defaults to sending a job’s parts list only to the shop’s preferred dealer, though the shop can expand the search from this default. State Farm does not get data about whether a Select Service shop’s parts list for a job went only to the shop’s preferred dealer for quotes.

A shop can “direct order” a part through the system without waiting for any parts quotes; State Farm does know, however, if a Select Service shop does this. And if a dealer always gives a shop the same discount, the dealer can set the system up to automatically respond with that discount to all requests for quotes from that shop.

“Dealers don’t have to hire a whole bunch of people to fill out quotes,” Sailer said.

More details on rating system. Vendors and shops using PartsTrader rate one another using a feedback system. Shops answer five questions to rate a supplier based on parts and service quality; vendors answer four questions to rate shops in terms of payment practices, return rates, etc.

Sailer said users of the system can expect to spend about one minute per day responding to feedback rating questions about companies with which they have conducted parts transactions. Participating in the anonymous feedback rating system is mandatory, he said, because a rating given to a vendor by a shop, for example, is weighted based on how much business that shop does with that vendor.

“If you represent 50 percent of somebody’s business, your feedback has to be worth 50 percent of their ratings,” Sailer said. “So as a supplier, if a shop has only ordered from you once, and he didn’t like you and trashes you in the feedback, that’s only one piece of feedback. He can’t be 50 percent of your feedback because he’s not that relevant to your business.”

Feedback is not required on every purchase, however, and the number of surveys a shop or vendor must complete may vary day-to-day but should take an average of about five minutes a week, Sailer said.

Users can request to provide feedback on a transaction even if not asked, he said.

Only a company’s star-based rating is visible to users of the system, Sailer said, but any additional comments that are made about a shop or vendor are batched and sent to that shop or vendor.

Bad ratings cannot be challenged, he said, but someone giving you a bad review isn’t likely to continue to do business with you, so the review won’t be weighted as heavily in your overall rating as feedback from those doing more business with you.

Customers don’t have to wait. Select Service shops don’t have to wait the half-hour to receive quotes if a customer wants an estimate right away, State Farm’s George Avery said.

“There’s no problem with writing your estimate like you do today and giving it to them,” he said. “In the event you’re awarded the job, you can take that estimate and do your direct buy, or you may choose to put it out for some quotes. But we certainly understand there are times when a customer just wants an estimate.”

Buying from non-participating vendors. Occasionally, Avery acknowledged, a shop may need to use a parts vendor who is not on PartsTrader, such as when an uncommon custom wheel or flare is needed.

“If it’s a guy down the street who you buy from once or twice a year, just an odd part, you’re more than welcome to buy that part from him,” Avery said.

Because that part will be shown as not having gone through the system, it will be flagged as an order not in compliance with Select Service guidelines, Avery said, but local management will have leeway to decide how far from 100 percent compliance is acceptable for shops on the program.

Getting vendors on the system. The only way a vendor can participate in PartsTrader is if they are “nominated” by a shop using the system. Avery said during the initial testing of the system in five markets, a shop complained that a vendor from Florida—where PartsTrader hasn’t been rolled-out—showed up on the system. Avery reiterated that only shops—not State Farm nor PartsTrader—control which vendors are on the system.

“It turns out a repairer (on the system in another state) had a relationship with that vendor in Florida,” Avery said.

If a shop nominates a vendor, then is unhappy with that vendor, can the nomination be rescinded? Sailer said 'no.'

“Two reasons: First, the odds are pretty darn good that someone else nominated them as well,” Sailer said. “And let’s say no one else did, but somebody else started using them. The last thing I’m going to do is say to my users, ‘Well, because Joe doesn’t want to do business with that vendor, you can’t do business with them either.’ We’re not going to take away your choice if they’re already on there. But no one will make you do business with them.”

Not part of a Select Service reduction. Some shops in several markets have dropped out of the Select Service program rather than use PartsTrader. But Avery said the program is not part of any plan to reduce the number of shops on the program or shift work toward large MSOs.

“That could happen, but this is not an effort to drive the number of Select Service repairers we have,” Avery said.
He also noted that more than 50 percent of Select Service shops are independent single-location businesses, a higher percentage than any other large insurer’s program.
“That’s not a signal to me that I’m trying to dump the independents,” Avery said. “They are great business partners.”
Lawsuit filed. PartsTrader hasn’t rolled into Mississippi yet, but repairers and parts vendors there have already filed suit in an effort to prevent shops from having to use it. The Mississippi Collision Repair Association and more than two dozen body shops, dealers and other parts suppliers allege in the suit, filed in Hinds County Chancery Court, that State Farm’s implementation of PartsTrader tortiously interferes with existing business relationships that shops have with their parts vendors.
In addition to an injunction halting State Farm’s implementation of PartsTrader, the suit seeks a ruling that State Farm is violating the terms of the 1963 Consent Decree, which placed limits on more than 260 insurer’s activities related to auto insurance and claims. The suit also seeks to prevent State Farm from interfering in the relationship between a shop and its customers by delaying payments or appraisals, or by placing limitations on the use of rental vehicles.
State Farm said the case is without merit and that it will vigorously defend against it. See related story this issue.
John Yoswick, a freelance writer based in Portland, Oregon, who has been writing about the automotive industry since 1988, is also the editor of the weekly CRASH Network (for a free 4-week trial subscription, visit www.CrashNetwork.com). He can be contacted by email at jyoswick@ SpiritOne.com.

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