On one side I find the owner who absolutely will not pay anything for jobs. On the other side I find a much broader range of opinions. Those concerned with the ethics of the situation generally will pay commissions to local mechanics and estimators and give discounts to dealerships and fleet management companies, but they draw the line at paying cash under the table to adjusters and directly to other insurance personnel.
And then there are those who will pay anybody, any time for any job they can get.
In a tough market like the one we’re facing today, it would seem this is a topic that should be considered very carefully. In many sales companies, there is an expression: “feet on the street,” meaning the more people that can be put out selling the product, the more sales that are likely to be made. An entire industry of multi-level marketing has sprung up around this concept. A huge effort is made to recruit just about anyone who has friends and family to promote the product. Even though the percentage of profit per sale gained is often miniscule, many hundreds of people have joined the ranks of Amway, Herbalife and Mary Kay Cosmetics.
Is there a way to make this “feet on the street” concept work for body shops? And is it ethical to pay for jobs brought into the shop in this way, or even possible? It’s hard to imagine a multi-level marketing program for collision repair, but it’s not so hard to imagine people who are out of work willing to do just about anything to make ends meet. Many shops employ at least one marketing person to contact insurance companies, agents, dealerships, and more. But I have yet to see a shop that employs an entire crew of straight commission sales people.
Perhaps this is a completely wacky idea, but unusual times call for unusual approaches to solving problems. Suppose you ran an ad and offered to train people to write simple estimates for you. In an earlier article last year, I talked about a simple business card estimate that could be left on a vehicle inviting the owner to come in for a more complete estimate (call me for a reprint if needed). One shop owner devised a card with the typical top down vehicle diagram found on car rental forms, to indicate points of damage. Very little training would be needed to instruct most people on doing a simple visual inspection to indicate points of damage. The difficult part would be estimating approximate repair costs. This would require some careful creativity, but since most estimates will be for small dings and dents, some simple rules-of-thumb should be manageable. A prospective customer is always being asked to come in for a more complete estimate.
Would people really go out and look for damaged vehicles and try to get business into the shop for you? Obviously that all depends on how much you’re willing to pay. Fleet management companies almost uniformly demand ten percent of a job. If you look at the difference between your door rate and the rate you give insurance companies, the odds are pretty good you’re giving away at least ten percent there. So paying ten percent to someone willing to get out on the street to bring in business for you shouldn’t be a problem. And it seems to me that this is far more ethical than slipping money under the table to some sleazy adjuster.
You might also have fun playing the rest of the multi-level marketing game. If you’ve ever been talked into going to an Amway or similar meeting, you may have some idea of what can be done. To make up for the small size of the commissions, many dramatize the game. Large score boards in the front of the room tally up each individual’s progress. Big applause goes to the largest producers. And prizes are awarded along the way. In addition to commissions, you might also give car washes, detailing or even free minor vehicle repairs to people bringing in significant business.
From what I’ve been able to see, it’s nearly impossible to avoid paying for some jobs, in one way or another. If it has to be done, it only makes sense to go in the direction of the largest volume of jobs obtainable. Insurance companies and dealerships generally provide the best volume of vehicles, but lately they have been unreliable sources. Perhaps creating your own volume of “feet on the street” could make a real difference in jobs in the shop.