Posts Tagged auto glass shops

The Future in the Automotive Aftermarket Industry

For me, listening to keynote speaker Tony Aquila, CEO of Solera Holdings, Inc. at Auto Glass Week in Baltimore was most interesting. He led Solera’s purchase of LYNX Services, GTS and GLAXIS from owners Pittsburgh Glass Works LLC and PPG Industries, Inc. earlier this year. Tony’s accomplishments are considerable, especially considering that he grew up sweeping floors working in his uncle’s body shop and he has a 9th grade education. You have to be incredibly impressed by the guy.

The “Strategic Focus” web page for the company states, “Solera is the world’s leading provider of software and services to the automobile insurance claims processing industry.” (Link to corporate history) Solera will certainly be changing the world of auto glass repair and replacement (AGRR) with innovative software solutions that will simplify the claims handling process surrounding glass repair and replacement. The organization has the potential to affect the way all consumers and influencers ultimately buy AGRR products and services dramatically. Depending upon the vision and direction Solera heads automotive aftermarket parts and service providers, including the auto glass repair and replacement industry (along with the collision repair industry and parts distribution industry) could be in for some big changes. It’s all about taking out market inefficiencies and reducing costs associated with those inefficiencies.

Just look at the AGRR industry. To ensure that service level expectations of the consumer is ultimately met, any software program would need to have access to the real-time inventory level of any supplier or distributor warehouses in the area, the inventory levels of any AGRR shop or technician in the vicinity vying for repairs or replacements, along with the schedules of all technicians available to properly repair or replace the part.

Imagine when an auto glass replacement is required, if it would be possible for the software program to instantly search for the part determining which supplier(s), distributor(s) or AGRR shop(s) has (have) the part in stock; perhaps ranked by cost for the part while finding the best auto glass replacement technician suited to properly install the part; when and where the consumer wants it installed. With that capability you then have to start asking some questions like:

Once the software program has all of the information required to start processing an auto glass replacement, who or what company is directly buying and paying for the part(s) required?

It could be:

  1. The AGRR shop or technician facilitating the replacement or
  2. Maybe the customer’s insurance company or
  3. If it’s a cash job the consumer could pay.

Which of the three above pays for any part required is important to determine the all-in price to be paid for replacement parts, along with the price paid for required installation supplies and labor.

So which organization determines the pricing level for the various scenarios outlined above?

Who is buying and paying for the part and installation supplies required?

Who is paying for the technician to install the part?

Answers to these and many other questions will give you an idea as to where the industry could be heading. There will be changes coming and margins are probably going to change in the AGRR industry in the near future. And probably not for the better.

What is it you’re doing to be prepared for the future?

Just sayin’.

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Courtesy of TomFishburne.com – Marketoonist.com©

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Just Sayin’ Blog – A Matter of Self-Interest or Consumer Choice

Dominos

 

Last June 3, 2013 Dannel Malloy, Governor of the State of Connecticut signed a bill that was passed by Connecticut’s House and Senate the previous month into law. This link to the summary of the act that was first introduced in the Insurance and Real Estate Committee of the Connecticut House states,

“The act requires that a glass claims representative for an insurance company or its third-party claims administrator, in the initial contact with an insured about automotive glass repair services or glass products, tell the insured something substantially similar to: “You have the right to choose a licensed glass shop where the damage to your motor vehicle will be repaired. If you have a preference, please let us know. ” By law, appraisals and estimates for physical damage claims written on behalf of insurers must have a written notice telling the insured that he or she has the right to choose the shop where the damage will be repaired (CGS § 38a-354).”

This law seems to be a reasonable approach to provide and ensure consumer choice to the residents of Connecticut.

As it appears on the State of Connecticut’s General Assembly bill tracking web site the law – Public Act Number 13-67 – states,

 “AN ACT CONCERNING AUTOMOTIVE GLASS WORK.

To require an insurance company doing business in this state, or agent, adjuster or third-party claims administrator for such company to provide additional disclosures to an insured regarding such insured’s right to choose a licensed repair shop or glass shop where such insured’s motor vehicle physical damage or automotive glass work will be performed.”

Again, this language also seems to be a reasonable expectation for residents of the state. Everyone believes that consumer choice is a good thing right?

The signing of the law was reported by number of industry publications (glassBYTEs.com, Autobody News, Automotive Fleet) due to the dramatic effect that it would have when fully enforced on insurance companies claims management programs, as well as automotive glass repair and replacement (AGRR) industry players (Harmon Solutions Group, NCS/Netcost Claim Services, TeleGlass/Strategic Claims Services, Gerber National Glass Services, PGW Lynx Services, Safelite Solutions)  that provide network and/or Third Party Administrator (TPA) services to the insurance industry. AGRR networks and/or TPA’s tend to steer business to either company owned stores and/or to affiliated network repair or glass shops that conform to the pricing or service requirements of the network and/or TPA. That has been a long standing business practice of networks and TPA’s and it’s not hard to understand the financial benefit to these companies to continue doing so. The passing and subsequent enforcement of this law requires a pivot away from the long-standing AGRR industry practice of placing the decision of which company provides the repair or replacement into the hands of the consumer needing service and out of the hands of a network and/or TPA that has always been heavily involved in the decision. This also seems to be a positive for consumer choice. Again, everyone believes that consumer choice is a good thing right?

In order to protect its network and TPA business Safelite Group, Inc. and Safelite Solutions LLC (the Plaintiffs-Appellants) have gone to court against GEORGE JEPSEN, in his official capacity as Attorney General for the State of Connecticut and THOMAS LEONARDI, in his official capacity as the Commissioner of the Connecticut Insurance Department (the Defendants-Apelles) in hopes of overturning the law. The law clearly prohibits the steering of Connecticut consumers to specific repair shops by TPA’s and/or auto damage appraisers so one can understand the self-interest involved. Connecticut’s “Department of Consumer Protection” web page states that:

“Ensuring a Fair Marketplace and Safe Products and Services for Consumers”

The purpose of this government department is pretty obvious by its title. Public Act Number 13-67 protects the interests of consumers in the state and their “right to choose”; and the State of Connecticut unquestionably is within its rights to enact such a law, right?

If the State of Connecticut prevails in its defense of the constitutionality of Public Act Number 13-67 through the appeal process, as Safelite continues to fight to overturn the law, the future landscape of networks and/or TPA’s that provide AGRR services to consumers in the state will forever be changed. And if this law stands it will have an effect on the landscape of the AGRR industry in the entire United States. You can be sure that similar consumer protection bills will be introduced in state assembly’s’ across the country. Is that why Safelite is so strongly fighting this law duly enacted by the State of Connecticut?

If you visit the Safelite web site you will find that the company describes Safelite Solutions LLC as providing:

“….complete claims management solutions for the nation’s leading fleet and insurance companies.

The company currently serves as a third-party administrator of auto glass claims for more than 175 insurance and fleet companies, including 19 of the top 30 property and casualty insurance companies. Safelite® Solutions manages a network of approximately 9,000 affiliate providers and operates two national contact centers in Columbus, Ohio and one in Chandler, Arizona.”

The Connecticut law could serve to undermine a business practice that has existed in the AGRR industry since the late 1970’s. The genesis of call centers (a.k.a. a network or TPA) was when Joe Kellman, former owner of Globe Glass & Mirror, visited an auto glass call center facility in Bedford, England operated by Belron’s Autoglass and brought the idea back to the United States starting the U.S. Auto Glass Network. Since then, the impact, influence and control of consumer auto glass losses by networks and/or TPA’s operating in the AGRR industry has continued to grow each and every day. The networks and/or TPA’s obviously work hard to control and steer auto glass repairs and replacements to either company owned stores or to glass companies that agree to join and follow pricing arrangements that benefit the goals of the network and/or TPA. A business practice worth fighting for right?

The State of Connecticut is interested in protecting consumers in the state, who are in need of auto glass repairs or replacements, from being steered by a network and/or TPA. This law seems like a reasonable next step action in a state where those that are engaged in the AGRR industry are required to be licensed by the state (in my last blog I wrote about “Is it Time for Licensing?” in the AGRR industry). The Department of Consumer Protection oversees the licensing flat glass and automotive glass work.

We will have to wait for the appeal process to work its way through the courts to find out if this law stands, is amended or falls. But whether you believe that the law is a positive development for Connecticut consumers or you believe that the law violates free speech in commerce, the fight will continue as the stakes are too high. If the law passes through the appeal process and stands, it could be the tipping of the first domino and could be the beginning of big changes for the AGRR industry.

So where do you stand on Public Act Number 13-67? Are you on the side of consumer choice or on the side of the networks and/or TPA’s? Perhaps it depends on your own self interest.

Just sayin’.

 

Dominos

 

 

Associated Articles and Reference Material:

Zauderer’s Scope (page 589) https://www.law.upenn.edu/live/files/1566-keighley15upajconstl5392012pdf

http://www.autobodynews.com/news/regional-news/northeastern-news/item/7277-connecticut-governor-signs-anti-steering-bill-into-law.html

http://www.nldhlaw.com/content/uploads/2013/07/UpToSpeed_July2013A.pdf

http://www.glassbytes.com/2014/04/connecticut-officials-file-brief-in-support-of-anti-steering-law-in-appellate-court/

http://www.glassbytes.com/newsConnAutoGlassBillGoestoGov20130523

http://www.glassbytes.com/newsConnecticutSteeringPasses20130606

http://www.glassbytes.com/documents/03192014SafeliteSecondCircuitBrief.pdf

http://www.glassbytes.com/documents/04232014SupplementalIndex.pdf

http://www.glassbytes.com/documents/04232014JepsenBrief.pdf

http://www.cga.ct.gov/asp/cgabillstatus/cgabillstatus.asp?selBillType=Bill&bill_num=5072&which_year=2013

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Just Sayin’ Blog – The American Dream and Garages

Have you seen the General Motors (GM) commercial selling the new electric 2014 Cadillac ELR? Interestingly you actually don’t know what the commercial is selling until the very end. When I started to watch it (click on this link to view) I recognized the voice of FX television show Justified bad guy Robert Quarles played by Neal McDonough. McDonough also appeared in the great film “Band of Brothers” portraying 1st Lieutenant Lynn “Buck” Compton who passed away in 2012. The commercial begins with our seeing from behind Mr. McDonough standing facing a swimming pool dressed in shorts and short-sleeved shirt in what could be a Southern California back yard. The actor starts out asking:

“Why do we work so hard? For what? For this? For stuff? Other countries that work stroll home; stop by the café and take August off. Off! Why aren’t you like that? Why aren’t we like that?“

Six quick questions and two statements set up the commercial. McDonough is then shown walking through his home pointing to his two daughters; then high-fiving one of the girls:

“Because we’re crazy hard working believers that’s why.”

“Those other countries think we’re nuts. Whatever…”

Next he’s seen walking down a hallway heading to the kitchen where he passes a newspaper off to his wife and continues his trek through his nice home.

“Were the Wright Brothers insane? Bill Gates? Les Paul? Ali? Were we nuts when we pointed to the moon? That’s right. We went up there and you know what we got? Bored. So we left. Got a car up there and left the keys in it. Do you know why? Because we’re the only ones going back up there that’s why.”

Mr. McDonough walks into an opening and then re-emerges dressed in a business suit and walks out of the house to his Cadillac ELR. He then delivers the overriding message, besides selling the ELR of course:

“But I digress. It’s pretty simple. You work hard, create your own luck and you gotta believe anything is possible.”

As for all the stuff. That’s the upside to only taking just two weeks off in August.”

“N’est pas?” (The French expression impossible n’est pas français is actually a proverb, equivalent to “there’s no such thing as can’t” or simply “nothing is impossible.”)

One heck of a great commercial in my opinion delivering the message of the American Dream being available to anyone and more importantly owning a Cadillac ELR of course. Wikipedia defines the American Dream as, “a national ethos of the United States, a set of ideals in which freedom includes the opportunity for prosperity and success, and an upward social mobility achieved through hard work.” Sounds right.

The commercial clearly points out that you’ve got to work hard to get all the “stuff” you see from the beginning to the end of the commercial. No one is going to give it to you. Pointing out in a very quintessential American way the commercial finishes with “N’est pas?” – a French proverb meaning “there is no such thing as can’t”. Words to live by. The owner of Cadillac is GM and as everyone remembers the company went into and out of bankruptcy protection during the summer of 2009. In a way the commercial was an analogy of all that GM and countless thousands of dedicated employees accomplished – “You work hard, create your own luck and you gotta believe anything is possible.” Granted they also did it with the help of $ 50.1 billion from U.S. taxpayers….

The commercial hasn’t necessarily been greeted all that well by the some in the media as they view it as American being arrogant, but the very simple message in the ad is that if you want you can own a Cadillac as long as you work hard and do what you do well. Simple message.

This commercial follows one aired earlier this year from Cadillac called “American Garages” (click here to view). The commercial is pointing out the value of Motor Trend’s Car of the Year – the 2014 Cadillac CTS. Mr. McDonough does the voiceover for this commercial telling us:

“The Wright Brothers started in a garage. Amazon started in a garage. Hewlett-Packard and Disney both started out in garages. Mattel started in a garage. The Ramones’s started in a garage. My point? Some of the most innovating things in the world come out of American garages.”

This commercial finishes with “Ain’t garages great!” Indeed they are. I know many auto glass repair and replacement (AGRR) companies that started out in a single garage.

It has been a long time since I’ve owned a GM product (a 1985 Chevrolet Station-wagon) and I don’t have plans on buying one anytime soon, but these two commercials celebrate what America is all about and why people from across the globe continually come to our shores. The opportunity to try like hell to catch the American Dream by working hard and then anything is possible, especially owning a Cadillac. Plenty of people work hard and then haven’t accomplished what they most wanted as their own American Dream, but it’s all about the opportunity. Nothing is guaranteed.

Don’t let any company or anyone keep you from whatever may be your American Dream.

You work hard, create your own luck and you gotta believe anything is possible.”

Just sayin’.

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Just Sayin’ Blog – The Times They Are (Always) A-Changin’

The ability to accept and adapt to change is a critical component to finding success in business. As much as we find comfort in the places we know best, we must continually push ourselves and our company toward a place that no one else has found yet or will never figure out.

How do you set the bar higher than your competitors so that you can outperform them? That’s a question that you need to answer for your market and business.

In 1964 the singer songwriter Bobby Dylan released a song “The Times They Are A-Changin’” which portrayed a time of great change in the United States. Every new generation looks back at the preceding generation as one being unwilling or unable to change and stuck in the past unable to move forward. The 60’s were a time of great change in social norms, fashion and music, as well as in the political landscape. We’ve been experiencing a great deal of change in retailing for quite some time, but especially so in this new Millennium and it doesn’t seem to be abating.

Right now there is a ferocious retail battle royal in the retail consumer market with two of the largest retailers, Walmart and Amazon.com (big box versus internet retailer), fighting to determine how consumers will buy countless products in the years to come. In 2009 Amazon.com began rolling out a program offering same day shipping in a number of cities. It has since developed a large network of warehouse distribution centers to service its customers across a large part of the United States. To counter Amazon.com, Walmart started a Walmart To Go offering online shopping of a select number of products shipped directly from their store locations to customers. And in a few markets Walmart is offering same day delivery of products. The strategy that Walmart is attempting is difficult and a potentially dangerous one as it already has 4,000 big box stores (including Sam’s Club) which have a very high cost to operate. The margins that Walmart operates under are also very small, so the gambit is one that is sacrificing current profits to maintain and hopefully gain market share against Amazon.com and other retailers unable to compete. When your sales are $ 444 billion a year versus Amazon.com’s $ 48 billion it would seem that you’d have an edge, but last year Amazon.com saw a 41% increase in sales versus Walmart’s 6% overall increase in sales.

Which company is following a strategy that will allow it to be the most successful retailer in the future? Time will tell, but even when you’re Walmart you’ve got to consider that your strategy for taking market share from the mom & pop businesses, which has proven to be such a successful model for years, could ultimately be at risk from other companies with strategies that don’t require big box brick-and- mortar stores. Each is trying to find a unique selling proposition (USP) that will attract consumers to ensure long-term success and neither will stop until it is found.

Who remembers A & P (The Great Atlantic & Pacific Tea Company)?A company that once was considered the Walmart of its time,  A&P held the title of the world’s biggest retailer in the 1930’s when  it had 16,000 stores in the United States. In the late 1930’s A & P began the self-serve grocery store concept, but by the 1950’s it failed to recognize the changing marketplace and failed to listen to the demands of the ever-changing consumers. It eventually became an irrelevant retailer. By not adapting to the changes that were taking place in the marketplace, A & P began a decline in sales that ultimately caused it to file for bankruptcy. The company did emerge from bankruptcy, but A & P probably never again will capture the greatness it had once achieved.

There are many ways for your business to remain relevant and continue to survive in the retail world. Whatever you believe it is that you must do to remain relevant you need to make sure that your customers believe it too. For some businesses remaining relevant may mean selling or merging with a competitor. In recent weeks several businesses have announce that they are doing just that. You’ve probably read about recent acquisitions announced or completed by Gerber Collision & Glass (in Florida), ABRA Auto Body & Glass (in Minnesota), Guardian Auto Glass LLC (in Maryland) and Safelite Auto Glass (in Wisconsin and South Carolina). Of course buying and selling companies in the auto glass repair and replacement (AGRR) industry isn’t new, it’s been going off and on in spurts since the mid 1980s. During the past 30 years, a number of companies have acquired others in the AGRR industry to increase their own market share and separate themselves from or take out competitors. It certainly seems that there has been an uptick in acquisitions of companies of all sizes and I’m sure you’ll be hearing of others very soon.

Other ways you can remain relevant are by finding that USP that separates you from your competitors. So what is that something that only you can do in your market, something that raises the bar so high that your competitors either can’t or won’t try to achieve it therefore distinguishing you from others in the eyes of consumers? If you find that USP, you will survive against other retailers in the battle royal that exists in your market. Of course the need to find that extra something has always existed in business, but maybe more so today with the pace of change that you see across the retail industry. When you see the mega-retailers like Amazon.com and Walmart fighting over current customers to determine which will find the USP that will secure future customers and separate it from others, you know that the same battles that have been going on for years aren’t subsiding anytime soon. It is the same in the AGRR industry and you can be sure that things that you’re doing today in your business will change tomorrow and you need to change with it.

So when Bobby Dylan wrote in the last stanza of his hit tune in 1964,

“The line it is drawn
The curse it is cast
The slow one now
Will later be fast
As the present now
Will later be past
The order is
Rapidly fadin’
And the first one now
Will later be last
For the times they are a-changin’.”

I think that he could have added another word to the last lyric, “For the times they are always a-changin”.

Just sayin’……

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Just Sayin’ Blog – Inconvenient Truth(s)

An inconvenient truth is a truth that no one likes to admit, but it is the truth nonetheless. A number of these inconvenient truths exist in the auto glass repair and replacement (AGRR) industry and everyone in the industry deals with them every day.

 

 

Over the years it has become more and more difficult to find success in the AGRR industry. Once upon a time, anyone could own a retail auto glass company and survive, but I think that has changed. One inconvenient truth is that some in our industry aren’t going to survive. As an owner you’ve got to master many new tasks that didn’t even exist 10+ years ago and some owners just aren’t capable of doing so. As a business owner you’ve got to figure out how to attract customers, especially in a time when the weather, the economy and miles driven are working against your business.

As we entered the new millennium, who in our industry really would have seen the need to understand the concept of search engine optimization (SEO) for a “website”? Who would see social media sites such as Facebook™, Twitter™, Craigslist, etc. becoming such an important way to market and communicate with customers; or that the Yellow Page Book™ that we once relied on would become a relic of the past?

Who, other than Steve Jobs, the co-founder of Apple®, would have thought that you could ask someone called Siri, the lady that lives inside my iPhone to list the “closest auto glass shops” near where I live in Chicago. Siri told me “Careful with the broken glass, David,” and then she gave me a listing of fifteen AGRR shops with two names (Safelite® Auto Glass and Gerber Collision & Glass) you’d easily recognize in the market because both are big advertisers in the local media. I also told Siri I was looking for “auto glass in Chicago” and she told me “I found fifteen glass repair shops in Chicago:” followed by a slightly different list of companies, but including the same two names aforementioned. Somebody is paying attention to their internet strategy aren’t they? Are you?

How convenient you make it for your customers to interact with you online will contribute to your future success. If you’re not willing to embrace innovative ways to grow your business in the ever changing marketplace you compete, you will not attract the customers willing to pay you the best price for the products and services that you provide. The truth is that if you’re going to survive and thrive as an AGRR retailer or as a network, you have to know that no one is going to turn the clock back to make it easier for you to be successful in your business. You have to compete in the marketplace with the hand that is dealt to you each day and if for some reason the way business is done changes tomorrow, you’ve got to figure out how to deal with it.

 

Another inconvenient truth is that AGRR networks provide great value to the clients that utilize the various services offered. As much as those who don’t participate in networks complain about the existence of them; clients vote with their feet and they obviously perceive value in the bundled services that networks provide. Can, or will, that change? Certainly it can change, but in the absence of a client deciding to take back direct responsibility for managing its AGRR losses (or a new platform that could take the place of the current networks that operate in the AGRR industry) it’s unlikely. We could certainly see movement of clients from one network to another network in the coming year(s) of course; and depending upon the relationship that your company has with the network that “wins” a new client you can hope that more profitable jobs come your way. But if that hope is what you need to make your business successful you might look for another source of jobs that you have more control over.

 

And staying on the topic of networks; I don’t think that a network that utilizes a “buy/sell” or “spread” (when the network “buys” the glass repair or replacement from an AGRR retailer providing the repair or replacement and then “sells” the repair or replacement to its client at a higher price) pricing model for its clients can continue to exist long-term in the marketplace. Relying on the AGRR retailers who actually do the repairs and replacements to accept lower and lower prices, while continuing to provide high quality repairs and replacements has to someday hit a wall. At some point AGRR retailers will push back and the networker that only makes profit on the “spread”  is going to have difficulty providing its clients with the same levels of service other competitors can provide in the marketplace. Those networkers must know this.

 

You can’t really find the greatest success in your business without surrounding yourself with the best people you can find. Basketball legend John Wooden was quoted as saying,

Whatever you do in life, surround yourself with smart people who’ll argue with you.” 

Sound advice from a true winner.

If you’ve been in the AGRR industry for a while you’ll remember one of the true gentlemen that help build it –Larry Anderson, President of Harmon Auto Glass back when it was a part of Apogee Enterprises, Inc. On his office desk in Minneapolis there was a small sign that read “Delegate Authority. Ruthlessly.” Larry surrounded himself with many of the best in the industry. There are some owners in the AGRR industry who don’t value the people that work for them. You can’t be successful if you don’t take care of those who work for you and let them have a voice.

 

Yet another inconvenient truth is that just because you have money, it doesn’t mean that you’re going to find success in the AGRR industry. History has proven that businesses owned and managed by those who have direct experience in the industry find the greatest success. Sadly, those that don’t have the experience, regardless of the size of their checkbooks, historically have tended to not be successful.

 

In writing my blog posts over the past year I’ve tried to raise issues about which I think those in the AGRR industry (or are associated with it) should give thought. I know that there are more inconvenient truths regarding the industry that no one likes to admit that I’ve not touched on, so please let me know what yours are.

Just sayin’……

 

  

 

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