Posts Tagged non-OEM
We are now in the last quarter of the year; so how has 2012 been for you so far? In the first month of this year I posted a blog titled ‘Hopes for the New Year’ and then wrote a spring and summer update to that posting. When you take a look back over the past 9 months pretty much all the hopes for 2012 I had have fallen short.
The first hope was that:
“Our industry is affected by three key business drivers: weather, the economy and miles driven. Sadly we have no control or influence over any of these so I’m hoping for some luck for 2012.”
The weather this year hasn’t been very cooperative for the automotive glass repair and replacement (AGRR) industry. We started with a snowless winter in most of the northern states and as reported by HailReporter.com we’ve experienced about 2/3 of the hail storms that we had in 2011. You know that snow, ice and hail all are big influencers to auto glass breakage and all were busts (pun intended) this year.
Early in the year many experts forecasted the economy would be anemic. Most of those forecasts were accurate. Kiplinger.com provides a variety of information on financial advice and business forecasts via its Economic Outlook section of the website which they regularly update with current outlooks. As of September 27, 2012 Kiplinger reported that:
“The stubbornly tepid economy will persist for the rest of this year and next.”
“It’s clear now that job creation will continue at a sluggish pace in the second half of 2012.”
“The U.S. is likely to add fewer jobs this year than last — about 1.6 million, compared with 1.8 million in 2011.”
“Instead of lending, banks remain wary.”
“Higher gasoline prices pushed inflation in August to an annualized rate of over 7%.”
“Business managers will remain very cautious about expansion at least into the early half of 2013.”
“Expect the recent roller coaster in oil prices to keep on going a while longer.”
“Rising prices of fuel and other goods pose a risk to the increased growth rate, even as consumers shrug off anemic job growth and continue to spend.”
Not very positive views from Kiplinger’s relating to another key influencer – the economy – to the AGRR industry.
Miles driven had been trending upward this year, but with rising gasoline prices the Department of Transportation’s Federal Highway Commission reports that as of July 2012 miles driven starting heading lower again. Earlier this year many forecasted that 2012 would not be a good year for gasoline prices and it appears that the forecasts were fairly accurate. This is the time of year when historically prices decline, but even though the price of oil has moderated; issues with a number of gasoline refineries across the country has caused prices to go higher as reported by a GasBuddy.com blog. The AGRR industry would like to see miles driven go back to the peak levels of seen in 2007 – 2008 for this key influencer.
The second hope was that someone becomes a market leader for the AGRR industry. I’m not holding my breath, but I’m still hoping for that one. My third hope was for fewer imported (non OEM) auto glass parts in 2012 so that prices might be able to stabilize. There may be fewer imports this year, but that’s only because the overall market size is down. The fourth hope was that every windshield be installed according to the Auto Glass Replacement Safety Standard – AGRSS®. It’s the right thing to do for your customers.
The fifth and final hope was that somebody would step up and compete against Safelite® at the both the retail and network level. It was a tall order considering the extremely envious dominant position that it enjoys with its strong retail and network. It’s not as though there aren’t individuals or companies at all levels of the AGRR industry with the unrelenting goal (and hope) of providing consumers with an alternative. At some point you have to believe that insurers and fleets might become wary of the tremendous influence the market leader has achieved with its dominant market position. It’s hard for me to see how Safelite® could maintain its market position or really grow its market share larger long-term. Unless they are willing to restart its acquisition program or maintain the onslaught of media advertising over the long-haul it’s going to be tough for Safelite® to move its sales upward in a meaningful way. Time is running out this year, but who knows what the New Year will bring.
Here’s hoping that in the last three months of 2012 you’re seeing positive signs pointing to improvement in your business or at the place that you’re working.
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In a recent blog post titled “Auto Glass Networks – Part 1” I wrote about difficulties that auto glass repair and replacement (AGRR) networks or TPAs face in managing auto glass losses for clients. In order to survive, networks and TPAs must manage a never-ending “effort to create some semblance of uniformity amongst a very large, broad and diverse set of participants” that actually do the auto glass repairs and replacements across the country.
In this blog I’m focusing on how networks attempt to demonstrate better performance for its clients versus what those same clients could achieve by directly managing auto glass losses.
The network does this by reporting on its operational “metrics”. Investopedia defines “metrics” as:
“Parameters or measures of quantitative assessment used for measurement, comparison or to track performance or production. Analysts use metrics to compare the performance of different companies, despite the many variations between firms.”
The reporting of metrics to clients begins with a network measuring:
- How many rings or seconds it takes a network to answer a telephone call from someone reporting an auto glass loss;
- How many seconds or minutes a policyholder is on hold while reporting the loss; and
- How many total minutes a policyholder has to spend on the telephone reporting their claim.
Why are these three metrics important to a network? Most policyholders believe that they are talking directly to their insurance company when they call a network that manages auto glass loss for insurers; generally that’s not the case. Since the network customer service representative (CSR) is acting on behalf of an insurer while talking with a policyholder, the insurer expects that a network is providing the same level of customer service to its policyholders that the insurer would provide. These three metrics are ones that the network has complete control over and are important metrics to measure how responsive it is to the insurance company’s policyholder.
But networks aren’t only tracking the performance metrics of areas under its direct control while handling auto glass losses; each also provides metrics on the performance of the AGRR retailers that actually perform the auto glass repairs or replacements. Why track that performance? It depends of course upon the network, but keeping track of the level of service that the AGRR retailer provides can determine how much work the AGRR retailer may get in the future.
What are some of the metrics on which AGRR retailers are measured or should be measured?
- The AGRR retailer that provides repairs or replacements is graded by its own individual customer service index (CSI). In determining CSI there are a number of key components and you’d like to think that a CSI score is the most critical metric that an AGRR retailer has in determining its value to a network. The basics of CSI is clearly spelled out via the RATER Model by tracking these five elements:
- RELIABILITY – A company’s ability to perform the promised service dependably and accurately;
- ASSURANCE – The knowledge, competence and courtesy of employees and their ability to convey trust and confidence;
- TANGIBLES – Physical facilities, equipment and appearances that impress the customer;
- EMPATHY – The level of caring, individualized attention, access, communication and understanding that the customer perceives;
- RESPONSIVENESS – The willingness displayed to help clients and provide prompt service.
Each network uses either its own questions or metrics for determining CSI or it may use CSI metrics that the client prefers used for its policyholders. Ultimately these CSI metrics show which AGRR retailers are providing great service and those that aren’t based on what’s being measured. Do you know what your company’s CSI is for each network? If not you should ask.
- What is the windshield repair percentage performed by an AGRR retailer? If the network believes that a policyholders broken windshield is repairable, does the AGRR retailer repair it or replace it?
Repair over replacement can obviously save big money and if you’re an AGRR retailer that ends up replacing a windshield that the network feels should have been repaired you’re making them look bad in the eyes of the client as it drives up the average cost of the claim.
If the network has a GAI (guaranteed average invoice) agreement with a customer when an AGRR retailer replaces instead of repairing a windshield, you’re costing the network money so you can anticipate fewer calls for your service or greater oversight of glass losses you must bill through the network. So your repair percentage is a critical metric.
- How many warranty claims (problems of any kind while handling a glass loss such as customer call backs for leaks or air noises, scratched glass, improperly installed moldings, any damage done to a vehicle during the repair or replacement, etc.) does an AGRR retailer have on work performed for the policyholder?
Obviously the more warranty claims you have the higher the likelihood a network will not be looking for your company to handle glass losses on its behalf.
- Customer service cycle time is also important. How long does it take for the policyholder to have a glass loss repaired or replaced from the first call reporting the loss to the time it takes to be completed and billed by the AGRR retailer?
That’s a pretty straightforward metric relating to service levels and customer care.
- What is the percentage of dealer or original equipment manufactured parts (OEM) used in a replacement versus non-OEM parts priced via NAGS® (National Auto Glass Specifications®)? Why is this important?
If an AGRR retailer has a higher percentage of OEM glass versus non-OEM it is costing the network and/or the client a whole lot more money.
Now back to TPAs versus networks. There are certainly other important metrics that networks track and report to current clients and tout to potential clients that use other networks and TPAs. Every network presumably wants its clients customers serviced by the best AGRR retailers that provide the highest level of customer service, but let’s face it, price versus service unquestionably creeps into the decision-making process of what AGRR retailer is referred a glass loss or not by a network.
That can be especially true if the network is using a “buy/sell” or “spread” pricing model for its clients. The network “buys” the glass repair or replacement from an AGRR retailer and then “sells” the repair or replacement to its customer at a higher price or “spread” that covers the networks cost to operate plus its profit. Do you ever get those calls from a network asking, “If you just give me another point or two on the NAGS discount I can keep sending you jobs” with the implied message if you don’t……? Probably you have.
In my last blog titled “Network Participation Agreement – Special Update” I wrote:
“From the view of this blog, transparency only serves to benefit consumers in making informed claim decisions, making their policy dollars work to their fullest, and identifying safe auto glass replacement services.”
How much transparency is there in how networks or TPAs report metrics? Well, last Friday glassBYTEs™ reported in a press release titled “Lynx Services Amends Contract Services Agreement” that the “Pittsburgh-based Lynx Services will amend its contract services agreement effective September 12. The most notable addition to the agreement is the availability of online scorecard access for shops. These scorecards will provide auto glass shops with performance records based on a variety of factors called Key Performance Indicators (KPIs).” This is definitely a big step in the right direction that allows AGRR retailers to see metrics (KPI’s) showing their performance. Perhaps other networks and TPAs will follow in a similar fashion? That should certainly be a welcomed change.
As I also suggested in my last blog, as an AGRR retailer you might want, “continue to focus on the customer and provide exceptional value with outstanding transparency.” In the long run exception value and outstanding transparency will pay off.
Today marks the 11th anniversary of 9/11.
Aftermarket glass, AGR, AGRR, agrr industry, AGRR Magazine, AGRR retailers, auto glass, Auto Glass Company, auto glass industry, auto glass network, auto glass networks, Auto Insurance, autoglass, automotive safety, buy-sell, call centers, CSI, customer, customer service, customer service index, fraud, glassbytes, Insurance, Insurance Industry, insureds, just sayin', Key Performance Indicators, KPI, KPIs, Lynx, lynxservices, measurements, metrics, NAGS, National Auto Glass Specifications, network participation agreement, networks, non-OEM, oem, OEM Glass, policyholder, policyholders, RATER, RATER Model, Small business, spread, state govt., Tom Fishburne, Tom Fishburne Cartoons, tpa, transparency, US Govt, windshield, windshield repair, windshield replacement, windshields
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