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The Golden Rule

30 Apr

In last week’s column, I received some comments saying big business is not all that bad and that we, in the auto glass business, should accept the reality of our situation. The reality being that we have already lost the war against the large corporate installers. It seems one hears the same message in a Star Trek episode that “resistance is futile.” I personally refuse to accept that premise.

Size does matter and I will be the first to admit that. First, it brings a number of benefits and efficiencies to any company. In Belron and Guardian’s case, glass acquisition costs are exceptional lower than any independent due to the companies possessing extensive manufacturing and distribution capabilities. One could presume that independents are subsidizing growth and profits by making glass purchases from their distribution arm. Belron has a substantial pricing advantage similar to Wal-Mart when it comes to support vendors. From IT to urethanes, these big companies are the one to acquire business from, maintain relationships with and to keep happy in the auto glass industry. If that statement sounds questionable, look to see the number of vendors that have set up offices in Columbus, Ohio, to be near “big daddy.”

Belron also mimics what Apple and Cisco have done in high tech. If they like a particular product or service, they buy the company. We have seen that behavior when it comes to glass repair and wire cut-out systems. They are doing the same to competitors. They identify certain regional chains and acquire them, adding to the growth curve they are presently enjoying

These are goals and practices that any good businessman would use and apply if the opportunity arose. I know, I certainly would and I tip my hat to the Lubner family for their abilities to take a post WWII backwater aftermarket glass parts company and build it into what it is today … a “big box” style metric-driven company that is striving in many regions to be branded as the first choice in the auto glass industry.

Since auto glass replacement is not a daily event like eating, every auto glass company needs to establish a reputation or a device to gain customers. One can advertise, but at least in my area of Northern California, it appears that the commercials that Safelite runs seem an attempt to reassure insurance claimants that the company is the best choice for replacement or repair. This is, when in fact, that there exists that little choice. By using assumptive scripts, many callers reporting new glass claims are seamlessly funneled in one direction and that one direction is towards Columbus, Ohio. Are the broadcast ads being used to acquire new customers or just to placate and enhance the steering process of those being directed via in-house CSRs?

How many installation opportunities to independents are lost when these claimants meekly accept this practice? In Lynx’s case, they give three approved local vendors names as choices. Is the customer aware these may be the cheapest bidders in an area or that a relationship exists between Lynx and the named shops?

The reality of the auto glass industry is that the existence and the ownership of third-party glass claims administrators (TPAs) have skewed the marketplace and altered the balance of power and influence to a very few companies, particularly Belron. If there was any one area that cries for some sort of regulation or law, this is it. While I am not a fan of any TPA, it is imperative that there should be no ownership or financial relationship between any claims administrator and those who provide glass services of any kind. If independents want to remain independent and not be steered out of the insurance marketplace, this sort of reform has to take place. If not, it will only be a matter of time that total control of this sector of the marketplace will be ceded to those who own TPAs. It is ironic that those who decry regulation and proclaim themselves advocates of the “free market” tend to be in control of the markets that others want either reformed or rebalanced.

Over the past 25 years, we have seen major consolidations within American retail and that has had negative effects along Main Street. Open a Wal-Mart near a small town and many retailers just can’t compete and eventually close up. Home Depot and Lowes have had the same effect on many hardware stores. How many neighborhood pharmacies can one find anymore? From McDonalds to Denny’s to Outback, people patronize chain restaurants more so than local establishments. Belron and others are attempting to establish the branding model for auto glass which has already negatively affected the existence of local shops.

Auto glass is a funny thing. It is a craft that can’t exactly be replicated into a repeatable process time and time again. One can’t stand before a car and punch buttons and get the same removal result or urethane bead over and over again like a “cook” can inside a fast food kitchen. Every install is different and so is every installer/technician. Inside a shop, one can apply various forms of labor divisions and standard practices to save time. Mobile auto glass companies deal with all sorts of variables from lighting to weather to vehicle positioning and, lest we forget, traffic. This is in addition to drive times between jobs. There seems to exist in the industry a never-ending pressure on performance and numbers whether one is self employed or an employee of either a small or large shop.

If we don’t install, we lose it all. Our industry is all about performance and metrics. Companies like Belron have a huge support staff that depend heavily on install or repair numbers because those are what produce the bulk of their revenue. There exists a great deal of implicit and explicit pressure to perform. Walk into any of their retail locations and view the sales and install numbers that usually are posted. Survival or prosperity for independents is simply a matter of quantity of installs as well.

It is my simple contention that that the more installs a person does in a day, the quality of those replacements decreases. There exists for the conscientious technician a delicate balance of where that number exists. Many of us can “man up” and when needed and squeeze in an extra replacement. Base a person’s pay on numbers of installs performed and a company is inviting shortcuts to be taken. Take the finest technician, work him to the bone all week placing him under relentless pressure and like a thoroughbred horse, he will break down over time. A mediocre installer usually will perform like a counterfeit Rolex and never provide reliability under any duress.

There is a huge difference between building a business and collecting a paycheck. Another attitude exists if the carrot of bonus money is dangled in front of an employee to promote added production. What goes to the heart of any craft based business is the accent that is placed on quality and conscience both within and the effort expended on the job itself. To some, that may be of far less importance than the amount of profit that can be extracted from every invoice. The question is: In the long run, which attitude is most important for success?

One cannot be dismissive of our corporate brethren. Clients seeking the comfort or need of size and scale will find them inviting. The “easy entry” nature of the replacement industry allows wide variations of quality and safety which gives Belron and others, who train in-house, the ability to denigrate and instill doubt toward competition by showcasing their efforts to provide safety and quality. However it is my opinion that it is the very rare case where a large organization can effectively police their employees, especially where remuneration is tied to performance. And from what I have observed that is nowhere close to being done in auto glass. In short, independents have a fair shot in trying to prove themselves against the mediocre and impersonal performance of a corporate install.   

The times may be changing for many of us. Regional chains that have used insurance tie-ins as an anchor for their business models are at greatest risk for extinction or acquisition unless some regulatory or statutory reform takes place. At the moment, that seems unlikely due to the political reality that independents lack both the unity and lobbying power to alter the current landscape of the status quo.

An independent’s strength is its flexibility, professionalism and proximity. It is said that all politics is local and people really appreciate patronizing local businesses when it is to their benefit. Treat people like how you yourself want to be treated and many times that attitude can bring sustainability and longevity. That premise is time tested. Never reduce your customer into a job number. Make them feel special and appreciated. Build value and worth into your business and give yourself the chance to be appreciated locally for those efforts. A strong foundation is needed to withstand outside forces. Do unto others as you wish others to do to you is a rule that we should never forget and always embrace.

 
 

The Indie Advantage

10 Apr

It has been said that ‘you can fool some of the people all of the time’ and one would guess that our largest glass installation company is trying to do just that with their latest ad campaign. The theme of the campaign is being bigger is better. What is left unsaid is that the experience that the public most likely will have with the company is more like one they would have at McDonald’s rather than the best local burger joint in any region.

It is not my place to pick apart the minutia of what is contained in the television spot. However, it seems to seek to either allay or to instill doubt or fear into a consumer who is in need of glass repair and replacement services. The commercial talks about national warranties and coverage, suggesting that size of that particular company matters when a person weighs his glass vendor selection. Is this company trying to deflect the fast growing distrust that the American public has for large corporations?

Let us go back to the hamburger analogy. Buy a meal at a franchise outlet in any part of the country and the one thing that stands out is not the quality nor the taste, but the mediocrity of the eating experience. One might choose that facility for speed or convenience, but how many of us can name or patronize a local establishment that makes a superb burger that is worth both the cost and time to have it made? That place may not serve billions but it has earned respect and loyalty. This writer would like to suggest that this position is one to strive toward in auto glass as well and is the best defense against a greedy and grasping adversary.

Let’s face it, being a small independent glass shop is not easy. However developing and maintaining a positive business reputation is the most single important factor for both success and longevity. Treat people right and provide the best your craft can offer is the most optimum recipe for survival and achievement that can be offered.

It is my personal observation that the larger the organization, the less sensitized it becomes. AGRR™ magazine recently ran an article on the top firms in auto glass. How many CEOs of these listed companies answer the phones? How many pick up the tools and install? How many even know which tools to use?

Auto glass work is a craft service oftentimes performed outside of managerial supervision. In theory, that type of effort not only requires a certain level of proficiency, but also one of conscience. In short, one needs to know not only what makes a good install but also the moral principle to provide a high standard of effort. Does that platitude become diluted or lost when pay-for-performance metrics are imposed on employees instead of pride of ownership?

A few years ago when I was attending my mother’s funeral in my hometown, my hosting brother’s two-year-old refrigerator broke down the day before the event. He scanned the phone book looking for a repairman and made his choice. The guy he called came out, diagnosed what failed part he needed and came back a few hours later and saved not only an appliance filled with food but also made a bad day easier to bear. This guy realized what was at stake and made a supreme effort to help and his charge was more than reasonable. I asked my brother later what made him pick this particular service, especially over a national repair company and his reply will never be forgotten. He said: “The man put his own name on the business and to do so, he must have pride in it.”

A truism of the auto glass business is that the public is usually at a loss to choose an installation company when the need arises because that need is a rare one for most people. Some people still foolishly trust their insurance company about giving installer referrals, but this number is diminishing due to the growing awareness of the financial coziness that exists between insurer and referred vendor.

Another sad truism that the ad campaign addresses is that it is hard to distinguish quality and proficiency when it comes to auto glass installation. By offering a nationwide warranty and service area, branded trucks and clean uniforms, the effort is being made to project an image of professionalism over and above what exists in the marketplace. In this writer’s opinion, it touches a real nerve because of the wide disparity of professionalism that exists in this industry. We have some real technicians and wretched hacks as well that work in our industry. One sad fact is that I’ve observed both behaviors in the work of this Madison Avenue-wise company as well as other providers. One other fact that cannot be ignored is that “Mr. Big” has provided training and instilled installation behaviors for a number of its smaller competitors after they left the company which has not exactly in this observer’s opinion raised the overall technical quality of the industry

A Massachusetts owner-operator related a story in passing to me a month ago that he had a customer who had Safelite install a windshield in their vehicle in Minnesota. They then drove East to Boston. An issue about the install came up and he had four different Safelite shops along the itinerary try to resolve the problem. None of them did it to the customer’s advantage.

The real Safelite advantage is owning the glass claims administration service that acts as the first contact point for new claimants. They have successfully constructed a conduit that shepherds many passive lemmings into using their services. Take that mousetrap away and one would opine that their installation numbers would fall dramatically.

The Independent Advantage is just that … be independent. Think of

your customer as yourself. What would you want done? Treat them as humans and not numbers or dollar signs that talk. Stop making decisions based solely on the bottom line. Think quality instead of quantity. The industry is being choked by those who confuse price over value. These are mantras that the auto glass industry needs to embrace because glazing a windshield into a vehicle is not the industrial repetitive operation that McDonald’s uses in its kitchens. Do the job correctly and treat the customer right. This gives us the real local advantage that folks appreciate and return to.

 
 

Do Not Spare the Rod

26 Mar

Ever hear the phrase “In union there is strength?” We can use a whole lot more of that unity concept in auto glass.

Why is unity important to an independent glass shop? Self-preservation should be a concern to us all. There will always be craft and commercial concerns that can overwhelm and affect a single shop or even a regional chain that cannot be dealt with by a lone owner or operator.

In ancient Rome, one symbol of power was a bundle of birch rods carried by magistrates called fasces.  Its origin is lost in time but it is generally accepted that the meaning has to do with the idea that a single rod easily can be broken but a several wrapped together cannot. The fasces would be a reminder that if unity of purpose can be achieved, much could be accomplished.

It is a simple fact that independents better learn to work together and find common ground on industry concerns or be marginalized into impotence. We suffer from so much fraternal competition that we are actually fighting over table scraps and losing sight that we are missing out of the real banquet above us. One plausible theory is that large corporate interests that dominate the auto glass industry have no desire to see the chaos, enhanced by our easy entry policies, that exists below them to end. The reason being if unity existed, their influence and profits could wane.

In the auto glass industry we have a situation much like Gulliver’s travels into Lilliput—one giant and lots of little people. Would we like to tie down this goliath into submission or just try to co-exist with it?    While we can point to Belzilla as an obvious menace or even a common enemy, this international company’s successful growth is partially based on the response to meeting the needs of insurers. With this corporation, insurers can receive national coverage and consistent pricing, and in many cases, have their internal costs reduced by having their claims administration farmed out.

Let me bring up a legal irony that prevents independents from competing at a regional level much less a national one. The Sherman Anti-Trust Law, first designed to prevent market control by a single entity, can be used against independents trying to compete against a larger company. A corporation may have 20 retail units in a single state and can obviously act in concert with each other for pricing. However if you were to gather 20 state glass shop owners in a single room, the last thing they can talk about is controlling or managing pricing or they could face prosecution for anti-trust violations.

Yet the reality is as the trend continues for insurance-billed work to decline, the demanding cash market will make it more difficult for a large corporation with a costly support infrastructure to make the kind of profit they are currently banking. The truth is many smaller independents possess the flexibility needed to survive changing times. The fate of dinosaurs may offer solace to future shops.

I wish mega corporations were the only fraternal dilemma we faced. The real, sad fact is that there is so little effort being made between glass shops to find common ground on issues that affect us all. Why can’t we all just get along?

One reason could be lack of respect for members within our trade. I will admit that from what I see or find in the field, craftsmanship is a lost art. In my area, I would guess the majority of mobiles or small operators got their training either from a large corporate installation company or from watching a You-Tube video. To me, more installers are either concerned with volume or convenience but not with doing the job right. The question I ask myself every day when I choke back the desire to organize shops is: would I want these guys to work on my car? The answer usually comes back is a resounding, “No!”

This comes back to the “easy entry” issue that plagues auto glass and in fact every other trade that exists. Since there is no mandated training or certification program that demands actual and continual proficiency, we will continue to beset with the “slop-and-drop” practitioners that are all too common in our industry. Many of these installers survive by subsistence-style pricing. If the number of bottom feeders in our industry can be reduced it would certainly improve both the quality and profit levels of the remaining members. Yet we lack the will to apply political and economic pressure to attempt to change the status quo. The root of our disunity is obvious. There is a complete lack of trust within the retail sector of auto glass. Somehow we must act to overcome local rivalries and mistrust and learn to cooperate for the greater good.

What are issues shops can agree to? Is the use—much less the existence—of NAGS pricing something that can become a rallying cry to stop? Do shops want cheap aftermarket parts or do we need to apply pressure to distributors and manufacturers to raise quality?

Most of the auto glass industry suffers from the same tax inequities as any small business when compared to large corporations, especially international ones. Health care? Workman’s compensation? Business liability? The cost for every kind of insurance has risen yearly and chokes most of us. These are just a few issues that many of us can find agreement on.

Unity does not come easily nor is it cheap. As we all know nothing is free (unless it is a car wash windshield repair). Our industry needs structure and rallying points. Our current association is not perfect but what is mystifying to me is when shops complain about membership prices. If enough businesses joined, a war chest for lobbying could be built. At this point, our association operates on a shoestring budget which makes very little political or legal action possible. If a Goliath situation ever becomes evident, the association can’t even use a slingshot since all they afford is a single BB. Power costs money and until the independent sector of auto glass retail is willing to contribute and unite behind one standard bearer, expect that insurers and its parasites will continue to break rods over our proverbial backsides. It would be a far better concept to take that rod and add thousands more so that we become a force to be reckoned with on issues that matter. It is our choice to act, with our future at stake.