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.