Late last month I wrote a post If we are not willing to be honest as customers how can we expect businesses to get better? and in the comments Bill Park mentioned this:
I was fortunate to have a 3rd party vendor that provided my company with customer engagement analytics based on customer remarks not “would you refer family and friends.” Those insights were game changing for my company, it shifted our entire business model as it related to how we interacted with the customer during the “sales cycle.”
This really intrigued me so I asked Bill if he would be willing to share this story for your benefit.
Here is Bill’s guest post:
A little background: I currently train and consult small to medium sized businesses in the automotive collision repair space. Prior to that I used to run my own successful automotive collision repair business and this is my story of working with a 3rd party on customer engagement analysis and how it benefited my business.
The collision repair industry has migrated into a predominantly 3rd party pay environment over the last 30 years. It used to be a business where 80% of the customers paid for their services out their own pocket. Today, however, the customer pay segment is about 12% of revenue for a typical collision repair shop, and the balance is paid through insurance claims. This shift has taken the consumer in many cases, out of the decision making process when it comes to choosing where the vehicle will be repaired. This is not unlike what we see in the US healthcare environment today.
The body shop of the past had to rely on their customers referring friends and family in order to grow, because there was no direct referral system back then. It was very easy to see if you were doing the right the things for your customers. That was, your business grew. The “survey” was happening at the point of sale, owner to customer.
Fast forward to today, and we see the insurance company has become the new “customer,” not the vehicle owner. So who do you serve now? I struggled with this myself as I drank the “direct repair” Kool-Aid, while my business literally doubled every year for three years. What could be wrong with this model? My business is growing like crazy, I don’t have to market, and all I have to do is fix cars. This is heaven! I have to admit, it was heaven for awhile, but once I realized that I was losing control of my customer, the vehicle owner, a warm sweat came over me. What was I to do? I need to better understand how I can influence my customers more than the insurance company or I will be at the mercy of the insurance company.
I decided to do a deep dive into our Customer Satisfaction Index (CSI) data, to gain some insight into how our customers really felt about us as a company. I felt I had lost that connection with them as I was now operating out of 4 locations and we were touching 6,000 customers a year. As I dug deeper into our customer satisfaction data I realized that all we were doing is managing a number for the insurance company. All they cared about was one question: “Will you refer us (the shop) to friends and family?” Seems like a reasonable question, and on the surface it was. I ran a report and sure enough our CSI score was 98.6%, we nailed that question. We must be great!
We were living in a false reality. I ran another report and queried all surveys that scored any metric 80% or below and looked at how those customers answered the above questions: would you refer, and to my surprise, 100% of those customers still said they would refer us. Something isn’t right. I already knew that the current customer satisfaction platform in the industry was broke, but now I could see the wheels coming off. The irony is that the insurance companies put a blind eye to all the gaming that goes on the industry to affect the scores that companies generate; yet they demand a 95% or better CSI to be on the “program.” They too are living in a false reality. However, there are a few insurance companies that get this. Those insurance companies don’t even measure CSI, because they already know that X% of their policy holders are going to jump ship for a better price, so it’s built into their actuarial data and their premiums support that. Their competitive advantage is their ability to get cars fixed cheap; therefore driving down loss adjustment costs, which in turn creates the ability to be more flexible in the pricing game.
However, after drinking the “direct repair” Kool-Aid I felt that I couldn’t easily exit the game I was in, so I decided to hire a company that focuses on using customer survey data to grow and nurture customer engagement. There is only one company that does this in our space, Phoenix Solutions Group (PSG), so we hired them to become our extended marketing consultant. We still had to subscribe to the industry CSI platform, but we never looked at the data or even considered it during any decision making again. We literally ignored the industry program. After our 90 day data review with PSG, we were able to identify exactly what we were good at and what we weren’t, as it related to the customers’ perspective. It wasn’t about what we thought, it was about what they, the customer thought. Here is what we learned:
Once we understood what we needed to do, we were able to commit to doing less work, leave a few I’s and T’s undone, and spend that “extra” time being 100% present with the customer. I know this sounds easy, but it took us about 12 months to really get our arms around this. The idea of putting your work aside is tough for most to understand, because the work still needs to get done. We also focused on training our staff to communicate through questions, customers don’t want to be talked to, they want to be heard. This shift in focus from being concerned with following process to being concerned to hearing the customer was paramount for us.
Over time the data was proving that our change in focus was making an impact on how our customers perceived us. Our emotional CSI scores increased by over 20%, our logical CSI scores increased by 15%, and more importantly our repeat/referral business was growing. By the way, our scores in the “traditional” CSI platform were still up in the top 5% in the market.
We also managed to get the work done too:)
The moral of the story:
“The morning breeze has secrets to tell you” by Jelaluddin Rumi
You just have to listen!
Bio: Bill Park currently trains and consults small to medium sized businesses in the automotive collision repair space. His passion is to “add value period.” Bill has also founded and operated multiple businesses over the years, ranging from small, 2-3 person entities, to a medium sized 100 employee corporation. Bill has over 20 years experience in all facets of business development, including, but not limited to: green-field and start-ups, process development, venture capital, financial literacy, acquisitions and disposition.
Bill Park blogs at mpoweru, is co-founder of mpoweru and mpoweru Insurance & Financial Services (start-up), which is a community based site for the collision repair professional that enables collaboration and leverages thinking across business domains. He dabbles in real estate; has a passion for learning; enjoys rolling up his sleeves and getting things done, and loves to build stuff. He is married and the father of six children. His personal vision: “To positively affect the lives of those who I cross paths with.” You can subscribe to his RSS feed here, connect with him on Twitter here and on LinkedIn here.
Thanks to mag3737 for the image.