The major paint companies, struggling to overcome federal charges of price-fixing and their largely unsuccessful and expensive "shop investment" programs of the '90's are now focusing on "value added" shop management programs to attract and retain customers.
While the paint companies have offered management tools for many years, they took a back seat to "investment" programs in which the paint companies helped a shop purchase new equipment in return for a multi-year paint contract. The investment programs were expensive, however, and did not have the intended results.
A district manager for Finishmaster, the largest paint distributor in the U.S., said, "those programs were losers for the manufacturers. All the (paint) companies did was trade business. The so-called investments didn't make customers more loyal, they just made every shop owner go looking for the best deal. And when the contract ended, if the shop was still in business, they'd be out looking for someone else to make them a deal."
With the new emphasis on working with their customers to improve profitability, the paint companies hope to build long-term loyalty.
"Not only will we encourage these programs, but you're going to see the paint companies get pickier about who they do business with," said the Finishmaster manager. The manufacturers are concerned that with collision industry consolidation, shops that don't take advantage of educational and management offerings will find themselves unable to compete and will close their doors. "Why invest time in a customer who isn't going to be around?" the Finishmaster manager asked.
Programs aren't all new
It's been almost a decade since Akzo Nobel, BASF, PPG, and other paint companies began trying to build customer loyalty and grow their market share by helping shops to better manage their businesses. One by one in the early and mid-1990s, the paint companies introduced 'partnership programs' designed to show shops that they offered more than just paint.
Akzo Nobel
Akzo Nobel in 2001 celebrated the 25th anniversary of its international "Acoat selected" program, although Acoat didn't make its way into the U.S. market until 1992. Current participants use a standardized chart of accounts that allows easier side-by-side comparisons to other participants in their Acoat '20 groups'. The program's other offerings include management seminars, on-site assistance from Akzo's staff business development managers; and marketing assistance such as in-shop courses that Acoat shops can offer insurance agents. The courses can be used for insurance continuing education credits required by many states.
But Mike Sillay of Akzo Nobel said the annual fee for the Acoat selected program, $5,500, and the travel costs for '20 group' meetings and management training have meant the program was beyond the reach of many Akzo users. That's why Acoat is changing to becoming less of a bundled set of services to a program with a lower annual fee and an a la carte menu of service options - some fee-based - that should allow the program to benefit more Akzo customers.
One new item on that menu will be "Collision Force," a package aimed at addressing workforce shortages for Acoat participants. Collision Force includes three elements, Sillay said. The first is designed to assist Acoat participants with the professionalism and effectiveness of their employee recruiting efforts. This includes a toll-free number (866-FIXACAR) that allows technicians and others seeking employment in the industry to participate in an 8-minute survey of their interests and experience; at the end of the survey, callers can choose to have the information they shared submitted to any or all of the Collision Force participating shops listed. These shops receive an email that contains much the same information as a job application, including the caller's years of experience, contact information, etc.
The second element of the program, aimed at attracting and training new entry-level employees into the industry, will be a partnership between Akzo and Mentors @ Work, a recently-launched web-based system designed to assist shops with the mentor-apprentice training process.
The third element of Collision Force, Sillay said, is designed to help Acoat shops retain employees. Information gathered through several focus groups of technicians will help Acoat participants better understand what drives employees to leave, what attracts them to other shops, and how best to reach those looking for a new employer.
Acoat shops wishing to participate in Collision Force will need to meet certain requirements, Sillay said. For example, focus groups have found employer-paid tool insurance is important to technicians, yet only about 20 percent of shops offer it; it will be required for Collision Force participants, Sillay said. Also required is a written policy explaining how work is allocated among technicians, another source of frustration for industry employees.
Sherwin Williams adds to program
With 620 participating shops - doing an average $1.6 million in annual sales each - Sherwin-Williams' "A-PLUS" is among the largest of the paint company value-added programs. That size is giving the company some advantages as it works to secure new benefits for its members, Bruce Cooley of Sherwin-Williams said.
One of the unique elements of A-PLUS, he said, is "Lasting Impressions," a program that enables participating shops to give customers a card good for a 20 percent discount on all purchases at any of Sherwin-Williams' 2,400 paint and wallpaper stores for a two year period after having their vehicle repaired. The shops can also provide their employees with a similar discount card good as long as they are employed at the shop.
"We don't look at A-PLUS so much as a way to get shops to switch from another paint company as a way to help our customers differentiate themselves in the market," Cooley said. "The program really is run by those customers, the shops that participate. If there's something they need or want us to initiate in that market, we try to do that."
Many of the program's offerings - including management training courses - are included in the $895 initial annual fee although some, such as facility design services, are fee-based, Cooley said. But, he said, many A-PLUS shops "pay" the program's $295 renewal fee out of their "A-PLUS Points" account.
"All of our members are entitled to a 2 percent rebate on the shop's annual purchase of Sherwin-Williams products," Cooley said. "That comes in the form of A-PLUS Points, the first 295 of which can be used for the renewal fee each year."
The points can be used to offset fees for other A-PLUS program services, such as CSI, he said.
Sherwin-Williams has also teamed with ADP, Ensera and AutoVista to "web-enable" all of its A-PLUS shops. The partner companies can help A-PLUS shops with everything from basic dial-up service to website hosting and third-party claims assignments. The launching of this effort coincided with the unveiling of Sherwin-Williams' "e-store" designed to simplify on-line purchasing through the paint company.
BASF heads to the Web
BASF believes its new set of web-based business analysis tools will become a cornerstone of the value-added services it offers its customers.
The goal of the new offering, according to the company, is to move away from just handing participants in its partnership program a thick book of financial analysis of their businesses, but to actually make it easy for the shops to get the specific and current statistics they are looking for - along with easy-to-access tools to improve those numbers.
Here's a summary (see a complete summary of new BASF offerings elsewhere in this issue) of how the site works and what it offers.
The shop owner enters some initial shop data and completes a "self-evaluation" of how he or she views the business' performance in a number of areas. A shop owner wanting a quick overview of the business' performance can start with the 1-page summary which includes key indicators about the business: annualized sales, sales per estimator, sales per administrative data, staffing density, etc.
At the bottom of the page are some projections regarding the shop's potential performance based on changes in staffing, productivity, etc.
In between are a list of 11 aspects of the business - parts, sales and marketing, awareness of financial measures, etc. - showing clearly which the shop owner felt were areas needing improvement.
A single click on any of these topics brings up a checklist of items the shop owner can use to improve the businesses' performance in that area, including ready-to-use forms or worksheets.
"Here's information to solve the guy's biggest headache, and he got to it at the second click," a BASF spokesman said. "He didn't have to dig through a 36-page report just to find some number that confirms what he thinks his biggest problem is, and still might not offer any solutions. He just says, 'This is the thing that's driving me nuts every day,' and click, here's the solution."
The website will give BASF customers 24/7 access to a wide range of information, from examples of employee pay plans to a dozen (and growing) plans for shop layout designs with interactive tools that allow the shop to determine what type of production it could generate in each plan.
By entering the shop's financial data each month - a process expected to take less than 15 minutes - the shop has immediate access to financial analysis, graphs, tools and comparisons.
PPG offers menu program
PPG's MVP ("Maximum Velocity Performance") program is among the most loosely structured of the paint company value added programs. Unlike most of the others, there is no annual fee to join or participate. Instead, the program offers PPG users a menu of services - some fee-based - from which they can choose the offerings of most value to them.
Recently added to the MVP line-up of management training courses, according to PPG's Mary Kimbro, is "Estimate Plus," a 1-day class that "delves into estimating practices to help shops learn the best practices" in the industry.
More than 300 MVP participants belong to regional "Round Tables," in which 15-20 non-competing shops meet several times a year to share best practices, most recently focusing on cycle time and production improvements.
Also new this year is an employee satisfaction indexing service.
"We've done CSI within MVP for quite a few
years now," Kimbro said. "But we've launched a new tool for our customers where we go in and let their employees rate their own satisfaction. There is a shortage of technicians, and we want to do everything we can to help our shops improve their own employee relations to help retain their staff. This tool allows them to analyze how they can improve their own employees' satisfaction."
PPG also says its has expanded the core of the MVP program: a shop benchmarking process based on its database of information from more than 3,000 shops. The company has revised the benchmarking reports making it easier to understand how your shop's financial, production and other numbers compare with industry averages and the top 10 and 25 percent of the industry. In recent months, a paint shop performance assessment also has been added.
"The benchmark covers the shop's entire business, but the paint shop performance focuses on exactly what's happening in the paint shop to really delve into the opportunities to improve processes inside the paint shop," Kimbro said.
DuPont to merge three programs
There have been three value-added programs under the DuPont Performance Coatings (DPC) portfolio: DuPont's "Assurance of Quality" (AOQ) program, the Standox "Partnership in Excellence" (PIE) program, and "Color Club" for Spies Hecker users. The three, however, are merging into one comprehensive package called "DPC Solutions."
DuPont says the simplicity and strength of DPC Solutions will come from its focus on three fundamental areas of business performance: people, process and environment. Tools and support for these areas will be offered in five modules:
- business improvement;
- management training and skills development;
- safety and environmental management;
- marketing; and,
- information, support and services.
"Collision repair facilities in North America continue to face challenging times," said Fred Wissemann, DPC collision segment manager. "There is over-capacity in the industry and shops face cost pressures from every angle. As a result of the leadership position of DuPont in a number of businesses, we have tremendous resources and tools that can help our customers overcome these challenges."
Certified First takes it a step further
But while all of the paint companies are making additions and incremental changes to their value-added programs, a number of them are also in the early stages of more dramatic changes.
PPG's new "Certified First" program, for example, is designed not just to offer services to shops, but also to build a "brand," a network of shops recognized by consumers and insurers.
"We wanted to build a program that would let consumers feel comfortable about a network of body shops regardless of whether they lived in Pittsburgh or San Francisco," PPG's Kimbro said of the new Certified First program. "We want to build that brand through a network of shops that stand for high customer satisfaction, high quality, a high level of facility amenities. It's designed to help the body shop get the benefits of a larger group and to get the consumer and insurance company's recognition."
Joining the network requires on-site audit -- conducted by Underwriters Laboratories Inc. (UL) -- of shop equipment and CSI (based on at least quarterly surveys by the shop, and an annually-required survey by a specific outside company). There is also a $2,000 annual fee, with reduced per-location fee for multi-shop operations.
Certified First shops must be using one of PPG's top three product lines: Deltron, Global or AutoColor. All three have earned the Good Housekeeping Seal of Approval, a fact played up in the signage, consumer marketing and point-of-sale materials available for use by Certified First shops. The network is also being promoted through a national ad campaign and a website.
Participating shops are also receiving a customized marketing report that analyzes as small or as large an area around their shop as they wish.
"They tell us which zip codes they want the information for, and the report allows them to understand what the demographics are in that area - what the consumers like, what do they buy, what do they eat, what do they drive - to help the shop with its local marketing in their area," Kimbro said. "A lot of shops do some marketing but often don't do it where their dollars are best spent. This will help them fine-tune where to spend their dollars."
Other benefits of the program include group rates on property and casualty insurance, preferred equipment leasing and financing rates, discounted facility layout and design services, and discounted office supplies. Certified First shops will also be able to offer their customers the ability to track the status of their vehicle via the program's website.
Marketing to insurers?
By building such a branded network, could Certified First or other paint company programs help single-location repair operations compete in the future with multi-shop and consolidator companies? In the U.K., for example, Akzo Nobel has created a separate company that established call centers to take first notice of loss calls for insurers, make claims assignments to shops in its program and offer the insurer central billing. Are paint companies planning similar efforts in the U.S.?
"It is our goal to be recognized not only by consumers but insurance companies as a place they want to do business with," Kimbro said of the Certified First network, declining to elaborate.
"We are taking a close look at what we can do to enhance the shop-insurer-consumer dynamic," DuPont's Wissemann said of his company's future plans.
Other paint company sources, speaking off-the-record, say they foresee more efforts by paint companies to market their customers to insurers.
"We see that as something that shops will be more interested in in future years," a representative of one company said.
"Will we market to the insurance industry? I think we will," said another. "But until you have a network built, there's not a lot of marketing you can do to the insurance industry."
Autobody News editor Richard Neubauer contributed to this article. John Yoswick is a freelance writer based in Portland, Oregon, who has been writing about the automotive industry since 1988.
John Yoswick