What’s that old saying? “Fool me once, shame on you, fool me twice, shame on me?”
Well, shame on me. In fact, shame on all of us, shame on the whole entire auto glass aftermarket industry.
I didn’t quite get it the first time round in 2000, but I see it crystal-clearly now. In fact, let me raise my can of Bud in honor of Diamond Auto Glass. They have put forth, and will profit by, an amazing strategy, similar to the one Safelite used eight years ago.
Now, to most of the world, it seems like both companies laden with debt like a teenager with acne, had decided to shed it through a process known as Chapter 11. It’s a brilliant strategy and it goes like this:
Keep your prices artificially low. Charge too little or pay too much for product. When the rest of the industry screams out that “you can’t do it for that,” smirk and say “yes, we can and we are.” Imply liberally that those other companies are just not run by savvy businessmen, or just aren’t as good at business as you, the big national corporate boy.
And don’t forget to pound into the heads of your insurance customers that the rest of the industry is woefully inefficient, just small mom-and-pops hanging on to a business model that has long since ceased to work. Pretend you feel sorry for them.
Hang on to your secret, the one that Diamond (and Safelite before it) don’t ever mention: that it turns out those screaming independents were right. They couldn’t do it for that—and neither could you. You were losing money at the prices you charged. And, despite being able to one of the largest volume buyers in this country presumably having some of the lowest material costs, you were too. Diamond was barely profitable EBITDA and wasn’t profitable after.
But none of that matters really, because Diamond is a big company and filed for Chapter 11. It will shed all that debt and will be bought eventually. Even Safelite’s owner Belron has expressed interest, probably just to keep it out of the hands of anyone else.
But here’s why I’ve been fooled again. I have to ask: how many smaller companies went out of business during Diamond’s reign? How many mid-sized ones had to sell out because they couldn’t compete? How many of them get a second chance Diamond does? How come they get to take others down while they can rise again?Maybe Diamond’s strategy (and Safelite’s before it) had little to do with making money and more to do with eliminating competition. If so, it’s brilliant. It just shouldn’t be legal.
Tuesday, April 22, 2008
Wednesday, April 2, 2008
Where's the Beef?
Come with me on a ride. Let’s head out early one Sunday morning for a trip down I-95 from Dillon, South Carolina to Orlando, Florida. That should be about nine hours or so of driving. It’s going to be a long day on the road, but we will make a few rest stops and break for an hour or so for lunch.
I-95 has pretty good signage (except in Connecticut, but that’s another story) and at every exit it tells us what food, gas and lodging is available.
It’s 1:15 in the afternoon and now we are hungry. We could go for some really good All-American hamburgers for lunch. So we start reading exit signs. One exit near Jacksonville has Taco Bell, a McDonalds, a Pizza Hut and a Joe’s Beef and Burgers. Great, we think, two choices of hamburgers.
So which should we choose? We know McDonald’s; heck, we see them advertised every day. We don’t know anything about Joe’s but the word “burger” is in his name. Is Joe’s a really good local place or one of those just-get-a-sign-on-95-and-it-doesn’t-matter-how-the-food-tastes place? Would Joe’s be a great burger experience (and we fancy ourselves connoisseurs of great burgers) or a salmonella shack?
We hem and haw, but we really just don’t know, so we end up choosing McDonald’s. The food may not be great, but it’s never really bad and we know that the staff there is trained and retrained on sanitation and safety. So in we go and each have a burger and fries that could be defined as, well, adequate. In fact the whole experience is just satisfactory. Joe’s may have been great, but we’ll never know. We chose mediocrity over the potential for greatness because we knew what we’d be getting and it wouldn’t be great, but it wouldn’t be bad.
I’ve used a hamburger analogy before, but it’s never been more timely than now as Safelite has just hired a new executive who comes from … you guessed … the hamburger business (CLICK HERE for related story). Matthew Johnson is the company’s new media director and he comes from Wendy’s International. He also has worked for Lenscrafters and a number of companies with a strong national presence. Couple this with Safelite’s announcement last week it is going to use a number of its employees in upcoming advertising and you can see where this is going.
I’d expect to see a series of commercials, both print and radio, in the company’s associates’ words about how much they care, how important quality is and how calling Safelite is like calling the neighbor down the block. I’d expect these advertisements to be the rollout effort in building a national brand.
So are those who compete against Safelite doomed? Hardly. A number of Safelite’s senior executives have been quoted saying how difficult it is for the company to compete against local companies that have a strong brand and presence in that location.
Let’s go back to our I-95 journey again. Suppose that I’ve stayed in Jacksonville before and seen “Joe’s Beef and Burger” in local advertising and sponsoring community activity. Suppose I hear them on the radio as I pass through. Suppose I have a friend who lives in Jacksonville who has eaten at Joe’s for years and mentions the restaurant to me. Do you suppose I’d try Joe’s then? Of course, I would.
So the goal for companies that compete with Safelite is to create a pond that you can dominate. This is easier for a small company than a regional player. Choose a market size that you can dominate, and then get to work doing just that. Even if it’s a small part of just one town, make it yours. Create an experience for the customer that is so superior to what a national chain can provide that you will build loyalty that lasts for generations. Right now, I’d be preparing some advertising talking about how locally grown my company is, how much I care about safety and what a superior installation job I can provide. I’d explain carefully that my company is not a big conglomerate or chain, nor is it really a British or South African one. If I was AGRSS-registered, I’d mention that. “I’m your hometown, homegrown auto safety guy,” I’d be telling potential customers.
And, whether I’m selling burgers or windshields, they’d be great, safe All-American ones.Pass the ketchup.
I-95 has pretty good signage (except in Connecticut, but that’s another story) and at every exit it tells us what food, gas and lodging is available.
It’s 1:15 in the afternoon and now we are hungry. We could go for some really good All-American hamburgers for lunch. So we start reading exit signs. One exit near Jacksonville has Taco Bell, a McDonalds, a Pizza Hut and a Joe’s Beef and Burgers. Great, we think, two choices of hamburgers.
So which should we choose? We know McDonald’s; heck, we see them advertised every day. We don’t know anything about Joe’s but the word “burger” is in his name. Is Joe’s a really good local place or one of those just-get-a-sign-on-95-and-it-doesn’t-matter-how-the-food-tastes place? Would Joe’s be a great burger experience (and we fancy ourselves connoisseurs of great burgers) or a salmonella shack?
We hem and haw, but we really just don’t know, so we end up choosing McDonald’s. The food may not be great, but it’s never really bad and we know that the staff there is trained and retrained on sanitation and safety. So in we go and each have a burger and fries that could be defined as, well, adequate. In fact the whole experience is just satisfactory. Joe’s may have been great, but we’ll never know. We chose mediocrity over the potential for greatness because we knew what we’d be getting and it wouldn’t be great, but it wouldn’t be bad.
I’ve used a hamburger analogy before, but it’s never been more timely than now as Safelite has just hired a new executive who comes from … you guessed … the hamburger business (CLICK HERE for related story). Matthew Johnson is the company’s new media director and he comes from Wendy’s International. He also has worked for Lenscrafters and a number of companies with a strong national presence. Couple this with Safelite’s announcement last week it is going to use a number of its employees in upcoming advertising and you can see where this is going.
I’d expect to see a series of commercials, both print and radio, in the company’s associates’ words about how much they care, how important quality is and how calling Safelite is like calling the neighbor down the block. I’d expect these advertisements to be the rollout effort in building a national brand.
So are those who compete against Safelite doomed? Hardly. A number of Safelite’s senior executives have been quoted saying how difficult it is for the company to compete against local companies that have a strong brand and presence in that location.
Let’s go back to our I-95 journey again. Suppose that I’ve stayed in Jacksonville before and seen “Joe’s Beef and Burger” in local advertising and sponsoring community activity. Suppose I hear them on the radio as I pass through. Suppose I have a friend who lives in Jacksonville who has eaten at Joe’s for years and mentions the restaurant to me. Do you suppose I’d try Joe’s then? Of course, I would.
So the goal for companies that compete with Safelite is to create a pond that you can dominate. This is easier for a small company than a regional player. Choose a market size that you can dominate, and then get to work doing just that. Even if it’s a small part of just one town, make it yours. Create an experience for the customer that is so superior to what a national chain can provide that you will build loyalty that lasts for generations. Right now, I’d be preparing some advertising talking about how locally grown my company is, how much I care about safety and what a superior installation job I can provide. I’d explain carefully that my company is not a big conglomerate or chain, nor is it really a British or South African one. If I was AGRSS-registered, I’d mention that. “I’m your hometown, homegrown auto safety guy,” I’d be telling potential customers.
And, whether I’m selling burgers or windshields, they’d be great, safe All-American ones.Pass the ketchup.
Tuesday, March 11, 2008
My Own Dr. Phil
Dr. Phil is a friend of mine. No, not that Dr. Phil. Dr. Phil Cristin (not his real last name) has been one of my closest friends since we played T-ball together after school in second grade. I always thought I was the smarter one, but I grew up into the glass industry and Phil became a doctor. Go figure. Today, he runs one of those local make-an-appointment or walk-in places right in the center of town. Whenever I need a doc, I go to Phil. When he needs a new windshield, he calls me.
The flu hit me pretty badly a few weeks ago and I went to see Dr. Phil in his professional capacity. The receptionist told me I hadn’t been there as a patient for nearly four years. (I was proud of being so healthy.) She told me to have a seat and the good Doc would be with me as soon as possible.
While sitting in the waiting room, I noticed a lot had changed in four years. First was the sign-in sheet. It was numbered and you had to sign in with your name and the time you had arrived. The nurse filled in the column with a time when you were discharged.
I noticed that almost everything in that office revolved around the sign-in sheet. Phil himself came out to look at it a few times while I waited, as did several of the nurses and other staff. The receptionist kept filling in and recording numbers.
The second thing I noticed was the change in procedures. I used to go into an examining room and have my blood pressure taken by the nurse, then Phil would come in and I’d describe my symptoms and he fix me up, give me a prescription or whatever and I’d be on my way. One time, I had an ear infection and he had to do something called “lavage” it and that took him almost an hour, but otherwise, I’d generally have Phil’s attention for about 30 minutes or so.
Not anymore. This time one lady in white took my vitals and another wrote down what was bothering me. She asked a few questions and put them on a sheet, and then a third escorted me into an examining room where I waited for nearly 15 minutes before Phil arrived. While I had spent more than 30 minutes in the exam area, he ended up spending no more than five minutes with me. I got my script and left.
Last week we got to catch up a bit at our kids’ basketball game. One good thing about Phil is that he always let’s me give it to him. “Phil,” I said, “what’s the deal with that sign-in sheet in your office? Why are you all so obsessed with it? And how come I only rated four minutes of your time?”
Phil got a real sad look on his face, like I hadn’t seen since Mary Agnes Ilaterria broke up with him in high school. “Oh,” he said, “a lot has changed. We get paid so little by insurance companies for patient visits that I have see at least 110 patients a day just to cover my overhead. That doesn’t include the time I have to spend on the phone fighting with them to cover procedures or medicine my patients need.”
I did some quick math. “Phil, that’s like a patient every four minutes.” ”Exactly,” he said. “It’s all different. I used to do blood work in the office, but I had such a hard time getting reimbursed for it, we stopped doing it. Practicing medicine today is not as much about patient care as it should be. Did you know a doctor’s average income has been going down every year for the past ten? Dentists now have a higher average income per patient than doctors, because the insurance industry is not nearly as insinuated into dentistry as they are in medicine. It’s depressing and demoralizing and it’s killing patient care.”
Phil told me he was thinking of getting out of medicine all together. “I want to do something where I control destiny and don’t have to fight with insurance companies all day. Maybe I’ll come work for you in the glass business,” he said. I didn’t have the heart to tell him.
The flu hit me pretty badly a few weeks ago and I went to see Dr. Phil in his professional capacity. The receptionist told me I hadn’t been there as a patient for nearly four years. (I was proud of being so healthy.) She told me to have a seat and the good Doc would be with me as soon as possible.
While sitting in the waiting room, I noticed a lot had changed in four years. First was the sign-in sheet. It was numbered and you had to sign in with your name and the time you had arrived. The nurse filled in the column with a time when you were discharged.
I noticed that almost everything in that office revolved around the sign-in sheet. Phil himself came out to look at it a few times while I waited, as did several of the nurses and other staff. The receptionist kept filling in and recording numbers.
The second thing I noticed was the change in procedures. I used to go into an examining room and have my blood pressure taken by the nurse, then Phil would come in and I’d describe my symptoms and he fix me up, give me a prescription or whatever and I’d be on my way. One time, I had an ear infection and he had to do something called “lavage” it and that took him almost an hour, but otherwise, I’d generally have Phil’s attention for about 30 minutes or so.
Not anymore. This time one lady in white took my vitals and another wrote down what was bothering me. She asked a few questions and put them on a sheet, and then a third escorted me into an examining room where I waited for nearly 15 minutes before Phil arrived. While I had spent more than 30 minutes in the exam area, he ended up spending no more than five minutes with me. I got my script and left.
Last week we got to catch up a bit at our kids’ basketball game. One good thing about Phil is that he always let’s me give it to him. “Phil,” I said, “what’s the deal with that sign-in sheet in your office? Why are you all so obsessed with it? And how come I only rated four minutes of your time?”
Phil got a real sad look on his face, like I hadn’t seen since Mary Agnes Ilaterria broke up with him in high school. “Oh,” he said, “a lot has changed. We get paid so little by insurance companies for patient visits that I have see at least 110 patients a day just to cover my overhead. That doesn’t include the time I have to spend on the phone fighting with them to cover procedures or medicine my patients need.”
I did some quick math. “Phil, that’s like a patient every four minutes.” ”Exactly,” he said. “It’s all different. I used to do blood work in the office, but I had such a hard time getting reimbursed for it, we stopped doing it. Practicing medicine today is not as much about patient care as it should be. Did you know a doctor’s average income has been going down every year for the past ten? Dentists now have a higher average income per patient than doctors, because the insurance industry is not nearly as insinuated into dentistry as they are in medicine. It’s depressing and demoralizing and it’s killing patient care.”
Phil told me he was thinking of getting out of medicine all together. “I want to do something where I control destiny and don’t have to fight with insurance companies all day. Maybe I’ll come work for you in the glass business,” he said. I didn’t have the heart to tell him.
Monday, March 3, 2008
Watching Washington
I don’t live in Washington State, but I have sure been watching the fight going on there in the legislature the past few weeks (CLICK HERE for related story from glassBYTEs.com™). It’s been quite an education.
From watching the hearings, it’s easy to see that the insurance lobby is big and powerful and full of lobbyists with fancy suits. Heck, the chairman of the committee was even calling the lobbyist by his first name. They looked pretty chummy. Probably play a lot of golf together too. On the surface, you might think that there’s no chance for the auto glass lobby to be victorious. Well, your wrong. The Independents have already won. Here’s why:
1 - The insurance lobby had to spend big bucks fighting this thing. They had to use valuable resources, time, energy, people and bucks to work to squash an attempt by the legislature to do the right thing. Even Safelite sent a hired gun out there to fight the bill.
2 - There’s an old saying in politics: when you’ve thrown everything you got and nothing sticks, confuse the issue. Well, that’s what these insurance fat cats have had to do in this case. In the end, they tried to confuse the issue by saying passing a bill to allow consumer choice would result in steering, which is bad for the consumer. Funny, Mister Insurance-miester, I guess steering is only okay as long as you are the one doing the steering.
3- The independents have grouped together around the cause quickly and effectively. Using grassroots work locally, they created quite a campaign in a short amount of time.
Insurers like to paint this as a “big chain vs. mom-and-pop” issue. What they, and their legislators, never get is that it is a quality issue. If you have the appropriate insurance and meet their criteria, any network will put you on their list. They have no idea how well you install glass, they don’t know if you are an escaped felon, they don’t know if you are doing drugs or other acts, they don’t know much about you. Mostly all they know is that you’ll do it for their price. The independents have been screaming for years that you get what you pay for. Who installs your windshield is as much a safety issue as who takes out your gall bladder. How’d you like your insurance company to send you a doctor they don’t know much about (except that they’d do the surgery for what the insurance company will pay)? More on this next time.
P.S. By the way, a few of you have asked if I worked for a urethane manufacturer. The answer is no. Never have. Never will. When the editors asked me to come up with a name, I thought it’d be a good one, but no, I’m not one of them. I’m one of you.
Thursday, February 14, 2008
Memories
If I could, I’d send everyone in the auto glass industry a box of blueberries. Why? Because blueberries are supposed to be good for the memory, and our industry seems to have the lowest ability to remember anything of any industry I have ever seen. Our auto glass shop owners make the guy from the movie Momentum look like a recall genius.
I figure that’s got to be what’s wrong with us. We have no memory. Or maybe it’s getting zapped the way Will Smith zapped Tommy Lee Jones’ memories in Men in Black (yeah, I watch a lot of movies). That must be it.
How else can you explain an amazing phenomena? In 2005, NAGS “revalued” its pricing system. At that time, they told us they were moving from a NAGS price that had included parts, labor and the kitchen sink and moving to a model that was akin to that used by the collision and mechanical repair industries. There would be a part price (i.e., the cost of the glass) and a labor charge. While NAGS could not tell us what to charge, they did remind us that those same collision and mechanical repair shops had an hourly rate for labor and did, in fact, charge by the man hour. While NAGS could not tell us what to charge, we knew that most body shops did not discount their parts all that much.
The intent, I believe, was to morph NAGS pricing into a “part + labor” equation. Articles were written, lectures given and the same caution went out over and over again: this new NAGS system will work, if people truly looked at their costs. They wouldn’t discount parts too much as the part prices were pretty accurate, and they would charge a fair labor rate per hour.
Miraculously, most insurers went along. Only one stayed with a flat labor rate, the rest went to hourly ones. Most insurers “offered” four and five percent off NAGS prices. There was great hope in the industry—for a while.Three years later, I am sure nobody remembers this. How else could we explain the fact that insurers are offering 45 percent off, and people are accepting it? It must be memory loss, because why else would anyone who had been paid an hourly rate for labor now accept a flat rate? Why would an industry go backwards?Now, here’s the part in the story where everyone blames NAGS. It must be their fault, they say, for putting out pricing so out of line that people take 45 percent off. Well, I’m not going to argue that, because I don’t think the problem is NAGS. The problem is us. Every time someone does work at a certain percentage off, the argument that work can’t be done for that price is shown to be untrue. NAGS has nothing to do with it.
The problem is us. We must not—collectively or individually—have any memory left. Because the alternate reason—the one that says we choose to let this happen—shows me that rather than not having any memory, we just may not have any brains.
Thursday, January 31, 2008
They’re Coming for You
Like I said, in last post, I know a lot of people. This is why I am not going to use the real name of my friend Mike in Southwest Florida. If I did, Mike would be able to figure out who I was. So his name as been changed to protect me.But Mike’s a real guy running an independent shop just inside the Tampa area and he was mighty worried when Safelite unleashed its onslaught of advertising in Buccaneer Bay during the last few weeks. “This is it,” he commented woefully one day. “This is the ‘branding’ thing they were talking about and I’m doomed.”
Safelite had hit the area with a major advertising blitz hyping windshield repair. They’d bought a lot of airtime so Mike was beside himself.
He called me when the dust had cleared and the ads had quieted. I wasn’t sure what to expect when he called me but I knew it wouldn’t be good.
Well, Mike was beside himself all right— beside himself with happiness. A funny thing had happened. The ads by Safelite had increased the amount of repairs being done in Tampa Bay—for Safelite and for Mike.
“This is great,” he said, so I could hear the smirk in his voice. “They paid for the ads and my work increased. Is this a great country or what?” he chuckled.
I didn’t want to burst his bubble that day so I’ll do it now with a simple analogy. Suppose you were McDonald’s and you had just opened your first location in a new country. While some people had heard about hamburgers and a few had even tasted one, the concept was relatively new to most people. What message would you advertise?
FIRST, you would advertise to get the people to eat hamburgers.
THEN, once you had them hooked on burgers, you would advertise to get them to eat them at McDonalds.This is what Safelite is doing. FIRST, they are attempting to increasing the amount of repairs being done and increasing awareness of repairs. THEN, they will link quality repairs with Safelite. That’s the real branding thing.
So Mike, buddy, I love ya, but don’t sit there smiling. Because they’re still a’ coming and they’re a ‘comin for you.
Next time: what you can do about it.
P.S.: Just for the record, my name’s not Mike either.
Safelite had hit the area with a major advertising blitz hyping windshield repair. They’d bought a lot of airtime so Mike was beside himself.
He called me when the dust had cleared and the ads had quieted. I wasn’t sure what to expect when he called me but I knew it wouldn’t be good.
Well, Mike was beside himself all right— beside himself with happiness. A funny thing had happened. The ads by Safelite had increased the amount of repairs being done in Tampa Bay—for Safelite and for Mike.
“This is great,” he said, so I could hear the smirk in his voice. “They paid for the ads and my work increased. Is this a great country or what?” he chuckled.
I didn’t want to burst his bubble that day so I’ll do it now with a simple analogy. Suppose you were McDonald’s and you had just opened your first location in a new country. While some people had heard about hamburgers and a few had even tasted one, the concept was relatively new to most people. What message would you advertise?
FIRST, you would advertise to get the people to eat hamburgers.
THEN, once you had them hooked on burgers, you would advertise to get them to eat them at McDonalds.This is what Safelite is doing. FIRST, they are attempting to increasing the amount of repairs being done and increasing awareness of repairs. THEN, they will link quality repairs with Safelite. That’s the real branding thing.
So Mike, buddy, I love ya, but don’t sit there smiling. Because they’re still a’ coming and they’re a ‘comin for you.
Next time: what you can do about it.
P.S.: Just for the record, my name’s not Mike either.
Thursday, January 24, 2008
Allow Me to Introduce Myself
I know what you’re thinking: who is this guy and why should I read this? Is Uri Thane his real name? If not, why not? What’s this blog about? When should I check this page? Okay, I’ll take ’em in order.
Who is this guy?
Chances are, you know me. We’ve met at a supplier meeting or conference, or maybe I’ve been in your shop to sell you something. I’ve been around for quite a long time, so chances are we are old friends.
Why should I read this?
Maybe you shouldn’t. I am going to be pretty frank. It’s for you to decide if reading this is worthwhile to you. I’m going to give you my opinions and it’s up to you to decide.
Is Uri Thane my real name?
No. Now that would have been quite a coincidence if it was.
If not, why not?
Hey, with some of the things I plan on saying here, I want to be completely candid. We all know how this industry works. I want to be able to speak the truth without regard for whether or not it’s going to cost me business or customers. The editors know who I am. That’s enough for now.
What’s this blog about?
It’s about the absurdities of the AGRR industry. Sometimes, it will be about the players and sometimes about the little victories. I have promised those same editors only that I will call ‘em as I see ‘em. It’ll be about topics you want to talk about too. Uri Thane is here for you.
When should I check this page?
I’ll be writing every other week or so … unless I get agitated about something, then I gotta let off some steam.
Who is this guy?
Chances are, you know me. We’ve met at a supplier meeting or conference, or maybe I’ve been in your shop to sell you something. I’ve been around for quite a long time, so chances are we are old friends.
Why should I read this?
Maybe you shouldn’t. I am going to be pretty frank. It’s for you to decide if reading this is worthwhile to you. I’m going to give you my opinions and it’s up to you to decide.
Is Uri Thane my real name?
No. Now that would have been quite a coincidence if it was.
If not, why not?
Hey, with some of the things I plan on saying here, I want to be completely candid. We all know how this industry works. I want to be able to speak the truth without regard for whether or not it’s going to cost me business or customers. The editors know who I am. That’s enough for now.
What’s this blog about?
It’s about the absurdities of the AGRR industry. Sometimes, it will be about the players and sometimes about the little victories. I have promised those same editors only that I will call ‘em as I see ‘em. It’ll be about topics you want to talk about too. Uri Thane is here for you.
When should I check this page?
I’ll be writing every other week or so … unless I get agitated about something, then I gotta let off some steam.
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