How big can you get?
The same broker who gave me the seed for the “You see what I see” program taught me a great deal about the upside of dents. His name is Hank Griffin.
His company will gross between 1 and 3 million a year in hail work depending on the season. His margins are 20 to 25 percent of gross.
The money is usually split like this. Body shop takes 25% of gross off the top. The broker takes the new number and splits this 35/65 or 30/70 with the techs. To illustrate, start with a car at a body shop with $1000 damage from hail. Body shop makes $250, broker makes $225 (750 X 30%), tech makes $525.
Now, depending on the math, he can tell the tech he makes 70% when technically he’s getting 52.5. There can be many variations of this.
What’s interesting about this broker’s business is how he sets up the slam dunk at every storm. While every other tech or broker is trying to pick the easy, low hanging fruit, Hank gets his big ladder, sets it up, and goes straight to the top. You tell him the number of claims in a storm, he’ll tell you how many cars will be fixed, and just how much he’ll make and how long it’ll take him to do it.
If you’re a door ding guy or you never want to go on the road, you might doze off right here. Listen. You don’t have to and likely can’t do what he did exactly. This is a different time and place in the industry. What I want you to see is the model.
Hank has what author Dan Kennedy calls a toll booth position. The analogy is a good one. Imagine owning a road where a certain number of cars will pass. From each one you collect a toll. You own the road you keep the money.
In the early 90’s we thought we were in Hog Heaven with hail. The insurance checks were all written for conventional repair and sometimes were double what we charged for PDR. Selling was easy. You want to keep half your check? Fine. Talk about a win win.
Hank had the foresight to see that big insurance was going to catch on at some point. He knew someone would show them how to get in the PDR claims business. So he appointed himself Chief PDR Liaison of XXX insurance. I won’t use the companies real name cause that’s not the point. I will tell you he chose them based on a number of unique factors that fit his goals. Point is, he had the vision first, then implemented.
Once he decided on the company, he started building his road. He spent many hours on road trips to XXX headquarters selling the top brass and training the ranks of adjusters. He did demonstrations. He birthed the baby and nursed it and when he was done, he had the trust, and even admiration of a very large insurance company. He even wrote their accepted procedures pages for writing PDR estimates. Ironically, his pages were adopted by other, bigger insurance companies as well.
Now that he had the relationship with XXX and access to the thousands of cars covered by them, it was time to build his toll booth.
To make this work, Hank had to not only have access to the claimants in a hail storm, but the body shops as well. Again part of the reason he chose XXX was the number of DRP relationships.
DRP stands for Direct Repair Provider. It is an agreement between insurance and a body shop that speeds up claims by giving the shops estimation and billing privileges. A shop without DRP has to have an adjuster come out and re-inspect the car when a supplement is filed. A DRP shop punches it into the computer and as long as they stay honest, they can write their own checks, so to speak.
When a XXX customer files a claim, they’re sent to the shop or one of the shops who has DRP status in that city. Shops like it because it gives them business, XXX likes it because they need fewer adjusters in the field.
These DRP shops are where Hank places his toll booths in a storm. Here’s how it works.
He finds out from his buddies at XXX where the storm was and the number of claims. If he likes his prospects in that storm, he then finds out who has DRP status with XXX. Now it’s time to use the leverage he has created.
He chooses the shop he wants based on size and volume and then meets with the manager and owner of that shop.
“Last year we worked a storm of this size in such and such town. We put revenue of 1.5 million through the shop we worked with there. We will do the same or more here. The shop we work with also gets the Drive Thru Claims set up in their offices. You get first crack at 3000 claims. Are you in or out?”
See the difference? Hank’s not the first PDR company to knock on their door, and he won’t be the last. But no one can compete with him because he owns the road. He has an unfair advantage. He can run his road of claimants through your shop or the other guys. How can they say no?
Without this, he’s like every other guy who comes in with a mousy voice and says, “Um, we do paintless repair. Would you like us to do a demo dent for you?”
Instead, he gets to negotiate from strength.
The body shops who work with Hank keep 25% of the ticket.
Another company who seems to have a toll booth position is Dent Wizard. Can you see where their leverage is? How do you think they do it?
Let’s make this interesting. Email your reasons Dent Wizard has leverage to tim@pdrsecrets.com and the best answer wins a set of long hammers from Dentcraft.
Dent Wizard only gives 10 percent to the body shops. Sometimes. Why a body shop would let a car in with those numbers baffles me.
Then again…
I pinned down a body shop manager the other day about real profit margins in a body shop. “Every management school I went to will tell you it’s around 8%. I have seen as much as 10 to 13 percent.”
If Dent Wizard “lets” them make 10%, I guess they can convince them they’re doing them a favor.
Truth be told, they don’t make that. There’s always costs beyond what’s on the surface.
The cost of acquiring the customer. The overhead of the building, the employees, the estimating time, detailing, delivery, etc.
Still, at 25% to shop it’s higher margins than they make on collision.
If you think this is lesson in the minutiae of running a hail business, you’re missing the point. This is really marketing. I just told you how to sell to the body shop manager.
In today’s world, you may never have to sell a body shop. Insurance now forces them to get an opinion from a PDR tech on hail damage. In years past, they would let the body shop say, “PDR can’t fix that, it needs paint.” Now the adjusters will call you for the truth. This is why it pays to hone your chops on bigger hail if you have the chance.
Should you sign a no-compete?
A Paintless Mentor student called the other day and asked me this same question.
Somehow, not just one but two local companies heard he was practicing and learning at home. So they called him and offered him a job doing PDR. The offer was 65% of the tickets as pay, but he would have to agree not to compete with them for 3 years if he left.
They told him they were too busy to teach someone from scratch, and since he had his own tools…
First I told him he should be flattered. Means he’s getting noticed. Second, those guys are smart to try to hire him. Competing with him would dilute their market.
Big question is always what do you get out of it?
If he needed to know more or knew he couldn’t or wouldn’t sell his services, maybe it’s a good match.
I signed a no compete when I first started. Why? Goes back to the toll booth position again.
They had the knowledge and I wanted the skill. The only currency I had was future revenue my labor would bring and they would keep a percentage.
At that time the alternative was to pay $30,000.00 for a franchise or $10,000.00 for a weeks’ training. I had neither amount.
At the end of my employment, I had to honor that no compete and not work in my own city for one year. Fair exchange, right?
Later, when I hired techs I also had them sign a no-compete, again in exchange for their training.
But these guys were complete newbie’s. No earthly idea how to push a dent.
Today, my thinking has changed. I would never hire someone without cash up front for training. Nor would I advocate anyone signing one in exchange for anything.
Remember the old saying about slaves and hand cuffs? Yep. The other end of the hand cuffs are attached to the slave owner as well.
Question is if you use a no compete are you willing to do all that’s required to enforce it? Will your inner good person even let you?
If you’re thinking about signing one as employee, do you plan on working for that company forever? What will you do when it comes time to quit? Can you do something else for the pre-agreed time to fulfill your agreement?
They should change the name from no-compete to “delayed pain agreement”. Why? Because, there is some way, some pain you could go through today that you don’t want to. You must recognize you will still have the pain someday.
For the employee, how else could he learn what they’re offering? Who would loan him the money to learn it? What can he find out on his own?
For the employer, what “today” pain is he avoiding?
Building a business where no one would want to leave. Figuring out how to market so that employees would find it difficult to compete if they did leave. Building your toll booth somehow so you have an immunity to competition.
When I share the Toll Booth model with people the response is that’s too complex. I want to do it the easy way.
I do too. And so does everybody else. Therein lies the problem.
If you run your business like everyone else, you don’t have a business, you have a job.
Everything that seems complex at first eventually tapers down to being easier. Hank spends far less time now than he did when he first started. Many road trips have now become a few phone calls and emails a week.
By now, I hope you can see that his real toll road is his personal relationships with real people inside of a big organization. He worked hard at putting XXX in the PDR business and now he’s rewarded year to year. He has a pool of techs he can hire because he has some storm somewhere every spring. They wanna work and he’s got it. Plus, his checks don’t bounce. In the broker world that’s a big thing.
Are you letting you hold you back?
Clay is a pdr tech friend of mine who shared a gold nugget with me the other day. You see, he is fast and he is good and his repairs are invisible.
He worked at a shop this year where the cars were too cheap and the dents were big. He couldn’t make money because the standards were too high. The guy running it also happens to be a very good tech, with a good eye. And he’s picky.
So Clay left, found a pdr guy working for a wholesaler who wanted quantity not quality, and worked with him. Made twice as much by blowing through them.
Here’s the gold nugget. “There’s a market for every level of quality. You don’t have to have “A” grade skill to survive.”
For you as a student of PDR, stop trying to be perfect. Do the best you can and ask for the check when you’re done. Pull the trigger and let the pushes fly. Under promise and over deliver. Sell improvement not perfection.
Blow through your 500 dents as fast as you can. Then go to work.
Tim Olson