VOLUME 6 - ISSUE 6  
NOVEMBER/DECEMBER 2004

Expert Advice

The Good, Bad and the Ugly
by Kerry Wanstrath
kerry@gtglass.com

Newton’s Third Law of Motion stated that “for every action there is an opposite and equal reaction.” I think it must apply in business as well. 

The Pros …
Since the advent of networks, windshield repair has benefited in several ways. The most obvious is the elevated fee for the service. Before networks, the retail fee was an average of $35. Now, the fee for a single repair, depending on your area of operation, is between $55 and $60. Nobody can complain about that benefit. Another benefit is the simplification of the billing process. Once you have billed several repairs the procedure becomes fairly simple and painless (well, maybe not entirely painless).

Networks have also added to the creditability of repair by pushing for a higher percentage of repair versus replacement. All of this is part of the “good.”

The Cons …
As the networks gained acceptance and use by glass technicians they started to gain control by having large numbers of technicians perform a service for them. Technicians, eager to increase their business, stumbled over themselves to sign up, incorrectly assuming they would receive business that they would not normally receive of their own accord. The networks now gained the ability to effectively manage glass claims cheaper and more effectively than the insurance companies; insurance companies flocked to the networks eager for them to assume the headache of glass claims. The snowball got bigger and bigger until it became what it is today. This, has led the networks to wield great influence with the major insurance companies. This unorthodox marriage between a service provider (networks) and a customer (the insurance provider) has created the “bad.”

… And Everything Else
Now comes the “ugly.” I am writing from the perspective of an existing small-town auto glass repair and re-placement shop that Glass Technol-ogy Inc. started four and a half years ago so we could relate better to our customers’ businesses. Well, I can say without a doubt we now feel their pain. When we started we were in an area that was considered by the networks to be rural; therefore we received a higher billing rate then someone in a larger city. Over the four plus years, the discount rate we give the insured has increased so many times we’ve lost count. For those not familiar with this rate or discount, it is determined by the networks and if you are to perform services for them you really must accept that rate. This rate or discount is based on the NAGS list price for auto glass. For every NAGS increase, a discount quickly follows from the networks in a never-ending game. 

Well, you say the solution seems obvious, ‘just don’t join the networks.’ The reality is if you are not part of the networks service providers, good luck trying to deal with insurance companies directly.

Which brings us to steering. Simply stated, steering is when a network tries to influence where a customer (the insured) gets his work done. This might be accomplished by a simple statement such as “ they are not an approved vendor” or “ we can’t guaranty their work” which implies a shop is inferior or incapable.

Steering is a major problem since one of the parties involved doesn’t think steering exists. The IGA has recently stated steering is its number one issue to address. I applaud them for this bold and noble undertaking and believe all independents should support them on this issue. They are trying to raise funds to force a resolution to this issue in the courts. Independents need to stand as a united force to effectively regain control of there industry. I strongly believe business should succeed or fail as a result of its making, not as a result of a third party that has too much control over someone else’s business. What started out as a billing service for the insurance companies has turned into an unsavory alliance that controls the pricing and to whom the business goes. This is the ugly truth of the auto glass industry.

The Next Step
So what happens? Nothing, if we don’t get involved and voice our opinion. There are various efforts underway that may succeed in having some affect in improving the industry’s health. As I see it, as long as an outside entity can tell you what you service is worth your success is in that entity’s hands. 

Kerry Wanstrath is the vice president and chief operating officer of Glass Technology, which is based in Durango, Colo.