Volume 14, Issue 6 - November/December 2012
While Safelite® Auto Glass’ SGC Network is the largest auto glass repair and replacement (AGRR) network, it is by no means the only one. All AGRR networks share some similarities, but each is unique in how it operates. Since there is no single AGRR company that covers every square mile of the United States, when providing services to consumers solely through its own AGRR technicians, every network must attempt to aggregate the services of thousands of disparate AGRR service providers into a single “quasi-retail” service entity. Each network attempts to replicate a full-service AGRR company that looks as though it is capable of servicing each and every consumer with a single price and service offering that suits the needs of every insurance or fleet company customer it has in its network. That’s where the problems begin.
How do the networks accomplish this? It takes a great deal of work to try to herd all of those cats. Some do it poorly, while some are more accomplished at the task.
It’s quite the challenge, and perhaps never so clearly demonstrated as by Safelite’s recent addendum (see page 11) whereby it now seeks to go beyond standards of repair and replacement practices to actually regulate the business conduct of its participants. The addendum to its Network Participation Agreement outlines new guidelines or requirements on AGRR companies that either participate in the SGC Network as subcontractors that Safelite uses to do repairs and replacements for Safelite or those AGRR companies that are forced to invoice work they do for certain customers through the Safelite® SGC Network. By venturing into this area the network may be leaning into “too big to fail” territory, as it tries to corral a wide range of participants into a single product offering. It is likely to be very difficult, if not impossible, for a large network to monitor and enforce all of the stipulations on which it seeks agreement from its numerous participants.
It makes me wonder if the newest Safelite addendum might actually be revealing some of the real challenges that at least one of the largest network entities is experiencing in trying to solve a problem and meet all of its customers’ needs.
Casting Your Network Net
That’s the networks’ strategy. Now how about your decisions as an independent AGRR retailer? It’s probably best to make your own assessment of how network participation fits into your overall marketing and sales strategy. You may not be able to avoid networks altogether, as most insurance companies require that billing for the service provided be processed through a network. But remember, in all cases, it is the choice of every AGRR company to decide whether or not it will participate in the opportunity to receive repairs or replacements from every AGRR network.
As an AGRR retailer, you may prefer to do work for one or more of the networks because the network provides value to you in exchange for the value you provide. Some AGRR retailers choose not to agree to the pricing or service requirements that a network has on participating. That again is the choice of the AGRR retailer. It’s probably not a good strategy if you’re relying on a network for your repairs and replacements but, if you do, you should be consistently working on lowering your costs as you can be assured that the network will be looking for you to lower the value you receive for repairs or replacements.
The reporting of metrics to clients begins with a network measuring:
Why are these three metrics important to a network? Most policyholders believe that they are talking directly to their insurance company when they call a network that manages auto glass loss for insurers; generally that’s not the case. Since the network customer service representative (CSR) is acting on behalf of an insurer while talking with a policyholder, the insurer expects that a network is providing the same level of customer service to its policyholders that the insurer would provide. These three metrics are factors over which the network has complete control and are important metrics for measuring how responsive it is to the insurance company’s policyholder.
An AGRR Retailer’s Grade
Following are some of the metrics on which AGRR retailers are, or should
Each network uses either its own questions for determining a CSI or the
CSI metrics that the client prefers is used for its policyholders. Ultimately,
these CSI metrics show which AGRR retailers are providing great service
and which are not, based on what’s being measured. Do you know what your
company’s CSI is for each network? If not you should ask.
Repair over replacement can obviously save big money and, if you’re an AGRR retailer that ends up replacing a windshield the network feels should have been repaired, you’re making them look bad in the eyes of the client, as this drives up the average cost of the claim.
If the network has a guaranteed average invoice (GAI) agreement with
a customer when an AGRR retailer replaces instead of repairing a windshield,
you’re costing the network money, so you can anticipate fewer calls for
your service or greater oversight of glass losses you must bill through
the network. Your repair percentage is a critical metric.
That can be especially true if the network is using a “buy/sell” or “spread” pricing model for its clients. The network “buys” the glass repair or replacement from an AGRR retailer and then “sells” the repair or replacement to its customer at a higher price or “spread” that covers the networks cost to operate plus its profit. Do you ever get those calls from a network asking, “If you just give me another point or two on the NAGS discount I can keep sending you jobs” with the implied message “if you don’t?” …More than likely, you have.
In my view, transparency only serves to benefit consumers in making informed claim decisions, making their policy dollars work to their fullest, and identifying safe auto glass replacement services. How much transparency is there in how networks or TPAs report metrics? Well, Pittsburgh-based Lynx Services recently announced that it would amend its contract services agreement (see page 10), the most notable addition to the agreement being the availability of online scorecard access for shops. “These scorecards will provide auto glass shops with performance records based on a variety of factors called Key Performance Indicators (KPIs),” the company announced. This is definitely a big step in the right direction of allowing AGRR retailers to see metrics (KPIs) showing their performance. Perhaps other networks and TPAs will follow in a similar fashion? That should certainly be a welcomed change.
As an AGRR retailer you might want to continue to focus on the customer and provide exceptional value with outstanding transparency. In the long run, exceptional value and outstanding transparency will pay off.
The Real Value in Networks
Perhaps the best advice for today’s AGRR retailer is simpler than we all have been thinking: Focus intently on the customer, listen to what they need, and set about to do the right thing. It’s a very simple and straightforward concept.
Sam Walton, founder of Wal-Mart, once said: “There is only one boss. The customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else.”
Stay focused on your customer and provide value to them and you should do okay.
David Rohlfing is former president of the auto glass companies Windshields America and Glass America. He serves in a volunteer position as vice president of the Auto Glass Safety Council® (formerly the AGRSS®Council Inc.).