Volume 14, Issue 6 - November/December 2012

Feature
Network Values
A Look into the Convoluted Reality of Auto Glass Networks
by David Rohlfing

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.

What Control?
The first problem a network has to manage is the reality that each AGRR company that participates in its network are not under its control. In other words, a network has to deal with inconsistency of service levels to its customers. That is an issue; a really big issue. Currently, a network attempts to counter inconsistencies by stipulating increasingly detailed and specific guidelines in its effort to create some semblance of uniformity among a very large, broad and diverse set of participants.

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
As I mentioned, every AGRR network must try to cobble together its own group of AGRR service providers (participants) attempting to provide a service model that it hopes attracts its targeted customer(s).

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.

Creating Value
Networks have a number of strategies through which they attempt to demonstrate better performance for their clients versus what those same clients could achieve by managing auto glass losses directly. The network does this by reporting on its operational “metrics.” Investopedia defines “metrics” as:
“Parameters or measures of quantitative assessment used for measurement, comparison or to track performance or production. Analysts use metrics to compare the performance of different companies, despite the many variations between firms.”

The reporting of metrics to clients begins with a network measuring:
1. How many rings or seconds it takes a network to answer a telephone call from someone reporting an auto glass loss;
2. How many seconds or minutes a policyholder is on hold while reporting the loss; and
3. How many total minutes a policyholder has to spend on the telephone reporting their claim.

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
Networks aren’t only tracking the performance metrics of areas under their direct control while handling auto glass losses, though. Each also provides metrics on the performance of the AGRR retailers that actually perform the auto glass repairs or replacements. Why track that performance? It depends, of course, upon the network, but keeping track of the level of service that the AGRR retailer provides can determine how much work the AGRR retailer may get in the future.

Following are some of the metrics on which AGRR retailers are, or should be, measured.
1. The AGRR retailer that provides repairs or replacements is graded by its own individual customer service index (CSI). In determining a CSI there are a number of key components. One would think that a CSI score is the most critical metric that an AGRR retailer has in determining its value to a network. The basics of CSI is clearly spelled out via the RATER Model by tracking these five elements:
1. Reliability – A company’s ability to perform the promised service dependably and accurately;
2. Assurance – The knowledge, competence and courtesy of employees and their ability to convey trust and confidence;
3. Tangibles – Physical facilities, equipment and appearances that impress the customer;
4. Empathy – The level of caring, individualized attention, access, communication and understanding that the customer perceives; and
5. Responsiveness – The willingness displayed to help clients and provide prompt service.

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.
2. The windshield repair percentage performed by an AGRR retailer is another factor the network considers. If the network believes that a policyholder’s broken windshield is repairable, does the AGRR retailer repair it or replace it?

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.
3. Networks also factor in the number of warranty claims an AGRR retailer has on work performed for the policyholder. These claims can include problems of any kind while handling a glass loss, such as customer callbacks for leaks or air noises, scratched glass, improperly installed moldings, any damage done to a vehicle during the repair or replacement, etc. Obviously the more warranty claims you have, the higher the likelihood a network will not be looking for your company to handle glass losses on its behalf.
4. Customer service cycle time also is important. How long does it take for the policyholder to have a glass loss repaired or replaced from the first call reporting the loss to the time it takes to be completed and billed by the AGRR retailer? That’s a pretty straightforward metric relating to service levels and customer care.
5. Also considered is the percentage of dealer or original equipment manufactured parts (OEM) used in a replacement versus non-OEM parts priced via the National Auto Glass Specifications® (NAGS®). Why is this important? If an AGRR retailer has a higher percentage of OEM glass versus non-OEM, it is costing the network and/or the client a whole lot more money.

Hidden Metrics
There certainly are other important metrics that networks track and report to current clients and tout to potential clients that use other networks. Every network presumably wants its clients’ customers serviced by the best AGRR retailers that provide the highest level of customer service but, let’s face it, price versus service unquestionably creeps into the network’s decision-making process of determining to which AGRR retailer they’ll refer a glass loss.

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
Networks are an established part of the AGRR industry and they aren’t going to go away. Legislative initiatives may be attempted state-by-state to help regulate or moderate how networks operate (see September/October 2012 AGRR Magazine, page 14), but networks do provide value to the customers that use them. Whether or not the networks that operate today will be in business five years from now will be determined by the value, service and quality that they provide to their customers. Only the strong will survive.

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.).


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