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Supplement, Fall 1999

wOrking from home
news analysis

In an effort to provide market coverage in areas where it does not have shops, Safelite has ignited a firestorm of controversy by introducing a program called the Mobile Pros. The program has sparked uncertainty from glass shop owners, who have to worry about keeping their employees and the possibility of losing some, if not all, of their work from the Safelite network.

To mobilize the program, Safelite is recruiting installers with two to five years of installation experience and some management experience to become full-time Mobile Pro associates. Technicians who sign up will be Safelite employees and work based out of their home. The company will also provide them with a truck and computer. “Essentially, what these guys will be doing is running a remote store out of their home,” said Dee Uttermohlen, marketing manager of Safelite. “We expect the same things out of them that we expect out of a store manager: the ability to use a computer, the ability to manage time appropriately and the ability to install glass.” Consequently, she said the Mobile Pros will receive compensation packages similar to what store managers receive, which includes a guaranteed hourly wage and the Safelite pay for performance plan.

Uttermohlen says the Mobile Pros concept was developed out of the company’s desire to service areas where it does not have stores, but does receive jobs as a result of its agreements with insurance companies. “We put this program together to answer needs in markets where we are beginning to get more business because of various insurance contracts that have been signed,” she said. “In each market, associates will be brought in as conditions dictate. Right now, each market will have one Mobile Pro, but if business increases to where we need more we will take a look at the situation.”

 

Increasing the
Insurance Ratio

The program also fits strategically into Safelite’s goal of increasing the number of jobs its shops do for its insurance partners. Though the company sees significant earnings potential in performing the windshield replacements and repairs as referred by its insurance partners, it is having difficulty getting some of these jobs from the insureds.

In a recent conversation with professionals from the financial industry, senior vice president/CFO Doug Herron said the company is bothered by the number of insurance jobs it has to send out to subcontractors. Currently, it does about 70 percent of its insurance jobs at Safelite-owned shops. However, Herron said the company would like to increase this figure by having these insurance companies exert pressure on their agents, many of whom are advising their customers to go to places other than Safelite Service Centers. “We need to stay ever vigilant with our insurance partners and solicit more and more of their support in helping us insist upon and drive higher levels of compliance with the programs,” he said.

The company currently has deals that provide insurance companies with price breaks if their insureds go to a Safelite Service Center, according to Herron. He said network pricing breaks down into four different expense levels for the Safelite or insurance companies. Understand-ably, jobs done at Safelite Service Centers are the most cost effective for the company. Work done at non-Safelite authorized installation centers are about 10 to 15 percent more expensive, while jobs done at shops without contracts are about 20 to 25 percent higher than work done at the company’s service centers. Finally, jobs where the insured goes to a glass shop without first going through the network channels cost Safelite 50 percent or more than they would at one of its service centers.

However, Safelite can increase the number of jobs it does by using the Mobile Pros in areas where it does not have shops. The company makes this clear in its message to prospective employees on the Mobile Pros employment hotline. The message says Safelite gets thousands of auto glass claims in areas where it can’t handle them. However, it indicates this practice could change in the future. “Currently we send this business to a variety of local installers. In the future, we want to handle this business using our Mobile Pro associates,” the message said.

Industry insiders have speculated that Safelite is attempting to increase its percentage of business referred from State Farm Insurance Company of Bloomington, IL, through the Glass Central program. These rumors may have some basis since Herron has told the financial community State Farm was “problematic” for Safelite. He backed this up by saying the number of State Farm units the company did was down 14 percent versus last year.

Under the Glass Central program, if an insured does not specifically request a particular shop, State Farm rotates the referral of work among a large number of glass companies that meet its criteria and participate in its Offer and Acceptance program. Shops receive business on a rotating basis based on their location. “It’s an issue for State Farm,” said one source who preferred not to be identified. “If State Farm decides these homes qualify as locations, then they will.” State Farm’s current Offer and Acceptance program speaks about glass facilities and requires glass shops to have a person available to answer the phone and a self-answering fax machine.

Chris Coyne of State Farm says his company accepts mobile installers to do jobs. “State Farm’s primary concerns are workmanship and customer service for our policyholders’ glass claims,” he said. “Mobile replacements go on every day, so as long as the technician is trained and qualified we don’t have a problem with it,” he said.

Darrell Ebert of Allstate Insurance Company of Chicago, IL, prefers to stay out of Safelite’s network operations. “We don’t get involved with the operations of their network,” he said. “It is pretty much their business as long as our customer satisfaction is high.”

 

Recruitment

While Safelite is going through the traditional channels to recruit these installers, such as advertising in one industry trade magazine, some in the industry have charged the company with taking a much more aggressive approach to stocking its program. One spot that is particularly hot is Wisconsin, where the company is attempting to meet the demands of its new American Family account (see AGRR, page 21). Mark Olsen of A-1 Glass in LaCrosse, WI, says Safelite has called two of his installers about possible employment, though he does not know whether the company is planning to open a shop or Mobile Pros in his area.

Bob Birkhauser, president of Auto Glass Specialists in Madison, WI, has leveled a much stiffer accusation against Safelite. Birkhauser says the company has not only attempted to lure his employees away, but is using rather aggressive and possibly unethical ways of doing it. “They have had people flashing their lights like policemen pulling up behind our guys and then pulling them over and recruiting them,” he said. “ They have also walked into our shops and recruited guys during business hours.”

Uttermohlen denies reports of such aggressive recruitment of installers. “It is against our recruitment policy to go into competitor’s property and recruit their people,” she said.

 

Installation Practices

Another industry concern has been raised about the installation practices of the Mobile Pros. Wes Topping of Elite Auto Glass in Denver, CO, thinks it will be impossible for Safelite to monitor the day-to-day work of its Mobile Pros. “I think if we had a single installer work in a small town, we would have very little control over them,” he said. “I don’t know how Safelite will keep that kind of quality control. How will they ensure the guy uses the correct primers and adheres to proper drive-away times?”

Gary Turner of Glass America in Clarendon Hills, IL, agrees with Topping, questioning what the mobile installers will do for the industry as a whole. “They are going to take these technicians and have them work out of their homes,” said Turner. “What will that do for the industry’s professionalism?”

Birkhauser expands upon Turner’s thoughts by focusing on the response of other companies within the industry. “It really runs the risk of lowering our quality standards,” he said. “ The reaction from the industry could be more discounts and absurd offers, which will compromise the quality of glass installations. ”

However, Uttermohlen said Safelite will use training and regular checkups to ensure Mobile Pros are professional and competent. “Whenever a Mobile Pro associate is hired they will go through classes and be trained using the Safelite pro-cut method,” she said. “We will ensure they are certified and if they are not, we will complete that [their certification]. In addition, they will be trained and supervised in the same fashion as any other store manager. The district operations and the technical and installation manager will visit them on a regular basis.”

 

Network Implications

With Herron stating that Safelite’s goal is to increase the number of jobs it does through its own shops, many glass shop owners seem justifiably concerned about losing these insurance referrals from Safelite. However, Uttermohlen says the company could not eliminate its network subcontractors in many areas. “There is an opportunity for us to pick up some of that work [with the Mobile Pros in rural areas], but there is no way we could eliminate the network in these areas,” said Uttermohlen.

In spite of this, many glass shop owners fear they could see a marked decline, if not a complete elimination, of insurance jobs from Safelite. However, their desire to continue to do business with some of the company’s insurance accounts can lead to a difficult decision. “It is a double-edged sword,” said Birkhauser. “They have accounts we want to do business with, but they are threatening to take my market away.”

Other glass companies see this as possibly the last straw in their relationship with Safelite. “I’m thinking if you are a network subcontractor the writing is on the wall,” said Turner, who is reevaluating his company’s decision to be on the network.

Topping is also skeptical of Safelite’s intentions, referring to the Safelite employment hotline. “I think they have put everyone on notice with that message [on the employment hotline] by saying they have no intention of letting a guy with a small shop do work for them in the future,” he said.

The company has also faced some criticism in the industry for hiring its own mobile installers to work out of their houses, while it will not completely accept mobile installers on its network. “We will have more control over someone who is a Safelite associate working out of their home than someone who is not a Safelite associate working out of their home,” Uttermohlen said. “When we are entrusting a network shop with a policyholder, we have to be very careful to ensure their ability and their willingness to follow the proper procedures. We would trust our own associates to do this, perhaps a little more fully than someone we don’t have the same control over.”

 

Where to Now?

Judging from the early reaction, Safelite thinks the Mobile Pros program is moving along well. Uttermohlen has called the rollout an “unqualified success,” though she said it was still premature to pass any kind of judgement with rollouts in only five states.

Others in the industry are a bit more skeptical about the program’s future success. Birkhauser thinks a lack of quality installers could doom the program. He speculates that the Mobile Pro program is just a stopgap to allow Safelite to get away from using third party vendors until they have enough income to justify having a storefront. “I can’t see a program like that being a long term way of doing business. One of their biggest challenges will be keeping their own employees in line, following procedures, showing up on time and following their routes. There are not many people out there who are self-starters and can monitor their own progress. The ones who are not like this could undermine the program. I am not sure how they will manage this.”

Olsen agrees with Birkhauser, questioning how the employees will hold up their end of the bargain. “The Mobile Pros will have to work out of their house, use computers, do paperwork and install windshields for a full day,” he said. The idea is good, but I don’t see it working.”

 

Leslie Shaver is the editor of AGRR magazine.

AGRR

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