State Farm Parts Program

I have been asked my opinion of the State Farms Parts Program on several occasions and I have actually developed a couple.  The most prominent is how it reduces the shop owner’s ability to make sound business decisions.  The collision industry has weathered situations like this as in the Safelite Glass Program and Greenleaf salvaged parts program.  Both these insurance company directed programs whittled away the shop owner’s ability to make a business decision that benefited the shop.  All shop owners develop an expectation on how their business should operate as well as establishing the profit margins necessary to ensure survivability.  They have developed business partnerships with local businesses to ensure that their profit margins are maintained.  In-turn the local business have relocated stores to become more convenient, stocked more parts and negotiated with shop owners to maintain an edge on their market.  The State Farm Parts Program negates these partnerships forcing shop owner’s to purchase parts from an unknown outside their market.    As insurance companies move farther away from insuring vehicles and go deeper into the repair process shop owners will see further erosion of their ability to run their business.  First it was glass, now it is parts, tomorrow it could be paint.

Another issue I have with the State Farm Parts Program is the distraction it has caused in the collision industry.  Every blog I read, every magazine I open up and every shop owner I talk to has the State Farm Parts Program on top of their mind.  Everybody is up-in-arms about it and not paying attention to the immediate tasks on hand. If you look around you will see that this program has caused distractions far beyond parts!

My last thought on this is that shops are dropping State Farm as a DRP, up to 40% in some markets and State Farm does not care.  They are contacting shops that were previously dropped from the DRP program for multiple reasons and signing them back up if they agree to the parts program.  Does that mean that you can be a poor performer and as long as you accept their parts program you are good again?

These are a few of my thoughts, I hope you have developed some of your own and most of all I hope you act on them to maintain control of your business.  When an insurance company quits being a business partner and starts acting like a business controller you need to rethink the arrangement.  If you have done your homework and marketed your customer base, insurance company affiliation is not as important, the customers are yours because you earned them.