As the industry continues to trend toward consolidations, industry professionals should keep an eye out for great opportunities to enhance the customer experience and overall outcomes for claims as a result. In general, we can expect to see some of these positive effects:

More uniform billings and administrative products. Organizations, whether franchised or company-owned, always push for more efficiency and brand awareness. This is made easier with larger monolithic approaches present in large organizations. It's very easy to refine the appearance of invoices and marketing materials based on what works. Larger organizations simply make more sales and produce more invoices, which means that opportunities to learn and refine are much more frequent.
Enhanced efficiency. The larger organizations allow for access at scale to better training, less expensive consumables and enhanced software systems that wouldn't be practical for smaller companies. For example, imagine a small drying operation buying three pallets of concentrated cleaner to get the best price. It would take years for the small operation to use all the cleaner, not to mention the added cost of storing and preserving it in a way to keep it free of damage. Meanwhile, a larger operation may buy three pallets every week and send one to each region. The efficiencies gained are real and can be the difference between profit and loss at a given price point.

While there are positive effects of consolidation, the industry may also start to encounter the following potential pitfalls:

Lack of choice and different approaches to the same problem. There will always be more than one way to complete a task, but consolidation may make the second and third ways much less prominent. For example, instead of three local options available for media blasting on a project — dry ice, baking soda and pressurized water — there may be only one readily available option as the consolidation process drives less profitable processes out of the market. Instead, the only way to get a more expensive option would be to call a specialist from several cities away. Because of consolidation, claims professionals may find themselves limited in choices on the types of services offered in all but the most specialized and cost-tolerant of circumstances.
Less reactive pricing. Smaller operations must be agile to survive, often changing prices every few months to reflect market realities. Larger organizations may not be as willing or able to react to fast changes in the marketplace as they often set their base price sheets on a yearly basis and enter into long-term emergency response agreements that fix pricing. When prices are on the way up, the lethargic nature of larger organizations could be seen as an advantage for customers, but on the way down it's just as likely to be seen as an encumbrance.

Predictions for the industry

As consolidation continues, there will be further movement of the industry towards managed repair products. As the pressures for uniformity in service and pricing grow, there will be an increasing number of restoration companies working with direct repair operations in an effort to take advantage of the services and volume discounts available to group members. While this is nothing new, the value proposition added with this approach continues to grow as participants get much of the same advantages of the large organizations at a relatively small cost.

Special Reports /

A closer look at consolidation in the restoration industry

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