SalvageDirect: Making a Total Loss into a Thriving Business
When a car is totaled, few of us ever gives a second thought to what happens after it’s hauled away. But totaled cars have quite an afterlife, thanks in large part to the efforts of Titusville-based SalvageDirect.
“Before SalvageDirect got started, total loss and salvage was a piece of the car insurance business that no one was really looking at; everyone was focused on the repair process,” says Bob Joyce, president and CEO of SalvageDirect. “Insurance companies would sell total loss vehicles at a local auction and take whatever they could get.”
Joyce saw an opportunity to market the vehicles better to licensed dealers and dismantlers who buy total-loss vehicles for salvage. He discovered that there were buyers all over the nation and the world who would be interested if they knew about a particular vehicle.
Successfully Serving a Niche Market
Part of SalvageDirect’s success is due to its niche market. The company is one of only two that sells total-loss vehicles strictly online. They work with insurance companies from the time of the accident, when a car is deemed a total loss, through the final internet sale.
“We market the cars through an online auction,” says Joyce. “We have a base of worldwide buyers who bid on them. Once the cars are sold, we handle the transaction with the buyer, help with transportation and then settle with the insurance company.”
SalvageDirect’s buyers consist of licensed automotive dealers and dismantlers. Ironically, according to Joyce, the majority of people who buy the cars strip off all the good parts and sell them back to insurance companies-to repair the vehicles they chose to repair instead of total.
Prepared for Steady Growth
By 2005, SalvageDirect’s total sales were in excess of $15 million, and the gross annual payroll had increased to nearly $3 million. From 2005 to 2006, sales grew to $17.4 million. Today the company has more than 100 employees and is more successful than ever.
SalvageDirect, which recently opened a new facility in Hazleton, PA, joined forces with Ben Franklin Technology Partners in 1999. Since then Ben Franklin has invested $500,000 in the company. But beyond this critical funding, says Joyce, Ben Franklin also helped with marketing, accounting and human resources processes.
“Basically, they helped us get set up and prepared to grow,” he says. “We were at the point where we couldn’t get any more bank financing, but we weren’t big enough for equity loans, so Ben Franklin gave us a nice bridge. Plus, they introduced us to some venture capitalists who ultimately invested in the company.”
The Importance of Customer Service
Beyond the uniqueness and comprehensiveness of its business, SalvageDirect pays a lot of attention to customer service. “Because many SalvageDirect employees used to work in the insurance business, we recognize the pains they go through and have been able to build and design our systems to help them through those challenges,” says Joyce.
In the future, Joyce says he sees SalvageDirect continuing to grow and evolve. “We have to constantly look at different technologies and processes to make sure we are doing what’s best not only for the insurance companies, but also for our buyers,” he says. “This industry is difficult to jump into and grab significant market share; you have to perform and earn a good reputation because whenever you mix insurance and salvage and auctions together, there are a lot of different things that can happen. You have to build credibility and show that you can do business with integrity.”
Keynotes January, 2008
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