Peak hour traffic might not seem like the best place to find customers for an IT services organisation, but Nerds On Site think there is nowhere better to build new business contacts.
The company’s contractors love traffic because their bright red VW “Nerdmobiles” stick out in it like a sore thumb. And that is why its team will often hit the road at 7.00am and drive out of town so the wave of incoming traffic sees their cars, note the 1800 My Nerds phone number they bear and then hire them to provide IT services.
Nerdmobiles are a great gimmick, but they are not the only one you will see in coming months as a new wave of resellers competes for the small business and consumer dollar with marketing tactics that are all but unknown in the channel, and an approach to delivering services that breaks all the rules.
And it is SMEs and home computer users that the new wave resellers are targeting, largely because research suggests these markets are yet to be serviced in a style that meets their needs.
“The time is right to develop branded services organisations for SMEs,” says Jean Marc Annonier, IDC’s research manager for IT spending, vertical markets and SMEs. “SMEs want trust with their providers,” he says. “But it is important to succeed every time you work with an SME. If you fail they find another provider.”
Many organisations that serve SMEs and home users have been burned, he says, and are looking for an organisation they feel is likely to win their trust as they return to the IT market.
“The SMEs are right in their attitudes. SMEs would like to go to the big brands and the big brands would like to go to them,” Annonier says.
But with large IT services companies largely unwilling to work on smaller scales and smaller resellers often struggling to offer service SMEs appreciate, the market has opened up for a new style of reseller that puts brand before technology and makes customer service a central tenet of their operations.
Meet the Nerds
Nerds On Site’s plan of attack starts with the Nerdmobile.
“The visibility the Nerdmobile gives you is great,” says Nerds On Site’s 'Pod Leader' Jay Carter (a Pod Leader is akin to a regional manager). “A lot of people see it and it wins a lot of business.”
The cars and the approach they lead are also useful symbols of just how different Nerds On Site is compared to a traditional reseller.
The Canadian company does not expect its staff will hold industry certifications and is proudly technology-neutral: it has no formal relationships with vendors or even distributors.
The company is even happy to make a hardware or software recommendation to its clients and have them buy the goods themselves, as it is uninterested in taking margin and would prefer to avoid the cash flow complications that come with equipment or licence resales.
This stance means the company can recommend and implement vendors’ products without ever coming into contact with them. But instead of trading on its vendor affiliations and using them as an indicator of quality, Nerds On Site sets out to create a customer service experience it believes other organisations almost never consider.
Nice Nerds
“The key criterion for becoming a Nerd is personality,” says Carter. The company’s selection process therefore sees it favour people with good personal skills over those with technical skills. “You can be self-taught,” Carter says. “It’s about ability, not qualifications,” and the company has a line about offering “human engineers” not computer engineers.
The combination of brand and customer service is intended to appeal to those who do not know where to turn for computer services, distrust a local white-box reseller or have been dissatisfied with previous experiences working with a smaller reseller. “A lot of our customers say they have been burned one time too many by one-man shops,” Carter says. "They want someone they can trust."
Many of those customers are small businesses seeking either break-fix services or ongoing support. Others are home users who more often that not have been infected by spyware and simply do not know what to do about it.
But Nerds On Site asserts it is capable of scaling up to tackle even an ERP implementation for a small business by tapping into the collective skills and experience of Nerds in Australian and beyond.
And whatever the task, Carter feels the combination of branded cars, friendly people, red polo shirts, a network of consultants who cover for each other and a central 1800 number for support creates trust.
“Lots of one-man shops are very technical,” Carter says. “When they charge $200 for 15 minutes’ work it can feel like a rip-off. We speak in plain English,” and whenever possible try to educate users so they can fix minor problems for themselves in future.
This education role marks the company as an unconventional franchise. Its structure follows that trend. Wannabe Nerds pay a once-off $3750 up front and, should they chose to acquire a Nerdmobile (which must be a 1998 or later red VW Beetle), receive free sign writing to build the brand. A small monthly fee then covers back office and group marketing.
Each Nerd operates as both a sole practitioner finding their own clients and a member of a network that assembles itself into virtual teams to tackle tasks too big or too complex for an individual. Set charges or hourly rates are eschewed in favour of “solution-based pricing” that sees Nerds offer clients a shopping list of differently costed approaches.
A complex set of rules covers the way fees are shared, with respect for other Nerds the dominant concern instead of legal niceties. “We shouldn’t have to squabble over things,” Carter says. “But once the client pays, it is the Primary Nerd’s [prime contractor’s] responsibility to ensure that any other Nerds who worked on the job get paid within 24 hours.”
That steely 24-hour edge to the rules of engagement is an indicator of how serious the company is beneath its fun exterior.
“We want 300 Nerds in Australia in the next three years,” Carter says, expecting that it may be possible to secure more. “We’ve never saturated a city.”
Another Jim
Another company that has yet to find a limit on growth is the Jim’s Group. Founded in 1982 by Jim Penman, the company has grown beyond its lawn mowing roots to offer a multitude of different services, all operated as franchises.
“Jim’s has 30 divisions,” says John Lawrence, regional franchisor for central and south Sydney. “The computer services division is fastest growing,” and already boasts 60 franchisees around Australia.
Like Nerds On Site, however, Jim’s Computer Services believes it is just starting its assault in the market. “In Sydney we are just beginning,” Lawrence says.
“Jim’s Computer Services is now in its fifth year. Initial growth was slow while we prototyped the business model. Now it’s a mature model and growth is really starting to kick in.” Lawrence will not be drawn on exactly how much growth the group desires. “Our ambition is to provide excellent service and if we get that right the growth will follow,” he says.
Achieving that services excellence will come from a process akin to those used by Nerds On Site.
“We require them to have a certification with either MCSE or CompTIA,” Lawrence says. “We have to be convinced someone can be a success in business, they need technical and customer service skills and we look for people who are upbeat, can present themselves well, are confident and really looking to work a successful business.”
“They need the correct personal attributes and motivation. We are careful of people who think they can buy themselves a job.”
Successful applicants generally come from a strong technical background, often learned in a large corporate IT department. “That gives them good customer skills because they have been working with users inside the corporation,” Lawrence says. “If a job is a little bit obscure or high end the first person may not be able to address it immediately, but it is very rare to come across something we cannot handle as a group.”
Jim’s then provides corporation-like support structures. “We make sure you have insurance, meet all the regulatory and compliance requirements. Then we help you with marketing.”
These services do not come cheap. Franchises listed for sale on the company’s website in eastern Sydney start at $18,700. The company also charges a monthly fee of $550 that covers the entire infrastructure.
Complaints
But one of those pieces of infrastructure is a call centre that serves two important functions.
One is to act as a professional capture mechanism so that franchisees can be allocated work based on skills and availability. The other is to give customers confidence they can complain about the organisation and escalate their problems professionally without having to confront a franchisee personally.
Nerds On Site’s call centre also performs the same functions, and it is this easy access to an escalation point that makes the two stand out from smaller or stand-alone resellers.
But some are uneasy with the new wave resellers’ relationship-free approach. “I haven’t studied them much,” says Kerstin Baxter, director of Microsoft Australia’s Partner Group. “My initial comment is that if they are creating a recognisable brand, that is offering quality to customers.”
“But my concern is whether or not they have the skills. Our priority is to work with organisations that will commit to selling and delivering the most current and up-to-date Microsoft products.”
Baxter also questions how customers can “be sure of consistency” across organisations where different franchisees have different skills and experience.
Sue Hope, IBM Software’s channels manager Australia and New Zealand, says: “When I look at the partner community the feedback I get is that it is a cost-heavy model to have an open position.”
“A lot of our partners are consolidating the number of vendors they work with.” Hope also feels that the investment IBM is willing to make in partners is designed to create a value proposition that end users should be able to recognise when they engage with its approved resellers. Baxter believes her company’s branding also stands for similar benefits. “Microsoft partnership and Gold Partnership are strong brands,” she says. “What we hear from customers is that the Microsoft brand gives them comfort.”
“I do not think that their [new wave resellers] brands and ours are mutually exclusive. We would love to work with those organisations and support them. They should not view vendor certification as a negative because our brand supports theirs in the market.”
For the time being, however, the likes of Nerds On Site and Jim’s Computer Services seem to believe otherwise, and IBM Software and Microsoft are both working with their channel to make them more attractive to the small business market that the franchised, branded resellers believe is their natural hunting ground.
Yet perhaps the new wave resellers’ focus on those markets is something the industry can take comfort from, despite their impressive expansion plans.
“I’ve read statistics that say there is $6 per person, per day spent on IT services in a city of 100,000 people,” Carter says. “We want five cents of that.”
Of course five cents is a little less than 1 percent of the available business and almost certainly less than the annual growth in services.
Red cars, call centres and the big plans that come with them may therefore look intimidating and market-changing. But for the time being these emerging branded resellers seem to be adding to the vibrancy of the channel rather than threatening the livelihood of its incumbent players, making this a time for careful observations rather than a panicked stampede to imitate or attack these upstart innovators.
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