Competing As A Small VAR

The sound of a pager interrupted the holiday celebration. Dan King recognized the phone number as that of a large produce distribution warehouse. New West Technologies, Inc., Founded by King and Jim Gerow, had installed an inventory control network in the warehouse and King was now receiving word that the server was down.

King was separated from the warehouse by about 250 miles of Oregon highway. While the warehouse operates 365 days a year, the warehouse supervisor did not expect King to respond immediately to the call on a holiday. Certainly the inventory could be tracked manually until the following day. However, that solution did not agree with New West Technologies almost zealous approach to service. "I dropped what I was doing and raced across the state. I got to the warehouse in under four hours and got the server up and running in no time," states King. "The supervisor at the warehouse couldn't believe it."

New West Technologies, a networking and POS VAR, has grown to seven employees since its founding in 1992 and posted revenues of $1.5 million in 1997. The Portland, OR, company still stresses quality service and attributes it as the main reason for the company's growth.

Service Above All Else
King and Jerow have tried to maintain a moderate level of growth for New West Technologies without compromising on the service the company provides. King has seen some of his competitors get too large, too fast. "Some companies get bigger in terms of clients, but do not increase their personnel. They don't expand internally because they don't want to increase overhead or they are too busy to hire new employees. In either case, customer service tends to decline," explains Dan King, president of New West Technologies. "I have heard that some companies take up to five hours to respond to a service call. That is unacceptable."

Quick response to service calls is one way that New West Technologies separates itself from the competition. The company guarantees a response to a customer service call in under 30 minutes, but averages between eight to nine minutes. Clients can contact New West Technologies at any time. The company designates a technician to be on-call if a client has a service problem outside of standard business hours (8:30 a.m. - 5:00 p.m.). The technician who is on-call can also contact other employees at New West Technologies if the problem requires more personnel. "All of our technicians carry cellular phones or pagers 24-hours-a day. They know that they will be contacted at any time if we need them. We review this aspect of our technician's job description very thoroughly during new employee interviews," states King.

A New West Technologies representative does a follow-up by phone after the service call two days later. The representative confirms that the original problem has been solved and the system is running smoothly. "The follow-up call is as much about PR as anything else. When we call and the client tells us the system is running fine, that reinforces the idea that we did a good job. It lets the client know that we care about the work that we did," states King.

An Advantage To Being Small
Given the size of New West Technologies, it is not unusual for the company to butt heads with a larger VAR who is vying for the same account. In these instances, King believes it is sometimes helpful to be a smaller company. He maintains that, as a company grows, its policies usually become more rigid. "Because we are still a small company, we are very flexible. We are able to bend over backwards to meet the needs of the client and secure the job," states King.

King recalls a restaurant owner who wanted to install a POS system and contacted New West Technologies and a larger VAR in the area to bid on the project. Neither VAR had experience with the POS software the restaurant wanted to have installed. "We talked to the restaurant owner and he had done his homework regarding the software. He was able to tell us legitimate reasons why he wanted to use this particular software," states King. The larger VAR withdrew from the negotiations because the restaurant owner refused to use the VAR's software. New West Technologies secured the account by researching the POS software and ordering that product line. "A lot of larger companies will say, 'This is the way we do it and we aren't going to change.' Modifying your product offering to meet customer needs is one way to beat the competition," states King.

One-Stop Shop
Providing quality service also means selling supplies to clients in some cases. Following installations, New West Technologies provides supplies to about 20% of its clients. Supplies can range from cash register tape to purchase order forms. "We are very proactive in this area. We don't want the client to be in the middle of a busy shift and find out there are no more printer ribbons," states King.

King explains that New West Technologies representatives always look to see what kind of supplies are going to be needed after an installation. Acting as an integrator and supplier gives New West Technologies a "one-stop shop" reputation. "We find that a lot of managers at restaurants and retail stores are fairly young and inexperienced. Typically, they are working in a high-pressure environment and might lose track of smaller business needs," states King. "Having us in charge of the system and supplies takes a big worry off the manager's mind."

New West Technologies usually delivers supplies to customers every other week. The company charts the types, amounts, and times supplies are ordered. "After one year, we are able to track a business' whole cycle and predict what it will need and when it will need it," explains King.

Working For A Small Company
King believes hiring quality employees is one of the toughest tasks facing a small business in the technology field and can differentiate one VAR from another. "There are a lot of companies willing to spend plenty of money on good employees," states King. "Being a smaller company, we pay a little less than larger companies so finding good people is a challenge."

According to King, a larger paycheck is not always the determining factor for a prospective employee. New West Technologies stresses the advantages that it offers employees which a larger company cannot. For example, the working atmosphere in the company tends to be more relaxed. New West Technologies often has to install its systems when the client's business is closed. This means that most big installations are done at night or on weekends to limit the amount of downtime for the customer. "If we have a big weekend installation coming up, we give our employees a lot of latitude. Our employees can take compensatory time off during the week or get the overtime. It is their choice," states King.

New West Technologies also offers very good benefit and vacation packages. The employee's paycheck is augmented with on-call fees, wake-up fees, and overtime pay. "We take care of our employees in any way we can. For instance, we consistently buy them lunch. While that might seem like a small thing, it really helps to improve the work environment," states King.

Get The Money Up-Front
A small VAR does not always have the capital to pay for an entire system upon delivery. For this reason, New West Technologies will often require a company to pay from one-third to one-half of the cost of an installation up-front. When a company invests money immediately it usually has a positive effect on the installation. "When a business is financially committed to an installation, the employees tend to be more cooperative," states King.

His company installed a POS system for a restaurant and required the owner to pay for one-half of the system up-front. As part of the installation, New West Technologies had to program the touchscreen at the cashier's station to contain all of the items that the restaurant sold. "We usually had difficulty in the past in getting food and liquor menus for restaurants. These items frequently change and most restaurants aren't organized enough to have a complete listing," states King. "We found that once a restaurant had its money invested, the employees were a lot more cooperative." With this cooperation, New West Technologies installed the system with no delays.

Beyond The Initial Sale
King attributes the growth of New West Technologies to the relationships it has built with clients. "Our business has grown primarily by word of mouth. By providing quality service to clients, we were able to get a lot of referrals," states King. "People sometimes laugh at me when I say this, but I think it is easy to accrue sales numbers. The hard part is doing a good job after the sale is done."