Everyone has a different memory of that first terrible recognition that the economy was in serious trouble. For Convergence Networks CEO David Murray, the realization came early, and it didn’t feel good.
“We saw it coming in November of 2007,” says Murray. “We could see people pulling back from IT spending and new technology. We had to do something.”
At risk was the future of a growing information network support company that provides outsourced IT for customers ranging from the Oregon Food Bank to Hertz Rent-a-Car. Murray, who has been CEO for nearly three years, saw that all of the gains the company had made since starting up in 2000 could be wiped out. The first thing he did was to organize a two-day, off-site retreat for six members of the management team at a conference room at the World Trade Center. The next thing he did was to bring the outline of a plan back to headquarters in Milwaukie and present it at a company-wide meeting. “It was a nervous time,” he recalls. “Nobody’s job was safe. I could tell people were thinking, ‘Should I really trust these guys?’ But I gave them the whole story and told them we wanted to hear their ideas.”
Between the management retreat and the staff meeting, ideas for saving money and improving efficiency began flowing. The ideas led to changes, and before long Murray and his team had built a comprehensive strategy for withstanding the downturn by honing the operation while improving customer service.
One easy decision was to start shopping for a better lease. The business parks of Clackamas County had been overbuilt and Murray could see that landlords would have trouble filling their spaces if the economy took the turn for the worse that he was anticipating. The company ended up saving 50% on rent for a new space less than a mile down the street from the old location. Moving costs were minimal.
Another idea was more structural. It involved setting up service teams of four to six people, organized by specialties and geographies. Each team received a private phone number and a block of direct inward dialing numbers. This enabled employees to get to know customers by name and build a reputation for prompt, consistent human service. Customers always spoke to the same team and they never ended up in phone-tree hell. That brought positive reviews and customer referrals, Murray says.
Under the category of “techy geeky stuff,” in Murray’s words, was an initiative to develop a centralized network operation center to respond to early warnings before they became expensive problems. Early detection of problems with servers and hard drives prevented more than a hundred hard drive crashes for Convergence customers this year, Murray says.
The most unorthodox initiative Murray and his team pursued involved cracking down on their worst customers. Every service business has to deal with customers who demand more time and attention than they are worth in revenues. This can be particularly true in IT, where some companies lack basic skills and infrastructure to the point they are very difficult to work with. “We can’t make any money with customers when we’re on the phone all day babysitting them,” says Murray. “The customers who didn’t return our calls, or abused our guys, they just took a lot of time and work.”
Murray and his team came up with a list of the customers making the most noise for the least amount of business and then started going out to meet with them to discuss the problem directly. He says most customers “worked with us and made the changes that needed to be made.” The few who didn’t are not missed.
The results? After two years of improving operations, honing the company’s focus and, yes, firing the worst customers, Murray is confident that Convergence will grow steadily into the future.
He expects gross revenues to grow from about $3.7 million in 2009 to about $4.2 million in 2010, while expanding from 32 employees to 35. He doubts the company would be in such a stable position if the management team hadn’t recognized the problem early and put out a staffwide call for ideas. The transition took time and hard work, but Murray is pleased with the results.
“2009 actually ended up being one of our most profitable years,” he says. “We’re not going to win any awards for revenue growth but if you look at the bottom line we’ll come out right near the top of the list.”