Internal and external business transformation can only be achieved through implementing new systems and the help of your employees. Here’s how Dial a Nerd is getting it right.
Many businesses stick to what they know simply because that’s what they’ve always done. Dial a Nerd entered the market in 2000 as a home-user IT support company. There was a huge demand for its services: Operating systems were complicated and many home users were new to technology.
“We had a document a page and a half long explaining how to connect to the Internet,” explains co-founder Colin Thornton.
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The business grew quickly. Thornton recruited three friends who were also good at tech, and together they became the ‘nerds’ who came to your house to sort out your PC, laptop or Internet service. As the company grew, so its services grew. Soon, Thornton’s brother Aaron Thornton joined the business. By the late 2000s, the business had 14 retail stores, with another 26 on the cards, and the company lived by its payoff line: Nerds come to you.
And then the market shifted. “Two things converged at the same time,” says Aaron. “The 2008 economic recession finally reached South Africa’s shores, and tech was becoming a lot more commoditised.”
The impact on Dial a Nerd’s business model was radical. Today, they’ve gone from 140 employees to 65. Their turnover is 35% less, but profits have tripled. It’s been a long, tough process, but the results have been worth it – and none of it would have been possible without negotiating very specific HR challenges. Here’s how they did it.
1. The shift from retail to offices
As IT became commoditised and operating systems became easier to use, home users no longer needed tech support in the same way, and products became expensive for Dial a Nerd to stock.
“We couldn’t compete with large retail chains in terms of price,” says Thornton. Up until this point, 14 nationwide retail branches ticked two boxes: They served as show rooms for products, and they ensured that technicians were area based, as the Dial a Nerd model ensured the ‘nerd’ came to you.
“Previously, we’d lost a lot of time traveling to clients. The branches ensured we were now based in all main centres.” But the retail branches were expensive, with high rents. The model was no longer working and needed to shift. The big question loomed though: What would they do with the extra staff it had taken to run those branches? “We didn’t want widespread retrenchments,” says Aaron.
“We made the decision to keep each branch as profitable as possible while we downsized.” This required very specific people management skills.
2. A focus on transparency
“Closing 12 branches was the hardest thing we’ve ever had to do, because we knew consolidating the business meant letting half of our employees go. We opted for full transparency every step of the way,” says Aaron.
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“As we saw the revenue of a store dropping, we’d work closely with the manager to keep it as profitable as possible, but always being clear that once the store cost more than it made, it would need to close. This level of transparency meant that employees were looking for new jobs during the process, and we fully supported them. We went from 140 employees to 65, and only three people had to be retrenched, and we didn’t get taken to the CCMA. We’re very proud of that.”
3. Changing the billing model
With branches now closing, technicians went from store-based to on-the-road. “We needed to change the way we billed clients to make this work,” says Aaron.
“Previously each branch had its own admin department. If there was a discrepancy between what the technician billed and what the client thought they should be billed from a time perspective, the branch’s admin department had to sort it out. There were a lot of cost and time inefficiencies.”
With admin consolidated into two branches, the whole system had to become more streamlined. “We changed our billing model from time-based to menu-based. Now the client knows exactly what they’re ordering. If the technician wraps up the job sooner, there’s a time saving on our side, if it takes a bit longer than expected, the client doesn’t pay more.”
It’s a simple change that has made a vast improvement in the company’s overall efficiencies and admin costs. Today, home users still account for between 30% and 40% of Dial a Nerd’s business, but at much higher profit margins because overheads have been reduced.
4. Moving from home-users to corporate users
This was the single biggest shift in the business model. “We’d always looked for technicians that were good with people – they needed to walk into people’s homes, be friendly, and be able to explain tech in a user-friendly way. Our best home technicians are still with us, servicing that sector, but when we started focusing on the corporate sector, we also needed to change our hiring practices.”
Business don’t want friendly technicians – they want tech that always works, because downtime cost money – often millions of rands in one day. “We look for highly trained technicians in this sector,” says Thornton.
“They need to be completely u-to-date in all the latest training and products, and it doesn’t matter in the slightest if they’re ‘people’ orientated.” It’s a valuable lesson the founders have learnt: Different business divisions and clients need different skill sets and personalities servicing them – one model does not fit all.
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5. Hiring for culture
“We don’t want people who have studied tech,” says Aaron. “We want people who live and breathe tech. If they really love technology, it’s not even work – it’s a chance to solve a tech problem, or find a better and faster way to do something. One of the first things we ask during our interviews is if the candidate plays video games. We want to know that tech is immersed in their lives on a personal and social level, as well as professional. We hire nerds. It’s not just in our name.”