Despite Battling a Price-Driven Market, Function 4 Uses Service Excellence to Earn Star of Texas
Thursday, June 29, 2017
If you think about it, quality service is to this generation of business what the Chevy Camaro was to 20-somethings from the 1980s: everyone claimed that they had it or were in the process of getting it. But the truth be known, few can deliver on such a bold promise.
Bob Evans may not be driving an IROC-Z, but the president and CEO of Function 4–a dealership serving eastern Texas and parts of Oklahoma and Louisiana–knows that the technical service component is the bread-and-butter offering of any reputable firm. After all, the service department interacts with the customer base more than any other facet of his operation. It is the primary point of differentiation for the Texas-based dealership.
Shown on the left is Roland Koennecke, Houston service manager, and Bob Evans, owner of Function 4.
The Houston market in particular has prompted Function 4 to evolve and adapt. Houston’s energy-based economy has been hit hard in the past 18 months. Many companies have either gone out of business or tightened their belts with reduced staff and spending cuts. And Function 4 is not the only game in town when it comes to office technology offerings.
“All the manufacturers are here and have direct offices, plus we have multiple dealers here,” Evans said of the competition. “Pricing pressure is really driving us down to the point where we had to get into additional businesses to be able to maintain margin and get closer to our customers. We had to add more value than just providing print-or-copy-based product or being a lower cost provider.”
Function 4’s ability to provide a full and effective service response the first time around, as opposed to just a promise that delivers little more than smoking tires, has enabled the company to earn this month’s BEI/ENX Service Excellence Platinum Award.
The company was created by the 2014 merger of Digitec Office Solutions (the Houston suburban branch) and Star Graphics of Beaumont, Texas. In October of that year, Office Equipment Center of Paris, TX, joined the fold. Since then the organization has added additional offices in Sherman, Texas, and Lake Charles, Louisiana. Function 4 has 87 employees across its network, with the three entities boasting 97 combined years of experience. Its geographic footprint services 31 counties in eastern Texas, five counties in southeast Oklahoma, and five parishes in southwest Louisiana.
With $19 million in annual revenue, Function 4 offers printer and copier products from Kyocera, Konica Minolta, HP, and Sharp. It provides managed print services, software solutions, and consulting. Beginning this year, Function 4 unveiled a managed IT solution via Konica Minolta’s All Covered and the Continuum platforms. Software solution sales account for 5 percent of total revenue, while MPS is 10 percent of total revenue.
Function 4 has enjoyed double-digit growth for its MPS and software solutions in the last year, with the Paris operation reaping double-digit growth in that location alone. Evans has added dedicated sales people to augment the software solutions, which has made a significant impact. The company has also embarked on a targeted marketing campaign to help identify vertical markets in which Function 4 can thrive. The new campaign involves marketing their MPS and software to selected targets within customer organizations, enabling the dealer to go deeper within existing accounts and yielding particularly successful forays within the health care sector and independent school districts.
“I tell our folks all the time, we’re truly a customer focused company,” Evans noted. “It’s what we do, regardless of the product or solution we’re providing to the customer. The product and service is only as good as the service team implementing it. We focus our efforts on providing the best service, whether it’s break/fix on the MFP side, implementation at the beginning of the product or solution, getting the toner there on time, or billing correctly. We want the customer to be totally satisfied with all of the service that we provide.”
Being customer focused has wide-ranging benefits, he added: “Because our techs do such a good job of providing quality service, our customers trust us and we have a very good rapport with them. It’s allowed us to go in and bring new products and services to our current base because they have been so happy with our service in our traditional MFP business. I think we’ll be able to continue to grow revenue within those customers.”
Experience is a factor in Function 4’s success—of the 87 employees, Evans estimated roughly 30 percent have 10 or more years of experience with the company. The techs are empowered to make key decisions, while offering honest communication to both the customers and the dealership’s executives. While Evans’ goal is to provide prompt and effective service, getting the service call right the first time is the overarching objective. Responding to a request for service within the hour is of little use to the customer if the machine isn’t repaired properly.
The BEI program has validated Function 4’s efforts. Evans implemented the program five years ago while with Digitec Office Solutions, then applied it to the Beaumont and Paris facilities following the merger. The branches have improved their first call effectiveness (FCE) each year on the program, with Beaumont and Paris increasing from the low-20s to the mid-50s. Sugar Land is in the mid-60s/high-70s range. In the process, Function 4 has increased efficiency by fixing the equipment the first time, having proper parts on hand, and reducing the number of callbacks. Service profit in Beaumont has jumped 12 percent in two-plus years to 49 percent, with the other facilities touching the mid-50s range.
“We’ve done a better job servicing our customers, but it’s also had an impact on aligning us to be more profitable,” Evans said, noting the company’s goal is to reach an FCE in the mid-60s by year’s end.
Customer feedback has been extremely positive. Function 4’s Net Promoter Score increased from 84.3 percent in 2014 to 94.2 percent in March of this year. The company sends out a survey following each service call that includes the Net Promoter Score question. When Function 4 isn’t graded at a 10 on performance satisfaction, an executive follows up with a phone call to determine how the dealership can improve on future visits.
Evans reiterated that it is the quest to perform a total service call correctly the first time that drives Function 4, rather than focusing on response time as a main service deliverable. And while their response time is strong, it is the level of service that stands as the point of differentiation.
OTSEA Platinum award winners score in the top fifteen percent of all dealers evaluated. The evaluations are based on Call Back percentage, Hold for Parts percentage, MCBV (Mean Copies Between Visits) and Technician Grading. Tech Grading encompasses Time accountability and Time management along with individual HP, CB and MCBV rates. It also includes parts expense as it relates to parts CPC compared to world stats.
“We enable and empower our service techs to achieve that goal,” he said. “They know we’re not going to pull [techs] off a job or call them and say ‘why are you on that call for so long?’ Customers see that, too. They know we’re going to do our best to repair that machine correctly the first time so we don’t have to come back again.”
Function 4’s immediate goals include building its managed IT offering in order to become a full-service provider. In developing the new competencies, the dealer is changing its approach to sales. A different kind of conversation with customers will be required, with new skill sets and additional sales staff to facilitate holistic business conversations, as opposed to traditional copier/printer-box dialogues. Evans converted a sales person with high-level technical sales acumen to be the firm’s IT source-matter expert.
“We’re a little behind on [IT],” Evans remarked. “We had to figure out whether to build it internally, find a partner, or go out and purchase a company. We opted for the partner route to learn the business and get more familiar with how to sell, implement, and provide those services. Being a Konica Minolta provider, we went with All Covered. We’re using them in the first couple of accounts to learn how to be a managed network service provider. Our ultimate goal is to purchase a company.”
Moving forward, Function 4 is also focusing on augmenting its Lake Charles’ sales operation to expand the company’s presence in Louisiana while building the sales force there and in Sherman, TX. With the evolving business landscape and the continuing pricing pressure, particularly in the Houston market, Function 4 is banking on its additional products and services to maintain an edge on the competition. Raising the bar on technical service is obviously an organizational forte, as the comment cards from customers will attest.