A lot of dealers say they have a service-first approach to their customers, but Nauticon Office Solutions has the numbers to back it up. Customer retention rates are in the high 90-percent range, and its Net Promoter Score of 94 is one of the highest we’ve seen.
Nauticon, which serves the greater Washington, DC area, is about to celebrate its twentieth anniversary in June. Since its founding, the company has grown from five to eighty employees, and achieved roughly $20 million in revenue in 2016. Last April, the company sold its Baltimore branch to focus on the Washington market. “We’re a Washington local company, and we are growing nicely in the Washington, DC, marketplace,” said Carter Hertzberg, one of the three Nauticon owners. The others are co-founders Tom Cunningham and Gary Sockel.
A Toshiba dealer for the past 14 years, Nauticon picked up the Xerox product line through its Document Technology Partner program a year ago. The company is proud to be the service provider of record for Toshiba National installations in the greater Baltimore area.
Nauticon’s customer base is diverse. “Anywhere from a singleshingle law firm all the way to a major national hospital chain, and everything in between,” said Hertzberg. “Surprisingly, we’re in Washington, DC, and we do very little federal government business, although we do some state and local business.”
Hertzberg says that Nauticon is growing in two ways. “Customer retention is phenomenal, as evidenced by the ENX/BEI service award and the job that [vice president of service operations] Vinh Phan and his team do,” he said. “We’re also beating out some competitors for new business, and we’ve built a solid managed network service offering that now serves about 60 clients of varying sizes.”
Maintaining a high customer retention rate, which Phan estimates at around 98 percent, is a priority for everyone at Nauticon. “The motto of the company, since the day it was founded by Tom and Gary, has always been ‘Service First,’” said Hertzberg, “Vinh and his team take their jobs really seriously, and the company as a whole, from ownership and senior management all the way down the chain, is really enabled to say ‘yes’ to the customer. There’s almost nothing we won’t do to make sure that we’re satisfying our customers’ needs and making them feel good that they are Nauticon customers.”
“I don’t think any of the owners will allow me to say ‘no’ to any of our customers. That’s not in our DNA,” said Phan, “because of that culture and that ethos, our customers are very sticky.”
“Vinh will show up at a customer on Saturday afternoon at 4 p.m. if he picked up a message over the weekend. One of Vinh’s service managers will do the same thing. It’s the willingness of our people to buy into the concept of helping the customer,” said Hertzberg.
Hertzberg believes that those sticky customers are critical to building Nauticon’s reputation and referrals. “We don’t do a lot of advertising. We don’t do billboards or radio ads or anything like that, but we have built some pretty good wordofmouth in this area,” he said.
Nauticon’s customer retention success and focus on service has earned it this month’s BEI/ENX Service Excellence Platinum Award.
Improving on Strong Service
One of the key challenges for Phan and his team of 30 service techs is to continuously find ways to improve and innovate on what they do. “I constantly motivate them, implementing new changes and getting them to buy in–like the BEI program, for example,” he said. Phan takes the time to walk his team through any changes. When necessary, he sees that they get training, which he did when Nauticon took on the Xerox line, for example. “Keeping my techs up to date is the biggest challenge for me,” he noted.
Hertzberg added that the service techs now need to know more IT concepts in addition to the hardware. “You’ve got to be able to do the mechanical stuff, but the techs now need a much more technological grounding, as well,” he said.
The goal is to fix a customer’s problem on the first try, but the real test of a company’s commitment to service comes when the customer is not satisfied with that first response. “If a customer calls their sales rep or one of the owners because they’ve got a recurring problem or they weren’t happy with the resolution that they got the first time around, we take that really seriously,” said Hertzberg. He elaborated on this concept, saying “Vinh is just phenomenal about saying, ‘Here’s what I think happened and I’m going to send one of my service managers out there to make sure that we get it right this time.’ The level of responsiveness to our customers, I would argue, is second to none.”
“The three owners have allowed us to do everything necessary to take care of our customers,” said Phan. He added that, because the owners “treat everybody at this company right,” the team picks up on those values, which has a positive effect on how they treat customers.
Service techs buy into those values easily because it resonates with the way they want to work. Phan says that “We hear a pretty consistent theme from the new hire technicians. They say, ‘Wow! We can actually diagnose a problem, try to get a solution and not be hustled out to our next call.’ Our goal is not built around X number of calls per day or Y dollars in parts. It’s built around making sure the customer is satisfied. That’s why we have a kick-ass team.”
BEI as a Coaching Tool
One of the reasons that Nauticon implemented the BEI program a couple of years ago was to help develop its service techs. “It’s a coaching tool, more than anything else,” said Phan, “we want positive reinforcement. We want to help them.”
Using BEI data makes that feedback more objective. “BEI is so great at gathering objective data and benchmarking it against our peer groups, and against the same makes and models of machines,” said Hertzberg. “Instead of having opinions about how techs are doing and how they’re measured, BEI allows you to drill objectively into whether or not your guys are doing well. It takes away a lot of that subjectivity of performance reviews and whether somebody deserves a raise or a bonus. The level of objectivity was a gamechanger for our ability to manage the tech group.”
Each service tech gets a report based on BEI data each month that has metrics about their work. “We can arm them with the correct tools and the correct resources so they can do things like improve their firstcall effectiveness,” said Hertzberg.
Phan emphasizes that the report is valuable to keep improving his team, not as a means to do a formal performance review: “I’m looking at how they’re doing that month, whether they had a bad month, or if they need help in one way or another. We can also identify which models or lines they need more help on.” Phan will then work with the tech to get them more time to work on those machines or more training.
Continuing with the “keeping it positive” theme, service techs can earn monthly bonuses based on the BEI data. Hertzberg said that Nauticon’s technician staff earned about $80,000 in “BEI bonuses” last year. Those bonuses and the recognition have generated buy-in for the program among the service techs. Phan believes that by accepting the BEI program, his team has become more aware of what the company expects of them.
Since implementing BEI, the Nauticon sales team doesn’t get as many calls from customers, and Hertzberg thinks that’s a good thing. “It means the customers aren’t calling them to say they’ve got a problem,” he said. On a more objective scale, Nauticon has achieved a Net Promoter Score of 94 using the CEO Juice program. “It’s off the charts,” said Hertzberg.
The next area where Nauticon might apply BEI is supplies usage. “If people call for supplies, we send them,” said Hertzberg. “I don’t think it is the most efficient way and we know that excessive supplies usage can really hurt the margin.”
“I would like to see BEI have a tracking mechanism for supply usage similar to what it has for parts usage,” said Hertzberg. “We probably have an opportunity to be more efficient with how we manage supplies if we are oversupplying a certain customer. We don’t really have a good, reliable tool to measure that.”
Phan would like to extend the monitoring and coaching to his field managers. He said Nauticon is participating in some beta programs in that area with BEI.
Nauticon also hopes to build on its success with Xerox Light Production products. “We’d move upstream with some of the Xerox Press products, which we haven’t carried before,” said Hertzberg.
Hertzberg also sees opportunities to leverage its MPS to grow managed services. “We see our MPS program, as a bridge between the copier sales approach and the managed services approach. If we can make some headway in production print and MPS while continuing to build the Managed Services, I think we’ll have had a great year.” That “great year” would be 75 percent growth in managed services revenue and 5 to 7 percent growth in traditional MFP sales and services.
Growth in managed services will be important to offset slower growth on the print side. “We all know that printed pages are trending slowly, slowly down,” said Hertzberg. “The other side is that data growth is trending way up. How do you capture that data growth and make that a little bit of a hedge against the erosion in printed pages? We have to continue to do a great job in servicing our customers in the traditional copier/dealer model, and we have to leverage every opportunity to capture more of the data side of the business.”
“Dealers aren’t going to go anywhere,” said Hertzberg. “They may stagnate if they don’t have a strategy to leverage the data growth and figure out how to make up for some of the loss in printed pages. If your only strategy is to sell MFPs and capture printed pages, your only path to growth is to eat somebody’s lunch, and you better be damn good at that.”