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Tech Support Businesses on the Rise
prostoalex writes "People are relying on more technology that ever before, and tech support geek squads are on the rise, media reports. The USA Today article says Best Buy has hired 1,500 more technicians for its Geek Squad and CompUSA currently keeps its tech support ranks at 12,000. The article from Digital Connect magazine talks about Geeks On Call, a nationwide tech support franchise, which has more than 300 shops in 20 states. The USA Today article states the profit margins for the tech support teams generally run within 30%, while the Digital Connect magazine gives an estimate on prices charged to achieve the margins: "An initial diagnostics call, for example, could run $99. Cleanup jobs usually run one to two hours, and some franchisees say they charge between $149 and $165 for one hour and $265 to $275 for two hours.""
In a previous life, the company I worked for sold both hardware and consulting services. The margin on hardware & shrink-wrapped software was about 3%. The margin on consulting, with the bloated managment overhead and massive cross-country travel costs was still over 30%.
Who would you rather compete against: Dell & eBay or Best Buy's repair desk?
This is no dofferent than with any other industry in the US. Skilled labor is expensive!
-MrLogic
Apparently that is the future economy of this country. We dont make anything any longer, so all that is left is 'services'.
---- Booth was a patriot ----
I do this type of on-site work and this is the single most common response I get when a customer is trying to talk me down on price, or complain about the cost of his/her repair.
There's an element of truth to it, but generally, it's not nearly as good a solution as it appears.
For starters, most service calls end up being at least partially due to virii and spyware. If the customer buys a new machine, how long do you think it will take him/her to get it just as infected as the previous system was - if he/she does the same types of things he/she did before?
I've actually had customers do this! They ordered a new Dell or bought a new HP at Best Buy rather than "waste money fixing this 4 year old machine" - only to end up calling me 2 months later, asking me to clean up *both* computers.
I do this kind of tech support work, but not as a primary source of business. The regular personal customers I do have running Windows I early and often tell them about Firefox and AdAware, and other such things, but approximately half of them regularly ignore my constant warnings about Internet Explorer. There are a couple customers I used to regularly visit and clean spyware off their computers because they couldn't be bothered with remembering not to use IE or run their spyware scanner. Most of the business customers catch on fairly quick, as my time in there not improving their systems is a noticable financial drain on their bottom line (especially since mose of my clients are small, 1-5 person businesses).
Interstingly enough, about a quarter of the people I've dealt with on in-home jobs have bought Macs (on my recommendation, most of our business clients are Mac-only shops) and are a lot happier with it. Their kids tend to be pissed off because this or that P2P app doesn't run on MacOS, or they can't play this or that game, but generally the parents don't care, because the computer doesn't get screwed up nearly as easily and kids are built to complain. That, and game consoles generally make up the difference.
quickly figures out that the real place to make money is the corporate market and not the home market. With most companies, they aren't behind you with a stop watch to count your time. Also, you normally can get several hours of time in during one stop. You don't have to go all over hell's half acre to make your money. Sure, you can make money that way but it's too much work.
Also, going into people's houses all the time weirds me out. We quit doing that about 4 years ago.
I read an article about Geeks on Call and, while it's an interesting idea, I don't see that they are going to have much success in the corporate market. According to the article, the techs are not supposed to talk to any of their customers on the phone - every problem results in a service call. That might work with joe homeowner but a business that spends several $k a month on your service will expect phone support....
As our applications inevitably migrate from our computers to the network, the network literally becomes the computer.
This new supercomputer gets faster as bandwidth increases. A completely optical network means bandwidth would approach the speed of light. My computer could use your hardware as seamlessly as mine.
Meanwhile Ray Kurzweils predictions of $1000 of hardware with the processing power of a human brain arising within our lifetimes is also quite conceivable.
These factors, combined with Metcalfe's Law (The power of the network increases exponentially by the number of computers connected to it) all point to an emergent, distributed, networked, increasingly "intelligent" global nervous system.
And we've got front row seats :)
Thoughts on the Emergence of Computing Intelligence
As a previous franchise manager for Geeks on Call; their profit margins are skinny. As an owner you are looking at zero profit in the first two years.
Everyone says it takes money to make money, well here you are spending all your money and making the franchise all the money. Oh, and your base mark up for hardware is 19% over actual cost, and that belongs to Geeks on call. All the money is made from actual labor, and even that margin is skinnier then 30%. At that point people are paying compusa prices or higher for your product. The franchise itself should be allowing for more leeway, by lowering franchise fees. It was common practice for people to start rolling that hardware into the labor to get away from that 19% mark up in hardware.
I'd say after 4 years of their buisness plan (pyramid scheme) you'd be making about the same as you would any other help desk job, except you'd be cold calling. Yes, that's right: Their buisness plan calls for door to door cold calling (solicitation). I preferred the more refined method of buisness networking through local chambers of commerce. Which kept me from feeling like a complete spammer.
In the end, the franchise ran out of money in 2.5 years thanks to my predecessor blowing through the investors capital. The franchise has a very small window of success, and I don't feel like it was the investors fault for hiring a retard prior to me. My job was bleak, and while we floated for another 1.5 years and generated actual contracts, the money wore out and paychecks started bouncing.
I do part-time tech support / trainign in my off time from my fulltime job, as I'm sure many /. readers also do.
Geek Squad et al do a wonderful job marketing their services, and BestBuy slaps a "Authorized for Geek Squad Installation" sticker on practically anything that can be used near a computer. They thereby get the Joe and Janes of the world to pay steep charges for simple installation of gizmos and peripherals, virus removal etc.
And it's quite simply: Brilliant
I have made my pricing significantly lower than Geek Squad (the only real, read:advertising, competitor in my city), but high enough that in 3 hours of work, I can make more than a full day at my full time job.
All this and I have a steady flow of new customers. People fear technology: just ask the lady I'm teaching to scan her photos in, write word documents, send email, and use the web. $55/hr to teach stuff I can do in my sleep, and they think it's a bargain!
Fact of the matter: it is a bargain, compared to a community college course, or having Geek Squad do a house call to upgrade / get rid of malware / etc.
A lot of people like the little guy, too and would rather pay an independant guy... clip-on tie and black and white Beetle or not.
I'm too lazy to enter a sig. Hey wait a second! You tricked me!
Don't bother to RTFA, it's basically a press release for Geek Squad :) I've been doing this type of work for 3+ years. I find that most customers are paying for the convenience factor. 2-3 hours billable to resolve the issue fast is far less costly to them than distracting themselves from their primary job for ?? hours or days to resolve it themselves. By analogy, I can do my own accounting, but paying my accountant 1 hour to do a project correctly is less expensive than taking me away from working 2-3 billable hours for my customers.
I have a friend of a friend who got hired there, you couldn't pay me to trust him to touch any computer I had to deal with. Geek Squad is overpriced and seems to have stupid hiring practices. A friend of mine applied there and didn't even get an interview but he's one of the best technicians I've ever met and has great customer service skills.
I do tech support professionally on a college campus and freelance for anyone recommended to me by friends. I hate freelancing because tech support crap is almost always boring and I already do it all day long, but it's hard to turn down extra income. I started out charging $20 an hour, now I'm up to $50 (for on-site calls). I always feel really guilty charging that much though (unless it's a nasty spyware infection). This one time I worked on this guys computer that had had the wireless card disabled - I literally just had to click "enable" and I was done. It took 5 minutes to drive to his house, 5 minutes to get situated with the computer booted up and all that, and then I was done. I told him because it took such a short amount of time I would only charge him $10, he was cool and joked that he pays the kid down the street more to mow his lawn and ended up paying me $30. I still felt bad - clearly I'm not cut out for this kind of work.
Right now I'm working on a PC in exchange for free food, mostly because it's a new customer and I know she is a good cook, but also because all I have to do is swap a CD-ROM drive and troubleshoot a Wacom tablet. I feel like an ass charging for simple things like that.
Ok, so where to begin? I work for GeekSquad as a Double Agent.(I do the In-Home Stuff) Obviously there are more desirable jobs out there, but givin my location I do pretty well. You can make fun of it, talk about how you feel that it's wrong to charge so much, pretend that no one needs it, but the truth is that demand is enormous. It's not like we are targeting these individuals, they come to us. All we do is offer this service based on lifestyle questions and then we let them decide. On top of that BestBuy is totally non-commission. We could care less if you buy it or not, on a personal level that is, so we don't rip people off. If it sounds too costly to you, or if you feel that it wouldn't be beneficial, then don't buy it. Simple. Now, lets compare GeekSquad to everything else. I have fixed thousands of computers. Our focus is to restore as little as possible. Time/cost is always a factor here though, especially when on-site. The customers time is very important in this decision too. Personally, I have yet to restore a single system on-site, but that doesn't mean I wouldn't. Thats with Hundreds of Service calls under my belt. Obviously each Agent will be different. It isn't a perfect world afterall. These agents are generally left as instore techs until weeded out. We charge a FlatRate. "It will Cost X amount. Would you like an agent to come out?" If im there for 10 hours the price will stay the same. Compare $159-229 to $50/h when your there for 10 hours. Obviously that doesn't happen very often, but that is how we handle it. Averagely each call is about 3 hours. Our goal is to be in and out asap but we will be there as long as it takes. Can the hourly people say that? Anyway... What im getting at is that GeekSquad offers the best solution. It's the struggling local people who will rip you off not Geeksquad. We have Branding, people know who we are! They come to us in such masses that sheer quantity outweighs trying to milk each individual Service Call. To top that, GeekSquad Agents do not receive the revenue but are PAID by the hour. An individual Agent is available 40 hours a week. Plus we are backed by an organization that isn't going away any time soon. Geeksquad is truely the best option for any consumer. Our mission is to take care of the customers needs, not to sell them things, for the sake of money, that they don't need. We call this Organic Growth. We grow through our existing Customer Base in this way. They will come back and see us again because they received a high-Quality level of service. People love that! Obviously, there will be some jaded consumers. It happens but the majority of shoppers @ BestBuy will have a much better experience then they would anywhere else. Lol, all that and I bet most people will never even read it. :P