Giving Employees An Ownership Stake Pays Off For Services Firm

At one time, close to 70 percent of the solution provider&'s $10 million in annual revenue was generated through product sales, a fact that didn&'t help much in building customer loyalty or repeat business. Today, that number is closer to 10 percent of sales, although revenue has been flat as the company transitioned from fewer enterprise clients more heavily into the SMB space, said Steve Burkhart, CEO of the Vincennes, Ind.-based solution provider.

“We&'ve also seen our margins increase because we are doing more high-end work for our clients. Our margins are running about 17.5 percent net right now,” he said.

Burkhart estimates there&'s roughly five times more margin to be made in services than in products, although he doesn&'t shun the product part of the equation by any stretch of the imagination. His company would best fit the second of the three channel models outlined by Service Leadership, one that does a lot of project work, although he is adopting more recurring services offerings.

“Product is always part of service,” he said.

Advanced Microelectronics&' ability to make its latest shift has been tied to its partners&' decision to structure the company differently than many solution providers, putting about 50 percent of the ownership into an employee stock ownership plan. About 35 percent of company ownership has been transferred to employees, which has inspired many to think differently about their day-to-day activities, Burkhart said.

What&'s more, almost all employees receive some sort of incentive for growing business, regardless of whether or not they are actually in sales roles, he said.

This wasn&'t exactly an easy change to make. About 30 percent of Advanced Microelectronics&' sales team left during the model transition, Burkhart said, because they simply weren&'t suited for the shift into solutions. “The person that sells service, you can&'t go in there selling, you have to ask questions,” he said.

That&'s because the company&'s services message differs dramatically whether it&'s for a health-care concern, an educational client or a small business. Advanced Microelectronics&' offerings run the full gamut from installations, hardware selection, networking, process automation and security audits.

“We&'re something different to each of those places depending on the size,” Burkhart said. The company&'s services region spans Indiana, Louisiana, Ohio, Tennessee and Texas.

All that custom treatment translates into one result: customer satisfaction, a fact that is underscored by the dramatic percentage of Advanced Microelectronics&' business that comes through customer referrals.

“Our goal is to be trusted by the client,” Burkhart said.