In an industry in which integrators often take years to find the right formula for growth, Texadia Systems in Dallas has achieved immediate results by achieving the right balance between sales and operational efficiency.
Indeed, when you look at the company’s business metrics, they almost look too good to be true:
- 85 percent employee utilization rate
- 25 percent to 32 percent profitability on every project
- Average project size of $150,000, with its largest project close to $1 million
- High customer satisfaction rates
- Selling service contracts valued at 10 percent of the equipment cost
That performance has enabled Texadia to reach a remarkable $6.2 million in revenues in just its third year in business.
But guess what — the growth is not based on some mysterious secret formula. It’s rooted in maintaining strong basic business principles and providing excellent customer service, along with a dedication to maintaining a presence in both the commercial and residential integration worlds.
Building a Better Mousetrap
When company president Steve Burke wrote his business plan for Texadia Systems in November 2014, he had a goal to establish two separate business units:
Commercial — Focused on spaces such as boardrooms, conference rooms, trainings rooms, and auditoriums; and technologies including digital signage, structured cabling and security.
Residential — Focused on home automation, networking, lighting control, home theater, video distribution, and audio distribution.
“At the end of the day, a lot of the technologies are extremely similar between the commercial and residential markets — you’ve got inputs, outputs, HDCP handshakes, control systems, programming, audio, video, switching, routing,” explains Burke, “and it’s all tied into this beautiful thing called the network.”
He says the goal of being a diverse company in both markets was driven by the “insane” housing market in Dallas, combined with his background in the commercial software business working with companies like Exxon, Lockheed Martin and other Fortune 50 companies. That experience honed Burke’s sales expertise.
“My background was specifically in software sales. I used to call on a lot of people that didn’t want to talk to me. I’m used to hearing the word ‘no.’ It doesn’t bother me. It’s just another opportunity for a ‘yes’ somewhere down the road. I’m pretty persistent, and what I do know is when I combine that level of intensity in regards to finding opportunities within providing quality engineering, good follow-through, and strong communication, it is a great combination,” he says. “That’s really been a major reason for our quick and fast growth.”
But what about from the operational standpoint? You can be tech savvy and be a great salesperson, but then to manage a fast-growing operation is not easy. Burke says he had to learn those lessons the hard way.
“I was driving deals as fast as I could, so quality control went down,” he admits. “I learned like I learn most things — I failed.”
So, he hired a process expert to help solve the problem. Texadia’s vice president, Dawna Payne, had worked with Burke at a previous company, and she brought her expertise in creating repeatable processes to the company.
“She can find the best way to build a better mousetrap,” says Burke. “I knew what my ultimate goal was, but I did not know how to get there. When I got Dawna on board, it really put a lot of pieces into place. We come to work every day trying to figure out how to build a better mousetrap, whether it’s internally for our people or externally for our clients. That’s what we try to do and we want to be a fun, exciting, cool place to work.”
3 Key Differentiators, Google SEO
The company focuses on several niche markets, including commercial relocation projects, design/build A/V projects, high-end custom homes, and multi-dwelling units (MDUs). Burke says the biggest differentiator between Texadia and its competitors is simple reliability.
“There are a lot of people out there who can hang a TV. Unfortunately, they don’t have much experience when it comes to the customer or end-user experience,” he says. “When you integrate video conferencing, audio conferencing, lighting, shades, and multi-input switching things can get complicated in a hurry. We really try to focus on the customer experience and that can be difficult when competing against lower-priced solutions.”
He continues, “We get a lot of business from people who give us feedback about other A/V companies that do not call them back timely. We take great pride in timely communication and quick response times — we want to solve your problem and build that type of relationship with our clients.”
Along with that reliability factor, Texadia pegs three key differentiators:
People — “We hire people who take great pride in what they do and care about. Our team’s collective combined A/V experience is over 250 years. We have been there and done it before,” says Burke.
Design/Build Approach — Burke believes the design/build method is the most cost-effective way to complete an A/V install. “We have a detailed knowledge of the technology and how it operates. We take a consultative approach to learning our client’s needs; we do not want to sell them a technology that they won’t need or use.”
Customer Service — “We strive for five-star customer service throughout the entire project lifecycle. That begins with sales doing a thorough needs assessment all the way to final project sign-off. The project doesn’t end when we complete an A/V install — it is just the beginning. We want to make sure that you are happy with your investment, and you are utilizing the technology and features that you purchased. We are looking for long-term relationships and want to help our clients see that return on their investment.”
As another way to stand out, the company has also honed its Google SEO online, which is breeding between 2 percent and 4 percent of the company’s projects.
Scott Birdsong, vice president of engineering, writes short case studies for online and pushes the stories through social media (LinkedIn, Facebook and Twitter). That outreach recently garnered Texadia an IT support contract and system design project for a conference room in Kenya. Burke says the close rate on clients who find Texadia via the web is very high, and the investment in optimizing the website has definitely paid for itself.
Tracking Metrics and Honing Operations
Competitive differentiators don’t mean anything if the company cannot perform. Burke keeps a close eye on several business metrics.
“First and foremost, I analyze company profitability,” he says bluntly. More deeply, he tracks customer satisfaction, labor utilization, miscellaneous materials cost, service utilization, job profitability, labor resource margins, design/PM utilization, and the number of days a project or service request is open.
Other operational areas of concentration for Texadia include:
Service — Burke admits that servicing systems in the field is the hardest part of the business. “From an Apple TV not connecting to the network to a DirecTV box getting a firmware update, these things happen every day in the world of an integrator. We’ve started implementing remote network management systems to help offset that. But the bottom line is it doesn’t take a lot of effort to call a customer and say, ‘I understand you have a problem. And you’re important to me. I’m working on trying to find a way to help you fix it.’ That’s really what we do every day.
“It’s a huge differentiator for us on both the residential and commercial side,” he says, “because a lot of our competition doesn’t have the courtesy to return the phone call and simply say, ‘I’m busy. Can I call you back?’ We do that. We are in the problem-solving business.”
Texadia offers service agreements to clients, targeting 10 percent of the hardware costs as the premium for the agreement, and offering one-, two- and three-year options. Those agreements take care of common issues such as user error, network configuration, hardware failure, software updates, and anything with DirecTV, Apple TV and power.
“We are very excited about the ability to sell remote management of our systems. It is something that helps us provide and higher level of service and improves our clients’ ability to see how their investment is working. We see a huge opportunity with protecting your investment in technology,” says Burke.
Customer Outreach — At the end of every project, Texadia project managers send each client a survey. Burke says the purpose is twofold.
“The first reason is so we can get paid, and the second is to make sure that we met and exceeded our client’s expectations,” he says. “We want to get their feedback — good or bad.”
The survey also uncovers any necessary training issues the customer might need with the operation of their system. The message to the client is that the integrator is taking responsibility for the system. “We don’t want to be just a vendor. We want to be a partner. So we really focus on building a relationship that way,” says Burke.
In addition, the survey is used internally for training purposes. Burke has a long-term goal to monetize the survey results for technicians. Currently, however, the survey results serve to recognize kudos given by a client to a particular employee.
“We brag a bit about the technician. They’re great emails to send out. It makes me very proud. Some of our people go above and beyond. I like to reward people that do great things. I think it’s contagious,” says Burke, who also rewards employees with special perks like tickets to Dallas Mavericks, Stars and Cowboys games.
Employee Utilization — Depending on the project, Texadia targets an employee utilization rate of 85 percent. (That means 85 percent of employee manhours are billable.) That is well above industry averages that hover around 60 percent. “It will fluctuate depending on how the project goes, but the key for us to be successful on a project is gathering a lot of information from the sales and engineering side, and communicating it effectively to installation and project management,” says Burke.
The company has implemented a “data dump” kickoff meeting with the whole team for every project where information is shared, from the client’s name and address to what to look out for in a certain area of the home from a construction standpoint depending on the project’s progress.
“Taking that extra hour to sit down, make sure we’re all on the same page, and make sure our design is good helps our technicians to be more successful. Those guys get thrown to the wolves a lot, and they have to think on their feet. But the more information they have, the more prepared they are, the higher the chance for their success,” explains Burke.
Organizationally, Texadia is structured with multiple project managers who oversee lead techs, CEDIA Level 1 and Level 2 certified technicians, and then junior techs. The firm recently hired a person whose sole job is to mentor the technicians, find the “holes in their game,” and help them improve on everything from rack building to programming the control system interface.
Profitability — For residential jobs, Texadia targets earning between 25 percent and 32 percent profit. It varies based on the relationship with the builder or client.
“The bottom line is that anybody can go to Google and find out what a panel costs. I tell my clients that if they buy the equipment on their own, ‘If it breaks, it’s your problem. You bought it,’” says Burke, noting that he likes to earn between 10 to 12 points in margin on control equipment.
“Where we make money is on the networking and back-end switching. That’s a component that can’t be shopped on the Internet,” he notes.
Burke says clients actually push back more on the line-item cost for project management than they do on equipment costs.
“We try to sell them on the value of our labor, then get the opportunity to do remote management. To me, that’s the golden ticket in our industry,” he says. “It costs me $100 to roll a truck. I’ve got gasoline, a vehicle, and an employee. But if I can reset a system from my phone or desktop, everybody wins.
“We have to come up with a way to monetize that and create recurring revenue from our customers. That’s going to be critical for our industry,” he adds. “We’re in the networking business. Everything we do is on the network. If it’s not, it should be.”
Ultimately, Burke says the success of the company is due to his staff.
“The reason we are successful is because of the people that work for us. We really value our employees. We try to give them the opportunity to grow, put them in situations where they can be successful. And enjoy life — that’s a huge thing for people that work for us.