The Transformation of ARG - Part 3

ASSOCIATION RESOURCE GROUP  (ARG)
Transformation leader: Greg Praske, CEO
Number of employees: 46
Year established: 1991
Original transactional business model: Telecom agent/subagent/master agent
Post-transformation business model: Voice and data network services consulting firm

How has your company benefited from the transformation away from a transactional business model?

ARG is celebrating our 20^th year in business and we’ve been blessed to experience our 20^th year of growth. We believe key to our growth is staying in tune with the needs of our clients — in other words, we need to constantly transform our company to meet the market demands.

In 2010, our year-over-year sales increased 62.4 percent. We were very pleased given the modest economy. Key to that growth was expanding services into our existing client base, which accounted for 52 percent of our total sales. Larger bandwidth services greater than 10MBps increased more than any segment of our business. Adding significant engineering resources and consulting on a broader range of services established ARG as a credible resource for midmarket and enterprise accounts. In 2010, we added our three largest accounts in our history. Our churn actually spiked a bit in 2009 and 2010. We invest a great deal in account support and retention. But, with companies going out of business or scaling back significantly, we saw our churn rate rise from 0.2 percent to 0.4 percent. However, when compared with typical industry churn rates in the 1.5 percent to 2.5 percent range, we're confident our value-add is translating well in our performance.

Through the second quarter of 2011, our year-over-year sales have increased 39.5 percent. This year, growth into our existing client base has grown to 68 percent of our total. Part of that result is from diligent marketing of services that we aren't currently managing. The other part is from expanding our consulting on cloud services. Data center, networks and large bandwidth services now make up 38 percent of our transactions and 52 percent of our new revenue. Our average engagement has increased 32 percent in total revenue. While the complexity of each project has increased, we are definitely seeing an overall improvement in scale. For the first half of the year, we're seeing the churn rate return close to our historical rate.

The talented team we've been able to pull together — through addition, training and development — at ARG has allowed us to aggressively grow in what is generally perceived as a tough economy.