Social Coupons, national companies and our struggling local economy (part 1)

Money tunnel

Last week the Lawrence Journal World ran a headline story about how our local economy is losing out on revenue due to Lawrence residents buying from outside our local community.  This isn’t some dry national statistic, but a reflection on our behavior as residents and our control of our local destiny.  I’ve got a lot to say on this, obviously 🙂

Of course, as a computer repair person in Lawrence Kansas, this top category interested me most:  Computer Hardware, software, and supplies.  Ouch.  I feel that one.  This year more than any other year I’ve been in business, competition has been incredibly fierce for your local technology dollars.  As many customers know, I don’t sell computers so I don’t really have a stake in that area, but obviously I have a particular interest in the service part (which most likely is part of supplies).

No matter where you buy your computer, smartphone, notebook, net book or tablet these days, everyone wants to sell you their support services.  National big-box stores such as Office Depot as well as computer manufacturers such as Dell, and even AT&T is selling you computer repair services.  Fortunately, as of this writing Sunflower/Knology Kansas’s Geeks on Wheels division is a local company with local employees, but that could change between the time I write this and I click submit.

With a recent change in the Apple Consultants Network, Apple Retail Stores are recommending a company called “OnForce” instead of, or in addition to,  recommending local Apple Macintosh Consultants like me directly.  That’s a shame on a variety of levels.  From a consumer perspective, your relationship is with OnForce rather than your consultant/technician.  When a potential client uses OnForce, the technician reports to OnForce and must follow their policies, even if this isn’t in the best interest of the client.  I don’t like that.  It’s not dissimilar to the clients I have who are doctors and tell me they must choose treatments and tests that based on what the insurance company authorizes rather than focusing on the best interest of their patient.  Sigh.

However, the writing is on the wall and if I want to maximize my ability to service clients provided from Apple Retail Stores, I must become a OnForce Service Provider.  In the few months I’ve been with the program, I’ve seen behind the curtain and noticed these national companies selling their computer services in their retail locations are using OnForce.  (Fortunately our local Apple Retailer:  MacXprts located inside iCafe does not have to recommend OnForce and will continue to recommend local consultants like myself and BestMacs) .

OnForce’s basic model is that service calls are dispatched to the first qualified technician to accept the call at the lowest possible price.  The technician is treated as an independent contractor.  The Lawrence resident uses the national provider (possibly Dell, Office Depot, AT&T etc), which contracts with OnForce, which contracts with a local provider.  You don’t need an MBA (I don’t) to figure out that each person gets their cut and the actual person doing the work gets a small percentage of what the end user pays.  I’m not supposed to tell you those numbers or whom contracts are with, because in this case OnForce acts as my employer not the end user.  This is only potenitally how it runs.  A hypothetical if you will 🙂

Therefore when you use a national company or a national retailer to get your computer repaired, it may be the same local Lawrence technician coming out.  However, a extremely large percent of the money and taxes leave the community.  Moreoever, the end user’s relationship isn’t with the local Lawrence company but rather the national company.

Ultimately the consumer gets the same product (at a slightly reduced cost sometimes), but that national company gets in the way of the provider’s relationship with the consumer while taking a large amount of money outside our community.

This is why I have concerns about Groupon, which uses a similar business model, but I’ll leave that until next time.

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