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FAST-GROWING UPGRADE CORP. SEEKS EXPANSION SITES

Upgrade Corp. of America is probably the fastest-growing company in Buffalo that you've never heard of.

In less than two years, the Buffalo computer software sales and service firm has more than tripled its work force to 230 people, despite a weak economy that has stunted growth at most other local companies.

Upgrade expects to handle transactions worth about $85 million this year, more than double the $42 million it handled last year, says Jordan A. Levy, the company's president.

The company, which has offices at 699 Hertel Ave. and a small distribution center in California, also plans to open a distribution center in Fort Erie, Ont., in June so it can ship software and other computer equipment for its clients' Canadian subsidiaries.

And the company is looking for a site for its second Buffalo-area location, which it hopes to open during the fourth quarter and which eventually could employ another 76 workers.

In a sense, Upgrade is finding itself in the right place at the right time. The firm has broadened its slate of services beyond its original software telemarketing and distribution functions to include technical support and customer service.

"We are really an information service company," says Levy, who founded Upgrade in 1990 with Ron Schreiber, the firm's chairman and a colleague from the days when they started Software Distribution Services in Buffalo.

While the economy struggles, computer software companies are trying to cut their costs as much as possible, and one way they're doing that is by having outside companies, like Upgrade, handle their telemarketing, distribution and customer service tasks.

"Outsourcing is becoming more and more important in the computer industry," Levy says. "Our biggest competitor is in-house. Do they do it themselves or do they hire someone to do it for them?"

With consumers already used to getting the type of quick and efficient service offered by mail order houses like L.L. Bean and Spiegel, Levy says the computer industry is being forced to improve its customer services, which is why many software firms have turned to companies like Upgrade.

As a result, Upgrade now handles about 12,000 telephone calls per day for its 75 clients and processes about 5,000 to 5,500 orders daily. In all, the company expects to process about 1.7 million transactions this year, ranging from taking and filling orders to processing the payments or answering questions from customers.

And with personal computer manufacturers beating each other up with one price war after another, more people are moving into the market for equipment and software every day. "It's been fabulous for us," Levy says.

That's because the spurt in personal computer sales also is increasing the demand for the services that Upgrade offers, since those new computer owners often are novices who need more help to get their computers and software running properly, Levy says.

The company started out almost three years ago primarily as a telemarketing firm that software companies could hire take and process orders whenever they came out with a new and improved version of some program.

Upgrade, using the software company's name so customers would think they were dealing with them directly, would take and process orders that were generated by direct mail campaigns or advertisements touting the new programs.

That service proved popular and Upgrade soon was doing business with some of the biggest names in the software industry, like Lotus Development Corp., Apple Computer Inc. and Sun Microsystems Inc.

But that upgrade business now accounts for only about 35 percent to 40 percent of Upgrade's revenues. Instead, about 60 percent to 65 percent of the company's business now comes from Upgrade's direct marketing and customer service programs, Levy says.

And Levy says the company now is trying to move into new areas that it thinks have good growth potential.

One of those areas is registering customer names so software companies can compile a more complete list of the people who have bought their products. Levy estimates that only about 25 percent of software buyers send in their registration cards, but Upgrade thinks its on-line system could improve response rates and cost less than the traditional methods.

Levy also thinks Upgrade could get some new business if computer companies take advantage of the increased memory capacity of personal computers by loading software onto those machines' hard drives at the factory.

Once the computer is up and running, the user then could try out the software for, say, three days before it would automatically shut down, Levy says. If the computer owner liked the software, he then could call Upgrade to get the code that would give him full-time access to the program after he had paid for it.

Upgrade also has set up a 20-person Advanced Products Division that is designed to handle marketing and customer service duties for more complex software packages. The company also plans to establish a group that specializes in Apple's Macintosh computers, Levy says.

Just keeping up with all the changes in technology and new products requires constant effort, which is why Upgrade's employees spend about six hours a week in training sessions to learn about the new products they'll be handling, he says.

"The industry is changing faster than the weather in Buffalo," Levy says.

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