Compaq Rings In Phone Sales By Telephone
Sydney Morning Herald
Monday July 7, 1997
One top computer vendor is going electronic to cater for the growing number of people who prefer to shop by phone KIRSTY NEEDHAM reports.
COMPAQ will introduce over-the-phone sales of its product this week through a national telemarketing reseller, TM Direct. The move has been described by the computer manufacturer as the expansion of its distribution channel to cater better to the rapidly growing small to medium business market, and it denies it is shifting to a direct sales model in the style of Dell and Gateway 2000.
This expansion will see Compaq introduce sales over the Internet by the end of the year, with an Australian Web site to launch this month, says Compaq Computer Australia managing director Ian Penman.
Aimed at small to medium enterprises (SME) wanting one-off sales of computers or additional components, TM Direct will offer the full range of Compaq products other than communications and server product requiring accreditation. Commodity notebooks and desktops are expected to be the focus of sales.
"There is definitely an emerging market segment of customers who prefer to purchase over the phone," says Terry Scerri, Compaq's director of customer support and services.
Compaq sees the telemarketing service as addressing customer complaints that it was too hard to buy additional components such as CD-ROM drives or memory upgrades.
It expects to win back incremental sales opportunities that were being lost to third-party suppliers.
"It is often difficult for a very large reseller to have the capacity to address government and corporate requirements, and then suddenly to respond quickly to a small business or individual who is saying, 'Ex cuse me, I would just like an 8Mb memory module'," says Scerri.
Compaq is targeting SME as it sees cutbacks to government sales in a trading environment Penman describes as difficult and "margin-threatening".
"We used to do between 25 and 30 per cent of our business in government but we are not doing nearly that sort of volume this year," he says.
"We have had to make it up in other areas and SME is a good example. That is part of the reason why we are expecting a lot from these initiatives."
But buoyed by overall shipment volumes for Compaq Australia and New Zealand which he says were up 30 per cent this June over the previous June, and shipping 1,000 servers in May and June, Penman aims to grow the SME segment to up to 50 per cent of Compaq's business. It now contributes 15 to 20 per cent of sales.
Market analyst William Christie of IDC says that while education and government spending on computers has fallen, the greatest growth in the Australian market has come from the SME and home segments.
"The medium business segment has 6.9 per cent projected growth this year over last year and small business 17.1 per cent, so you can see why they are targeting that area," says Christie.
"They feel they can offer an increased service that will work better than existing channels. They will support the channel, but offer an additional service."
A similar telephone call centre was introduced by Compaq in Britain this year to improve customer service to the SME and home markets with an investment of $25 million.
Compaq Australia, however, will only provide training to staff employed by TM Direct, which is part of the Cellarmaster Wines group.
The telemarketing centre is being positioned firmly as a reseller only, and staff will answer the phone as TM Direct.
"We don't in any way want to (decrease) the importance of the existing channel, because that has made us number one and they are doing a great job for us," says Penman.
Compaq says it is giving the customer the choice, and advertising will carry a 1300 telephone response line which will direct the customer to a traditional reseller or the telemarketer.
TM Direct provides outsource telemarketing from headquarters in Sydney's eastern suburbs to a range of companies selling products from vitamins to computer software.
An exclusive deal will see Compaq as the only IT hardware company it represents, and a team of staff dedicated to the Compaq business.
TM Direct general manager Martin Daine says: "The final number of staff will depend on how this is received in the marketplace.
"We have high expectations. This is a business-to-business arrangement initially, but with people becoming more telephone literate we will be filling a market niche."
Computer vendors have been carefully examining direct sale channels after watching the global success of companies such as Dell and Gateway 2000, whose business has relied solely on direct mail and telemarketing and recently expanded to Internet sales.
By the year's end, Compaq customers will be able to shop over the Internet with a Web site enabling them to configure their own machine, have their purchase loaded into a cyber shopping basket and delivered to their door.
"When we do have all the tools which are currently under development it will be a really great asset for customers and Compaq," Penman says.
"But to be honest with you, do I think many people in Australia are ready to do that on the Net?
"Not yet. I think we will be right on time. We will have ours before the end of the year and I think 1998 will be the start of people actually using the Internet to purchase things.
"I don't purchase anything on the Net yet because I'm not convinced it's safe and all the firewalls are in place to protect my information and my money."
© 1997 Sydney Morning Herald