'We see a lot of business coming from channels than the Web'

Armed with a degree in business management from Delhi, Neelam Dhawan joined HCL in 1982. The rich experience at HCL made it easy for her to join IBM where she came to head the PC division, before moving to Compaq in December 1999. She came to Compaq at a time when the company had bought Digital and both organizations were trying to understand each others' business and move forward. With all her previous experience, Neelam could handle the situation well and move forward quickly. Neelam describes her stay at Compaq as a good learning experience so far and speaks to CI on her plans for the channel.

What is in store for Compaq channel partners in the coming quarter?

We end our year in December, so we are now planning for the coming year and not just the next quarter. We have not frozen any changes in our channel policy and not too many changes are expected this year because a major change was undertaken last year. We follow a distribution strategy that is two-tiered. We partner with distributors and they further work with the resellers. 

We also have systems integration partners, who we work with directly. This is that category of resellers who directly sell to customers. They procure the hardware from us, package a solution around the product, which could include networking or any other service. Thus, we work through a distribution model and the SI model. 

We also have relationships that focus only on a particular product line. For example, there are partners who focus only on servers and there are partners who focus only on notebooks. These are the two primary categories that we address here. These partners not only focus on the product but also understand the technology and then sell the products. We drive this structure through events, programs, special offers, schemes, quarterly rebates and other such things.

How do you take care of the training needs of your channel partners?

We do have training sessions for our resellers. We hand out the contract to a third party to train the resellers in selling skills, negotiation skills and other soft skills. So, all the non-technical training is done through them. And we organize product-training sessions every quarter, throughout the country. This is generally a one-day or one-and-a-half-day program that we organize in eight cities to ensure that all partners can conveniently attend. 

How big is your distribution network today? And is there a focus to increase this number?

We have around 300 partners as of now. Our focus is never to expand numbers per se. We try to increase our channel networks after identifying gaps. For example, last year we realized that our presence in category A towns was good. But in category B towns like Bhopal, Nagpur, Indore, Vizag, Coimbatore, our channel was not actively present. So we undertook an initiative to organize road shows in these towns as well as empanel resellers there and train

them.

Once empanelled, we send them price lists, product information and other literature. So it all boils down to finding out the vacuum in our network. The number of channel partners that we have may not hold all that relevance for us. It is the reach that is more important.

What are your expectations from your channel partners?

If partners are computer-literate, it makes life all that much easier for us because they know the market and they know who the buyers are. But we require partners to be well aware of the geography in which we are asking them to do work.

Geography in the sense that he knows the customers in that geography. They must know big organizations in their area, have relationships with them, by selling EPABX machines or fax machines or peripherals or whatever. So as long as they know the buyers it is okay, they need not essentially be a computer resellers. But like I said, if they are resellers already, it is that much easier.

What are your strengths vis-à-vis the channels?

One the biggest strengths is our brand. Compaq, as a manufacturer of quality computers, is very well known. This is true in the industry and with the end customers too. So for a reseller to say 'I sell Compaq' helps him. So it is brand that customers recognize and associate with good quality. 

Besides, we also have a very wide range of products. We have a small business PC, hand held PC and servers. We have a wide variety of products and resellers have to decide what to sell. This also gives customers the choice to select what they want to buy. The sheer choice of products provides a wide customer base for the channel. We see a lot of business coming from channels than the Web. Whatever be the model, channels are very important to us and we are committed to making that revenue grow. We plan and devote a lot of time to see how their revenue can grow with us. 

What percentage of revenue are you looking at from the channels?

Nearly 70 percent of our revenue comes from the channels. 

Don't you think that the wide range products that Compaq has confuses channel partners?

We have a range of computers for the home segment - Presario and one for the commercial business environment - DeskPro. We sell the Presario range of PCs primarily through the retail channel. The objective of having two different lines is very clear because the needs are very different. 

For the home user, e-mail, surfing, playing games, movies, music, and some learning activities are dominant over any office environment application. They are more into graphics and sound. While in an office there are a lot of spreadsheets, lot of e-mail, lot of documents, not much of sound, not many graphics. So the needs are different. Thus, the global thinking at Compaq is that there should be two different products, one that focuses on the home and hence has the features that home users are most likely to use. 

We sell this range through our retail channel. While the commercial user buys machines in larger numbers, so the reseller can go and meet him. This may not be the case for a homebuyer. And the retail channel has its own peculiarities, there is a big fixed investment in real estate and overheads are higher. 

But ironically what happens is that if there is a special scheme running on Presario, and overlap of features exists, customers opt for Presario rather than DeskPro and vice versa. So customers don't mind taking a DeskPro home. 

There have been complaints that MNCs have begun to cut corners as far as quality is concerned to match the prices of assemblers. How does Compaq face this situation?

For Compaq, the policy is very clear, we cannot use any component that is not from a Compaq approved supplier. They are empanelled worldwide suppliers. So we cannot substitute a component in the country. So what you get here manufactured in India uses the same components as what you get in a Compaq machine manufactured in Singapore for instance. So across the world we have fixed suppliers for fixed components. We can't change that. So it is a continuous challenge for us to ensure that the customer pays the premium, as we are not at the same price point as the local assemblers, because he can substitute

components and bring prices down.

How do you handle issues related to warranty?

Our service model is very different. We have partners who are service providers. They are the ones who finally provide the service. The spares are stocked by us as well as by partners. So if partners do not have a particular spare, all he has to do is log on to the Net and requisition for it. 

We also have a call center, wherein a customer can directly ring us up and register his complaint. We then inform the service provider, who attends to the call. We however monitor the entire process. So this translates to the fact that wherever the customer buys from, we are there to service the product. The customer does not even need to know where the service provider is located. All he has to do is call us. So the manpower is with the service provider and some spares, but predominantly, we stock the spares in eight locations across the nation. 

What are the terms and conditions that you lay down before appointing channel partners?

We enter into a contract with all our partners. There has to be a commitment from partners towards promoting Compaq. This will be in terms of people they employ, the kind of training they will impart to their people and the kind of accounts that they will give us. We do a reference check on the resellers before we appoint them. After we have assessed their competence, their commitment and their willingness to invest, we nominate someone from the organization to speak the partner on a daily basis to monitor their progress, motivate them and provide support.

Sylvester Lobo & Mohit Chabbra in New Delhi