Study: Large Companies Favor Direct Channel for Computer Products

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A new study that measured customer satisfaction among the computer-products buyers at large corporations found that direct vendors Dell and Gateway generally did a better job of meeting or exceeding their clients' expectations than large corporate resellers like Compucom, GE Capital and Vanstar. Local, value-added resellers, however, fared almost as well overall as the direct channel in the study and exceeded the performance of direct vendors in some categories.


Technology Business Research Inc., a Hampton, NH, firm that conducts regular assessments of customer satisfaction and technology purchasing behavior, found that direct vendors ranked higher than both VARs and corporate resellers in 12 out of 16 categories in terms of providing customer satisfaction. The first quarter 1999 Distribution & Fulfillment Customer Satisfaction Survey included interviews with 330 end users -- primarily information-systems managers -- at U.S. companies with at least 500 employees. The new study is the firm's first effort at comparing distribution channels, following a test survey in the fourth quarter of last year.


The study queried the end users about the attributes that were most important to them in purchasing computer products and weighted those attributes accordingly in ranking the channels in each of the various categories .


"Both Dell and Gateway are consistently rated by their customers in the sample as significantly better companies with whom to do business than corporate resellers and, in most cases, over the local VARs," the report concluded.


End users said ease of doing business was the No. 1 criteria they used to gauge their overall satisfaction, followed closely by on-time delivery. Rounding out the top-10 criteria, in order, were off-site systems repair, ease of set-up, product availability, systems and networking configuration, on-site support response, hardware evaluation and selection advice, returns policies and parts replacement.


Direct vendors Dell and Gateway enjoyed strong advantages in several categories, including offering advice on hardware evaluation and selection, configuration of systems and networking, out-of-box quality, ease of set-up, accountability, parts replacement, off-site systems repair and overall satisfaction.


The direct channel ranked about the same as local value-added resellers in returns policies and in on-site support response, although both channels ranked higher than corporate resellers in those two categories.


The areas in which the survey respondents gave direct vendors weaker scores than other channels included volume discounting, ease of doing business, technical support response and on-site support expertise.


"Local value-added resellers [receive high marks in customer satisfaction] for similar reasons to direct channels," said Julie Perron, manager of primary research at TBR. "It is because of their ease of doing business and just basically their contact with customers. It appears that the large corporate resellers may be too large to do that."


The study did not assess Gateway's on-site support because the company only recently began contracting with vendors to provide this service, but Dell ranked poorly compared to other channel distributors in the category of on-site expertise.


"In Dell, there appears to be a disconnect between their on-site response and their on-site expertise," said Perron. "In terms of their response, they always do very well in the customer satisfaction study, but their expertise, that may be a problem with their on-site service partners, but we can't really pinpoint which one."


Dell uses several third-party service vendors to provide on-site support for its products, including Wang Global, Unisys and others. The company, which is based in Round Rock, TX, did not immediately return phone calls seeking comment.


In the weighted customer satisfaction scores, Dell led the entire field in overall score, however, garnering a score of 84.94 out of a possible high score of 100. It was followed closely by local value-added resellers, who scored 83.87, then by Gateway, with 83.66. Inacom ranked the highest among corporate resellers with an 82.68, trailing Gateway slightly and ranking almost as high in many categories as Dell, Gateway and the local value-added resellers.


In measuring Dell against Gateway, the survey found that Gateway had no strengths against Dell, but that Gateway did exceed customers' expectations in many categories. Dell was reported to have the edge over Gateway in volume purchase agreements and technical support response.


A second TBR study comparing customer satisfaction with the major computer manufacturers also ranked Dell No. 1 in the first quarter, but that study corroborated findings from the channel study revealing that Dell's customers were less than satisfied with Dell's on-site support expertise.


"That's the first time we've actually cited a weakness for Dell," said Perron.


The second survey showed that Gateway's main weakness in customers' minds was its lack of volume discounts, although Perron pointed out that Gateway's own customers don't regard volume discounts to be as important as other attributes.
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