Compaq Computer Corp., Houston, is consolidating its Internet-selling initiatives into a single operating division, and has named Kenny E. Kurtzman the division's vice president and general manager.
According to analysts, the consolidation is an effort by the company to fortify its leadership position against fast-growing direct marketers like Dell and Gateway.
Kurtzman, who most recently was vice president of Compaq's Small and Medium Business division and led the launch of the company's Prosignia family of products and Internet services, will be responsible for selling not only Compaq products but services ranging from personalized Web pages for individuals to extranets for multinational corporations. He will report to Enrico Pesatori, senior vice president of corporate marketing.
The company launched an Internet-sales effort for its personal computers in November, and it now generates more than $1 million per day in online sales, according to some reports.
Kurtzman spoke with DM News on Feb. 1, the day his appointment was announced.
DM News: What are the advantages that Compaq will receive from having a dedicated Internet division?
Kenny E. Kurtzman: First of all, it puts focus on selling Compaq products and services over the Web for the whole company. It creates a common architecture, look and feel and then it makes the business measurable both in terms of revenue and costs. One of the claims of the Internet is that the selling model is more efficient. Well, unless we really create a dedicated organization and understand the costs and measure them, as well as the revenues of the products and services going through them, then it's hard to measure and understand what impact we're having.
DM: Can you talk about the results so far from your online efforts?
KK: A lot of people define Internet sales differently — a lot of our customers will get online and then call the company and make a purchase that way, or they go online and look and then go to a reseller. The real, true Internet sales are currently only about 8 percent to 10 percent of our direct business, and I'd be very surprised if our competitors don't have something similar to that. They claim that they have 40 percent or 50 percent, but that includes Internet-enabled. We're measuring our Internet business based on true Internet transactions.
DM: And you are charged with growing that piece of the business?
KK: Well, there are a couple of things. We want to be the market share leader in true Internet sales. Today we're not. We think we can become the market leader by the end of the year 2001. The second objective is to provide, through Compaq.com content, information about technology, services poured over the Web and make it really easy for consumers to use and work with our product. The first step is just selling the basic products and the services we have today, the second step is to develop more content that's valuable to the customers, and finally, by doing this, we want to create a relationship with the customer that's different than the one we have today. Our heritage is selling PC products on a transaction basis. Where we're headed is offering the customer a complete relationship.
DM: Have retailers objected to Compaq's increasing presence on the Internet?
KK: The reality in the market is that customers buy in different ways. Some want to buy retail, some want to buy over the Internet, some want to buy through other resellers. Our philosophy is to give the customer the most choice. Our customer choice model is something we announced back in November, and that's something we believe is critical to the evolution of the industry. Having said that, there often is a role for our resellers even when the customer chooses to buy over the Internet … What we will actually do is bring the seller in after the sale to provide the support and services the customer needs. One of my objectives is to tie the channel into Compaq.com in a way that givers customers more value and supports the resellers.
DM: How will the product divisions be represented within Compaq.com?
KK: I haven't completed the organizational structure, but my thinking is to organize around customer segments rather than products so that we'll have a focus on consumers, a focus on SMB, a focus on large and global accounts and a focus on government and education, and that's really a transition that our whole company is making — from a product-based company to a customer-focused company, and I think the Internet is the right place to lead that.
DM: How are you marketing to your database of past purchasers?
KK: We've been doing direct mail campaigns and outbound marketing to our Internet customers already. One of the things we've been focused on is increasing the attach rate of the Internet services that we've bundled with the products. We've got a 30-day free trial going on those services, and we'll call them back and see if they've used the services, and if they want to buy the services, they can.