Two of EuroChannels 1994’s many panels clarified the challenges of direct marketing and some of the elements necessary for Europe’s 35,000-odd dealers to thrive in an ever-more-competitive environment. Anyone that thinks direct marketing means simply order taking is highly mistaken, said Ulf Sandmark, managing director for Dell Computer AB, in remarks during the Direct Channel – Boom or Bust? panel. Sandmark added that there are actually three types of direct sales: transactional (telephone based, medium to small accounts, products priced to move, standard, easy-to-install configurations); relational (large corporate accounts, priced to be discounted, custom configurations and integrations, production to order and advanced service, big volumes and complete product lines); and indirect sales to value-added resellers (face-to-face, customised, pre-installed solutions, advanced technology, specialised service, rapid order fills). In the session Dealers: The Formula for Success, Allan Mack, managing director for Datech Ltd, an AutoCAD specialist subsidiary of Frontline Distribution Ltd in the UK, said his company’s survey of 1,000 end users showed them disappointed with the level of knowledge of dealers. The survey respondents ranked their top criteria for selecting, or remaining loyal to, a dealer. Good post-sales support came first, followed by fast service response, ability to solve problems, and understanding of the user’s requirements. Contrary to popular opinion, he said, price came only seventh in importance. Datech drew several conclusions from the survey, Mack said. If you’re not already big as a dealer, you probably won’t get big these days, so it’s probably a good idea to focus on a niche. Furthermore, he said, get out of box shifting and, if you outsource anything, outsource logistics. Outsourcing technical support reduces costs further, but it also reduces customer dependence on you, and we think it’s something the dealer should be doing, it’s a core competency, Mack said. Mack pleaded with vendors to devise and keep a clean channel. Don’t sell direct: your cost structure can’t handle it, so why bother? he said. He also said vendors waste too much effort today haggling and managing their channels and that they should focus more on enabling dealer differentiation. Kenneth Ratcliffe, president and chief operating officer for US-based PC Connection Inc, contended that all of this talk about dealers becoming lean and mean is like putting lipstick on a chicken. There will be consolidation; the real issue now facing the channel is that it cannot support three tiers. Phillip Howells, managing consultant for European distribution channels at UK-based Romtec Plc, disagreed. I, in fact, think the channels will get more complex rather than less. It’s easy to forget that we’re a young industry and we have a long way to go to developing multi-tiered distribution channels. Indirect will play a role; the question is to what extent. We shouldn’t, however, plan for direct [sales] to go away. – Marsha Johnston
