Quality Matters

Partners, who comprise the vital link between vendors and customers, have
once again revealed their preferences in deciding the fate of IT hardware and
software vendors in the country. The third country-wide Channel Satisfaction
Survey, 2001 was conducted by the eTechnology Group@IMRB on behalf of Dataquest
Channels India (DQCI), a sister publication of Dataquest.

The good news is that channels partners seem to be happy with their key
vendors, having rated them at 3.59 on a scale of 1 to 5, where 1 is ‘poor’
and 5 is ‘excellent’. This feedback should warm the hearts of vendors
because partners have not blamed them at a time when the market is reeling under
the effect of a recession.

Before understanding the satisfaction levels of channel partners with regard
to various parameters like product quality, price, warranty, schemes, support,
etc, it becomes necessary to find the key vendors that channel partners have
chosen to do business with. Key vendors are the ones that topped most channel
partners’ lists when asked to select their most preferred vendor.

Systems

According to the survey, HP is the vendor preferred by channel partners in
the systems category. The second vendor in this category is Compaq followed by
IBM and HCL in the third and fourth positions respectively. Surprisingly, unlike
last year, where assembled systems formed a major chunk (with almost 35% in its
fold), this year, partners have preferred to do business with brands. Of the 539
respondents, almost 40% deal in HP systems, 31% in Compaq, 11% in IBM, 7% in HCL
and 11% in the rest.

Peripherals

In the peripherals category, HP and Samsung turned out to be the most
represented brands with 39% and 30% respectively. HP with its printers and
Samsung with its monitors managed to keep up this lead.

Epson and Wipro, with only 12 and 9% representation, appear to be losing
their recall value among partners. Besides, the entry of a large number of other
players, has made it all the more difficult for big vendors to keep up their
earlier shares.

Samsung’s entry into the printer market has threatened HP’s hold. Another
player who intends to be aggressive in this segment is Canon, but is yet to make
a dent in the pie. Possibly by next year, we should see a major change in
channel partner preferences.

Networking

In networking products, D-Link has maintained its popularity among the
partners for the second consecutive year. However, what is surprising is the
entry of the Dax brand in the second position, dethroning Intel from the
partners’ shelves. D-Link has maintained its lead with 44% representation and
Dax has 19%. Given the fragmented networking products market, there is a host of
vendors represented by tiny fractions of channel partners, which clubbed
together, form a major chunk of 37 %.

Consumables

Here again, HP takes up the highest representation of 53% because of its
large printer market share. Epson is represented by 19%. In this category, the
ink re-filling business also plays a major role. While HP and Epson have the
largest share in the consumables market, the others form 28%.

Power supply

APC topped the power supply category with 38%, followed by TVSE at 14%. The rest
comprises other vendors from the organized as well as the unorganized sectors.

Operating systems

In the case of operating systems and other software, the leader is none
other than Microsoft. The second most preferred vendor in the OS category is
Linux and in other software category - Oracle.

Last year, Microsoft had lost its position to Tally as the most preferred
vendor in packaged software. This is possibly because of the high instance of
piracy in Microsoft products. The 2001 survey results corroborate Microsoft’s
statements that it has managed to curb piracy to a large extent.

In the OS category, Microsoft has a representation of 69% and Linux 10%. The
entry of Linux vendors like Red Hat, Caldera and Suse has improved Linux’s
share because of its free availability and also the partners’ willingness to
support it.

To maintain a healthy relationship with channels, it is important for vendors
to understand the satisfaction levels of their partners. Resellers can choose to
support one vendor over the other, depending upon how satisfied and enthusiastic
they are about a company’s product, programs, margins, sales growth and
potential, service quality and involvement in helping them grow their business.

At the same time, it is crucial to find out the level of importance that
partners give to various parameters while measuring satisfaction levels. Giving
least importance and being highly satisfied with a particular parameter would
not mean much to vendors. But vendors could use this information and divert
their efforts from such low importance activities to where it is required.

Similarly, given below is a chart listing the level of importance and
satisfaction in descending order. Here, various product categories were clubbed
together.

According to the survey, product quality is the most important parameter for
the channel in the selection of vendors and products. And the good news for
vendors is that channel partners are the most satisfied with product quality
giving it a score of 3.94. At the same time, vendors need to strive towards
perfection as the level of satisfaction is just about to touch ‘very good’,
and is nowhere near the ‘excellent’ level.

While product quality preference remains very much similar to last year’s
survey, a small change appears in this year’s results. Unlike last year, where
channels had given lower importance to the pricing factor, this year, this
particular parameter has come up to the second position. However, the
satisfaction level is at the fourth place at 3.56.

Partners have ranked customer preference/demand/pull as the third most
important parameter. Though this parameter is not directly dependant on vendors,
partners feel it is the vendors who should create the brand value and goodwill
in order to spur the demand/pull.

continue....

The criticality of customer preference is built on factors such as the
product quality and support. Most vendors have now realized that a good quality
product and a good support network will build the brand on its own.

While partners prefer doing business with products that have enough customer
demand, the survey has revealed that partners are satisfied with the existing
customer preference/demand/pull with a score of 3.64 points.

By giving the fourth position to updating technology in products, partners
have indicated that they consider this parameter as one of high importance. And,
from the satisfaction point of view too, partners have put this parameter on par
with 3.64 points.

Partners have given lower importance to some of the parameters. But their
satisfaction levels for these are marginally higher. Though this appears to be
on the positive side, the satisfaction levels on their own are on the lower
side. This is true especially with factors like the openness of top managers
from the vendor side and innovative channel meets where the score stands at 3.04
points each and needs to be worked on by vendors.

Partners have given greater importance to warranty programs putting this
parameter at the fifth rank in terms of importance, compared to commercial terms
at the eighth rank.

continue...

Channel training support as a critical element in choosing the product, is at
the 11th position. This means that a good number of channel partners felt
training is not at all critical. If vendors intend to use this as a reason to
cut down on training overheads, then beware! The satisfaction chart has a sad
story to tell.

What the channel has indicated is that vendors have failed to impart the
required training. The channel has expressed its dissatisfaction over the
training parameter giving it a score of only 2.94, the lowest in the entire
survey.

The survey also indicates that vendors need to put in more efforts in
customer education programs, innovative channel meets, post-sales service and
promotional schemes. The survey shows that there is a lot of scope for vendors
to increase the satisfaction levels of partners in these parameters. Last year’s
survey too, had indicated dissatisfaction in the areas of service and technical
support.

A challenge for vendors

The Channel Satisfaction Survey - 2001 provides critical insights to vendors
that will contribute to the development of a vibrant channel leading to the
growth of IT business in the country. So, it is up to the vendors to take up the
gauntlet and strive to satisfy their partners based on this valuable feedback.

Nelson Johny in Mumbai/DQCI