Acer sets its service record straight
At Acer's annual global press conference, the vendor revealed that the UK market is a core focus for the company and explained how it had invested heavily to improve its much-maligned service levels. Laura Hailstone reports from Monaco
Following better than expected growth during the second quarter of 2006, Acer now ranks fourth in the global PC market behind Dell, Hewlett-Packard and Lenovo, according to the latest figures from analyst Gartner. The global PC market posted growth of just 9.7 per cent during Q2 while Acer achieved 35.7 per cent growth – not a bad 30th anniversary present for the vendor.
Speaking at this year’s global press conference at the Fairmont Monte Carlo hotel in Monaco, Acer president Gianfranco Lanci, said: “Revenue growth and profitability remain a major concern for the entire PC industry; economies of scale will become even more important and consolidation will continue with a limited number of players remaining in the coming years.
“Application-based products, new form factors across all segments and connectivity will become the key differentiators of vendors in the future.”
Acer has identified three macro areas it intends to focus on: mobility, enterprise and convergence. It has also reorganised its entire product range under four distinct user profiles: Home/Private Users, Professional and Small Business Solutions, Small and Medium Companies, and Enterprises, in a bid to simplify product selection for customers.
In EMEA Acer is currently the number three PC vendor.
“Our objective is to become the number two PC vendor in EMEA by 2008,” Lanci said. “It may be a little ambitious, but we are already number one in the notebook market in EMEA, number three in desktops and number four in servers, so we have a solid foundation from which to climb to the number two position.”
Acer also revealed that the UK, along with France, Germany, Italy and Spain, are its main focus areas for growth in western Europe over the next three years.
Speaking exclusively to CRN, Lanci said: “The UK is the largest market in western Europe and we want to grow our share in notebooks so the UK is a key part of our strategy.”
He added that the UK had been performing “very well” this year.
However, Acer UK has undergone its fair share of changes during 2006, starting with the resignation of managing director Paul Cook in January who cited “basic differences in the business model” as his reason for leaving (CRN, 13 February).
Acer UK is now jointly run by Semmy Levit, Acer UK country manager, and Gianpiero Morbello, Acer UK managing director and communication and channel marketing director for Acer EMEA.
“Semmy is really running the UK operation,” Morbello said. “He is living in the UK whereas I only spend two to three days a week in the UK. All of Acer UK report to Semmy and he then reports to me. I take care
of the financials and the relationships with some customers. We work quite closely together and make some business decisions together. We have been working together for a long time so we know each other well.”
Asked how he has found stepping into Cook’s shoes, Levit said: “The nine months in my new role feels like nine weeks – everything has happened so quickly. We’ve moved to larger premises in a brand new building and have made a few staff changes, building up the team and now we are almost there.
“It is going very well, but it is also challenging. It is definitely a big task but I’m proud that I have this challenge in the third largest market in the world.”
Levit’s personal task was to achieve the number two position in the notebook market by the end of Q4 2006.
“We did it by the end of Q2 2006,” Levit said. “We are very happy and proud of this. It is a tough market and it was a tough period. To say that the mission has been completed is wrong, but we are in line with our targets, which is important.”
Acer UK has shaken up its distribution channel this year, beginning with the conclusion of its relationship with Midwich in May. It replaced Midwich with Micro Peripherals (Micro-P), added VIP Computers to its stable, and appointed Enta Technologies as a sub-distributor for Acer notebooks.
“We are happy with the first results from our new partners,” Levit said. “I don’t see us making any other changes to our distribution during 2006. However, at the beginning of 2007 we will review our distribution model, as we do every year.”
Acer UK’s current distributors comprise Computer 2000 (C2000), Northamber, Micro-P, ETC, Ingram, Lynx and VIP Computers.
Earlier this year, there were reports that Acer’s distributors were unhappy with the amount of stock they were asked to hold by the vendor.
Levit explained: “The amount of stock we had at the beginning of the year was due to the fact that we had a great ‘back to school’ in 2005. Everyone in the industry then expected a good Christmas. However, the festive period was not that good, so at the beginning of January we had more stock than normal. This became an opportunity for our distributors and they sold it all.”
Morbello added: “Our business model is based around about six weeks of stock. Most of our distributors ended up making twice the revenue in Q1 than they normally do so it actually became an advantage, not a disadvantage.”
Darren Lewitt, divisional director at Midwich, said: “We dealt with Acer for 10 years. The naivety of Acer is that it thinks the UK is the same as all the other markets, which is not the case. Acer’s business model will not last long term in the UK.”
However, Levit said: “I’m sad that we are no longer working with Midwich, but we had a change of strategy – to push on volume – and sadly Midwich had different plans, a different strategy.”
Steve Lockie, managing director at C2000, told CRN: “As an Acer distributor we do have to hold slightly higher levels of stock than we do with other vendors, but that is reflected in the terms and conditions we have with Acer.
“Over the past few months we’ve sat down with Acer and reached a really good level of working conditions. We needed to understand their new direction and they needed to understand us.”
Acer’s service levels have come under strong criticism from the channel over the past couple of years, however, at the global conference Acer revealed that it had made a significant investment in improving customer satisfaction.
Emanuele Accolla, Acer EMEA vice-president, admitted: “Our average repair time was very bad 18 months ago. We had a crisis and couldn’t provide the necessary support, but we have since put in a huge amount of investment to rectify this.”
Acer now has 15 direct repair centres in EMEA that can handle up
to 5,000 repairs a day. It also has six direct call centres manned by 250 employees who can handle 18,000 calls a day; one spare parts hub with 150 employees and structured web site support that can handle 40,000 downloads a day.
“We care about customer satisfaction,” Accolla said. “We have in place a directly owned customer service structure to serve our customers. We interact directly with our customers on after-sale support for a better understanding of their needs.”
Acer has implemented a customer satisfaction rating system with a score of one being unsatisfactory and five being very satisfied.
“We were a score of three on average 18 months ago and now we are more than four,” Accolla claimed. “More than 900 completed customer satisfaction interviews a month are carried out to obtain these figures.”
Acer said its average repair turnaround time is now four days; its average call centre response is 80 per cent and the average response with no delay is 50 per cent.
“Our goal is that four out of five customers are given an answer to a problem within a couple of minutes,” Accolla said.
Levit said: “If you look at our entire product portfolio, it is clear that our strategy is to sell more than one product to the end-user. If we cannot guarantee them a good level of after-sales support they will not come back to us. That is why we are measuring levels of customer satisfaction in order to be sure that we are giving them the right level of satisfaction. We are benchmarking it on a monthly basis.”
Morbello added: “In the UK, service is a key factor. Unfortunately if you burn a reseller it is really hard to win them back. We need to change the perception of Acer’s service and get the message out to resellers that Acer’s service level has improved.”
Mike Gammie, IT services development manager at VAR Misco, said: “I’ve checked with our customer service team and they said that 18 months ago they couldn’t even get through to Acer on the phone and now they can, so there is a slight improvement. However, they would still only give Acer a two on their satisfactory rating.
“The main problem is that Acer says a PC will be repaired in 72 hours, but neglects to say that this is only the case if the parts are in stock. We then tell our customer that it will be fixed in 72 hours and when it isn’t the customer complains to us. We then have to make a commercial decision which is often to give the customer their money back.”
Lockie said: “It’s no secret that Acer’s service levels weren’t very good 12 months ago, but now they have got better.”
The SME market has been the core focus for Acer UK this year and remains so. “Over the next 12 months we will continue to grow in the SME market and to continue to push in the notebook sector,” Levit said. “Also we will continue to develop the other product lines that we are focused on: desktop – both consumer and commercial, and also TV.
“In the first six months of this year we traded with about 4,000 resellers, which is a great achievement. In the UK there are 6,100 resellers so we still have some more to reach.”
Acer UK has about 400 certified resellers split between its Acer Point and Acer Active channel programmes. Acer Point resellers are partners with either a shop front or demonstration facilities who are expected to use most of their display area to promote and demonstrate Acer products. Acer Active partners are business-to-business VARs addressing the SME market who can generate a minimum revenue for Acer of £60,000 a year.
“We’d like to have another 100 partners by the end of the year split between Acer Point and Acer Executive, focusing on the SME and consumer markets,” Levit said. “We are happy with the number of resellers that we have in the other areas.”
Acer UK also has another 100 resellers split between its Acer Solution and Acer Executive programmes.
Stressing the point that Acer is committed to remaining indirect, Levit said: “If VARs want to expand their business and grow in a profitable way, they know they can do it with us. Our plan is not to stay in the same position. Growing the way we are, which is faster than the market, gives resellers the opportunity to grow faster than the market as well and that is the value we can give them.”