Changes To Compaq Warranty Reimbursement Schedule Irks Solution Providers
By Scott Campbell
CRN
Houston - 2:51 PM EST Fri., Dec. 21, 2001
Compaq Computer lowered warranty reimbursement rates by as much as 60 percent to authorized service providers.
The End User Replaceable Parts (EURP) II program is aimed at getting end users to replace some internal components themselves.
Service providers still receive reimbursement if the end user installs the part, but they are uncomfortable asking their end-user clients to open up systems.
"It puts us in a difficult situation with customers. I don't want to say to a customer that I have a relationship with, 'You can replace it yourself.' That's a problem," said Jane Cage, owner of solution provider Connecting Point, Joplin, Mo. "It's indicative that Compaq is not as interested as they once were with solution providers."
As an example, a Compaq Premier partner received $150 to replace a hard drive under the old format. Now the service provider would receive $60 if the part falls under Compaq's EURP II list, regardless of whether the end user or the partner does the work.
Compaq created the EURP category last year to entice end users to replace their own mice, keyboards and laptop batteries. In September, Compaq created EURP II for hard drives and other internal components such as CD-ROM drives, memory boards and PCI boards.
But many solution providers did not realize the change until they received reimbursement checks last month for much less than they expected. Compaq did not adequately explain or promote the program, solution providers said.
"If you expected $5,000 or $10,000 and you get $3,000, that's a huge change," said Leonard DiCostanzo, president of Turnkey Computer Systems, Staten Island, N.Y.
Complicating matters, said solution providers, is that they have not received a master list of parts on the EURP II list. Partners must input the part number on Compaq Service Network's Web site to determine the EURP status.
"I asked them for a list and they said there is no list," said John Azzinaro, president of Networking Technologies & Integration, a Kenilworth, N.J.-based solution provider.
Compaq calculated the reimbursement rates based on the expected percentage of instances the end user would do the job vs. the percentage of instances the service provider would, according to the company.
The move will lower Compaq's warranty costs and allow the company to be more price-competitive, said Walter Mello, director of North American Compaq channel service delivery.
"Partners that acknowledge this strategy and can modify their cost structure will maintain profitability while at the same time see us continue to price products more competitively," Mello said.
But solution providers said it could lead to poorer customer service because end users, especially small businesses, do not have the expertise to open the chassis and replace parts.
"This is like taking a new car to a dealer because it doesn't start and the car dealer says 'It's the battery. Do you know how to use the wrench? Because you have to put it in.' How would you feel?" Azzinaro said.
In a Compaq document titled "How To Do Business With Compaq," Compaq states that EURP II parts may require tools, a degree of technical ability or mechanical or electrical skills.
"I don't know of any other vendor that expects the end user to open the box," said Michael Semel, president of Chemung Computer, Elmira Heights, N.Y. "My customers are angry with us like it's our warranty. We spend a lot of time explaining Compaq's warranty."
Thus far, customers report a 91 percent satisfaction rating for EURP II, about the same as EURP I, Mello said. In addition, 98 percent of customers said they would use the process again, he said.
"In order for the program to be successful, our goal is that there is no impact on customer satisfaction," Mello said.
Turnkey Computer Systems still plans to perform warranty services on site, even if costs don't cover it, said DiCostanzo.
"We take the approach that we work for our clients," DiCostanzo said. "We'll still stick with Compaq, but it makes you wonder [if] they want us to recommend them or [if] they want us to find a better warranty reimbursement. We try not to jump based on vendors' plans, but it certainly gets in your head." |
