BUSINESS-TO-BUSINESS: A better Connection

PC Connection keeps growing, with a new call center and service deal

Between mid-December and mid-January, PC Connection reorganized into a holding company, bought a call center, and cut a deal with DataSTAR Technology Group to sell its network support services directly to customers. The three acts serve one purpose: to allow the $1.06 billion computer cataloger to attract and retain more small and midsize business (SMB) customers.

The allure of the SMB market is clear: The margins are much higher than in the price-driven consumer business; there’s more repeat business than on the consumer side; and the SMB pie is huge. Robert Wilkins, PC Connection’s senior vice president, sales and marketing, estimates that more than 7 million companies have 100 employees or fewer.

But for all the advantages of targeting the SMB market, there are also two challenges: SMBs demand personal attention, and they require full technical support. “When you’re talking about selling routers and hubs, you have to have account managers,” Wilkins says, as such components of data networks are more complicated to buy, install, and support than computers.

Providing personalized support

As early as five years ago, Wilkins says, Merrimack, NH-based PC Connection began growing its corporate outbound sales organization from about 35 people to roughly 300 reps last year. Corporate outbound sales grew too, representing 47% of the company’s net sales by the end of 1997 and 53% by the end of ’98. Today, SMBs – including those that do not order through an account rep – bring in more than 80% of the company’s sales and are largely responsible for its 44% growth in net revenue last year.

Wilkins explains that while PC Connection has more than 100,000 SMB accounts, it has only enough account managers to support about 25,000 of them. By purchasing the Marlborough, MA, call center in January from El Segundo, CA-based technology products distributor Merisol – and offering jobs to more than 100 of Merisol’s call center staff – PC Connection is increasing its number of SMB reps to about 400.

On the technical support side, after working with several integrators over the past three years, PC Connection formalized a relationship with Melville, NY-based DataSTAR to sell the latter’s services directly. The DataSTAR deal isn’t likely to be PC Connection’s only relationship with a service provider. The cataloger is in talks with several digital subscriber line (DSL) providers.

In fact, the restructuring of PC Connection as a holding company was designed to better support such deals – as well as acquisitions. The new holding company consists of three subsidiaries: PC Connection Sales Corp., which includes the PC Connection and MacConnection catalogs; ComTeq Federal, which provides high-end products and support services to federal agencies; and Merrimack Services Corp., which provides service functions for the holding company and the other subsidiaries. This sort of structure typically allows the subsidiaries to operate independently; also, if one group should suffer a downturn, it would have less of an effect on the others.

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