Since 2013, HP has been striving to improve its customer purchase experience, moving from an open to an Authorized and then to a Qualified program for the resale of its original supplies in the US.
November 1, 2015 sees the next phase of the Qualified program, with resellers needing to fulfill a few new requirements, particularly in relation to how they sell HP supplies online. OPI caught up with Steve Sakumoto, HP’s VP and General Manager, US Supplies Sales Organization, for more details.
OPI: How did the move from Authorized to Qualified go? You reduced the number of resellers quite significantly, didn’t you?
Steve Sakumoto: The final number ended up at between 4,800-4,900, which was exactly to plan, and the whole process went very smoothly.
We did have a few one-off complaints, which would be expected when you’re cutting out roughly 3,000 resellers, but by and large it was a very successful transition – we had robust processes to manage the applications and people trained to handle that, and I think it paid off. Both the distribution partners as well as the second tier resellers all said that they thought it was a worthwhile thing to do from HP’s perspective.
OPI: Almost 40% of Authorized resellers failed to gain Qualified status. What were the main reasons for that?
SS: The minimum sales threshold of $15,000 over a six-month period was the primary criteria that eliminated most of those resellers. If you look at it from an overall perspective, I would say 99% of our business is from our top 1,000 or so resellers. So you can see we had a tremendously long tail with very little volume, and from a business impact the change was almost indiscernible.
OPI: What is the rationale behind the next stage of the Qualified program?
SS: When we first started this journey back in 2013, the fundamental strategy was to be able to deliver the best customer experience for purchasing HP supplies. Part of the customer experience is how the HP brand is presented, sold and ultimately transacted to the end user.
Those fundamentals have not changed – the driving strategic intent behind all of these changes is how to continue to improve the customer purchasing experience so that they are happy buying HP supplies and they come back again as a loyal customer.
One of the things we’ve found is that as customers turn increasingly to the online channel to buy products, we have also had to shift our investment and our focus to make sure that this channel is as well presented, well maintained and well supported as our bricks-and-mortar and our commercial B2B sales forces have been.
And as we shift our attention online, we also want our resellers and our distribution partners to follow us there and make that same shift in their sales motions and capabilities. So that’s the reason why, when we looked at our Qualified 2.0 program – which we announced on May 18 for effective implementation on November 1, 2015 – we have focused most of our tweaks, so to speak, on improvements in the online marketing and sales space.
OPI: What are those ‘tweaks’?
SS: If you look at the Qualified program we introduced last year for implementation on November 1 2014, we really focused on the online presentation of the product itself: the naming of the product, the image associated with that product, etc, because what we found in our research was that customers were primarily confused and they were struggling to understand exactly what they were buying.
What we’re doing this coming November is following that up with additional improvements in the whole area of online purchasing. We’ve done a lot of customer research this past year and we’ve found that when our customers go to buy a product online, they are presented with confusing or irrelevant product search results and advertising.
We know that most people shop online for a specific product; they want to have a focused approach to identifying the product, finding the right selection and then getting checked out quickly. Instead, what we find in a lot of web searches is that customers are bombarded with options, many of them not related to the product they are looking for. It’s a confusing and customer-unfriendly shopping experience.
To address that, we have added new criteria into the qualification experience that we believe will enable resellers to better manage that customer shopping experience and to create a more focused and simplified approach. This will ensure that when the customers go into their online shopping space, they can easily navigate, find the products they want and check out in a very quick and simple manner.
Specifically, we’re adding two things that are related to online search. The first is that when a customer searches for Original HP ink and toner, the website must return HP search results first because that’s what the customer is looking for, not alternative products. I’m not saying alternatives cannot be presented at all, it’s just that the HP products must come up first.
The second piece involves search-related advertising. Typically, when you search for an HP product on a website, you are presented with a page listing a number of different products and on the top or side banners of that results page there is a series of advertisements. We are requiring that these advertisements cannot be products that compete with HP because we consider that to be brand switching which is leveraging off the HP brand and confusing the customer.
We believe these two new requirements are beneficial not only to the customers – who will benefit from a superior purchase experience – but also to the resellers as they will generate better goodwill with the customer that hopefully leads to a return purchase and loyalty.
OPI: I imagine you’re going to be relying on some intervention here from various technology providers to enable your resellers to implement what you’re looking for.
SS: Absolutely. Many resellers rely on third parties that specialize in web technology or on our Tier One distribution partners that provide it as part of their value-added services.
We’re working with all of them to ensure that they understand what the specific search criteria are, what the appropriate way to present the HP search results is and, most importantly, we’re providing public content for free. The third-party providers can then repackage that content and put it in the appropriate technology funnels for each of the resellers they work with.
OPI: What about the other five criteria that you introduced last year? Have you made any changes?
SS: The criteria themselves haven’t changed, but there are a few small changes within them. For example, the six-month $15,000 minimum spend for supplies or $50,000 for all HP products will only be valid for HP Inc. once HP is split in two. Another minor change is that we are requiring the resellers display their HP Qualified medallion on their websites.
OPI: So that’s a requirement now?
SS: Yes, we want every reseller to proudly display that because they are Qualified and it sets them apart from those that aren’t. It’s a watermarked and serialized medallion to deter fraudulent or inappropriate use. We know there are non-Qualified resellers out there that obtain HP products which are not intended for resale through gray market or others means.
The HP Qualified Supplies medallion helps those that have met the qualifications to proudly display that and be able to stand by the HP original products they sell.