CDW - High Touch in a High-Tech Era (1,778 words)
At computer solutions provider CDW, co-workers call their business model "clicks and people" (1,778 words)
By Donna Loyle
The fiery energy level is immediately apparent. Inside the massive plain gray building is an astonishingly well-choreographed workforce on a mission.
This is the headquarters for CDW Computer Centers, a computer hardware and software solutions provider in Vernon Hills, IL, just outside of Chicago. Downstairs is an orderly and pleasing retail showroom full of laptops, computer screens and other electronic gear. But just behind the doors, just past the threshold, is a bustling atmosphere of automated, integrated activity—the office and mammoth distribution center.
In one area of the office, employees are engaged in an interactive class on a new piece of computer technology. In another section, workers hustle to custom configure equipment (the team can do 1,200 configurations a day) for shipment to clients. Down the hall, account managers sit perched at brightly lit computer workstations organized in aisles marked by city names. Head down the San Antonio aisle to see the gigantic foam cowboy hats propped on cubicle walls. Why the city names and props? "To organize the sales force, foster team-building, and, well, to have some fun," is the matter-of-fact answer.
Back out in the main office area, a woman with a food cart circulates, keeping the casually dressed staffers fueled up. Overhead is a toy train; its cars display inspirational words and the company's vision statement. The train winds its way around the vast office, over the din of brisk banter and clacking keyboards. Instead of looking hokey, the train seems perfectly matched to the playful nature of this place.
Here CDW employees sell computer hardware, software and ancillary equipment to companies all around the country. But they don't just sell product. Rather, they act as solution providers-—true providers—to small and mid-sized companies looking for help with their IT purchases.
And provide, they do. In 2000, sales reached $3.8 billion, up 50 percent from 1999. CDW processed 3.8 million invoices last year, up 30 percent from 1999. The average invoice amount in 2000 was $1,054, an increase of 15 percent from 1999. Its U.S. client list is more than 300,000 strong, 96 percent of which are business-to-business
(b-to-b) customers. It's the No. 1 authorized direct source for products from Compaq, IBM, Microsoft, Toshiba, Computer Associates and others.
While the stock price of this publicly traded company declined sharply during 2000, analysts brushed it off, citing a general down-turn in the computer industry. Since early January, CDW's stock price has rebounded about 20 percent.
Looking long-term, this is a company on the move. And it's a far cry from its humble beginnings. Founded in 1984 on the kitchen table of Michael Krasny, the company today employs more than 2,800 people corporate wide and was recently named by Fortune magazine as one of America's 100 Fastest Growing Companies. Says Krasny, "I didn't have a master plan or a Harvard MBA, but what I do have is a passion for technology."
Marry that to a passion for customer service, and you have a company whose stated business model is "Clicks and People."
School of Sales
CDW has four call centers in Illinois, each staffed with account managers. No ordinary customer service reps are these—all have graduated from CDW University's School of Sales, an in-house, customer service training program. In all, the company employs more than 1,000 account managers whose average tenure is one-and-a-half years.
Initial applicants for the account manager jobs are judged not for their knowledge of technology, says Gary Ross, company spokesperson, but for their ability to "smile over the phone." Once hired, they start the classes. Training is full-time and fully paid for the three to five months it takes to graduate. Phase One of the program is comprised of classroom instruction about the company, its culture, products and technology.
During Phase Two, students work in one of the company's showrooms to further perfect their people skills. Phase Three finds them back in the classroom learning more about technology.
"The training is rigorous," says Ross. "They even have to pass daily tests." The training doesn't stop after graduation; technology classes, often taught by vendor representatives, are held during work shifts and attendance is mandatory.
Once they become full-fledged account managers, reps are responsible for servicing a group of clients— no matter what medium those clients use to contact CDW.
Customers can learn about product offerings and/or place orders via various methods, including: the showrooms, magalogs, newsletters, telemarketing, an award-winning Web site and a customized extranet program.
Currently, CDW has two showrooms: the one in Vernon Hills, and another in downtown Chicago. However, showroom sales account for only a fraction of the company's revenues, says Ross.
CDW's e-commerce site is well-designed and intuitive. And in the fourth quarter of 2000, direct Web sales were more than 12 percent, or $125 million, of the total net sales of more than $1billion, says Ross.
But by far, the company's most innovative customer service initiative is its
b-to-b extranet program, CDW@work, which demonstrates personalized
b-to-b marketing at its best.
Extranets to the Rescue
Here's how the extranets work: Commercial customers are given their own CDW Web extranet (similar to a personalized Web site), complete with the client company's own logo displayed on the site. Currently, about 59,000 businesses actively access the CDW@work extranets.
The extranets, which were developed in-house using proprietary software and feedback from CDW customers, feature side-by-side product comparisons. In addition, they allow customers to get online quotes and prepare orders for approval within their own organizations. Customers' personal account managers review all extranet orders to ensure quality and product compatibility.
Explains Ross, "If someone from the client company orders via his extranet, say, a network cable that won't match the servers we sold his company a few months ago, his CDW account manager can alert him to that, even if the client placed the order at 3 a.m. The next morning, when account managers log on, they can see the overnight orders placed by their clients and check that everything is all right before we ship the products out. In this way we become, in essence, an extension of the customer's IT department."
In addition, CDW@work clients can use the extranet to see their own CDW invoices (current and past), track their own shipments and even assign certain parameters to their orders. For example, they can denote that only certain people within their company can place orders amounting to $1,000 or more.
Says CIO Jim Shanks, "The extranet is not siloed away into its own database. It's integrated into our entire operations."
In fact, this is almost a transparent operation. On the back-end, account managers can leave notes in the comment fields on the company's AS400—notes accessible only by other CDW employees—about special customer requests or recent correspondence with clients. This comes in handy, says Joe Kremer, vice president of marketing, when customers are having problems.
"Say one of our collection co-workers is about to call a customer for payment," explains Kremer. "The collection agent, working in our accounting department, can log on to see if the customer has been trying to return to us the item for which he or she hasn't yet paid. Perhaps there's something wrong or the product doesn't work. So it saves us time and shows the client that we're up-to-speed and value their business."
Having such integrated, up-dated information at the click of a mouse, Kremer continues, also enables account managers to pro-actively try to please their customers—fixing minor ordering and fulfillment snafus before
they become full-blown, customer-relationship dilemmas.
Shanks agrees, adding, "The power of tight integration like ours really shines when you encounter bad situations. CDW's primary goal is to make each customer's day a little easier, whether that involves facilitating more efficient communication or providing better service."
CDW uses a proprietary transactional database system designed in-house by Shanks and his team. Why not use packaged solutions? Says Shanks, "A packaged solution can dictate what you can and can not do, how you handle a customer or a situation. We didn't want that. Our system is our competitive advantage."
The enterprise-wide database can, when prompted, issue detailed reports and has data-mining capabilities, all consolidated into a data warehouse that is easily accessible, says Shanks. "To gather whatever data is needed, we make business rules and assumptions, then work the data model.
"For example," he continues, "if we want to know the associated sales that go with a particular item or a particular customer demographic, we can easily drill down for the information. Or if we're doing a marketing mailing, we can do an ad hoc query with filtering to determine who are our best prospects and customers for the offer."
An interesting twist to CDW@work is CDW-Government (CDW-G), a wholly owned subsidiary that offers a specialized electronic platform just for procurement officers at local, state and federal government agencies. Customers get separate account managers who've been specially trained in the unique purchasing requirements and procedures of government agencies.
CDW-G is a good example of the drive for innovation that permeates this place. "Once we realized in 1998 that we had a lot of government agencies as clients," remembers Kremer. "We thought: 'Now how do we automate that specialized service? How can we make their customer experience with us better?'"
Which brings us to the final piece of this company's success—a relentless, high-spirited drive to improve processes and with it, customer service. Says Kremer, "We're stuck on continuous improvement. It's just a habit."
Ross agrees, adding, "Our business model is to be efficient and speedy, and to offer personal attention, as well." Such a mission works particularly well with CDW's primary customer base, he continues.
"In a small or mid-sized company, the IT director may have been volunteered for the job. In a tiny 10-person company, for example, he was the only one who knew a little about computers, so he was 'elected' to purchase technology equipment, in addition to doing his regular job," says Ross. "Having highly trained account managers, CDW can assess that company's needs and make product suggestions perfectly targeted to that client."
Although the company is highly automated, the human touch permeates all customer-facing operations, he continues. "Our account managers really get to know their customers. When I first arrived here, I was amazed to see how often account managers get, for example, wedding invitations and holiday cards from their customers—from customers! They consider our account managers like members of their families or their co-workers. It's astounding to watch."
In short, Founder Michael Krasny's motto "Success means never being satisfied" is lived daily in this place.