Harvey shows IBM affinity
- 18 April, 2001 16:05
Harvey Norman has sided with PC vendor IBM in an affinity program which offers bundled PC, Internet and service packages to members of the Baptist church.
The retail giant has been dappling in the affinity market for the past 12 months, but the deal with IBM and the church is its most significant offering to date. The company has formed a new division - Harvey Norman Commercial - to broker and manage bulk purchasing programs for the likes of McDonalds, Sara Lee, Tennis Australia and Australian Dairy Farmers.
The program, which could bring in as much as $20 million in revenue over the next five years, will initially be trialled in NSW and the ACT.
"We have 129 stores
in every state. With those economies of scale we can enter into relationships to really give the local area community support," according to John Slack-Smith, Harvey Norman's general manager of computers and communication.
"Our regular business is not just about purchasing the package - it is about delivery, training and easy access to services such as the Internet. We are in the customer service game so it's all about demystifying the process of buying a computer."
Harvey Norman will offer Baptist Church members a number of discounted computer packages, incorporating a PC or notebook computer, printer, online installation and training, OEM software bundles and Internet connection with Ozemail. This bundle can be modified to suit the user's needs.
The idea, according to general superintendent of the Baptist Churches of NSW and the ACT Phil Skinner, is to encourage first-time users and bring about closer ties within the church communities through the Internet.
IBM's move into direct sales through its online Web site last year caused some consternation from Harvey Norman. But IBM's personal computer division Australia/NZ marketing manager, Evan Williams, denied the retailer had been brought in on the deal as an appeasement measure.
"We have always been interested in involving a retailer in our larger affinity deals, and Harvey Norman want to be involved," he said. "It comes down to a rural presence, and being able to service the church Harvey Norman was the perfect fit."
He said the affinity program was an important emerging market for IBM because of the business it presented to its partners.
Ed Smith, CEO of Virtual Communities, the reseller that pioneered the affinity package, said the deal was testament to the success the company enjoyed last year.
"Anything that brings computers and access to more people is a good thing," he said. "Harvey Norman has good strength in terms of having stores on the ground."
Smith says the Virtual Communities package still stands alone in terms of low price and end-to-end solutions.
"It is important to compare the full lifecycle of a product. I doubt if Harvey Norman can achieve the same price point. It is a very good model but very expensive because they have so much infrastructure."
Although Harvey Norman is not generally acknowledged for its service levels, the deal will see the company offering full service agreements on the bundles.
"We are very conscious about our level of service to ensure members of the church get the most benefit," Slack-Smith said.
"Most Harvey Norman stores are authorised service providers. The ones that are not are in the definite minority, but for those stores we have a service set up with independent organisations. We are very much about being at the front end."
Harvey Norman's store network will be a huge advantage for church members, Skinner said.Photograph: Harvey Norman's John Slack-Smith