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by Wes George
 Apple,

Finances,

Money,

and Trading.

Mmmmmmm...... Good




iRant at CompUSA Part II:
The Deadly Combo of MarketSource Corporation, Spiff Rip-Offs, and Low Wages

February 22nd, 1999

This is the second in a series of articles on the ills of CompUSA's Apple Store within a Store. Last week's scathing condemnation of CompUSA focused on the almost universally consistent complaints of Mac users concerning the quality of service and displays at CompUSA. I would like to thank the hundreds of people who e-mailed me with bits of information and advice.

The Good, the Bad and the Ugly

There are some CompUSA stores that have a loyal Macintosh specialist, sometimes a whole team, who are eager to sell Apple and would never turn a customer to the PC section as I reported instances of last week. To these few elite, hardworking souls who toil with little personal reward or recognition, I would like to extend an apology for tarring them with the same brush as the more dysfunctional stores. Everyone here at the Mac Observer would like to say a big "Thank You" for being there. We hope that you will survive the presently chaotic and negative environment surrounding the Apple Store with in a Store to see brighter days in the future as an Apple specialist at CompUSA.

Rick Gass, a CompUSA employee in Honolulu, wrote the MacObserver to let us know that all CompUSAs are not created equal. "We are all too familiar with the CompUSA horror stories, but please don't condemn us all. There are some of us (though admittedly far too few) who do everything we can and more to make sure that our customers have the best possible experience while in the Mac section. We know we have product, software and accessory problems, but we can't do anything else at this level. The problems need to be addressed further up the food chain." Italics mine.

Another CompUSA store that should be held up as a model for how thing could be done different in other parts of the country is store #567 in Charlotte, NC. Gregg Bennett wrote this, "The Mac support at (store #567) is great. We have five people (three full time and two part time) who know Macs inside and out. We all know it's a superior platform and we try to point just about all new computer users to the iMac... in my store every Mac is fully functional and most even have additional demo software installed such as Virtual PC (a real sales advantage for PC converts). In addition, every screen is kept clean and on the right settings. No empty folders, useless aliases or relocated items which seem to plague Mac store demos can be found on my Macs..."

This unheralded minority of hardworking Apple specialists should not feel ashamed when the truth is exposed about the sordid majority of mismanaged CompUSA outlets. We're all on the same side here, unfortunately the truth is ugly.

There is an amazing amount of disparity between one store and another. Rick Gass works at a CompUSA with a team of four Apple specialists. His store provides a helpful Mac friendly environment for the consumer. The other CompUSA on the islands doesn't have a single Apple specialist. The purchasing experience for the Apple consumer can vary from a dream to a nightmare within city blocks. This lack of standardization of the Store within a Store illustrates that no one is really in control of the situation, not Apple, not CompUSA nor the mysterious New Jersey outfit that goes by the name Market Source.

MarketSource. Apple has outsourced the maintenance of the Store within a Store to a company called MarketSource Corporation based in Cranberry, New Jersey. Yes, you heard that right; Apple does not deal directly with CompUSA, nor, amazingly enough, with any of its retail outlets. I received several calls from "Apple Power Reps" who upon questioning admitted that they were contractors, not Apple Employees.

The MarketSource reps are responsible for the maintenance of the displays and training of Mac Sales personnel for the Apple store. The MarketSource Apple Power Rep in the Austin area is responsible for eleven CompUSA stores spread across the state. When I suggested that she must be overworked the rep cheerfully told me she works seven days a week. She makes it to the Austin area once a week to check the displays and to arrange for any training or interviewing for new employees. She sounded very competent, hard working and pro-Apple but admitted that her resources were stretched thin.

There are only five MarketSource reps handling the whole state of Texas. Their territory includes not only the 32 plus CompUSAs but also all the Microcenters, Frys and the VARs. MarketSource has no office for their reps in Texas. They work out of their homes. It's strictly a low budget operation.

Apple's contract with MarketSource is one of the reasons why the Store within a Store concept is such a failure. MarketSource is essentially the nationwide liaison between Apple and retailers that sell Apple products. The "Power Reps" by necessity of their workload can only make infrequent visits to the retailers they service. The individual MarketSource reps I interviewed execute their jobs with zeal, but how much of an impact can five human beings make in an area the size of Texas. Clearly, it's due to lack of attention that the Apple Store, staff, stock and service have atrophied to the dismal state we see today in most CompUSA outlets.

Outside of Texas, MarketSource seems to have less enthusiastic Power Reps. A CompUSA employee writes from North Carolina, "Our area Apple Computer Rep. (MarketSource) can't be found anywhere. For the last few weeks we've been trying to just find out who he is. From what I understand he's been to the store once in the last year or so. I've never met him." This seems to be the rule, not the exception, for the way Market Source is handling their Apple account.

The solution: Apple must either bring the maintenance of the Apple store in-house and give their retailers the personal one-on-one attention they deserve, or, renegotiate the existing deal with MarketSource to put quadruple the number of Power Reps on the street. Personally, I favor canning the MarketSource contract altogether since it is clearly a rip off outfit with incredibly below par concept of the meaning of service, as demonstrated by their handling of the CompUSA account for Apple. It would be comforting to hold MarketSource alone responsible for this whole affair but since Cupertino is neither blind nor paraplegic, Apple has little excuse for letting the arrangement with CompUSA fester for so long.

The situation is reminiscent of Apple's attempt to outsource to contractors the Apple Assistance Center. For awhile in the mid-1990s when you dialed up Apple technical support you were subjected to endless waits on hold only to find an underpaid, undertrained contractor at the other end who knew less about your Mac than you did. The service became so absolutely dismal that even the laconic Apple bigwigs noticed that it wasn't working and brought tech support back into the fold. Now the Apple Assistance Center is one of the few bright spots in Apple's relationship with Mac users. In house, Apple, as an organization, seems to understand how to implement quality. However, Apple becomes myopic once a service is outsourced, as if they have washed their hands of the problem.

Low Wages. Over and over again it was impressed upon me that for 7 bucks per hour you just can't get good sales help these days. I also heard over and over again that while PC sales staff was easy to find, anyone who knows the Mac OS well couldn't be had for the low wages that CompUSA offers. This leads to a chronic shortage of Apple sales people. Many of the Apple folks at CompUSA work there almost out of a sense of duty and they hold more lucrative jobs as illustrators or Mac OS instructors on the side. The turn over rate is phenomenal. Market Source is responsible for training CompUSA sales staff on the Mac platform but it's rare for anyone to stay long enough to complete the training. Often no one turns up for the training classes that the Market Source reps organize. Morale is low.

Part of the problem is CompUSA's policy of making all sales staffers work the whole store. Thus, a sales person hired to sell Macs has to service PC customers as well at the whim of his/her manager. Just another discouragement for any Mac enthusiasts who might think of applying for the job. An Apple Power Rep told me that she couldn't find a single applicant for the Mac sales staff at local CompUSA at 9 dollars/hour.

The only way for a sales rep to make more money than 7 bucks per hour is to sell CompUSA's in-house extended warranty plan. (Let's just sidestep the fact that CompUSA has the most god-awful Mac certified repair centers in the known universe.) Apple buyers usually don't buy an extended warranty because of Apple's one-year all parts and labor guarantee that comes with each new Mac. Just another excuse for the sales staff to avoid the Mac section.

Interestingly, Apple users need not feel as singled out for persecution at CompUSA as they do. Several wintel users wrote me to complain about the horribly inaccurate information that they had been given by incompetent CompUSA sales reps. My favorite: A sales drone told a customer that Windows 98 wouldn't run well on an AMD K-6 processor. The moral of the story is you aren't going to find committed, well-educated and informed people working for 7 dollars an hour. Period.

The low wages at CompUSA are not going to change. Their whole business model is based on moving inventory at low prices much like a Home Depot or WalMart only without Home Depot's wonderful employee/management relationship or Sam Walton's genius for marketing. In fact, the evidence is that CompUSA treats it's own employees in a cavalier and contemptuous manner consistent with their poor service record on the floor.

CompUSA's lowest common denominator philosophy is totally antithetical to Apple's efforts to be Insanely Great. However, unless Apple is prepared to make it's own billion dollar retail effort, the CompUSAs and Best Buys of the world are the only viable retail outlets for the foreseeable future. Apple should develop a format to make these stores work for the Mac platform instead of exlemplifing the minority, marginal and even irrelevant state of Apple today in relation to the PC dominated world.

Finally, CompUSA is in long term strategic trouble in their ongoing losing battle with the e-vendors and catalog sales organizations that have sprouted up like weeds over the last few years. This is a major distraction for their upper management who are terrified by the signs of the time, such as Egghead.com with their eager abandonment of strip malls for cyberspace. The CompUSA shareholders are likewise not happy campers seeing the value of their investment more than halved in the last year. This is a corporation in denial, operating under the illusion that their "good reputation" will carry weight in cyberspace. Apparently they're too shook up to notice what's going down on the store floor.

Spiffs. In the fall of 1998 Apple announced a Christmas spiff program in which CompUSA sales staff would receive $30 for every iMac they sold and $50 for every PowerBook. Often spiff programs are put in place by PC or peripheral manufactures to clear out old or slow moving inventory by giving a cash incentive to sales staffs for each item they sell. This might explain the mysterious false alarm that was set off last November as a few analysts squawked prematurely that iMac sales were lagging. It's very unusual for a spiff to be given for items that sell like hotcakes. Historically, Apple almost never gives spiffs.

Spiffs are a good thing, right? Apple is rewarding the frontline sales staff, encouraging them to aggressively sell iMacs. What an innovative concept! Perhaps someone at Apple didn't feel comfortable putting the Christmas season retail sales number in the hands of underpaid, noncommision, PC-centric sales staff. (That person should be promoted, s/he is not yet at their highest level of incompetence.) iMacs were often selling eight to ten a day at CompUSA. For a CompUSA sales person to sell just one iMac means more than half a days wages in commission.

The reality is that CompUSA made it rather difficult for their sales staff to collect on the spiff. In at least some instances CompUSA has told the sales staff that the corporation did not participate in this spiff program or that this money was to be used on promotion, not distributed to individual sales people.

Jason Hope, the CompUSA administrator that seems to be most closely associated with this spiff, even wrote to one Apple Specialist, "CompUSA did not participate in this spiff program. We did, as a company, spend promotional dollars from Apple to drive their sales during the holiday season... if you do not see an official notification (from) CompUSA Corporate the spiff probably is not valid." Jason doesn't answer e-mail, so I was unable to get any input from him directly on this topic. I'm still curious as to what is really going on. Jason, you know where I live, give me a ring.

Of course denying the validity of this spiff is outrageous behavior and probably illegal. Yet, it seems to fit into a pattern of deceit that surrounds other Apple-related spiff programs. One such report I received read in part, "Take the Viewsonic monitor spiff of this summer, $25/50 per monitor, and it's price/performance made it the best choice for our Apple customers. We sold many of these and then found out about the spiff too late to take advantage of it. This happens entirely too much." Hell, it's probably just a communications problem, right? Jason?

Another CompUSA employee while trying to explain how hard it actually was to collect spiff money laid out an "official" 24-point outline of how a floor rep was supposed to handle a sale. It's a cumbersome and convoluted procedure more akin to a Monty Python skit than to what late 20th century consumers expect. The procedure is designed to sell the computer buyer peripherals and warranties regardless of what the customer actually needs. In fact, my source said during the sales process, "…if the customer refuses the CompUSA extended warranty for the third time, call a manager and wait five to ten minutes while the MOD (manager of the day) work his way to the front of the store from his office in the rear...wait while the manager plays ‘let's make a deal' with the customer. Often this works."

As for sales reps collecting on the spiff, "(you) must fill out the spiff forms on the spot. While eighteen folks are waiting for the one Mac expert in the store." He goes on to say that, " I don't think I will ever see the spiffs. I will not ever believe anything they promise again. (He blames Apple.) Their folks are downright nasty on the phone. I still love to sell Macs!" Other CompUSA employees have told me they aren't allowed to do the paper work to receive spiffs while on the clock. This doubles the difficulty of actually finding all the paperwork needed for management's kafkaesque requirements.

Yet another CompUSA Sales person wrote me this, "... the spiffs we were supposed to get over Christmas. We had at least two, maybe three salespeople sending in all the required information and none of us ever got the money. If we weren't so Mac-loyal that would have turned any other salesperson away from selling Mac. Even if there was a good reason why we didn't get anything, we never heard it. No response from Apple whatsoever. But, we keep selling them anyway."

I've heard second hand that here in Texas the spiff checks are in the mail. So who knows what is really going on. Hopefully, next week, I'll be writing a retraction as all that spiff money is distributed to the sales folks who earned it. Meanwhile, I'm eagerly awaiting e-mail from CompUSA and Apple employees who have any light to shed on the condition of the Sore within the Store.

Next week, I hope to shine the harsh spotlight of concern on the few key management players who are the folks responsible for the overall gestalt of this situation and suggest, humbly, a few solutions. One thing is certain. If a new functional paradigm cannot be invented within the existing management structure then the structure should be dismantled and a new one with fresh faces be instituted. Slow, bureaucratic, glacial change that threatens no one's personal fiefdom is not going to cut it, folks. It has gone way too far for that. A radical bifurcation rom the status quo at the Store within a Store is needed now. Every day is money and mindshare down the drain.

(...to be continued)

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Wes George writes about the financial side of being a Mac nut. Wes has followed Apple's finances for the last 7 years and comes to The Mac Observer every Monday to tell all about his opinions. He is, in his own words, "inordinately fond of money." If you would like to write Wes, make it nice. Someday you might own a company that has something to do with Apple, and Wes will probably still be writing for The Mac Observer...... On the other hand, Mr. George is known to love a rousing, hair-raising debate, so send him your worst!

Disclaimer: This column is for informational and entertainment purposes. While Mr. George may be sage indeed, his writings can not be construed as a solicitation to buy, nor an offering to sell any particular stock. As with any trading in the financial markets, you must use your own judgment to make the best trades that you can. Neither The Mac Observer nor Wes George may be held accountable for trading advice.



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