eMachines Overhaul Continues

NEW YORK— PC maker eMachines' effort to shine its heavily tarnished brand name among consumers and retail sales associates has made some headway, but company executives say they must keep proving that the company has changed before people's perceptions are truly changed.

Purging the company's poor image from the market has not been an easy task, said Bob Davidson, senior vice president of product marketing, and despite the changes made to date it will take many more months to complete the makeover.

Most of eMachines current image improvement efforts focus around delivering a better customer service experience, or as Michael Zimmerman, senior vice president of what the company calls customer care.

"Our customer service [organization] was broken. The former management thought it wasn't important, but we think the opposite," Zimmerman said.

While eMachines' executives admit the company still has a far way to go toward reaching this goal, they can point to a few successes on the firm's financial side, Davidson said. The privately held company, owned by Taiwan's EM Holdings, posted a $1.9 million profit for the first quarter of 2002 on $93 million in revenue, a 56 percent increase compared to the prior year. The company also came out of the fourth quarter of 2001 with a clean inventory, a huge change from a year ago when there were five warehouses full of unsold eMachines PCs.

The new customer-care program, created in October and now fully implemented, consists of a re-staffed customer call center, an in-house PC repair depot, retail-based repairs and a parts and repair system that helps customers repair their own computers. All eMachines PCs are now covered with a one-year warranty, compared to the 15 days of free customer service previously provided.

The situation at the customer call center was so poor that Zimmerman had to clean house and bring in new and better-trained personnel that are able to resolve most customer issues on the first call, he said.

The three repair programs are geared toward fixing what might have been what vexed most eMachines customers in the past: the inability to have a defective PC repaired. Zimmerman said the former system simply replaced a broken PC, which resulted in the owner losing all the software and data stored on that hard drive. Zimmerman hope customers will be content to have their PC fixed and returned within five days.

In the past consumers could not expect service from the retailer at which they bought their eMachines because there were no authorized service centers. One of the underlying thoughts by the previous management was that the PCs were so inexpensive consumers would simply go out and buy a new one when the old model broke, Zimmerman said.

The final piece in the customer care system is a self-repair program where the call center helps the end user figure out what is broken, then sends out a new component and, if necessary, talks the customer through the installation.

The company also had made a few changes like placing the serial number and customer service telephone number on the front of the PC. On the surface this may seem simple, Zimmerman said, "but it shows that we don't mind if people call us for help."

The most obvious result of the changes so far is a product return rate that has dropped from a high of about 18 percent in early 2001 to about 6 percent today.

All of these programs are being rolled out in Canada this month.

Repairing the company's damaged reputation with sales associates has also been a difficult task, Davidson said. Despite the improved customer service and revamped PC line, many sales associates think of eMachines as it was and frequently steer customers to other brands. Davidson is combating this issue with a retailer road show during which the various changes will be discussed.

Davidson said what will eventually sway sales associates to again endorsing eMachines will be consumers.

"When they start hearing the customer input then their attitude will shift," he said, adding that the primary reason sales people are negative about the brand is it has caused them endless grief during the past few years. The sales associates were always the first to hear it from customers when they had a problem with their PC, Davidson said, so once this negative experience is eliminated the situation will turn around.

Consistently being one of the lowest priced PCs on the market is one practice eMachines has not changed. The company's PCs still start at $399 and the majority of eMachines' business takes place between that price and $699, Davidson said.

Despite industry rumors to the contrary, he stated that the $399 PCs are not loss leaders and do generate a profit.