Dell: A Brand in Flux?

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For years, Dell has enjoyed one of the strongest brands on the market. Lately, however, the giant PC maker has been taking some real heat in a number of blogs and consumer affair sites. In fact, a quick browse of sites like My3cents.com, Ripoffreport.com, ConsumerAffairs.com and BuzzMachine.com will turn up multiple negative posts and comments from dissatisfied Dell customers. Not exactly what you would expect from a company with such a sterling reputation.

Dell executives say they’re monitoring online complaints and taking steps to correct those issues. In particular, they’ve added more customer service centers and employees in an effort to better resolve customer complaints. These measures seem to paying off. In a recent article, Investor’s Business Daily cited internal Dell numbers that show a 35% year-over-year improvement in customer satisfaction and a 30% improvement in its ability to resolve problems the first time out.

Considering the fact that Dell surveys about 24,000 consumer customers a month, these numbers are worth noting. But I wonder if some of the steps Dell is currently taking might come back to bite their brand in the long run.

Great Out of the Blocks

I recently purchased a Dell computer online, and I have to say the experience was outstanding. In fact, Dell executed flawlessly.

I happened to be in the market for a new PC and saw a great price in one of Dell’s advertising circulars. I went to their web site and easily found the advertised box. I added a few extras (nothing like a little extra horsepower to jazz up a new PC!), placed my order and sat back to await delivery. Afterwards, Dell sent me several tracking e-mails to keep me apprised of my order’s status.

The computer arrived a couple days before promised — a nice surprise. I whipped it out of the box and set it up in a matter of minutes. Everything worked fine and I began to install my own software. During the installation process, however, I hit a snag and my computer locked up. I called Dell, and in a matter of minutes they helped me resolve the problem.

I’m sure my experience is repeated thousands of times a day around the globe. After all, this is where Dell really shines. They do the acquisition and setup experience in less time, at a lower cost and with less hassle than any other personal computer company. That’s what Dell’s value proposition and brand promise are all about — delivering a low-cost, customized PC to your door with minimal time and effort on your part.

Not So Great Down the Stretch

Although Dell has mastered the PC acquisition and setup experience, they have struggled to provide service well after the sale. And that’s where the Dell brand is taking a hit.

Dell built its reputation by providing quality PCs at a very low price — a classic application of the lowest total cost value proposition. What Dell doesn’t provide is a true customer intimate solution or the best total solution. If a complicated problem arises several months after buying the computer, your problem-solving experience with Dell is likely to be very different (and far less satisfying) than the initial acquisition experience.

Until now, Dell has gotten by with this approach because their traditional customers, who tend to be experienced consumers of technology, don’t expect much service after the sale. However, Dell’s customer base is expanding, and that seems to be where many of the problems are coming from.

As Dell has achieved dominant market share and picked up more new customers, a growing number of them are first-time buyers or PC novices who require a great deal of hand-holding after the sale. If you read the posts on the customer affairs sites and blogs, you quickly get the idea that the majority of complaints are coming from technology newbies. Plus, as the absolute number of customers continues to increase, the number of mistakes on Dell’s part is bound to increase with them.

A Shift in Strategy

As a low-cost provider, Dell does not have the profit margins to provide comprehensive customer service. But that’s about to change.

Dell recently announced a spate of paid customer support options ranging from consumer services that mirror the comprehensive in-home services offered from Best Buy’s Geek Squad to comprehensive business services. The business services run the gamut from simple system set-ups to complex deployments that coordinate rollouts at multiple sites and meet tight customer deadlines. Looking ahead, it’s just a matter of time until Dell offers comprehensive IT outsourcing that mirrors similar service offerings from HP and IBM.

Why this shift in strategy? One, Dell is trying to protect its brand by offsetting a growing number of customer complaints. Two, and more important, they’re hoping to boost revenues by turning customer service from a cost into a profit center. To me, the most interesting aspect of all this is what it might do to the Dell brand.

Currently, Dell dominates the best total cost value proposition in the personal computer market. But some day their top line revenue growth will stall unless they do more — hence their ventures into providing value-added services after the sale. My bet is that Dell will successfully navigate this shift and that customers will want the added services will pay for them. However, adding these services and becoming a services company may prove confusing to customers. Ultimately, it could confuse their brand.

Is Dell a best total cost or a best total solution company? Can they implement both value propositions without confusing customers and/or diluting the brand? For now, they remain firmly entrenched in the best total cost camp. But if their intentions are to migrate — however slowly and tentatively — toward a best total solution strategy, it should make for a very interesting journey. More important, it should teach us all some valuable lessons about the challenges involved in maintaining a #1 brand in a rapidly changing environment.

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Source by Rod Whitson

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