In 2007, Dell’s CEO was replaced by founder Michael Dell. The warning alarm had sounded two years earlier on the Internet, when a blogger lamented:
I just got a new Dell laptop and paid a fortune for the four-year, in-home service. The machine is a lemon and the service is a lie. I’m having all kinds of trouble with the hardware: overheats, network doesn’t work, maxes out on CPU usage. It’s a lemon.
In the olden days before blogs were big, Dell management could have addressed these issues at a time of its choosing. And executives would have needed time because this comment strikes at the heart of the company: the product, the service, marketing, pricing and, most critically, the Dell brand. Millions of customers were not won and kept by selling lemons. With Jeff Jarvis’ use of a catchy phrase “Dell Hell” in his blog, The Buzz Machine in June 2005, Dell’s customer issues were publicized by The New York Times within two days of the blog post, and in discussed in the next issue of Business Week.
I’m writing this on a Dell laptop, and my last half-dozen PCs were purchased from Dell, so as a loyal customer I was amazed and shocked to hear about issues I had never experienced myself. So I asked around, and started to talk to other customer relationship management scholars about what was going wrong inside this company that once had such a sterling reputation for customer satisfaction and customer delight.
What we arrived at was that what had changed was outside, not inside, the company.
What from the outside looks like a well-oiled machine is, from the inside, lots of people working really hard to keep up that impression and make it truer each day. I worked for five years each at Intel and Oracle, both enormously successful companies. Both were similar in this aspect: It was exciting to come to work each day because of the multitude and magnitude of issues to be resolved, insurmountable obstacles to be overcome, unavoidable disasters to be prevented and imminent crisis to be averted.
|Learning from Dell
—Insights gained from Menchaca’s presentation Oct 25 2007, San Jose, California
—Mei Lin Fung
Such is the life of those of us who are adapting technology, changing processes and improving customer experiences and relationships. We know that inside, it’s a lot like a sausage factory. It would astound the customers to watch the sausage being made.
Dell weathered the storm because Michael Dell has been personally involved in Dell’s efforts to listen to its customers. One of those moves was to create a dedicated corporate blogger. Dell tapped Lionel Menchaca, an employee of 14 years. Menchaca, as blogger Jarvis, himself, said on The Buzz Machine, speaks to people “honestly and directly” (April 3, 2007). In blogs, Jarvis related, Menchaca “admitted the company’s problems. But he also answered back … . He immediately earned the respect of me and many other bloggers. According to Jarvis, Manchaca gave the company “a human voice.” In return, Jarvis said, Manchaca gave customer respect and “got respect in return. It works.”
For his part, Menchaca credits Bob Pearson, Dell’s vice president of Corporate Communications, for changing how the company adapts to the world of the Internet.
In a way, Dell was the test dummy of companies bearing the impact of one customer’s experience in the new socially-networked world. It stood up to the test, recognizing the harm to its and reputation in the marketplace. That change on the outside drove changes in the company, as it responded to the new challenge.
Something similar happened to Sony, after it disappointed PlayStation fans who wanted to play the games with their friends on the Internet. The fans responded with a series of videos posted on YouTube to express their disappointment. Just take a look below at the YouTube page for what has become the famous “PS3” (for PlayStation 3) song written to the melody of a top-selling pop song by the Fray:
Sony, you went wrong with your PS3
I’ll just keep playing my 360
Hope this song has helped you understand
Now you know, how you killed your brand
You can see not just that the video has been viewed almost 3 million times but also the over 34,000 comments the video generated and its selection as a “favorite” more than 21,000 times. The social media avalanche hurts Sony well beyond the disappointing sales of the PlayStation 3, which lagged behind Microsoft’s Xbox and Nintendo’s Wii. The PS3 song, with its haunting refrain, taints a globally respected brand known for design and innovation with one product’s shortcomings as viewed by a single customer.
Sony still hasn’t responded to this viral criticism. But as of this writing, Dell seems to have recovered from its episode. Menchaca, presenting at the Intel Global Manufacturing Summit in October 2007, explained that Michael Dell was personally involved in driving the company’s response to the new world of Social Media, and the creation of Direct2Dell. He has said that the company is just “at the beginning of the turnaround” and would be making “fundamental changes” to the tune of a $150 million investment.
Dell is in an epic struggle to adapt to the challenges of the Internet and the rise of the social media. With a team that includes Menchaca and Pearson, and with Michael Dell back at the helm, Dell is on an odyssey that will be interesting to monitor.
great to get reacquainted with your writings – happy to see you’ve found a new home after all this time.
social media certainly is pervasive – it has been entertaining to watch what Apple has done to Sony with their commitment to internet-enabled technologies and am very interested to see what kind of turnaround Stringer will pull – i can’t imagine such a giant can just fall.
being an avid video game fanatic in my early heydays – i can vouch for Nintendo’s strategy to just “think different” much like Apple. I think it’s great they are reinvigorating the younger generation and inviting them to actually use their muscles creatively during game play. i think it’s great some kids (and adults) may actually find interest in their actual sport counterparts which is absolutely genius and very responsible on Nintendo’s part IMHO.
the Intel anecdote is nice – after having been “intel inside!” myself, it certainly is great to be part of this caliber of engine and literally find myself using an Intel-powered mac! Do you think Dell ever dreamed he’d see the day?!?
That’s the title of Jeff Jarvis’ article which reinforces the lessons from Dell Hell –
“their flaming blog posts can help you fix your products – and reinvent your business”
all this from the guy who invented the term “Dell Hell”, hear what he’s saying now about how Dell is reaching for the skies, climbing out by”enabling customers to rate its products on its own Web site;… reaching out to bloggers to fix their problems; and by organizing
customers’ advice for each other. The company also started Idea storm where customers have offered 8,000 suggestions in a year, voted on them 600,000 times and left 64,000 comments.”
This is just one of several great pieces in Business Week’s special report on Customer Service Champs March 3, 2008.
thanks to you, Chinarut for your good comments – its great to see a fellow Intel’er confirming what it was like inside the company where “only the paranoid survive” as Andy Grove put it so succinctly!
Mei Lin Fung
Blog: Professionals Earn Customer Trust
Postscript to this article came out April 1, 2008 at CRM Buyer
“Bloggers Hopped Up on My Starbucks Idea
By Erika Morphy
Part of the ECT News Network
04/01/08 4:00 AM PT
Judging from the high level of early and enthusiastic buzz, Starbucks seems to have a winner with its interactive tell-us-what-you-really-want Web site, My Starbucks Idea. Some skeptics are wondering whether the whole thing could backfire, though, if Starbucks fails to react quickly and favorably enough to the will of the people. ”
For full story link to
Take a look at the link to see the blogosphere reaction both positive and negative to Starbucks entry to the internet conversation.
Mei Lin Fung
Blog: Professionals Earn Customer Trust
Dell has positioned itself particularly well to chase the so-called SMB market. The company is organized around market segments, not product line technologies.www.gibo.in
I was a loyal Dell customer for eight years. I purchased my first computer, a Dell, eight years ago. I defended the company from all those Dell Haters.
Now I’ve joined them. My experience before and after purchasing a new Dell this month has been unbelievably negative. And it gets worse by the minute.
If they’ve made changes they are not apparent yet. And I certainly do understand your reference to “a sausage factory”. The website is impossible to navigate. Dealing with people at Dell is, well, HELL!
I’m glad I found this site through Google. And I will go to DIRECT2DELL to vent my frustration. I have gathered the postal mailing addresses of major Dell corporate execs and will be sending letters. I hope this works better than sending e-mails to them.
I believe my situation with the company and my horrible experience is uncorrectable ….. because they won’t try to correct it, don’t care. But at least I’ll communicate that to them.
And you are right …… the ruination of a brand (through greed I believe) is so unfortunate. My take is this ….. I’m just a small grain of sand on a large beach. A home user purchasing basic products is expendable.
But they are wrong. Every customer has to be satisfied. That’s what held the brand in high standards. Michael Dell should have stayed at the helm. It’s his fault.
Still in Dell Hell