Kemble: It sure is not surprising that BusinessWeek selected DELL to be the #1 information technology company in the world. You may have already seen this article (in the the Nov. 2nd issue). Yet, I thought I would post is again. It contains more great info. for your bibles on DELL <ggg>!!
WHAT DOES NO. 1 DO FOR AN ENCORE?
Dell Computer has ridden the direct sales of PCs into the stratosphere. Here's how it plans to stay there
Dell Computer Corp. (DELL) defies gravity. Whether you measure its growth in
sales, profits, market share, or stock price, the company is simply weightless.
Last year, sales climbed from $7.7 billion to $12.3 billion. Profits rose from $518
million to $944 million. And then there's Dell stock, which has split six times in the
past six years and continues to soar, up 120% this year, to $53. To top it off,
Dell is now the largest merchant on the Internet, selling $6 million worth of gear
daily. And all of this after three previous years of similar pyrotechnics. That's why
Dell ranks No. 1 on the BUSINESS WEEK Info Tech 100 list of top
performers.
So what does the company do for an encore? Ask CEO Michael S. Dell, and
he'll tell you with his typical straight face: more of the same. Well, sure, that's what
you'd expect him to say. Except Dell--whose direct-manufacturing model shook
up the industry by redefining customer service as the speedy delivery of
custom-built PCs--now wants to get even more up close and personal with
buyers. ''Our industry has generally neglected the customer. I want to take the
customer experience to a whole new level,'' Dell says.
That's not just marketing mumbo jumbo. For Dell, it's a new battle cry. The
33-year-old CEO sees customer service as the ''next battleground for market
share.'' And nowhere will that be more true, say analysts, than in the consumer
and home-office PC markets, which Dell is just beginning to target. ''The
consumer and home-office markets are going to be where the growth is, and
that's where I want us to go next to keep growing,'' Dell declares.
The message isn't lost on the troops at Dell's suburban Austin, Tex.,
headquarters. Pinned to a wall amid a sea of cluttered cubicles is a photograph of
Dell. Someone has drawn a hat on him, the kind worn by Uncle Sam. A slogan
scrawled below reads: ''Michael wants YOU to OWN your relationship with the
customer.'' Just in case there's any doubt, Dell has tied bonuses and profit-sharing
to service improvements of at least 15% this year. Success will be measured by
shipping deadlines, fixing machines on the first try, and getting repair people to
customers within 24 hours.
Dell's new customer-service plan: Use the Internet to automate and customize
service, in much the same way that Dell streamlined and customized PC
production. The do-it-the-customer's-way mantra has created for Dell the
tightest--and most envied--relationship with buyers in the PC business. By using
communications links over speedy private networks and the vast Internet, Dell
plans not only to provide personalized Web pages for non-corporate customers
but also to answer knotty service questions with the lightning speed that only the
Net can deliver. ''All our customers have individual files with us online,'' says
Scott Eckert, director of Dell Online. ''Why not expand those files for a new kind
of direct-service model, one that will enable conversations with customers about
service, industry trends, and new products--or even, say, weather and news
someday?''
Weather and news from your PC company? It couldn't hurt. Research results
from PC users show consumers are not yet satisfied with the industry's track
record on service. In the November issue of San Francisco-based PC World
magazine, a reader survey found that Dell and Micron Electronics Inc. (MUEI)
were the only two manufacturers (out of 17) that ranked ''good'' for ''reasonably
reliable systems and serviceable support.'' None of the companies, though,
earned an ''outstanding'' rating on its work, home, or notebook PCs.
Dell scored high mostly for having a very low rate of out-of-box quality problems.
But its ranking was dragged down by complaints of long waits on the phone and
a relatively high percentage of unresolved problems. ''Creating a new
direct-service model is extremely important,'' says Dell strategist Kevin Rollins.
''The first company to crack this--or who can do quality and service
demonstrably better--will have a new, sustainable advantage over everyone else.''
Today, only a third of Dell's customer-service force is dedicated to handling
queries online.
So far, Dell has been better than most rivals at customer hand-holding, online and
off. Last fall, Dell delivered eight customized PowerEdge servers to NASDAQ in
New York in 36 hours so the exchange could handle higher trading volume during
the first whiffs of the Asian crisis. ''We didn't have to pay extra,'' says John Delta,
director of NASDAQ's interactive services. ''Originally, Dell got in with us on
price, but that's not the issue now. Their customer support and service is what's
driving our relationship.''
That's what Dell wants to keep hearing, from a whole new crowd of less
tech-savvy buyers--the small-business owners and the work-at-home crowd.
''The Net allows us to take personalizaton to the next level,'' says Dell. Starting
this fall, the company will expand its online forums with Dell executives, called
''Breakfast with Dell,'' beyond big corporate buyers to small businesses. The live
chats will cover topics ranging from the Year 2000 problem to trends in the
server market. Further down the road, there will be a way for customers to ask
hundreds of service questions, all of which, says Dell's senior Web manager
Manish Mehta, will be answered automatically from Dell's online knowledge bank
with the help of artificial-intelligence software.
''CUDDLY TOUCHES.'' And coming in the next few months: more warm and
fuzzy Web-service features, including ''My Dell'' Web pages--customized pages
for small-business and home-office consumers. Such additions will enable these
users to trade service tips, answer queries, and get weather, business information,
and technical support papers over the Web. Also in the works is the ''virtual
account executive.'' Interested in a notebook but can't fly to Austin for a
demonstration? ''That's fine,'' says Rollins. ''Go to our Web site, and get a
full-motion video of someone explaining it.''
To Dell, the benefits of dispensing more service over the Net are twofold: ''It can
be a great relief valve for disgruntled customers,'' says Mehta--and a relief for
shareholders, too. Doug Chandler, a customer-service analyst at International
Data Corp., estimates that phone calls to give service and support can cost PC
companies $25 apiece. Dell's online service operation, he says, saves a
bundle--thousands of calls per week and potentially millions of dollars. If that's
extended to include a greater percentage of Dell's customers, it could save
millions more.
Can Dell pull it off? The direct-service approach works well with corporate
buyers--the bulk of Dell's business. Consumers and small businesses, though,
expect far more hand-holding, and are more inclined to hunt for bargains. They're
also often enamored of the marketing ploys and gee-whiz gizmos that make
corporate-account managers cringe. ''For all its success, Dell has had little
experience with these cuddly touches,'' says Kevin Knox, senior analyst at
Gartner Group (IT).
And even if Dell persuades the masses it's tip-top in customer service, there are
other challenges facing the company. At a Sept. 25 meeting for analysts, there
were questions about price. While Dell's machines are still cheaper than
comparable ones from Compaq (CPQ) and IBM (IBM), Dell hasn't been
lowering prices as fast. ''Normally, Dell had a $100 to $200 price advantage
because of its direct model, but that advantage is nearly gone,'' says James
Poyner, a PC analyst at CIBC Oppenheimer. ''Isn't price supposed to be Dell's
advantage?''
Not necessarily. Now that customer service is the new battleground, price may
not be the main event. Says Dell: ''IBM and Compaq are assuming that price is
the problem. The problem is that the dealer channel they're using has
fundamentally failed customers.''
And what about continuing efforts by rivals to mimic Dell's direct model?
Copycats such as Gateway (GTW) and Micron still don't have the heft and
market clout of Dell. As for rivals such as Compaq who use middlemen, Dell
wins on cost. ''Anyone who tries to go direct now will find it very difficult--like
trying to jump over the Grand Canyon,'' says Dell. And now, with his efforts to
get even more personal with customers over the Web, Dell's hoping that gap just
got a lot wider.
By Marcia Stepanek in Round Rock, Tex.
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DELL will contine to prove that they are the next DELL!!
-Scott |
