Will the Holy Grail of marketing revive Dell?
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| If Dell wants to regain its former glory, it will have to do a better job selling laptops like its XPS m1330; and that means new marketing methods. Image: Dell |
Two years from now, we’ll be hailing Dell as a marketing innovator — or snickering about its failed attempt to decode the art of hype.
Either way, the struggling computer maker is promising a spectacle that marketing experts everywhere will be watching with keen interest. This week Dell (DELL) announced that over the next three years it will pour its considerable $4.5 billion marketing spending into an unprecedented partnership with marketing giant WPP.
The goal of the effort is twofold. First, Dell executives want to bring all marketing efforts under one roof, rather than continue spreading them among 800 agencies worldwide. Second, they want to invent a new way to measure the bottom-line financial benefit of every online ad, TV commercial or press release Dell puts out — basically, to crack the code of marketing buzz.
Sound ambitious? It is. Marketing can be murky stuff. Assigning a value to computer chips or hard drives is one thing. But how do you put a dollar value on marketing gems like Apple (AAPL) CEO Steve Jobs’ Macworld keynote speech, or the Maytag repair man, or the Energizer Bunny?
If Dell and WPP can figure it out, the marketing effort could play a major role in the company’s turnaround effort. Dell has lost ground to rivals such as Hewlett-Packard (HPQ) in part because other companies have more experience reaching out to customers where they shop, rather than just connecting to them by phone, mail or Internet. Such marketing savvy is increasingly valuable in the technology business as customers view tech devices as portable style items, not just as stay-at-home appliances.
'Wave of the future'
Dell has launched a new global retail strategy to adapt to that new reality, and gain ground on its competition. A new analytical marketing model that allows the company to reach more customers and spend less money would be a definite plus.
“That kind of marketing is the wave of the future,” says Eric T. Bradlow, editor-in-chief of Marketing Science and a professor at The Wharton School of the University of Pennsylvania. “Given Dell’s expertise in data collection, it is ambitious, but it’s something that’s possible.”
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| Founder Michael Dell had a groundbreaking model for PC manufacturing; the company now wants to do the same for marketing. Image: Dell |
That elusive formula has been described as the Holy Grail of customer outreach. No company yet has discovered the secret, so there’s reason to doubt Dell will be the first. Then again, Dell has a track record with Holy Grails – years ago the company revolutionized manufacturing. Its number-crunching system made Dell the biggest and most efficient PC maker in the world, until rivals figured out ways to close the gap.
“This really means applying the same kind of discipline to marketing that Dell revolutionized in the supply chain,” says Casey Jones, Dell vice president of global marketing. “We’ve got phenomenal data. All we have to do is connect the dots.”
Connecting the dots
But boy, are there a lot of dots. To do this right, Dell will have to track every marketing campaign, public relations effort and product price shift, and watch how these and other factors affect sales. The volume of data will be so great — and the analytical challenge so complex — that Jones felt Dell had to run all marketing through a single agency for it to have a chance of working.
To help execute this ambitious plan, Dell picked an ambitious agency. WPP, a multi-billion-dollar conglomerate built by raider Sir Martin Sorrell, owns properties such as mainstream marketer Young & Rubicam, online specialist Beyond Interactive, mobile-focused M:Metrics, and TV measurement firm AGB Nielsen. It was WPP’s experience with measurement that sealed the deal — Dell needed a company equally comfortable with advertisements and analytics.
There are also plenty of downsides to cozying up with one big partner. Similar strategies have backfired before. For instance, Dell stuck to exclusive relationships with Microsoft (MSFT) for operating systems and Intel (INTC) for chips for too long — competitors used open-source software and chips from Advanced Micro Devices (AMD) to get a jump on Dell.
A calculated risk
And then there’s the matter of hedging bets. If the relationship with WPP sours, Dell could have a hard time switching gears, says Tülin Erdem, a marketing professor at New York University Stern School of Business. “You have all your eggs in one basket,” she says. “Any time you have only one relationship, there’s the risk that if something goes wrong, everything will go wrong.”
Investors seem to have lost some confidence in the company. The stock is down 23 percent from its October high, as investors expressed disappointment that Dell is spending so heavily to get the company into better fighting shape.
Despite the cloud over Dell, Erdem admires the gutsy marketing move. “Given Dell’s problems over the last few years, obviously they had to do something,” she says. “It’s a calculated risk. If it works, it will be wonderful.”
Others here have commented on quality, service and support, and that's all part of a marketing message. You have to have it, then you have to make sure your buyers know about it.
But one thing that helps marketing tremendously over the long run is something commenters haven't hit on — design. And by design I don't mean the skin on the computer, or the box it's shipped in. Design is how something works, how you interact with it, and how it does the job you've asked it to.
Obviously this is something Steve Jobs understands. The iPod wasn't the first mp3 player on the market but they got the design right. Ditto for the iPhone.
Another example: Volkswagen turned an ordinary Golf into a compelling new Beetle. Chrysler turned an ordinary Neon into a compelling PT Cruiser. Both cars changed the skin, of course, but also changed perceptions in how you owned/drove/rode in it. And for that they charged, and got, a premium, in the same way Apple gets a premium for a MacBook.
Now look back at Dell. Is there anything about the design of a Dell computer that inspires you? In how you use it, work with it, carry it with you? Not really.
You can still survive in a market with ordinary design, but then you have to have the rest of it right — quality, service, support, etc. And since it appears Dell has problems there, it now means that there is no compelling reason for anyone to buy a Dell.
No clever new marketing plan in the world is going to fix that.
From Jon Fortt: See How to fix Dell.
Dell has been putting out crap, and they know it. My sister purchased an Inspiron laptop that would crash on a regular basis just after the warranty expired. She contacted Dell support and was advised by the call center in India that she should ship it in for a $600 motherboard replacement (which isn't much less than the original cost). I did a Google search and found that it was a design flaw causing the CPU to overheat. I bought a $10 laptop cooler and installed shareware to improve CPU fan performance. Denying a known flaw, then trying to PROFIT from it is so short sighted that the company deserves the death sentence the market has imposed. I've purchased a Compaq desktop and an HP laptop this year, without giving Dell ANY consideration. Dell can spend trillions on marketing but that wouldn't change. NEVER. I am sure I'm not alone. I
Ummmmmmm even though i don't care for Dell…..I hate apple….they are the leader of the emo crowd! go pray to your god Steve jobs while he sells you sh– that is over priced!
Remember what Michael Dell said of Apple about a decade ago?
"I'd shut it down and give the money back to the shareholders,"
ummm, check yourself, before you wreck yourself.
-Americo
I just had a terrible incident with a brand new DEll that I had bought. The OUTSOURSE problem is out of control. Those people in the Philipines, India and El salvador can barely answer the phones let alone diagnose your problem. I had bought every warranty possible for my new dell and someone should have come to my computer to repair it but they made me send it in to repair – they lost track of it and then I finally only got action after sending a letter directly to Michael Dell's office. Once should not have to do this. US support should be available to US customers and tech support should have a better understanding of what the warranty coverage is. Long story but after a 4 page letter, I am getting attention and Dell is trying to make things better. They have agreed to send a new computer but it is not here yet so we will see. I must say – I did get a CALL from Someone in the US within 6 hours after I sent the letter to Michael Dell via e-mail. I recommend every customer do this!!!
Dell computers are terrible. Aside from their cheap looking design, they are not reliable machines. My friends owned them in law school, and this was enough for me to never buy one. No one I knew was satisfied, but since we were broke law students, people had to get one. If you can afford a better computer, don't go with Dell.
Maybe they should switch from 'cheap' to compelling and irresistable products, and forget the analytics.
They can improve the design of their computers, but if the quality continues to be bad and the customer support is lousy, then 45 trillion in marketing wouldn't be enough.
They might be able to market Michael Dell a little better. Right now when I hear his name I think "innovation in computer assembly" and "armtwist your suppliers into lower prices" and "act surprised when you get the quality you paid for". If Mikey has any vision that includes quality computers, innovative design, and the best customer service in the business, then I sure haven't heard of it. As the face of Dell, he comes across as a cross-eyed chubby Texan loudmouth jewboy bear. Might be considered hot by a segment of the gay community, but that's it.
Our company has used Dell computers exclusively since the late 1990s. Initially very pleased with our Dells, about 3-4 years ago their quality declined precipitously and their tech support went from excellent to terrible. We've been graudally replacing them with other makes. In all the buzz about a new marketing campaign, people seem to have forgotten that if you make a poor product and give rotten support, people will remember and not buy from you.
Dell needs better service, better quality… and lower, consistently lower prices. Spending a ton of money on marketing analytics is the wrong answer to the wrong question.
their supply chain is horrible, it takes sometimes 2-3 months to get your laptop and good luck trying to cancel and getting your money back. the customer service is horrible and after 3 bad experiences, im scared to order anything from them again
I used to work for a company in Texas where Dell support was outsourced to. I can still remember when the contract was being canceled and calls were being routed to India. There were so many complaints about the poor English of the new support staff in India. The problem was that management always looks to shave cost, and never really sees the bigger picture. The big problem was that even though there were complaints, the actal profit margin didn't slip right away. Dell had a very loyal customer base. Since numbers didn's slip and costs were shaved it looked like the idea worked, so they committed heavy to India. I am guessing they are in the process of reversing course, but since the industry went bust about that time, the workforce was gutted and it will take a long time to regenerate even the low level phone techies. It only takes about a month to bring one up to speed enough to answer the phone, but about 6 months+ for them to become competent. With a high turnover rate because of the relatively low pay (about $15-$20/hour) it takes a lot longer than it looks like on paper to rebuild a workable labor base.
What Del has to do is improve its Support Services for exisitng customers. Dell should also stop outsourcing Help Desk functions to India. Finally, Dell needs to use QUALITY product parts.
I agree with several of the above comments. Dell sold me on its clean pricing, excellent customer service and product reliability. My last two Dell purchases, however, have shown me how far this company has slipped on all these issues. To me the slip in product reliability is disappointing, but it is the lack of effective customer service that has sealed my dismay. I had been a loyal Dell customer for over 10 years…no longer.
"To do this right, Dell will have to track every marketing campaign, public relations effort and product price shift, and watch how these and other factors affect sales."
This will not work. Period. Too complex. We can laugh at Star Wars-like pronouncements (may the Force be with you) but what is really needed is a FEELING for the market and the firm. Think of white-water canoeing. Think of hang-gliding. Analysis can provide a map but it shouldn't do the steering. Dell is over-thinking the problem and will probably do worse–and spend a lot of money doing it.
OMG! Dell rocks!! I would get a Dell computer anytime and anyplace. I work for a company that has over 300 computers and they are all Dell. Also servers. They have the very best customer service that I have ever, ever experienced. I wish they could adopt me (they are just so nice). I have to deal with customer service all the time on software and hardware. They are just simply the best EVERY time. They beat the EVERY time each time I need some help.
I have to agree with the posts above. First, in this new "connected" world, marketing won't matter if you don't have the product right. For one reason this is true – see this post about online communities:
http://humanvoice.wordpress.com/2007/12/05/can-marketing-save-dell/
WPP will have to help Dell get back to basics, and then into the conversation to save the day.
TO'B
I have owned 5 top of the line Dell computers in the past! The past three have been disappointments, very poor customer service, you are going to get it Dell’s way or no way (whose money are you spending yours or theirs), bad components, and pricing that is confusing from one day to another. These are just a few of the reasons I have chosen to give my money to a different maker…Apple…At least it works, easier to use and I can have it my way not Dell’s way.
It's amazing how simple things can be made so complex. Dell is beat because they are not innovating. HP has cool looking laptops that are not as bulky. Dell on the other hand forgot about looks altogether. Guys this is the first thing people see, hello? And the bulkyness look of their laptop–it looks like a box. Can you hire some designers who can create smooth curves? Then Dell needs to imporve thier quality and reduce the price and they can cut their marketing budget in half. Watch this stuff sell! People want fast, quality cool looking machine at a good price.
Dell needs to work on better products… like laptop batteries that last longer than a year and cost $180 to replace. They also need to simplify their pricing. They play to many games with pricing and promotions. Price something on 2 consecutive days and you will get 2 different prices. Give us good prices all the time without the games. If I want games I will buy video games. I should not have to play games just to buy equipment !!!
None of this matters one iota if you order a computer and it's out of stock and will take three weeks to get it.
Dell should be spending their 4.5 Billion in making products that customers want. Apple hardware for instance is far more innovative with a much cleaner design.
Centralizing marketing has been done, but the drive to metrics is a new wrinkle. Two critical questions remain. First show where WPP has been able to decently measure the impact of cross campaign "leverage" where one campaigns benefits from others before it, and the buyer acts after many "touches". Second, B2B tech marketing is pretty specialized, and having 1,000 relative neophytes to drive complex tasks like marketing for Server Virtualization could be problematic. Especially if DaVinci tries to do the vast majority of work in-House
My last go around with Dell was so bad that they have lost me as customer for ever. I bought a XPS desktop. The first computer failed within a month and was finally replaced after both a new motherboard and memory chips failed to fix the problem. The sent replacement died within a week. I spent what seemed like an hour a day dealing with people who could not do anything for me. I was shunted from department to department, given case numbers and numbers of people to call ( never did reach one again) and promised countless call back phone calls that never came. It was only after emailing Micheal Dell directly
( who knows there that email actually went) that I was finally able to get the third new machine. The expedited customer service was a joke with some of the conversations bordering on farce. Until their customer support improves nothing will ever get me to buy a Dell product again.