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Tuesday, January 09, 2007

Rise and Stall of the Dell Marketing Machine

In the words of any self-respecting leader from an autocratic company culture fashioned in the glory days of the mass-market, "it's either my way, or it's the highway." That's the kind of bean-counter bravado that Wall Street conceived, nurtured and ultimately rewarded. Now those same market analysts that cheered-on that mindset are questioning it today. Why the change of heart?

Perhaps one good case study in the tech sector is the rise and stall of the Dell marketing machine. In February of 2006, Business Week published an editorial entitled "It's Dell vs. the Dell Way." Nearly one year later, a current assessment sheds light on a growing dilemma for the mass-market oriented American enterprise.

People that get very angry at Dell, for unresolved customer care and technical support issues, tend not to understand the company's core business model, or the company's longstanding culture that's sometimes called "The Dell Way." The company has always prided itself on extracting cost elements from every single step in the process of designing, building and selling computer systems.

Doing What They Do Best
When the Dell methodology could no longer sustain continued market growth, of course, they looked for ways to do what they do best -- cut costs. Granted, there's nothing in this observation that is profound. However, few people who now criticize Dell -- sometimes based upon their own personal customer experience -- seem to comprehend just how difficult it must be for the company to live up to their customer's renewed expectations.

Think about this disconnect -- perhaps a gapping chasm -- that separates the non-technical mainstream consumer needs from Dell's inherent ability to satisfy those increasingly multifaceted demands.

Once again, Dell has long been known for its strict financial and operational discipline -- therefore the view of their customer-base from the corporate headquarters in Round Rock, Texas looks like a series of perpetually tweaked spreadsheets shared in a never-ending flow of business performance review meetings.

From a world-view that's founded upon metrics, key performance indicators, and transaction-oriented analytics it must be daunting to be tasked as a front-line 'customer advocate' at Dell. Who are their role models, as they peer up into the corporate hierarchy, and what is their weighted value within the operational decision making process that guides the company?

The Story Beyond the KPIs
For all those probing Wall Street analysts that ask Mr. Rollins and his leadership team to "put a little more color on this quarters numbers," I have a word of advice. Try asking a meaningful question about the longer term prospects of Dell -- and other American companies where growth has stalled -- for you will likely learn more about what really ails their business.

Be honest. If 'good enough' doesn't sound like a viable business model for today's hyper-competitive global networked economy, then offer some constructive criticism. Don't take cheap shots at the business culture that you helped to create -- clearly any Motley Fool with a blog can do that.

In 2007, Dell doesn't need another round of ridicule from external devil's advocates; they do need someone to boldly stand behind their few and beleaguered internal customer advocates.

The Dell Way must be recast into 'the way of the customer,' if the company is to evolve beyond their mass-market legacy, their transient mass-customization, and ultimately discover today's landscape of micro-markets containing customers with logical clusters of differing -- and yes, demanding -- requirements.

Today, Business Week published an editorial entitled "Jobs vs. Dell in Dueling Keynotes" which sheds light on the differences between Apple and Dell, relative to loyal customer engagement. Michael Dell's keynote at CES included a brief reference to the launch of a new microsite called StudioDell.

IMHO, the StudioDell initiative should have been the keystone of Dell's presentation. Moreover, the site's "Learn about new technology" focal point should be redirected towards how their customers apply Dell products to benefit their personal interests and lifestyle. Put simply, engaging Dell loyalists.

Dell's supportive customers don't directly appear on the company's balance sheet, regardless, they could become Dell's most valuable untapped corporate asset.

Disclosure: I am a stakeholder -- I own Dell notebook computers, a pocket PC and a multifunction printer, but no Dell stock.