Académique Documents
Professionnel Documents
Culture Documents
Secrets of
DELL COMPUTERS
“ Building Great Customer
Experiences”
Prepared
By
Hasan Kursad Devecioglu
Mercy College
July 2003
1
INTRODUCTION
Michael Dell established Dell Computer Corporation in 1984 in Austin, TX with the
capital of $1,000, during the time he was Attending University of Texas. He had a vision
that he could do great things by upgrading PCs and sell them. In 1983, his father asked
him what he wanted to do with his life; Michael’s answer was “ I want to compete with
IBM!” Even-though his father was not amused; he made his choice and started his own
business with all his heart. While upgrading and selling PCs, he found out that traditional
think of finding ways to sell to the end users directly. By doing so, decreasing the costs
on the supply chain and more important servicing the customer with those saved dollars
would be a great solution in order to increase customer satisfaction and loyalty. He was
not only in terms of the sales but also building great customer relationships.
We, direct marketers, are in an environment, which changes so quickly and only way to
survive is keeping track with customers’ preferences and trying every possible method to
satisfaction, customer loyalty and customer profitability in cost effective way. In Dell
Corporation, success is coming from proper research, positioning and the most important
approach to each customer in each segment to build and improve customer relationships.
Computers. That is not an inside out company but outside in. Since what he is doing is a
2
perfect example of direct marketing, I have enjoyed making research and preparing this
project. I would like to give you detailed information of Dell’s success in the view of
M
P
l
ay
Fujitsu-Siemens computer Holding 1,700,000
el
..
IB
D
ew
u.
its
Gateway 506,000
at
j
G
Fu
DELL COMPUTERS (2)
The Company was founded in 1984 by Michael Dell on a simple concept: by selling
personal computer systems directly to customers, the Company could best understand
their needs, and efficiently provide the most effective computing solutions to meet those
needs. Dell Corporation is based in Austin, TX. They have 40,000 regular employees
Currently Corporate customers make up about 80% of Dell’s business. Dell’s direct
3
Description of Business (3)
Dell Computer Corporation designs, develops, manufactures, markets, services and
notebook computers and enterprise systems (includes servers, workstations and storage
products), and also markets software, peripherals and service and support programs. The
Company is managed on a geographic basis. The three geographic segments are the
4
Dell Computer Corporation Organization
(4)
Office of Chairman
Michael Dell
Chairman
Morton Topfer Kevin Rollins
Vice Chairman Vice Chairman
5
Segmentation and Dell Computers(5)
Segmentation is the backbone of the Dell Computers operations. Based on segmentation,
company takes its positioning and modifies its offerings for each segment’s customers.
Michael Dell says, “An Important element of virtual integration with customers is
segmentation. The finer the segmentation, the better able Dell is to forecast
what customers are going to need and when. Then coordination of flow of strategic
information comes to stage all the way back to suppliers, effectively substituting
Small Customers
Large Customers (Business and consumers)
6
Dell's Market Segmentation
00
8
1
9
0
9
19
20
19
19
20
ar
ar
ar
ar
ar
ye
ye
ye
ye
ye
prospects, based on the Dell 2002 annual report. Here are the factors:
7
•General economic and business conditions
•On the level of demand for Dell’s products and services, and on Dell’s ability to
manage its supply and delivery logistics in such an environment
•The level and intensity of competition in the technology industry and the pricing
pressures
•The ability of Dell to develop new products based on new or evolving technology
and the market’s acceptance of those products
•The ability of Dell to manage its inventory levels to minimize excess inventory,
declining inventory values
TIMELINE (8)
•1984 - With $1,000 in startup capital, Michael Dell registers his business as Dell
Computer Corporate. The company becomes the first in the industry to sell custom-build
8
•1986 - The company also pioneers the industry’s first thirty-day money back guarantee,
which becomes the cornerstone of Dell’s commitment to expand its service offerings and
offer superior customer satisfaction and offers the industry’s first onsite service program.
•1990-Dell started to sell computers through consumer retail stores such as CompUSA
and Best Buy. The company later exits this segment after determining the retail-store
9
Business Strategy (9)
The Company’s business strategy is based on its direct business model. The
is the best business model for providing solutions that are truly relevant to end-user
needs. This concept, together with the Company’s flexible, build-to-order manufacturing
process, enables the Company to achieve faster inventory turnover and reduced inventory
levels and allows the Company to rapidly incorporate new technologies and components
into its product offerings. In the same way that the Company’s computer products are
built-to-order, service and support programs are designed to fit specific customer
requirements. The Company offers a broad range of service and support programs
through its own technical personnel and its direct management of specialized service
suppliers. These services range from online support to onsite customer-dedicated systems
engineers
Dell is the first company, which starts the direct selling model to end users in computer
market place. Following benefits give great competitive advantage to Dell Corporation:
10
•Avoids the higher inventory costs associated with the wholesale/ retail channel and
the competition for retail shelf space
•Allows the Company to maintain, monitor and update a customer database that
can be used to shape future product offerings and post-sale service and support
programs.
The Company develops and utilizes direct customer relationships to understand end-
users’ needs and to deliver high quality computer products and services tailored to meet
those needs. For large corporate and institutional customers, the Company works with the
customer prior to the sale to plan a strategy to meet that customer’s current and future
technology needs. After the sale, the Company continues the direct relationship by
establishing account teams, consisting of sales, customer service and technical personnel,
dedicated to the Company’s large corporate and institutional customers. The Company
direct customer relationships provide the Company with a constant flow of information
about its customers’ plans and requirements and enable the Company to weigh its
11
Chart of Dell Direct Model (11)
immediately Dell Began selling $1 million per week through Web. Once customers
logged onto the site and configured the system that best suited their needs, they had the
option of purchasing the system using a credit card. After ordering the system, the
customer could use “dell.com” to track the order’s status from the time it was entered in
the system, through to the manufacturing process, and then to shipping. Once shipped,
dell.com was linked to shipping partners who assigned the system an air bill number that
racked delivery of the system. In addition to the purchase functionality, the site contained
complete service and support data, with 35,000 pages of troubleshooting information-the
same information used by the Dell’s technical representatives to solve hardware and
software problems over the phone. Dell served its online customers with 12 sales reps
and two order processors dedicated to processing Internet orders. According to the 2002
•According to Nielsen/ Net Ratings, during the December 2000 holiday season,
www.dell.com was the third most visited web site in USA
12
•Custom Internet sites, called Premier Pages™, for various corporate and
institutional customers, allowing these customers to simplify and accelerate
•Through these custom sites, the Company offers the customer paperless purchase
orders, approved product configurations, global pricing, real-time order tracking,
•an online virtual account executive for its small business customers
•for all domestic customers, the Company provides a spare-parts ordering system,
and a virtual help desk featuring natural-language search capabilities and direct
•Listen their customers to make sure what they need and when they need &
responding them.
•Learn from customers as much as possible (Michael Dell spends 40% of his time
with domestic and international customers)
•Before building any product, they knew what the customer wanted and were able
to deliver exactly that. To make this model successful it was important that the
13
entire sales force is trained to understand the customer requirements and convey it
•Customer support after sales over the phone and the internet
customers in order to build and expand the relationships with customers. Here are the
the cost by eliminating the retail stores and spend those saved dollars on customer service
14
and other after sale services in order to build great relationships with customers. Here are
•Being able to contact with the customer directly so that can understand better they
customer needs.
•Engaging with customer on each touch point as productive & efficient as possible.
Capturing as much information as possible.
Conclusions
•Dell has a different way to provide computers in market place, in terms of the
channels and quality of contact moments. That gives a great advantage
•Dell reducing its costs by using direct marketing methods. Therefore they can give
build better customer relationships by using saved dollars from regular distribution
channel.
•Dell has to keep contacting with customers to determine any change on customer’s
purchasing behavior and preferences.
•Dell has to keep an eye on rivals such as HP and IBM against any competitive
move.
15
•Dell’s CRM strategy based on direct model is the best way to capture information
about customers and analyze it. DATA IS THE KING in any CRM system as long as
•High level of sales is the greatest indicator of success on CRM strategy along with
customer loyalty and satisfaction.
END NOTES
1- PC World Magazine – April 2003 issue
2- Cases In Electronic Commerce – Authors: Sid L.Huff,Michael Wade, Michael Parent, Scott
Schneberger, Peter Newson ) Mc Graw Hill –2000- P:233
3- Dell Computer Corporation Annual Report 2002
4- Cases In Electronic Commerce – Authors: Sid L.Huff,Michael Wade, Michael Parent, Scott
Schneberger, Peter Newson ) Mc Graw Hill –2000- P:234
5- Direct From Dell by Michael Dell – 2000 – P:157, Cases In Electronic Commerce – Authors: Sid
L.Huff,Michael Wade, Michael Parent, Scott Schneberger, Peter Newson ) Mc Graw Hill –2000-
P:231
6- Dell Computer Corporation Annual Report 2002
7- Dell Computer Corporation Annual Report 2002
8- Direct From Dell by Michael Dell – 2000 – P: ix
9- Dell Computer Corporation Annual Report 2002
10- Dell Computer Corporation Annual Report 2002
11- Direct From Dell by Michael Dell – 2000 – P: 21
12- Cases In Electronic Commerce – Authors: Sid L.Huff,Michael Wade, Michael Parent, Scott
Schneberger, Peter Newson ) Mc Graw Hill –2000- P:240
13- Direct From Dell by Michael Dell – 2000 – P: 157-169
14- Dell Computer Corporation Annual Report 2002
15- Dell Computer Corporation Annual Report 2002, Direct From Dell by Michael Dell – 2000 – P: 157-
169, Cases In Electronic Commerce – Authors: Sid L.Huff,Michael Wade, Michael Parent, Scott
Schneberger, Peter Newson ) Mc Graw Hill –2000- P:251
16