The Case of Dell: Does a Company Own Its Customers?

by | Apr 15, 2001

What criteria do you use to decide whether or not to invest in a company? P/E ratio? PEG ratio? Price to book ratio? Earnings growth? Revenue growth? Market share? All of these criteria have their appropriate use, but I would like to submit for your consideration another important factor to consider when making investment decisions: […]

What criteria do you use to decide whether or not to invest in a company? P/E ratio? PEG ratio? Price to book ratio? Earnings growth? Revenue growth? Market share?

All of these criteria have their appropriate use, but I would like to submit for your consideration another important factor to consider when making investment decisions: does the company own its customers?

I’m not talking about monopolistic control here. I’m talking about owning customers by delighting them with customer care.

Allow me to elaborate.

My experiences as a customer lately have been so bad that whenever I see the term “Customer Care” on a company’s web site, I want to insert the words “I Don’t” between “Customer” and “Care”.

Anyone using Sprint PCS knows what I am talking about. First, try finding their customer care phone number. It is so well hidden on their web site that it took me twenty minutes to find it. (I’ll give you a hint: you sure as hell won’t find it under “contact us”.) Next, when you finally do find it, try calling the number for technical support, but don’t do it if you plan to eat a meal this millennium — that’s how long you will be on hold before you talk to somebody. Anytime, night or day. Interestingly, one of the numerous recorded messages that plays while you are on hold explains that wait times are so long because Sprint is busy signing up lots of new customers. I guess the existing customers don’t matter.

My recent experiences with Charter Communications, Bellsouth, and Sprint PCS cause me to wonder: doesn’t anybody understand the importance of owning the customer anymore? Doesn’t anybody understand that customers are willing to pay a premium for customer service and technical support?

The only technology company I know that understands this is Dell Computer. We hear a lot about Dell’s business model — the make-to-order model that Michael Dell pioneered.

But you’re missing the point if you think of Dell’s business model is “make-to-order”.

Dell has a much more fundamentally important business model. It’s called “own the customer.” And that, not Dell’s manufacturing business model, is the secret of Dell’s success.

Over the past decade or so, I have purchased about a dozen Dell computers. I could save a few hundred dollars by having my local mom and pop shop build a computer for me, but I wouldn’t even consider it. I willingly spend more money to buy Dell computers because of Dell’s outstanding technical support and customer service. I buy from Dell even though I am somewhat of an expert, and I need less help than their typical customer. (Aside: It always amazes me that the people who need customer care most — the novices — are the ones that make purchase decisions based solely on price.)

I can’t recall the last time I had to wait more than five minutes to talk to somebody at Dell. Nor can I recall the last time my problem wasn’t solved. Dell’s technical support people are so well trained that they seem able to solve even the most complex problems over the phone.

On occasion, I have had a component go bad on my computer. The last time, it was a zip drive. I called Dell at 4:00 in the afternoon, and the repairman showed up the next morning with a new zip drive. That’s why I gladly pay the $150 or so for three years of next day on-site service. And Dell follows me when I travel. They show up in Wichita, Tulsa, or wherever I am to fix my laptop.

So I gladly shell out the extra money, because I value Dell’s outstanding customer service and technical support.

And I would gladly shell out more money for a broadband connection, cell phone service, or any other type of technology if I could find a company that understands and embodies Dell’s business model. Price is not the issue. Never has been.

Companies that don’t own the customer don’t last. It’s as simple as that. Oh, they might make a big splash for a while offering “low, low prices”, but eventually the lack of customer service catches up with them.

And here is what really makes me crazy: that these days, I have to beg companies to own me. Sometimes it seems like I could walk through a trade show with a blank check and still not find anybody willing to own me and solve my business problems.

In order to own me as a customer, a company must meet all of the following criteria.

  1. Provide me with a single point of contact. I don’t care how complex your business is, or how many organizations have to get involved internally to solve my business problem. Isolate me from your organizational complexities. I don’t care if ten stove-piped organizations within your company have to be mobilized to meet my needs. I don’t want to be a prime contractor, responsible for contacting, engaging, and coordinating the efforts of each of these organizations. I want a single point of contact who will handle all of that for me.

  2. No finger pointing. If you are selling a technology solution that involves third party products and services, support the entire solution. Don’t point fingers at third parties. Most of the time when I call Dell, my problem is with a third party software product that came pre-installed on their machine. Dell’s technical support people have provided me with outstanding support for these products. I’ve never had to call Microsoft, Adaptec, or any other software vendor for support. Dell owns all of my business problems, and they don’t point fingers and third parties.

  3. No excuses. I don’t want to hear about how you are trying to improve, and how things are going to get better. I don’t want to hear that nobody else can deliver reliable service or good support. I’m the customer. I want it all, and I want it now.

  4. No voice mail hell. Or, as my friend Don Luskin says, “No voice jail”. I don’t want to spend five minutes working my way through your multi-level voice mail menus. I want to talk to a person who can solve my problem.. The guy who invented these multi-level menus should be taken out back and shot, repeatedly, through every non-vital joint, so that he dies slowly and painfully. Not surprisingly, Dell has a solution for this problem. They put a service tag number on every machine. By entering your service tag number, you are quickly and automatically routed to the right person for customer care.

  5. No waiting. My time is valuable too. Do you really hope to win me over by making me wait for two hours when I call customer support? With Dell, I rarely wait more than a few minutes.

  6. No hiding. If I’m not happy with the support I am getting, make it easy for me to escalate my issues.

  7. No idiots. Don’t pretend to offer technical support by hiring people who sound like they never made it past the third grade. I don’t know how Dell does it, but somehow they have screened out all of the idiots in their hiring process — I can’t remember the last time I talked to someone who wasn’t very intelligent and articulate.

  8. Know your customers. I’m reasonably technically competent. When I call you for support, don’t take me through a trouble shooting script designed for idiots who can’t turn on their computer, or who think the CD-ROM is a coffee cup holder. I have a home network, for crying out loud. Stop wasting my time. If you can’t gather information about your customers, and treat them differently based on their level of expertise (novice, intermediate, or expert), you won’t deserve to be in business. I don’t know how Dell does it, but they clearly have some means of categorizing their customers. I say this because when I call with a problem, they give me instructions that would befuddle a novice user. Somehow, they know me well enough to know that they can instruct me to do something without having to give me instructions on how to do it. It saves a lot of time, and it impresses and pleases me that they respect the knowledge that I possess.

  9. No lying, no guessing. If you don’t know how to solve my problem, don’t pretend that you do. Get competent help — fast. Dell apparently has a very sophisticated knowledge base that enables their technical support people to find solutions to problems they have not encountered before.

  10. Empower your people.. Earlier, I talked about the time Dell came to my house to replace my zip drive. What I didn’t tell you is this. Turns out that my zip drive was fine. The problem was that the zip drive in my daughter’s computer was corrupting the media. Unfortunately, my daughter’s computer was three months out of warranty. But realizing that I was a loyal customer, Dell instructed their serviceman to replace the zip drive in my daughter’s computer anyway — at no cost. Why did Dell do this for me? Because Dell understands the importance of owning the customer.

  11. Keep me informed and up to date. Recently, I began having problems with my Sprint PCS phone. I needed a solution this millennium, so instead of calling their “customer I don’t care” number, I took my phone into my not-so-local Sprint PCS store. They plugged it into a port and upgraded my software. Not only did it solve my problem, it provided me with lots of new features I didn’t have before. For example, when I am on a call, I can now see the name and number of a second caller who is calling in. Any I noticed yesterday that my phone now roams when I am in Canada — it never did before. All of which is wonderful. But Sprint PCS did nothing to keep me informed. No letter. No notice on my monthly bill stating, “Take your phone down to your local Sprint PCS store and upgrade your software to take advantage of great new features.” Nothing on their web site. Is this customer service? Dell, on the other hand, makes it extremely easy for users to download the latest drivers and bios updates from the internet. They still have room to improve — I don’t want to decide what updates to download. I would prefer to have Dell’s web site examine my computer and determine what updates to download. I’m confident they will get there.

Dell Computer gets it. They understand that I want to be owned. Sadly, they are the exception, rather than the rule, in the world of technology. Most companies would get F’s if the above list was a report card. Fortunately, they have marketing departments to turn the F’s into A’s, much the way a kid would do before showing the report card to a parent.

Which means that there is a great opportunity out there for companies to grab market share by learning how to own their customers. My friend John likes to make the point that it is easy to shine in a world full of average people — all you have to do is be slightly above average. We can extend this concept to corporations. We have a world full of corporations that, even at the very highest levels, are managed by average people who rose to the top for reasons other than managerial acumen. In a world full of corporations managed by average people, the few that understand the importance of owning the customer will be the ones that shine.

Next week, in a follow up column, I will recognize the efforts of a few people — owners of small companies, or employees of big companies, who understand that the key to success is owning the customer.

The views expressed above represent those of the author and do not necessarily represent the views of the editors and publishers of Capitalism Magazine. Capitalism Magazine sometimes publishes articles we disagree with because we think the article provides information, or a contrasting point of view, that may be of value to our readers.

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