Did Poor Customer Service Really Kill Dell?

This blogger believes that customer service, or the lack thereof, has been the deciding factor in Dell’s decline. He cites “low cost and high operational efficiency” as not being enough. While I’ve personally considered Dell a disappointment in terms of hardware performance and reliability, I’ve never heard anyone complain about the service (aside from having to call them all the time because the systems keep breaking). Certainly no more than I’ve heard complaints about Sony or Apple (and reliability has been an issue for these manufacturers as well).

I’d like to present an alternate theory: that rather than rebel against poor customer service, what customers have really shied away from is Dell’s “directness.” I think that increasingly consumers have been pushed (back) toward retail computer buying. There are many reasons for this. Bundling and 0% financing options are one big one. The perceived value of a free printer or scanner at retail usually far outweighs the cost of delivering it. And it’s a hell of a lot easier to wait for the “0% on all Computers until 2008” insert in the Sunday paper than it is to wade through the shady 10% coupon deals for Dell on eBay.

Proliferation of choice may also be a factor: I think consumers have become less confident in their ability to choose the right system and components online, and Dell’s plethora of models and configuration options works against them in this regard. Intel vs. AMD (how many cores do I need? 32- or 64-bit? And don’t even get me started on the “processor number” debacle), a half-dozen different kinds of RAM (DDR? DDR2? what’s PC-3200 in Mhz? and how much do I need?!), three or four generations of hard drive technology all currently available, XP vs. Vista, CD vs. DVD.

And then there’s the sales aspect–dragging people squirming and clutching their wallet that last few feet to the register. Should I wait for Vista? What if BlueRay suddenly languishes and I can get an HD-DVD drive for $50 next month? In an almost perverse reversal of the status quo, I think the geek at Best Buy and the WalMart sale flier are actually keeping the PC unit sales flowing at this point with gentle hand holding and impulse buys. Conversely, anyone confident and patient enough to shop online has been in a holding pattern for at least six months.

I wouldn’t be surprised if we see Dell making some deals for retail placement this year. Given that they already have a rivalry/relationship, WalMart/Sam’s Club is the obvious first step. Costco is always a possibility. But to really make a go of it, Dell is going to need to get in bed with one of the big chains: Best Buy or Circuit City. Or, if they want to really hit it out of the park, Target. This strategy helped pull Gateway out of the fire when their online business dropped off (which, ironically, did have something to do with customer service). Adjusted for the 21st century, it could work for Dell too.

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