2/7/2009

Case Study: Dell Hell

The impact of social media on corporate communication

Kimberly T Williams

Kimberly T Williams

Kimberly T Williams

Case Study: Dell Hell

The impact of social media on corporate communication

Case Objective:
The internet within the space of ten years has changed in regards to the manner in which individuals use it. In particular, the development of social media has forever changed the manner in which individuals communicate. This new evolution of social media, including social networking sites as Facebook and Twitter and activities such as blogging, have begun to show themselves as a prominent tool for not only social networking but also as an effect communication medium in the realm of business. Despite social medias mainstream popularity, many corporations have a tendency to disregard it as a professional means of communication. As it turns out, this attitude can be detrimental. This case study will demonstrate how social media can directly impact the success or failure of corporate communication.

Executive Summary
In June 2005, Dell Inc. received some major complaints concerning its customer support services. Blogger Jeff Jarvis posted a series of rants, coined Dell Hell, about the Dell laptop hed recently purchased. Jarvis posts caught the attention of others who

Kimberly T Williams

also began to lodge their own negative experiences with Dells customer service. It was not long before the Dell Hell posts began to catch the attention of the mainstream media. As a result of the bad press and Dell Inc.s continued silence on the issue, the computer industry giants sales and reputation began to plummet.

Background
In 1983, Michael Dell attended the University of Texas in Austin as a premed student. However, Dell had long developed a passion for computers. At the age of 15, Dell purchased (and dismantled much to the horror of his parents) his first computer, an Apple II. As a result of his interest, during his freshman year of college, Dell began to buy, upgrade and resell computer components from his college dorm room. By the end of his freshman year, Dell was earning approximately $80,000.00 per month The following year, Dell incorporated his business as PCs Unlimited and moved his headquarters to Austin Texas. In 1985, Dell hired and engineer and the company began to design and build computers with purchased components. In 1986, Dell introduced the fastest PC of that time, with a 12 megahertz, and 286 processor. The model generated a great deal of attention and success. Sales that year were reports at $60 million dollars. In 1987, Dell renamed his company Dell Computer Corporation and a year after that took it public. Much of the companys success was a direct result of Michael Dells original concept of a direct sales model. Consumers were able to customize their machines to their exact

Kimberly T Williams

specifications and place the orders directly by phone. The advantage of this model of custom configuration and a direct relationship with the customer was that Dell, Inc. was providing the customer with exactly what they asked for and did not have to guess what the customer might want. One of the drawbacks to the direct model was that customers were not able to see or handle their product before purchasing it. As a solution to counter this issue, Dell offered his customers a 30 day money back guarantee and next day at home product assistance. Both of these initiatives were industry firsts and they served to establish Dell, Inc. as a consumer friendly company. By 1994, Dell, Inc. had become one of the top five computer system manufacturers in the world. The company saw the potential of using the internet to generate sales and so in 1996 www.dell.com was introduced. Just seven months after its initial launch, the site began to generate $1 million dollars per day. Dell Inc. became a pioneer of ecommerce. With the introduction of dell.com, the company introduced other consumer experience. In 1996, Dell introduced e- support, Dells online technical support system which served to further enhance Dells reputation among consumers. In September of 1999, Ford CEO remarked We can interact much more effectively with the [Dell] than with their rivals. As of late 2002, Dell,Inc. was recognized as the largest online commercial seller of personal computer systems.

Give em Dell

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Near the end of June 2005, media consultant and blogger, Jeff Jarvis purchased a Dell manufactured laptop as well as the four year at home warranty. Almost immediately after receiving the machine, it malfunctioned. After contacting Dells customer support, Jarvis was told that he would need to send the machine back to the company because the technician would not be able to come to his home with the parts he would need. This exchange angered Jarvis so that he began to vent his frustrations on his blog at Buzzmachine.com. . This initial post received approximately 253 comments, all of which were written by other consumers whod been on the receiving end of Dells poor customer service. Jarvis received his laptop back only to find that it was still not functioning. He continued to rant on his blog. Jarvis begins his third post with the phrase Well my Dell Hell continues In this post, Jarvis detailed his encounters with Dells customer service. He wrote And I am getting email from Dell people who are clearly not paying attention. Dear Mr. Langley, said one. I corrected them and said the names Jarvis. The response: Dear Ms. Kolar. In this same post Jarvis asks the question Is anybody at Dell listening? Jarvis continued to send emails to Dell but he never received a reply. Jarvis also proceeded to chronicle his experience and his ever growing frustrations on his blog. He received more comments. Some people related their own experiences while others offered advice such a Get an Apple.

Kimberly T Williams

It was not until Jarvis wrote a letter directly to Michael George, Dell s Chief Marketing Officer and Vice President for US Consumer Business, that Jarvis received the long awaited reply. Jarvis received a call customer service representative from Dell (while purchasing an Apple) offering him a full refund for his laptop which he accepted. On July 11th, Jarvis posted his final Dell Hell rant. However, the fires of Dell Hell had been stoked and continued to burn throughout the summer of 05. Thousands of other unhappy Dell customers had either commented on Jarvis blogs or linked to it from their own and it was not long before the mainstream media took notice. On August 16, 2005, Computerworld online reported on a study conducted by the University of Michigan regarding Dells customer service rating. According to the study, Dells ACSI (American Customer Satisfaction Index) score dropped five points in one year. Survey respondents complained mostly about the quality of Dells customer service and not its product. A few recurring complaints were the length of time on hold and quality of help (Krazit). Media Post News reported In the days before the blogosphere, Jarvis might have been another dissatisfied customer. But today, his widely circulated criticism has triggered dozens of other bloggers& hundreds of commenters to publicly complain about service theyve received from Dells technical support (Gupta). Business Week Online wrote PC industry circles have been buzzing in recent months that Dells customer support is slipping- a claim bolstered on Aug 16th by a University of

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Michigan study that showed a hefty decline in customer satisfaction from a year ago (Lee). Intelliseeks Pete Blackshaw stated The most sensitive question for the brand is this. Whats the net impact of a curios buyer stumbling into Jeff Jarvis nasty gram? He goes onto say This is where brand reputation and purchase behavior take a hit (Lee) Blackshaws statement was accurate both Dells consumer sales and reputation were directly impacted by Dell Hell.

What Went Wrong

Remaining silent Despite the onslaught of bad press & negative blogging, Dell remained silent. While the flames of Dell Hell burned, Dell Inc. played the fiddle and did nothing, at least publicly. The company refused to comment on any of Jarviss blogs and did not respond to any press statements regarding the incident. As a matter of fact, during the height of Dell Hell, Dell closed its online customer forum. The silent treatment did not work in Dells best interests and served to only make matters worse. The reason for Dells silent treatment was quite simple. Dell knew what was being said about them in the blogosphere, but it was company policy to look but not touch or in this case not reply publicly. It can also be argued that Dell did not take blogging seriously since it was still a fairly new medium. During the time of the Dell Hell rant there were not many companies using blogging as a communication tool therefore, in the eyes of Dell, blogging did not have much credibility.

Kimberly T Williams

Not listening Dell simply did not listen to its customers. It should not have mattered to Dell from which media their consumers were using to voice their concerns, Dell should have listened. Even with the silent treatment, Dell could have taken action which alone would have spoken volumes. Resolution A year after the Dell Hell incident, Dell created two new corporate communication initiatives which incorporated social media technology. In June 2006, Dell launched its own blog, Direct2Dell. In a video interview Michael Dell stated that it was not the Dell Hell blog that encouraged Dell to create its own corporate blog. Michael Dell asserts that Direct2Dell was already in the works (Jarvis). Whatever its origins, it appears that the blog is encountering some success in quelling Dells negative online conversation. According to Dell, at a low point in 2006, Dell calculated at least 50% of the online conversation was negative. A year later, Dell calculates that the negative online conversation was reduced to 23% (Moore). Dell has also extended its blogging to include a blog for Dell employees as well as a blog for Dells investors. The Direct2Dell blog changed how the company viewed online customer service. Dell now understands the importance of participating & reacting to online conversation. After the success of the Direct2Dell blog, Dell continued to find new ways to communicate with its consumers and identify with their needs. On February 2007, Dell
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Kimberly T Williams

launched IdeaStorm, which served as Dells online suggestion box. In this online forum, Dell welcomes consumers to post ideas and suggestions on how it can improve their products and services. It also serves as a means for Dells product development team and consumers to co create products. Dell learned how powerful social media can be and how it cannot be simply ignored. It also learned new ways in which to incorporate new technologies into its existing communications platform.

How to Avoid Hell

The Dell Hell episode serves as a useful model for the corporate approach to both social media and consumer relations. Dell Inc. learned from their experience with mainstream social media and took the proper measures to counter the effects of Dell Hell and preventative care to avoid future incidents. From Dells experiences, a simple model can be developed to not only serve as a deterrent of negative criticisms but also a positive way to connect with constituents. Put an ear to the ground Quite simply, companies need to take the time to listen to what is being said about thier organization particularly online. In the online arena, it is very easy to see and hear what is being said about a company. Web sites are fine, but corporations cannot expect much feedback from them.

Kimberly T Williams

Put your money where your mouth is Companies should demonstrate how they are listening by implementing some of the ideas that it has received either directly or indirectly. Dell for instance began to manufacture machines preinstalled with Linux because of a direct suggestion from the public. This served to not only increase Dells consumers to include Linux users, but also created a positive relationship between consumer and company. In with the new Companies should begin to use new social media tools to interact with the public. If Dell has taught us nothing else it is the power and popularity of social media. There is quite possibly no better or more cost effective platform to engage with the public than online. Blogging, in particular, is one of the best ways to interact with a variety of constitutes, whether they be consumers, stockholders or employees. Blogging generates a real conversation and adds a human voice. A human voice communicates sincerity, which is not a characteristic commonly associated with large corporations.

Conclusion
It should be noted that social media initiative should not just be developed as a method to avoid a crisis or as a way to manage a companys reputation. Initiatives should be taken as a new method of interaction. People, especially in these troubled times, do not have a great deal of confidence in corporations. Through the use of social media, companies have a real chance to reverse the general opinion.

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Works Cited
Albanesius, Chole. Dells Consumer PC Business Struggling. PC Magazine.com. 2, November 2007. Web. 6 February 2009. Argenti, Paul A. Corporate Communications 5th ed. New York: McGraw Hill, 2009. Print. Gupta, Shankar, Jeff Jarvis vs. Dell: Bloggers Complaint Becomes Viral Nightmare Online Media Daily. 19 Aug. 2005. Web. 6 Feb. 2009. Lee, Louise. Dell: In the Bloghouse; A PC-owners Web diary of complaints about customer service has yielded heavy traffic and some near-contrition from the maker. Business Week Online. 25 Aug. 2005. Web. 6 Feb. 2009. Jarvis, Jeff. Dell Learns to Listen: The computer maker takes to the blogosphere to repair its tarnished image. Business Week . 29 Oct. 2007. Web. 6 February 2009. Krazit, Tom. Study Dell customer rating plunges; Apple leads pack: Customer service, not products were source of dissatisfaction for Dell Computerworld. 16, August 2005. Web. 6 February 2009. Oberkirch, Brian. Dude Youre Getting Delld. FastCompany.com . 9, August 2005. Web. 6 February 2009. www.fastcompany.com/blog/brian-oberkirch/dude-youregetting-delled 6 February 2009.

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