Dell's transformation

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Dude, you're probably not getting a Dell — although your company might be. For the past two years, the Fortune 50 brand has been looking to swap its image as a consumer PC manufacturer with that of a technology services provider, an initiative that has increased in intensity within the past year and continues in 2012.

“About two years ago, when we recognized that the Dell brand didn't necessarily represent where we were going as a company and we had some opportunities around how we were consistently presenting ourselves to our customers, we embarked on one of the most significant pieces of customer research we've ever done in the history of Dell,” said Karen Quintos, SVP and CMO of Dell, in an interview with Direct Marketing News at Dell's Round Rock, Texas, headquarters.

Internally code-named “Project North Star,” Dell commissioned a survey of more than 9,000 customers in each of its worldwide markets, including submarkets like China. “We talked to consumers. We talked to parents. We talked to CIOs. We talked to the full gamut of the customers that we do business with,” Quintos recalled.

Dell had previously spent billions of dollars in acquisitions in the area of the commercial b-to-b space around software, services and enterprise, most notably its 2010 purchase of Boomi, a cloud computing company, and technology services company Perot Systems in 2009. However, Dell's research revealed that consumers primarily thought of it as a consumer PC company, Quintos said.

The research proved that general consumers responded to Dell differently than b-to-b customers and that all customer segments “really wanted was for us to care about their outcomes,” Quintos explained.

Based on the survey responses, Dell was able to formulate an action plan that ultimately became Dell's brand repositioning and the well-known “The Power to Do More” campaign.

Quintos wanted to accomplish two things with the new branding, she said. “We need to represent and talk about Dell in a consistent way and emotionally reconnect with these customers. The second thing is we said we've got to get them to understand the full capability of what Dell has to provide.”

The (waning) power of Dell

A cynic could be forgiven for projecting that Dell's image flip is rooted in the company's sagging PC performance numbers. The hardware giant rode the PCs-for-the-masses wave to swell since 1996, the year e-commerce site launched and the company generated $1 million in sales per day. Since then it has seen its global PC market share fall to 12%, behind companies such as HP and Lenovo, according to research firm International Data Corporation (IDC). Dell's market share is at risk of further decline. Television-maker Vizio is entering the market, which is already crowded by HP, Lenovo, Samsung, Toshiba, Sony, Acer and Asus (all in turn overshadowed by Apple). But Quintos offers a different explanation.

“Sometimes people go, ‘Wow, I thought Dell was this consumer PC company.' No, no, no. Go in and take a look at our performance,” she urged.

The numbers back Quintos' assertion. In Dell's most recent quarterly earnings statement, released on Nov. 15, the company reported that its consumer business generated only 18% of its $15.4 billion total revenue, a 6% year-over-year decline. Revenue from Dell's public business also decreased, falling 2% to $4.4 billion. However, revenue from its large enterprise segment increased 4% to $4.5 billion, and small-to-medium-sized business (SMB) increased 1% to $3.7 billion.

While Dell's products business continues to generate 80% of the company's revenue, last April CEO Michael Dell told The Wall Street Journal that Dell only generates one-third of its profit from the PC business and that “the vast majority [of that share] is not consumer.”

The cornerstone of Dell's brand repositioning is “The Power to Do More.” The initiative, which launched last summer, rallies Dell's four global business segments — public, large enterprise, SMB and consumer — under one unifying message.

“This push around ‘The Power to Do More' is really satisfying two objectives,” Quintos explained. “One is the power that customers have utilizing technology to give them more capability to do things that matter to them. So the TV spots, the print ads, the social media campaigns that we've done around it are all about how technology enables a teacher to do more with their technology, how it enables doctors to spend more time with patients and less time on paperwork, and how it enables a CIO to spend more time on innovation and less time on maintenance of their IT organization. The other part was embedding it with a real understanding of the full end-to-end solutions that we have the capability to supply.”

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