Dell’s transformation

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.”

Dell is aware that consumers might not be wholly familiar with its cloud computing, IT management or business intelligence services. During a telephone interview, Crawford Del Prete, EVP of worldwide research at IDC, said there hasn’t been a “Dude, You’re Getting a Dell”-level campaign to promote specific Dell products because “they didn’t want to steal the thunder of its services business, which it spent billions on.”

In fact, “The Power to Do More” campaign may have never existed had Dell not acquired Perot Systems two years ago for $3.9 billion.

“What changed was all of a sudden they have feet on the street that can have a very different conversation with a healthcare provider or with a manufacturer or with the government or with an energy company, where they can now come in and say, ‘We can help you build an application or consolidate your applications, or create a new set of functionality for the way you handle patients,” Del Prete said.

“Quite frankly, as is almost never the case in technology, the capabilities have kind of gotten beyond Dell’s message,” he added.

Now Dell is playing catch-up with a global campaign that pushes the idea that Dell is an end-to-end technology supplier. The problem is Dell’s customer base cuts a wide swath: large enterprise, public (government, education and healthcare), SMB and consumer.

Traditional tactics with branding

To grapple with the diversity of its consumer bases, Dell has in part relied on the direct marketing model it pioneered online in the 1990s. “From a targeting perspective, one of the biggest advantages that we have is our direct model. We know more about our customers arguably than sometimes they do,” Quintos said. But given that “The Power to Do More” is a brand campaign, Dell designed it to be flexible enough to reach its customers from various angles.

While “The Power to Do More” primarily targets business customers, Dell hasn’t isolated consumers from its messaging. Monique Bonner, VP of marketing for Dell’s consumer and small and medium business, and key architect of Dell’s brand identity, said Dell developed the campaign with its business customers in mind, but tested the initiatives with general consumers because the general segment threads all the others. For example, a CIO is as likely as an educator to see the blue banner touting the slogan above the escalator to baggage claim at Austin-Bergstrom International Airport; and an IT manager and a small business owner might both have seen the TV spot promoting Dell’s XPS line of consumer PCs during January’s college football championship game.

“We don’t think about [customers] just in their individual silo,” Quintos asserted. “[We have to] think about them as they want to buy a new system for their son who’s going to college [while] at the same time they’re also responsible for the security of [their company’s computer] network during the day.”

To meet the needs of the multidimensional consumer, Dell arms its sales and marketing teams with the ability to understand various products and solutions across the entire enterprise so that they can cross-sell products and solutions back and forth, Quintos said.

That the consumer segment can serve to thread the various business customer segments is a popular talking point among b-to-b marketers. Dell is no different.

“We may market to someone like Carnival Cruise Lines, but you’re still dealing with an individual CIO or IT decision-maker,” said Russ Fujioka, VP of marketing for Dell’s public and large enterprise business. “You’re still dealing with individuals. So we have to find out where they are, what they’re interested in, capture any piece of data, and map that data together to give us insight,” he explains.

Fujioka — whose customer segments comprise CIOs and IT decision-makers in the healthcare, education and government verticals, as well as clients such as Deloitte, General Electric and Boeing — is particularly interested in leveraging customer touchpoints. Whether consumers are browsing or interacting with the company’s social channels, Fujioka must connect that data with publicly addressable data sets, such as credit information from D&B. Dell then correlates the resulting profile with its predictive analytics model to determine “where this person is in the funnel, where they are in a company, mapping disparate IPs to companies, to accounts, to whether they do business in that [segment they had visited on Dell’s site],” Fujioka said. The employee in charge of demand generation and marketing automation is an MIT-educated rocket scientist who attended Harvard Business School.

“It’s all of these pieces of disparate data that we’re trying to model to give us some lines of predictive analytics to give us just a small hedge. When you’re at this scale, you’re just looking for small hedges,” Fujioka said.

Structural changes

While Dell divides itself and its roughly 100,000 employees into four global customer segments, the marketing department’s reporting structure combines public with large enterprise and SMB with consumer. That arrangement could institute paralyzing levels of bureaucracy for many organizations, but Dell has actively pushed against the possibility.

This month Steve Felice, Dell’s former president of consumer, small and medium business, will take over as president and chief commercial officer. In his new role he will be responsible for all four customer business segments and will be charged with unifying the sales and marketing organizations. Quintos, who oversees more than 4,000 marketers, will also add the four divisions to her various responsibilities and she will join Felice’s leadership team to oversee all go-to-market activities for the segments.

“Marketing has to be an integrated function, not just within marketing but also within sales,” Quintos said. “So we spend a lot of time developing capabilities, on working through process with our internal teams … so that marketing is seen to be an integrated function across the company.”

The push for integration extends to Dell’s advertising agencies. Sixteen months after Dell signed a three-year, $4.5 billion contract with holding company WPP in Dec. 2007 to create Enfatico — a standalone agency dedicated to Dell — it was folded into WPP agency Y&R. Four months later, Dell splintered its agency work, hiring three shops to support global brand agency of record Y&R. Dell tapped Arnold Worldwide‘s Boston office for SMB and Sid Lee for consumer.

Shelley Diamond, Y&R’s worldwide managing partner for the Dell account, told Direct Marketing News that Dell made clear during the agencies’ pitch process that it was the alpha dog. Not only did Dell stress to prospective agencies that Y&R was to remain the brand agency, Diamond said, but it informed the firms that they would not be pitching their own strategy for Dell’s marketing. In fact, she recalled, Dell briefed the agencies on “The Power to Do More.”

Diamond admitted to some initial reservations about sharing the account, but she said Dell never failed to assert itself in the new dynamic. In keeping with the client’s expectation that its agencies cooperate with one another, the firms organize quarterly interagency council meetings. At those meetings, which Dell does not attend, the agencies “share best-in-class creative, what’s working, what’s not, any new research we’ve seen, any new trends,” said George Pace, Arnold Worldwide’s EVP and global brand director on the Dell account.

In addition, the digital elements one would expect from a company trying to bill itself as a technology services provider, Dell sends more than one billion pieces of direct mail annually to customers and prospects around the world. All four business segments use direct mail to promote white papers, product and solutions news, deals, offers and events, among other things. Creative work is handled by BDM, Arnold, and Sid Lee, and activation is handled by Enfatico primarily.

But integration remains a core aspect of the company’s approach. As if to underscore this philosophy, Dell’s public and large enterprise division (PLE) will launch a campaign during the first quarter to promote the rollout of its twelfth generation of servers. However, that campaign won’t only have the PLE fingerprints on it; Dell also involved its SMB team throughout the campaign’s development, starting at the creative and product briefing levels, with all sides sharing ideas and collaborating on visuals, specific messaging and even media guidelines.

“It’s a major launch for us, and it surrounds our whole enterprise push,” Fujioka said.

Crawling, walking, running

Dell met Customer 2.0 the hard way. During the mid-2000s Dell repeatedly came under fire for shoddy customer service. The assaults mounted across the Internet, but arguably none were more relentless than those from City University of New York journalism professor and “Public Parts” author Jeff Jarvis, who criticized Dell in viral-before-viral blog posts and articles.

Jarvis lambasted Dell in a series of posts titled “Dell Hell,” detailing his frustration with a Dell PC and the company’s deficient customer service.

In the series’ final post, he writes, “One of the great lessons of the cluetrain era is that your customers are your best customer support agents and marketers if only you allow them … and respect them enough to listen to them. Dell does’t [sic]. As we reported the other day, Dell shut its general customer forums … which should be the place for customers to help each other.”

Six and a half years after Jarvis began telling his tale, Stuart Lynn, information services director at SMB software company Sage, added to the critical assault with a 1,000-word diatribe on his personal website about a PC he purchased from Dell in November as a Christmas gift for his son. The machine had not arrived as of Dec. 31. Lynn, a self-described “Dell advocate for at least 13 years now,” vents his frustration with Dell’s call enter, which he terms “a complete waste of time.” He does applaud Dell’s Twitter account @DellCares, however.

Socially acceptable behavior

I asked Quintos about the criticism Dell has endured over the years.

“I think companies critically make the mistake of not engaging in those [negative] conversations. So we absolutely learned early on that [engaging] is critically important,” Quintos said. “We also find that when we engage in these conversations, the vast majority of the time we can turn these ranters into ravers.”

Roughly two years ago, Dell invited Susan Beebe, a Dell b-to-b consumer, and roughly 20 other customers to one of the company’s Customer Appreciation Days in Austin. Beebe cofounded IT consultancy KBB Consulting & Networking in 1996, which she ran until 2007, and then served as manager of IT integration and project management at education finance company Nelnet. After listening to Beebe’s thoughts on customer service and social media, Dell offered her the position of chief listening officer.

“We said, ‘She’s got so many insights, so let’s hire her,” Quintos said. “And I think the direct [sales] model played beautifully to that … [because it] gives us that capability to talk directly to that individual, not through someone else in the organization.” Today, Beebe serves as a social media and corporate communications strategist.

Because Dell entered the social channel earlier than most companies, it has benefited from its initial stumbles. While CMOs in 2012 are still puzzling over how to measure social ROI, Dell joined Twitter the year the platform launched in 2007 and attributed $3 million in revenue to its Twitter account for the first two years.

Quintos referenced Dell’s social marketing as another example of Dell’s integrated marketing strategy. “I talk to a lot of CMOs all the time, and they’re always asking us how we’ve cracked the code around social media. I say it’s because we’re not chasing social media as the next shiny object,” she said. “We see social media as one important lever that integrates our messaging and our brand and our targeting across multiple channels in the organization.”

Dell has trained “thousands” of its employees in social media best practices and certified “upwards of about 2,500 individuals,” including employees outside the marketing department, in how to use social, Quintos said. Dell also dedicates a team to its Social Media Listening Command Center. Launched in late 2010, the Command Center features six monitors that allow employees to track social media conversations concerning Dell and trend those conversations into data to be shared with the product groups.

“We don’t think about [social] as how do we get 10 million people on Facebook or 10 million people on Twitter,” she said.

Instead, Dell’s social strategy relies on using direct customer knowledge to integrate social media properties into its back-end CRM systems, Quintos said. “We have arguably the richest customer data in the industry given what we’ve done over the years around the direct model, and that’s a huge competitive advantage for us because we know a lot about what our customers want, and we can do some really cool things with social media and helping to target them not with just the right products or the right solutions but the right case studies and white papers and points of view and virtual events,” she explains.

That social data collection and targeting is of particular interest to Fujioka.

“I look at Dell as this big engine that broke ground in the supply-chain automation and the direct function to now being really advanced in what we gain out of social media, what is the information that’s garnered by social media, what can we predict out of the psychographic social operation of our CIOs or our IT decision makers: where do they go, what’s driving them, what keeps them up at night,” Fujioka explained.

Dell’s drive to better understand its customers and market its brand comes at a turbulent time for the two verticals the company toes. On the one hand technology services behemoth IBM, riding the success of Watson and its “Smarter Planet” initiative, dominates the market to the point of parodying the famed Apple “1984” ad. By contrast HP, waffling on whether to spin off its PC business, has been parodied by Michael Dell himself. “If HP spins off its PC business … maybe they will call it Compaq?” the CEO tweeted.

I broached the subject of HP with Quintos and her response spoke to Dell’s decision to stay in the consumer PC business, as well as the company’s decision to reposition its brand. The last thing customers need right now is instability, she said. Whether it’s a bad economy or an ever-changing workforce, consumers don’t want a partner that will cause them to sit back and pause, Quintos insisted.

“The HP thing actually reaffirmed for us the direction that we were headed in,” she said. “[Our] traditional competitors are not necessarily going to be the competitors going forward.”

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