Dells Corporate Crm Strategy
Dell Computer – The Past, Present, and Future
When Michael Dell founded Dell Computer in 1984 the company’s mission was to be “the most successful computer company in the world” (Diversity Facts, 2011). To achieve his goal of becoming the dominant supplier of affordable consumer grade PCs, Dell Computer adopted a Direct Selling business model, building each PC only after a customer places an order. Revolutionary at the time, this system allowed Dell to reduce inventory to Just in Time levels. The efficiencies gained through reduction of inventory necessary to operate had enabled Dell to sell computers for significantly less than the competition with a smaller margin. Dell’s focus was to acquire as many new customers as possible, which in turn allowed them to negotiate even lower prices from their component suppliers, and through economies of scale, reduce costs even further. This strategy was extremely successful, shown in Figure 1 Dell sales numbers and income rapidly increased through most of the 1990’s. Figure 1
http://finance.yahoo.com/echarts?s=DELL+Interactive#chart5:symbol=dell;range=19880901,19991201;indicator=volume;chartt ype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined
At its peak Dell achieved daily sales in access of $57 million, with over 16 million customer interactions per week (Navigating the Company Timeline, 2011). Their customer acquisition strategy and direct sales model was a stellar achievement in the business world.
Putting the Customer First But as the computer age marched on, so did decreases in the cost of PC ownership. The Personal Computer became a commodity and new competition entered the market. While the market changed, Dell’s strategy did not. Remaining focused on beating the competitions price, Dell became their own worst enemy and the Dell brand was soon associated with low cost, low performing consumer PCs with poor customer service. Sales of Dell PC’s plummeted and with little diversification in their
When Michael Dell founded Dell Computer in 1984 the company’s mission was to be “the most successful computer company in the world” (Diversity Facts, 2011). To achieve his goal of becoming the dominant supplier of affordable consumer grade PCs, Dell Computer adopted a Direct Selling business model, building each PC only after a customer places an order. Revolutionary at the time, this system allowed Dell to reduce inventory to Just in Time levels. The efficiencies gained through reduction of inventory necessary to operate had enabled Dell to sell computers for significantly less than the competition with a smaller margin. Dell’s focus was to acquire as many new customers as possible, which in turn allowed them to negotiate even lower prices from their component suppliers, and through economies of scale, reduce costs even further. This strategy was extremely successful, shown in Figure 1 Dell sales numbers and income rapidly increased through most of the 1990’s. Figure 1
http://finance.yahoo.com/echarts?s=DELL+Interactive#chart5:symbol=dell;range=19880901,19991201;indicator=volume;chartt ype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined
At its peak Dell achieved daily sales in access of $57 million, with over 16 million customer interactions per week (Navigating the Company Timeline, 2011). Their customer acquisition strategy and direct sales model was a stellar achievement in the business world.
Putting the Customer First But as the computer age marched on, so did decreases in the cost of PC ownership. The Personal Computer became a commodity and new competition entered the market. While the market changed, Dell’s strategy did not. Remaining focused on beating the competitions price, Dell became their own worst enemy and the Dell brand was soon associated with low cost, low performing consumer PCs with poor customer service. Sales of Dell PC’s plummeted and with little diversification in their