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2/7/2009

Case Study: Dell Hell

The impact of social media on corporate communication

Kimberly T Williams

Kimberly T Williams

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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 media’s 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 he’d recently purchased. Jarvis’ posts caught the attention of others who

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Kimberly T Williams

also began to lodge their own negative experiences with Dell’s 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 giant’s 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 company’s success was a direct result of Michael Dell’s original concept of a direct sales model. Consumers were able to customize their machines to their exact

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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...
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