What do you think about the pricing changes announced in the spirit of customer service - especially when looked at in conjunction to the blog launch? Do you think think this is all part of a greater company shift in strategy? Will it stick?
Dell announced on Late Thursday that it plans to institute a series of pricing changes over the next 12 to 18 months that will result in fewer promotions and rebates for its consumer and small-business products. The company stated that the moves should result in a 70% cut in promotions for individual product lines, and an 80% reduction in price promotions for individual products. Dell VP Rosendo Parra said these moves were being made in order to create "a simple pricing and sales structure" for the customer. A primary target of these reductions are mail in rebates - which tend to have a messy process for both company and customer.
This change in promotions strategy comes on the heels of two other huge moves by Dell. First, the company stated it plans to invest $100 million into its customer service operations. In addition, Dell took its first steps into the new media world of blogging with their one2one site. It is this second move that has many people in the bloggosphere in a tizzy fit.
First, I think the pricing moves are smart. Even for those of us who worked at Dell once upon a time (I was there from 2000 to 2003), it was tough to keep up with pricing changes. Mail in rebates are a nasty business as well. The time and lack of information after submission make for a perpetual customer complaint. Second, I think this move will allow demand to smooth out for Dell . No more price games between consumer and small business divisions. No more crazy eddie deals that cause the customer to have buyers remorse post purchase. Then again, it will be much tougher to stack coupons from places like Fat Wallet or Tech Bargains against traditional Dell offers. That may not make folks happy either.
Three things must be watched with this change in discounting. First, will customers just perceive this as greed by Dell? I fear it will. Its very hard to pass off "we are cutting our discounts to make it more simple for you Mr. Customer." Second, what will the competition do? Dell's pricing has always set the pace in the industry. Will HPQ and others follow suit? Retailers? This could really change market demand and behavior. Third, how well will Dell be able to manage to Wall St. expectations with this move? Traditionally they relied heavily upon quick discounting to make up unit or margin shortfalls at the end of the month or quarter. Reducing discounting can potentially reduce flexibility.
As for the Blog, I posted my thoughts on this topic and a few others on one2one the other day. Here is my specific comment with respect to their foray into blogging:
"As for the blog - if Dell is going to do this, then it must blog for real. It must embrace blogging even more than it did the Dell Forums. It must be wide open, two-way, good and bad, and most of all, honest communication. If the entire machine gets run through the corporate communications group and appears to be part of a master PR plan - then all you are doing is poking the 8000 LB customer gorilla. You are now publicly in the arena. There is no turning back now - the genie is out of the bottle."
Net, I think this is a good move as long as they commit to a real blog. The most recent post on customer service is a step in the right direction. Why? Admitting you have a problem is the first step to hopefully fix it. I think this post admitted to some pretty scary issues they were grappling with. But, they have to avoid being too sarcastic or defensive in their responses. This will only fuel the fire. I fear this latest post may have crossed both lines to some degree (e.g. the comment of "Right. We got it. If we could wave our magic wand, it would already be done.") Ironically enough, this is what most bloggers push - sarcastic and aggressive commentary. It will be a delicate balance for Dell to manage.
They will never be totally accepted by many bloggers because it is in the end a "corporate" blog. But, I do think that if they evolve correctly, they can get to a state where they are respected. That in my eyes would be a victory for them. Only time will tell.
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