Dell and the Blogosphere

It is no surprise that Dell’s stock price and ranking (as one of the top PC manufacturers) have been declining steeply since early 2005. Losing its top spot to HP, Dell’s major downfall has been its less than acceptable customer service. Jeff Jarvin took advantage of this declining ‘consumer satisfaction’ and launched an unexpected blog attack against Dell. This attack became a campaign as Jeff’s blogs gained momentum through immense support and comments.

Was Jeff right or did people just need an excuse to vent their frustration out? What we see here from the blog storm is obviously the power of media, and its ability to casually erode a brands image.

In dealing with this case, in my opinion, most corporations would of reacted in this same manner. Jeff jarvins was neither a premium customer nor a media tycoon. As a result he was a blimp on the radar screen, and would never have been flagged by the customer service in a million years. They simply under estimated one bloggers’ ability to reach the media in a prolific way. Paying him off or offering him a job position is NOT an option, as it would only release an eruption of fantastic complaints.

Having a strong online presence, Dell realized the importance of communication in acquiescing its customers. The ironic thing is had Dell sent Jeff a new laptop the very next day, Jeff would of probably praised Dell in his next blog.

In any case, Dell did eventually change this apathetic approach, and implemented a new communicative strategy. In July of 2006 Dell started its Direct2Dell blog, where Chief blogger Lionel Menchaca quickly assembled a task force to deal with complaining customers and negative publicity. They also launched IdeaStorm.com asking customers to give the company suggestions on what to do. One of the outcomes was the switching of Dell to sell Linux computers.

To conclude, I find the Jeff Jarvins situation fascinating; How he proved the effectiveness in harnessing the blogging power. What I do find a bit riducolous however, was the extremity of his complaint. He got a lemon, and eventually the company Dell reimbursed him. They should of done it sooner, but because of bad customer service and a busy agenda they didn’t. How many PC’s does Dell sell each month-millions. From a finance perspective, the company is obviously still highly valued by investors (PE of above 16X and market cap of roughly USD 25 billion). It is still fascinating how one blogger managed to dent the image of a multi-billion dollar company. The fact is, it was not him alone, he was merely trigger. My advise to Jeff would be to get over it, and stick with Apple.