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September 18, 2006
Dell 2.0: What Does It Tell Us?
In his online editorial "Is Dell Ready for the Channel?" in eWeek's Channel Insider, Pedro Pereira stated "As Dell may have finally realized, a direct model only gets you so far." Well, on both sides of this argument, there is a lot of wailing and gnashing of teeth. However, the reality remains that instead of black-and-white answers, lots of industries are going through the grey zone of direct/indirect battles.
Hubris and past success set Dell up for an ignominious fall, but their situation is not about bloggers beating them down or batteries igniting. (BTW...check out this cool new flame retardant computer wrap...another sign of market ingenuity?!?!?!) Dell today is a product of a corporate culture where success was measured by bottom line growth created through process efficiency. Dell spent more energy cutting costs than building broad value in its customers' eyes. As competitors began to match its process efficiency, the company looked devoid of the innovation and support that rivals like HP could suddenly deliver at competitive prices.
This issue has long been a point of contention with manufacturers, financial institutions and other solutions providers desperately seeking more direct customer access, but needing local presence for both sales coverage and service support. Maybe even more critical in markets like IT, OEMs need the application specific expertise of diverse channel partners to cover the expanding array of business needs that customers express.
Despite this obvious symbiosis, we continually hear companies express "Oh, that's just not a priority now" when discussing channel support programs. It is painful to see channel partners continually dismissed as "not skilled enough" or "not strategic" when they could become a vital component in delivering true customer relationship management. It is tough line to walk, since failure to build the core brand and overcommitting to independently branded channel partners can lead to irrelevance in the marketplace. Nevertheless, the Dell freefall is a sobering lesson in customer service for many companies that believed that the direct model was the only sure way to get control of their market presence.
Posted by jcioban at September 18, 2006 8:22 AM
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