Back in the summer of 2005, Dell computer made a mistake: It upset just one of its customers. The guy had bought an expensive four-year in-home customer service contract that wasn’t being honored. Instead, he was told to send the product back to the company. The guy was also generally unhappy with the quality of the Dell products he had purchased in general, finding them to be inconsistent.
But more than that, what really bothered Jeff Jarvis–Founder of Entertainment Weekly, one of the first people to report live on scene during 9/11, and blogger behind buzzmachine (source: Wikipedia) — was that Dell didn’t seem to be listening to its customers, whether they were on the phone or online. Here’s what Jarvis wrote in his 18th post, an open letter to Michael Dell on buzzmachine:
“One of your executives said you have a look-don’t-touch policy regarding blogs. How insulting that is: You ignore your consumers? You act as if we’re not here? How would you like it if you gave someone thousands of dollars and they ignored you…the least you can do is engage them and join the conversation.”
Now for the scary part. This was an isolated problem six years ago. Today, it’s not just bloggers that companies need to worry about, but possibly every single one of their customers. That’s because almost everyone is online, and they’re discussing almost everything. Firms shouldn’t be paranoid: It’s not that every single one of their customers are talking about them; it’s just it’s guaranteed that some of them are, and influencing each other as they do. In this new more participatory world of consumption, customers have more of a voice than ever. There are two ways for a firm to deal with it.
1. Bring Them to You. Houlihan’s Restaraunt and Bar chain built Houlihan’s HQ, an invite-only, exclusive online community of 10,500 members that tell Houlihan’s exactly what they think about their pubs. The company is using Houlihan’s HQ to fine-tune their upcoming small plates offering, getting feedback on how to tweak the menu and the customer service (SOURCE: Fast Company). Companies like this approach, and they’re comforted by it, because building a platform or using a closed network means it’s more likely the firm will retain control in this arena, making it an easier step for most companies to take. This can be an illusion, however, since consumers will continue to have uncontrolled conversations outside this space.
2. Go Get Them. This is a second option, and probably better, because it’s also unlikely consumers really want to visit the corporate website of every company they interact with. Sure, they might like shopping at Safeway, but why type in the URL? But it might make sense for them to catch the latest about the firm in a Facebook News Feed. Companies can also do much better than this: Just a few steps behind the U.S. President in popularity on Facebook (Barack is #4) are Starbucks (#7) and the Twilight Saga (#10). On the former, you can manage your Starbucks card through a Facebook web app; on the latter, you can participate in chat discussions, watch the new Muse Neutron Star video for the upcoming movie, or find a showtime near you. These Facebook pages are interactive and offer real value.
Looking at the two strategies above, notice what’s not an option: Keeping quiet and not engaging. Whether a firm builds their own platforms and integrates them into their website, or uses an open network like Facebook or Twitter, these solutions are orders of magnitude better than staying disconnected from the customer. That’s because if firms don’t get in touch, there’s little to keep customers loyal if they aren’t being heard.
In the end, Dell actually did everything right to respond to the concerns of their customers, and Jarvis even points it out. They launched several blogs, including Direct2Dell, which kept communication open. Dell also spent $150 million to improve their service, the target of so much frustration (SOURCE: ZDNET). Everything Dell did was absolutely textbook, except for one large mistake in execution: Dell was far too slow.
If the Internet erupts and customers are upset, it doesn’t take too long to get into trouble. Just two months after Jarvis fired his opening salvo, Dell stock had dropped by 11.7%, and over a year later, it had dropped more than 40%.* In December 2005, Dell executives started leaving for Lenovo (SOURCE: channelinsider); In October 2006, HP surpassed Dell in global PC shipments (SOURCE: BBC). Yet it was February 2007, 18 months after Jarvis started making noise, when other company participatory strategies started to take hold, such as IdeaStorm, a platform allowing customers to submit advice online as to how to improve operations.
The lesson: Engage your customer. Quickly.
*Measured from July 1 to September 1 2005, then September to September a year later (SOURCE: GOOGLE FINANCE)
