A modest proposal to fix Dell's customer service

When Robert Pedersen's Dell Inspiron E1705 laptop went on the fritz, he naturally assumed the 5-year Next Day service warranty he purchased would get him instant help from the company's customer service staff.

That was April 18. By May 4, he still had yet to have his guaranteed next-day in-home repair appointment scheduled. And it wasn't for lack of trying. He sums up his frustration on his blog: "Close to a month, 37 different communications, a Certified letter to the CEO of Dell Computers, Inc, and 29 actual hours working directly with Dell Computers, Inc in my attempt to simply get my Dell laptop repaired or replaced."

Pedersen certainly isn't alone. Most people who own a computer can probably cite at least one example of bad customer support or an unresolved technical issue with their PC maker. And to be fair, customer service is one of those thankless jobs. Rarely do we hear or read about good service experiences. Bad customer support is what gets written--or blogged--about.

But Dell seems to get the brunt of the complaints, at least publicly. Formerly a leader in the field, Dell has dropped to the back of the pack of customer satisfaction among PC owners. The University of Michigan releases quarterly reports each year, the American Customer Satisfaction Index (ACSI), on different industries. Each August it ranks PC vendors, and the most recent ranking put Dell at 74 out of 100. Apple leads PC companies with a ranking of 79. At its peak in 2000, Dell achieved a score of 80.

So what happened? A combination of doing business in a maturing industry, the resource-intensive demands of being a consumer tech company, and the company's evolving business model is likely what tripped it up.

As disaster stories circulate, public perception also becomes a problem (Hewlett-Packard is ranked 76, while its Compaq brand, for example, is actually last at 73 in the rankings, yet you don't hear noisy complaints about their service as often).

"(Dell is) below the industry average" of 75, said professor Claes Fornell, head of the ACSI at the University of Michigan. "For a company that has really been a high flyer--they were No. 1--for them to drop is problematic."

Consumer Reports this week ranked tech support among PC companies, and Dell came in third in notebook support with a score of 60 out of 100, far behind Apple with 83. It also trailed Apple's score of 81 in desktop support with a score below 60.

It's not as if Dell's not trying or unaware of customer perception. The company says its own metrics show improvement in the past two years. "But we're not finished. We are going to put much more rigor around our service delivery record and aim to improve so we can meet our customer expectations in this critical part of the business," said company spokesman Bob Kaufman.

Dell is known for actively taking suggestions from customers, and has already poured millions of dollars into improving how it helps its customers. Last month Dell announced the availability of more premium services for consumers for more specialized support, and two years ago the company said it would invest $100 million in tech support and put more resources behind its remote support operation. Experts say two years should be more than enough time to show improvement in customer satisfaction.

Luckily, those same customer service gurus say there are concrete steps the computer maker can take to get customer service back on track:

Decide what you are
The tension seems to lie with Dell's identity: Is it a manufacturing company? Or a consumer products company? Manufacturing companies are always looking at the bottom line. Cutting costs and doing more with fewer resources to squeeze the most value it can.

Consumer-facing companies, particularly technology companies, have to do a lot of handholding with customers. And tech support is resource intensive: it requires knowledgeable people answering the phones helping callers who may or may not know the difference between, say, a USB port and an Ethernet port. To this point, Dell says that 80 percent of the time most computers that have issues, the problem is not the hardware.

Another key to the company's troubles is likely found in how fast it grew, says Donald Rosenfield, a senior lecturer in management and operations strategy at MIT's Sloan School of Management. Dell became the largest manufacturer of PCs in the world in the early part of this decade, but after dominating, has since dropped to No. 2.

"When a company grows, sometimes they don't pay as much attention to all aspects of the process as they should," said Rosenfield. "In Dell's case, they didn't focus on services as much as they should have."

Plus, he said, the focus on cost reduction to stay competitive in a commoditizing industry, didn't help. "That led them to trouble in last year or two, though they have tried to devote a lot more attention and resources to customer service."

Customers love customization
Customer satisfaction can be measured in three basic ways: Price, quality of the product and service, and the fit between customer needs and a company. In his years of doing the ACSI, Fornell says price is the least important. Second-most important is the quality of product of service.

"The one that's the most critical of all is rarely discussed," he said. "The fit between the customers specific needs and wants and what the company is offering." In other words, customization is king.

Dell began business selling made-to-order PCs. You could say there's been a correlation between Dell's customer satisfaction ranking and shift in the company's business model. As the PC industry has matured, as Dell became more popular as a brand, and the company's direct model moved toward offering more mass-produced computers, including now at mainstream retail.

A possible fix for Dell's service woes could lie in more customization, or better product targeting or segmentation. "If you have a good fit between buyer and seller, you have a high level of satisfaction," said Fornell.

Get up close and personal
Another way to improve could be to have more in-person support. Though online or remote tech support is cheaper and sometimes enough to fix a problem, face-to-face service could lead to more satisfied customers.

"A lot of their problems stemmed from, as they expanded rapidly and they tended to outsource their operations, they set up these call centers around the world. I don't think the service they were getting out of them was as good as it was before they did all this expansion," said Rosenfield.

Invest in quality
Of course, there's another way around all of these issues--the Maytag approach, or making products that don't break. Consumer Reports says that all PC companies, from Apple to Lenovo, see the same quantity of service calls generally.

It's a change the Japanese auto industry embraced two decades ago, and Fornell says the entire PC industry could benefit.

"They just made sure customers didn't have to go to dealerships for service and made cars very reliable," he said. "There would probably be a market for a more costly product if it could be demonstrated that it was more reliable and did not break."

What manufacturer wouldn't want that?