Editorial: Know your enemy

Editorial: Know your enemy

Hands up if you are a reseller and you think the (federal/state/local) government is your worst enemy. Now hands up if you are a woman, so that I can tell you — in my most sympathetic and non-governmental voice — I hear you, sister! Because I do.

Over the last few days my inbox has been inundated with letters (a selection of which appear on the opposite page) in response to last week’s news on the Queensland Government’s $30 million education deal. Amidst strings of words tipped in gall, many readers wondered why the government would include the perennial channel nemesis — the direct-dealing Dell — in the contract which clearly stipulated the requirement for an existing local dealer network and support infrastructure. More to the point, many wondered why the choice would be made at the expense of local comp­anies which seemed to have matched the tender criteria both on price and service requirements more closely. Indeed, why?

One possible answer is that Dell seems to understand IT customer mentality better than most. They also seem to be able to market that understanding better than anyone else. And the government — federal, state or local — is just another customer whose purchasing decisions are based on brand perception and the promise of good service.

While it is a given, as one of our readers pointed out, that everyone can make a decent box these days, Dell’s ability to market to those expectations — and beat every other vendor and reseller in the process — is what seems to matter. In a recent PC brand awareness study conducted by IDG Australia, Dell beat Compaq, IBM and HP for the title of the ‘top of mind’ brand in the PC desktop space, while also emerging as the number two installed brand for the 302 local companies comprising the research sample. This is a telling — and a disturbing fact.

Only a few years ago, resellers questioned Dell’s ability to scale up its direct model. Yet Dell continues to deliver on its ability to crank up the direct threat to the channel by another notch, precisely by marketing to customer expectations. Take the company’s long-awaited and equally feared entry into the printer market, for example. In an interview with the Insider Pass newsletter, Dell’s vice-president and general manager of imaging and printing, Tim Peters, sums up the Dell approach while talking about the company’s first systematic attack on this market segment:

“All we’re doing is taking great available technology from our partners, putting a great customer experience around the buying process — which is Dell-unique — and adding great ease of use. [T]hese little components look like mere paper cuts to our comp­etitors, but when you add them all up they can be pretty aggressive. To the customer, it looks like great value.”

The key theme? “Customer experience” equals “great value”. Now, there is no doubt that Dell has always had a great reputation as a reliable and reasonably priced supplier. But, similarly, there is no doubt that their ability to match that reputation with clever marketing is what propelled them from the number four to the number two PC supplier and the number one PC brand in Australia in just a couple of years.

Of course, no reseller can match the marketing clout of a giant like Dell. Attacking the channel is their job and their business model. But is it possible for the channel to learn something from the experience? Like the fact that the customer — who in this case also happens to be the government — is not necessarily the enemy? And like the fact that Dell may simply have been better at marketing itself to that customer and remains the real ‘enemy’ of the channel — the one you need to get to know. Have your say!

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