Case Study on value of social media: How Dell Learned to Listen

Interesting case study in Wall Street Journal on use of social media by Dell to generate new business. According to the article Dell estimated that it had generated $6.5 million of business through Twitter activities alone.

That would be nice to see how much revenue other channels have generated. I, for once, would love to know how that estimate was made. Despite all the talk, I have not seen the issue of ROI from social media been addressed properly.

And one other thing. I’d pay a lot to get a glimpse into Dell’s Social Media Listening Command Centre.

Anyway, here’s the case.

Dell was in trouble. Not only had it lost its position as the world’s leading manufacturer of PCs, but its reputation was in tatters following a court case which showed that between 2003 and 2005 it had sold millions of computers knowing them to be faulty and told staff not to be forthcoming about the problems. Also in 2005, veteran blogger and City University of New York Graduate School of Journalism teacher Jeff Jarvis published a blog article under the heading “Dell Sucks” in which he complained about the quality of the laptop he’d bought from the company and the service he’d received afterwards. Thousands of disgruntled customers brought a storm of bad publicity by adding their dissatisfied comments to his posting.

Today, the previously opaque nature of Dell’s dealings with its customers has gone. The company appears to have embraced the transparency inherent in social media – a process it started first by reaching out to critical bloggers and then by launching its own blog Direct2Dell.

Early last year Dell started to offer customer support through Facebook and Twitter using the @dellcares address. The next step, in December 2010, was the creation of the “Social Media Listening Command Centre” which tracks an average of 25,000 topic posts a day related to Dell. In 2009, Dell estimated that it had generated $6.5 million (€4.5 million) of business through its Twitter activities.

It had already established “Ideastorm” in 2007 as a place where customers could suggest new products, services or features and discuss them with Dell. Of 15,000 ideas, the company now says it has implemented over 400.

It has taken a similarly open approach with customer reviews creating a “Tag Team Facebook” app which simplifies the process of finding independent customer ratings of Dell products. There are now over 100,000 of these reviews.

Within the company, there is increasing use of social media tools. Dell chief executive, Michael Dell, last year Tweeted enthusiastically about the use of the Seesmic app for Twitter, Facebook and the cloud CRM company’s Chatter social media service.

“Engaging in honest, direct conversations with customers and stakeholders is a part of who we are, who we’ve always been,” Mr. Dell says.

“The social web amplifies our opportunity to listen and learn and invest ourselves in two-way dialogue, enabling us to become a better company with more to offer the people who depend on us.”