“IBM white paper.doc” SETTING THE STANDARD …...2004/06/18 · TBR’s Corporate IT Buying Behavior & Customer Satisfaction Studies (published in four separate volumes each quarter

TECHNOLOGY BUSINESS RESEARCH, Inc 1 1 M e r r i l l Dr i v e , H a m p t o n , N e w H a m p s h i r e 0 3 8 4 2 6 0 3 - 9 2 9 - 1 1 6 6 w w w . T B R I . c o m

“IBM white paper.doc”

AN ANALYSIS OF DELL’S CUSTOMER SATISFACTION

TRACK RECORD AND APPROACH

June 22, 2004

TECHNOLOGY BUSINESS RESEARCH, INC.

SETTING THE STANDARD FOR CUSTOMER SATISFACTION

Setting the Standard for Customer Satisfaction: An Analysis of Dell’s Track Record and Approach Page 2

T E C H N O L O G Y B U S I N E S S R E S E A R C H , I N C . 1 1 M e r r i l l D r i v e , H a m p t o n , N H 0 3 8 4 2 6 0 3 - 9 2 9 - 1 1 6 6 w w w . T B R I . c o m

BACKGROUND In early 1997, Technology Business Research, Inc. decided to take on the responsibility of filling a relatively vacant industry niche by developing and implementing what would ultimately become an industry-standard measurement for PC customer satisfaction. TBR’s goal was to originate a repeatable methodology for tracking end-user customer satisfaction at medium and large North American enterprises on a quarterly basis. The project quickly rose to its current status as a reliable, consistent and timely measurement of customer satisfaction among IT managers.

TBR’s Corporate IT Buying Behavior & Customer Satisfaction Studies (published in four separate volumes each quarter covering Desktops, Notebooks, Intel-based Servers and Service & Support) have been conducted since the first quarter of 1997. For vendors, distributors, large end users and the investment community, this program has become the preeminent tactical tool for monitoring customer satisfaction from quarter to quarter. These studies have been designed to “grow” with the industry without sacrificing their basic integrity as dependable, objective tracking tools.

Within the first year to 18 months of TBR’s independent satisfaction studies, Dell quickly emerged as a No. 1 ranked vendor and has maintained this customer satisfaction leadership position more consistently than any other vendor. As of June 2004, Dell Services has held a No. 1 ranking position for 27 consecutive quarters in the Desktop study, 24 consecutive quarters in the Notebook study, 24 of the last 26 consecutive quarters in the Intel-based Server study, and for 14 of the 15 quarters during which TBR has conducted the Service & Support satisfaction study.

INTRODUCTION The customer satisfaction experience is something we all need to understand better, both customers and vendors. Customers want to know that their unique needs and concerns reach open ears. Vendors want to be able to engender trust by not only listening, but also by acting on these concerns in real time. When customers hold a positive perception of a vendor, this leads to strong loyalty, translating into high customer retention rates and extended word-of-mouth recommendations. A negative experience can have lingering ramifications for a vendor, even when quickly addressed and corrected, often requiring a long period of time before that vendor can restore customer confidence. At TBR, we believe we are all in this together, as the vendors follow our quarterly studies closely, employing improvement programs wherever needed. This benefits both the reactive vendor and its customers toward the development of long-term quality relationships.

TBR believes Dell has long understood how to build and maintain customer confidence, based on the adherence to a set of core principles and practices where customer concerns, needs and wants are communicated by customers and acted upon daily within the Dell organization. TBR’s purpose in this white paper is to articulate our understanding of what has enabled Dell to achieve unparalleled ratings based on its historical performance in TBR’s independent data and analysis. Since we have just completed our 29th* consecutive quarter of interviews across four products and services, we have a wealth of information to look back upon in support of our premises. TBR feels it relevant that we detail Dell’s position as the leader in defining an industry standard for customer satisfaction. The paper looks at the details of how Dell has achieved its exemplary performance in the past, while examining current initiatives that hold the promise for continued leadership into the future. TBR’s objective data provides the basis for this paper’s themes, and is supplemented by information provided by Dell.

Dell has maintained an unparalleled track record of customer satisfaction leadership based on TBR’s satisfaction studies.

While the rest of the computer industry viewed customer satisfaction almost as an afterthought, Dell built a new kind of company with customer experience as the foundation.



TBR also conducted on-site executive interviews and toured Dell’s facilities in Austin, including close-up looks at a manufacturing facility and a centralized customer support center.

A secondary focus of this white paper is to provide readers with a basic understanding of TBR’s methodology and how to interpret TBR’s satisfaction metrics accurately.

*1Q04 was the 29th consecutive quarter for TBR’s Intel-based Server, Desktop and Notebook segment satisfaction studies. The more recent Service & Support Customer Satisfaction Study has been in operation since 3Q00; consequently, 1Q04 represents the 15th consecutive quarter for that study.

KEY PRINCIPLES UNDERLYING DELL’S SUCCESS Throughout TBR’s customer satisfaction program, the same analyst team studied and reported on the data findings, lending an unusual level of consistency and reliability to the conclusions. For this white paper, TBR conducted a thorough review of its customer satisfaction data for the past five years. Based on this analysis, TBR believes Dell’s strong performance in customer satisfaction is attributable to the interrelated effects of six underlying principles:

1. Commitment. Consistent success in customer satisfaction does not happen by accident. It is the result of deep commitment and constancy of purpose, guiding long-term decision-making and day-to-day actions. Dell clearly demonstrates this unique commitment. The company is extremely unified and consistent in its commitment to customer satisfaction.

2. Leadership. Dell leads the industry by perfecting and continually innovating a services model that meets and often exceeds the expectations of customers. Some of Dell’s principal competitors are only now approaching similar status in the industry-standard markets by following many of Dell’s practices and policies for customer relationship management. In this manner, Dell is a true innovator. This drive for leadership repeatedly has led Dell to “push the envelope” with innovative approaches to meeting customer needs. TBR believes this type of consistent leadership has given customers the confidence to expect more out of Dell than of other vendors.

3. Value Consistency. Dell consistently sets the standard for promoting the most positive customer perceptions, not only of pricing, but also of quality and overall value. This is an area where Dell customers have always been extremely unified in their view of Dell’s value proposition.

4. Assurance. Dell has established a strong sense of trust among its customers, achieved through an understanding of customer expectations and how best to meet those commitments in a timely fashion. Dell earns customer trust through its commitment to customer satisfaction, achieved largely due to Dell’s renowned process refinement abilities.

5. Adaptability. The Dell story is unique in that the vendor has been faced with the added challenge of orienting large numbers of new customers, an ongoing reality. Many new customers come in with different expectations. Dell’s adaptable, flexible and responsive approach to customers is at the root of its ability to serve customers, both new and old.

6. Resilience. As is universal in technology products, service and support, Dell has faced a number of challenges along the way. At each juncture, TBR has observed Dell’s rapid response to problem solving implemented throughout all levels of the organization.

Six powerful operating principles underlie Dell’s distinctive track record in customer satisfaction:

1. Commitment 2. Leadership 3. Value

Consistency 4. Assurance 5. Adaptability 6. Resilience



RESULTS OF THE ANALYSIS TBR has concluded that six essential principles underlie Dell’s industry-leading customer satisfaction track record. These six factors – Commitment, Leadership, Value Consistency, Assurance, Adaptability and Resilience – collectively define Dell’s unique position in TBR’s studies since their inception and explain Dell’s dominant position over time with its industry-leading customer satisfaction record. While we will consider each principle separately in this paper, it is important to remember they are all interconnected, active components of Dell’s successful track record. TBR will show examples of TBR customer satisfaction data that promote these concepts.

1. Commitment to Customer Satisfaction Before we begin to examine TBR’s satisfaction metrics, we need to consider the holistic view behind the Dell organization. Our first underlying principle, commitment to customer satisfaction, is the unifying concept behind Dell’s successful customer satisfaction track record. It is a directive throughout all of Dell’s customer satisfaction policies and practices. Dell looks at customer satisfaction as the focal point from which its business model radiates. While most companies in the industry designate separate customer satisfaction units, at Dell the commitment to customer satisfaction permeates throughout the entire organization. It is a priority among all Dell employees. While competitive companies viewed customer satisfaction almost as an afterthought, it is the original foundation from which Dell was built, and the reason customers at that time viewed Dell as a new kind of company for the computer industry.

The Dell Philosophy. The unique environment forged by Kevin Rollins and the people of Dell is characterized in a statement of corporate philosophy, called the “Soul of Dell.” All Dell employees are encouraged to feel they are an integral part of the commitment to creating loyal customers by providing a superior experience at a great value. This interlocks with the concept that Dell is a “winning culture” and that all participants share in the passion to succeed. Dell’s BPI program (Business Process Improvement Program) is an enhancement to the concept of shared responsibility. Here, employees are encouraged to submit cost-saving measures and are awarded for their efforts. Through this very popular program, everyone in the company is empowered to implement and innovate for the benefit of the customer experience. According to Michael Dell, “innovation doesn’t mean things, it means ideas.”

A parallel philosophy running throughout Dell equally forms the basis of the Dell customer satisfaction commitment. It is something that customers want to hear from their vendor. Through its numerous listening opportunities, Dell is able to not only keep up with customer requirements, but to continually up the ante and challenge itself even further. This is because of Dell’s “pleased but never satisfied” mantra. While customers continue to push Dell to do more, to be different and not like the competition, Dell is pleased to keep pushing itself and continually establish new leadership. As Dell leads, competitors follow the trail of success, leading to the next level of Dell’s leadership model. TBR has seen the results of this in our customer satisfaction studies, where the competitors are following Dell’s lead and are improving their positions in the studies.

Unique Circumstances. In addition to its deliberate philosophies and practices, Dell’s success is driven by some circumstances unique to Dell. These conditions have allowed the company to build on a foundation uniquely positioned for solving customer issues. In particular, Dell’s direct model, the first in the industry, has allowed the company to maintain an extensive and growing customer database. This forms the basis for

Dell’s interconnected philosophies, centered on the “winning culture” and the directive, “pleased but never satisfied,” empower all Dell employees to work toward a common goal of providing quality products and services at an exceptional value to customers.

Dell’s unique direct model enables it to respond in real time to customer needs and wants.



listening to customers and collecting detailed customer information on a daily basis, supplemented by more structured listening posts. Dell is also uniquely positioned in that all centers are profitable, while competitors are forced to cross-subsidize across product segments. Because Dell is not in such a precarious position, the company is able to invest in parts and services to bring better value to its customers. In terms of the product versus services models, Dell has not wavered from the principle that it is a product company with services attached as an enabler to the products. This approach has become a key contributor to increasing value to the customer relationship. Many competitors try to combine services and products together; or they shift their strategies to emphasize one or the other in order to decrease visibility involving low-profitability centers. Dell is able to learn from past mistakes, and to become flexible enough to shift with the changing tides determined through customer listening posts.

Taking an example from TBR’s satisfaction study metrics, we believe Dell’s proactive approach to customer relationship management largely defines its role as a vendor wholly committed to customer satisfaction. If we consider the attribute “Ease of Doing Business*,” a measurement of how well customers believe their vendor responds to their needs, listens to their concerns and works with them in a partnership arrangement, we find Dell leading the way in defining the quality of those relationships. The graph below is from TBR’s Intel-based server satisfaction segment, and shows the GAP analysis (the distances between the expectation and the reality) for ease of doing business. The ideal is for a vendor to fully meet expectations, reflected in GAP ratings at or near the 0% mark on the graph. While all three major Intel-based server vendors have improved their abilities to meet expectations for customer relationship management, only Dell has performed consistently. Dell has been precisely meeting customer expectations since 3Q02, while its competitors have been unable to maintain such levels of consistency.

Ease of Doing Business Intel-based Server GAP Analysis Trend Analysis

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* The ease of doing business metric was added into TBR’s studies in early 2002.

Customer Experience and Voice of the Customer Metrics. Dell’s Customer Experience (CE) and Voice of the Customer (VOC) metrics are offshoots of the company’s underlying philosophies. They are formulated in a manner where they can easily be adjusted to changing customer needs. For example, the original directive “Ship to Target” measured where Dell told the customer when they would ship the product. Dell changed this metric to “Deliver to Target,” which tracks the product from manufacture to receipt by the customer, thus measuring the efficiency of the whole network. In the future, Dell will continue to increase the ante, changing the metric again to “Deliver to Commitment,” where it can tell the customer precisely when to expect

Through its early recognition of customer satisfaction as the key to customer confidence, Dell implemented a method of proactively responding to customer concerns, before issues had a chance to take root.

Dell’s approach to customer relationship management is hands-on and proactive, setting a new standard for a relationship between an IT vendor and customer.



their product. In the services sector, the metric is now “Time to Resolve,” where Dell sets a time requirement for problem resolution while the techs work to meet those commitments.

Dell’s customer satisfaction metrics are enhanced with changing customer expectations from year to year and even quarter to quarter, and are cascaded through Dell and owned by all associates in their performance metrics. Every directive originates directly from the customers. Dell’s CE/VOC metrics apply the likely approach that will best meet the customers’ expectations. Metrics are then scaled up in order to continually improve Dell’s ability to meet its commitments to customer satisfaction. These goals are enabled through an elaborate bonus structure, where employees are awarded for successfully hitting their targets.

Dell’s internal metrics are supplemented by TBR’s quarterly study results, used as an objective arbiter. TBR is an important barometer and check used to red flag potential issues. Together, the two processes are geared toward successfully meeting customer satisfaction commitments.

2. Leadership: Defining an Industry Standard for Customer Satisfaction Dell has maintained a strong reputation through the years across all four of TBR’s customer satisfaction tracking studies. This model for managing the total customer satisfaction experience has entirely transformed an industry in that Dell’s competitors are now modeling their own practices on Dell’s successes. In the end, it is the customer who benefits, as we find that customer satisfaction in the computer industry is generally increasing over time. In this sense, Dell has been the architect of change, transforming the marketplace and consequently the experiences of all customers to the better. TBR believes Dell established this leadership reputation because the company recognized, early on, the essential importance of customer satisfaction. Dell executives understand that trust and customer confidence naturally stem from the company’s committed efforts to increase customer satisfaction. Dell accomplishes all of this through a proactive approach to services.

In order to realize the extent of the influence Dell has over the industry, let us consider the Weighted Satisfaction Indices in the corporate desktop customer satisfaction segment for the past five years. While Dell has maintained a level of satisfaction above the competition throughout the time period, note that competitors have actually been able to improve since late CY02. Today, the distances across the four measured brands is relatively small compared to past distances. The overall impression, however, shows Dell as the long-term leader in the sector.

TBR strongly believes Dell has been the impetus for industrywide change for higher quality service and support leading to more satisfied customers. This clearly is an ongoing focus for the company.

While some companies restrict innovation to product development, Dell is a proven innovator of leading-edge strategies focused on customer satisfaction.



Corporate Desktop Weighted Satisfaction Indices, Five-year Trend Lines

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The result of a quality satisfaction experience for any customer is increased loyalty. TBR includes in its studies various measurements for determining customer loyalty. Let us consider the ways in which IT managers express their loyalty levels toward their desktop vendors, based on a 1-5 point scale. While Dell has managed over the years to maintain strong customer loyalty, note that some of the improving competitors have also been rewarded recently with increasing loyalty levels, driven by improved performances across many of the key measurements of overall customer satisfaction with a brand.

Desktop LoyaltyFive-year Trend Lines

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In order to better understand Dell’s leadership in the industry today, we need to consider how it all started. How did Dell recognize, so early on, the critical nature of the customer experience? Dell came into the business with this understanding. Dell conducted trials among early customers in the business environment and noted that these customers discovered a new level of satisfaction that they found had not been there in the PC business prior to Dell’s market entry. It was an epiphany for IT managers that Dell was so far above anything they had ever experienced. Part of this was Dell’s early implementation of customer-focused services. Dell was the first to offer a toll-free

TBR finds customer loyalty to be a principal benefit of increasing customer satisfaction. Dell is the IT satisfaction leader.



number for tech support and later was the first to offer on-site service for the masses, including for its Latitude notebook products in an industry where depot repair for notebooks was the norm. Because Dell had ready access to sales and service data, Dell was able to find patterns. For example, Dell found the marketplace to be set up in such a way that customers were paying an arm and a leg for next-day service. Because the direct sales model gave Dell an economic advantage, the company was able to leverage this into providing even better service.

Another example of Dell’s efficiency comes from TBR’s studies, where the company has excelled at parts replacement. Since TBR began asking the question, study respondents have consistently rated replacement parts availability at the top of their list of priorities from their vendor, nearly as important as the overall hardware reliability itself. The graph below tracks the progress of the various notebook vendors’ abilities to meet commitments for supplying replacement parts, based on their customers’ perceptions. Because the customer requirement for this service is so inordinately high, TBR considers that GAP ratings of –5% to 0% will be difficult to achieve – a vendor would need to receive top ratings from virtually every customer in order to meet the expectations. Dell has generally managed to outperform the competition over the years; that is, until some competitors began to more fully evaluate the importance of this service. Again, Dell has defined a skill level for anticipating and fulfilling demand for replacement and spare parts that the industry has subsequently attempted to address.

Notebook Replacement Parts Delivery/AvailabilityAverages 2Q99 Through 1Q04

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Dell no longer measures misses in terms of percentages, but rather in the raw number of orders missed. This impresses upon Dell employees the sense of urgency. While Dell has performed consistently with regards to parts availability, the company recognizes that customers continue to ask for improvement. At the beginning of this year, Dell decided to increase its challenge and invested in parts and did some re-engineering of its supply chain by holding suppliers more accountable for service. In engaging its suppliers at a senior level, the results show that availability is up 50%.

Another example of Dell’s innovation involves its early recognition of the value of an online support mechanism through its equally early implementation of a solution for its customers. Dell was the first major PC vendor to actively pursue a Web-based PC support mechanism, and subsequently led the way in the industry. As indicated in the graph below, from TBR’s Service & Support satisfaction study, Dell customers have typically been much more inclined to utilize Web-based support than other customers.

In early test trials among business customers, Dell learned of its unique competitive advantage. Customers discovered a high level of customer experience in the Dell brand, something previously missing from the industry.

Dell’s Parts Infrastructure Network enabled them to deliver parts next-day five to six years ago. As demand increased, Dell built a four- and two-hour network of parts and people in response.



Only recently have Dell’s competitors followed suit and worked on improving and promoting their own online support solutions.

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Dell recognized an opportunity to extend the use of its technical support knowledge base from helpdesk technicians to customers. Dell was the first in the industry to implement a comprehensive solution. The Dell Solutions Network is particularly efficient in that the more it is used, the more its utility increases, simply by “learning” from past support solutions. Through the Premier Page portion of the solution, the tool becomes customized for the customer, customized but scalable, and adaptable to changing needs. Premier Pages are an example of change through evolution, through Dell’s listening to customers and making adjustments to the tool’s functionality. Dell is in the unique position where the database accessed by the customer is the same one Dell’s telephone technicians use, and it improves with every transaction as successful results are aggregated and used as scripts for technicians or within Dell’s self-service tools.

Additional examples of Dell’s innovation abound. On the manufacturing side of the operation, Dell implemented an ID tagging system, allowing the company to track the history of a PC from inception so that failures can be tracked to the source. In this manner, defective parts can be traced to their source and dealt with quickly because the suppliers are located at the site of manufacture. Dell goes as far as to connect suppliers into its real-time ordering system, and Dell requires suppliers to carry at least one week’s worth of inventory at all times, replanning its supplier hubs every two hours. This represents a unique Dell undertaking: working closely with its suppliers – always nearby, always available. Within the manufacturing operation itself, due to the ID tagging process, as well as the fact that quality control personnel work alongside assemblers, Dell can track patterns throughout the pipeline. Another example of innovation is ImageWatch, a tool that tracks product roadmaps in an extremely detailed, down to the component level. Dell’s innovation extends back to the way the company develops its products and services alongside one another. Dell employs parallel processes, where engineers design the product and the services to go along with it at the same time. On the support side, Dell is the first vendor to centralize its support center for enterprise (servers and storage) product support.

3. Value Consistency: Staying Ahead of Changing Customer Requirements Calendar year 2003 represented a particular challenge for PC vendors, as restricted budget conditions pressured IT managers at a time of economic upheaval. As a result, customers placed greater pressure on the vendors to deliver a better value. At the same

Dell was the first industry vendor to recognize the efficiency of providing its customers access to its technical support database. Dell customers were quick to endorse this highly effective tool that improves daily.



time, the vendors struggled with attempting to improve their operating efficiencies so that they could better respond to customer needs. In particular, Dell was feeling pressured to maintain its value advantage as competitive forces became more aggressive in their pricing practices.

TBR has been tracking customer requirements over time as well as customer satisfaction, and we have clearly been seeing a sizeable increase in the expectation for pricing and value across all customers. The level of stated importance regarding pricing/value that we observed with our respondents increased over time (particularly in 2003), while most other attributes remained constant or only slightly increased in importance. The GAP analysis measures the relationship between expectation and satisfaction, with the ideal GAP rating ranging between positive 5% and negative 5%. Dell is the only vendor continually able to successfully keep ahead of the curve of increasing expectation, as indicated in the graph below, detailing the relative distances between expectation and satisfaction for Intel-based server pricing and value. Note, in particular, Dell’s consistent GAP ratings of 0% throughout the time period in question (CY03), while both major competitors have essentially been unable to significantly improve their customers’ perceptions of Intel-based server value.

Intel-based Server Value GAP Analysis Five-year Trend Lines

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In addition to the fact that Dell remains the value leader, TBR notes that additional factors influence the customer decision to work with Dell. The perception of value permeates throughout a customer’s perception of the company overall. Value is the glue that binds, integrating the customer’s experience with Dell products and services. In 1Q04, TBR asked customers if they would switch brands if given the opportunity to buy any brand they liked without concern for price. Among Dell Intel-based server customers, two-thirds indicated they would continue to buy the brand, thus squelching speculation that Dell customers buy on price alone. In the desktop segment, the numbers were even greater: three-quarters of Dell desktop customers would continue to buy Dell if they did not have to account for price. In the notebook segment, we found evidence not only of strong Dell customer loyalty, but a considerable propensity of other customers to switch to the Dell brand irrespective of price. This suggests that the “outsider’s’” view of the Dell brand extends beyond price to include quality, reliability, service and long-term value.

Dell is the only vendor consistently able to meet customer expectations for value, even at a time when requirement levels for pricing and value are accelerating.



Preferred vs. Current Desktop Brand "If Price Were Not a Consideration"

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Stay Sw itch

The competitive strength of Dell’s position with respect to customers’ perceptions of value extends into the support services arena as well. The two graphs below compare the relationship between satisfaction and expectation for services pricing/value for Dell and its competitors. Clearly, Dell has maintained better consistency in its ability to precisely meet those expectations in spite of rising expectations for value pricing of services. Dell’s satisfaction ratings have generally kept pace with customer expectations, exceeding them in two time periods. While a small gap has recently emerged, it is smaller than that of its competitors and represents a short time period. By comparison, competitors continue to flounder in their abilities to convince customers of the ultimate value of their services pricing, and their scores have never moved up to within acceptable boundaries. The distances between satisfaction and expectation among Dell’s competitors have been both considerable and consistent.

Support Services Pricing/Value Analysis for Dell & Partners

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Dell customers do not describe Dell as leader solely on price, but rather on the total customer experience. Dell’s reputation for long-term value continually attracts new customers.



Support Services Pricing/Value Analysis for Dell's Competitors

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During our discussions with Dell executives, TBR came to understand the interconnected components driving Dell’s value proposition. They all converge upon the essential raison d’etre of Dell, to deliver the best products and services at an exceptional value to its customers. The table below details the essential components making up Dell’s value equation, showing how the underlying principles cross over between product and service value. The key item to remember is how Dell sees itself in terms of products and services – they are integrated in philosophy. Dell is a driver of industry standards through its partnerships and its position against proprietary products and solutions, because this does not serve the customer well. For example, Dell is driving a standards-based approach to server and systems management. Dell is also driving the industry toward simplified management of hardware, while extending this concept into simplified service offerings by taking the best practices from its enterprise support offerings and moving them to the client side. Stability and consistency of the platform are among Dell’s product positioning directives, where consistent configurations contribute toward enhanced customer planning. According to Dell, stability and consistency continue to be the top criteria customers demand, after price. Dell focuses on commonality across product lines with the promise that customers will be able to depend on this level of consistency for a set period of time, guaranteeing stability. Serviceability of the hardware refers to design aspects, allowing for easy upgradeability where Dell sees itself as an innovator. This extends to the flexibility of services based on a customized approach to offering such services.

Components of the Dell Value Equation Products Services

• Standardization • Standardization • Simplification • Simplification • Stability • Stability • Consistency • Consistency • Serviceability • Flexibility

TBR can cite several additional examples of how Dell presents its value proposition to customers. Delivery time is one area where Dell made a name for itself, by understanding that customers view delivery time as a component of value. In TBR’s satisfaction studies, delivery time quickly rose to the top tier of important attributes in

At the heart of Dell’s value proposition lie the company’s interconnected goals: standardization, simplification, flexibility, serviceability, stability and consistency.



defining their relationships with their vendors. This became particularly critical in the notebook space, where components are more difficult to procure, particularly with the changing size requirements of LCDs. The graph below details the relative abilities of the leading corporate notebook vendors to meet expectations of customers for delivery time. Dell clearly and consistently leads the industry.

Notebook Product Delivery/Availability GAP AnalysisFive-year Trend Analysis

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Another example of the extent to which Dell’s value proposition benefits customers is with regards to notebook support. The graph below measures the leading corporate notebook vendors’ varying abilities to meet customer expectations for repair times. While some of the Dell patterns have been irregular at times, Dell has clearly led the competition in its overall ability to satisfy notebook repair time requirements. TBR believes this is largely the result of Dell’s approach to notebook support, based on its commitment to meeting the needs of customers through its daily contact with customers. While most vendors offer a mix of on-site and depot repair for their corporate notebook customers, Dell understands the immediacy of the need. This is particularly relevant today, when the notebook is taking on more and more of the responsibilities of the desktop, quickly becoming the primary information device among business customers. Many notebook users are executives whose sense of urgency is even greater. Being without their system, even if a loaner is provided, is unacceptable. Today, 95% of Dell’s Latitude customers receive on-site support with a three-year, next-business-day standard warranty. On the server and storage side, more than half of Dell’s customers now purchase two- or four-hour response time contracts from the company.

Dell’s delivery time commitment goals adapted along with customer need: from Ship to Target to Deliver to Target and, eventually, to Deliver to Commitment.



Notebook Repair Time GAP Analysis Five-year Trend Analysis

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4. Assurance: Meeting Customer Expectations and Earning Their Trust Dell has always understood just how critical it is that customers be heard and that their expectations be met to the full extent at which Dell can manage it. This is the basis for establishing trust. Expectations can change based on a number of factors, including outside influences beyond the control of the customer (economic conditions, product or component shortages), internal influences based on changing corporate conditions or needs, and based as well on a customer’s past history. Dell executives, product managers and service managers all listen very carefully to what they are hearing with regards to customer expectations. Dell is always there with the necessary solutions to react to these changing requirements. Through Dell’s flexible approach to customer relationship management, the company is able to express its commitment to customers through its actions, and its actions do not lag the intent.

We have already observed Dell’s remarkable balancing act with regards to meeting the increasing expectations of customers for value. As another example of an area where customer expectations have been rising, let us consider on-site support expertise, from TBR’s Service & Support Customer Satisfaction Study. Dell customers historically expected less from Dell-badged and partner technicians in terms of technical skill. Recently, however, Dell customers’ expectations have been rising, to the point where they now equal the expectations of customers of vendors with very large and diverse support organizations compared to that of Dell. One might expect Dell to have greater difficulty in managing those expectations as they grow. Consider the graph below, detailing the relationship between expectation and satisfaction for on-site support expertise. In the past, Dell managed to exceed expectations for technical expertise partly because they were low in comparison to those of competitors’ customers. Yet, as the demand level increased, Dell was able to keep on top of those increasing requirements for technical skill. As the demand level increased, we observed the satisfaction levels increasing as well.

In rapid response to increasing expectations for on-site support resolution, Dell has increased its challenge by defining a new metric: stay on-site until the problem is resolved and confirmed as resolved by the customer.

Dell recognized early on that depot repair for corporate notebooks was not good enough. 95% of Latitude notebooks are serviced on site and one-year warranties were escalated to standard three-year warranties.



On-site Technical Expertise GAP AnalysisThree-year Trend Analysis

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Dell & Partners Competitor A Competitor B

New this year is a program whereby Dell partners are bonused according to customer satisfaction scores, the extension of a program previously offered only to Dell-badged technicians. Prior to this, Dell partners were awarded exclusively based on response time. The bonuses are substantial enough that it makes a difference in a business with razor-thin margins. In addition, Dell has recently formulated a new customer experience metric: stay on-site until the problem is resolved and confirmed as resolved by the customer.

Let us consider the example of the telephone support mechanism. While in some cases customer expectations remain stable, they can also tend to be higher for one vendor over another. More than any of the other support services, this is the one Dell customers rely on most to support their need for quality, speed and low cost, based on their frequent usage expressed during interviews with TBR. Dell customer expectations for phone support have always been much higher than among competitors’ customers and the expectations have risen further during the past several years. While Dell has struggled at times, TBR believes customers’ recognition of Dell’s improvements and commitments to continue to improve have led to recent increases, as Dell’s ratings have stabilized.

Phone Support Intel-based Server GAP AnalysisFive-year Trend Analysis

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Dell keeps up with the growing expectations and demands for on-site support expertise. Its on-site profile is as strong as much larger support organizations with long-standing reputations.

Managing expectations for support via telephone is complex and costly for all vendors. Dell has reached parity against the competition, and is working avidly to go beyond simply meeting expectations.



A monumental example of Dell’s commitment to improving the customer experience is its new Enterprise Command Center. When Dell learned from its customer discussions that customers wanted more in terms of support for servers and storage, the vendor reacted quickly. Dell invested in a centralized Enterprise Command Center that would address customer needs in real time. The concept is that of a mission-control like setting, modeled after 911 emergency resource centers. The 2,600 square foot operation serves server and storage customers with two- or four-hour service contracts in the United States, Canada and Latin America. Dell describes the impetus for this investment in the customer experience as centering on Dell’s desire to be aware of anything having gone wrong even before the customer is aware of it. “Customers tell us that they do not want any surprises. The ultimate measure of success in customer service is for us to mitigate risk or service failures before the customer even knows or, better yet, feels the impact,” Jan Uhrich, Dell’s vice president of Americas Enterprise Support Services, explains. In developing the concept for the center, Dell understood the importance of “no surprises” and mitigation success, and borrowed management practices from its successful supply-chain operation that incorporates a combination of tracking, communications and a culture for people. This led to the implementation of an aggressive “red first, then green” process where nothing moves to the next phase until it has been validated. Dell’s culture specifies that it must assume everything is red; you have to track, check and validate everything before you can move on. This staged process allows Dell technicians to catch bottlenecks at their formative stages. Processes are automated so that once a process has been validated, it turns green and moves through the gate. Throughout the resolution, the customer is involved and informed through constant, real-time updates.

The fact that the Enterprise Command Center is a centralized operation makes it work because the operation comes under a unified direction. It also works because of the culture of the people. In addition to the Dell staff maintaining the mechanics of the operation, Dell’s partners are located on-site, and are actively involved as part of the chain. The Center operates 24/7, to track and classify each incident in terms of criticality, determining locations of parts relative to the customer site and the expected time to deliver those parts. A large screen at the front of the operation lists the projects underway and their levels of criticality. If a critical incident occurs, an adjoining boardroom is available for all involved parties to convene and work on the resolution. This may involve manufacturing, engineering, partners such as EMC, VERITAS or Microsoft, engineers, sales reps, account reps, anyone who might contribute to a rapid resolution.

The Enterprise Command Center relies on a combination of best-in-class processes for tracking, communications with customers, field techs and parts depots, and a culture of committed people, including the active participation of Dell technicians, managers, manufacturing, engineers and partners.



Dell’s Enterprise Command Center, Austin, Texas.

The Center is all built around the “Time to Resolve” directive and success is tied in with performance incentives and bonuses for Dell employees. In addition to the minute-by-minute tracking of problem calls, Dell is able to take advantage of its natural inclination to approach customer support from a proactive stance. Technicians can track weather conditions across North America down to the level of detail of very small geographic areas. In this way, Dell can be aware of power outages, storm situations or other emergencies that might have an impact on its customers’ IT operations. During a recent hurricane, Dell was able to remove its parts from the path of the storm in anticipation of potential difficulties in getting its parts through.

Dell has plans to develop regional centers in Asia and Europe, using the same processes, same metrics worldwide. In keeping with Dell’s commitment to bringing the best practices from the Enterprise support group to the Client PC group, the successful elements of the Enterprise Command Center will soon be extended to cover client support services as well. Many best practices from the Enterprise side of the business are translating well into the client side, and vice versa. Dell recognizes that Client PC customers have the same need for case management ownership of the experience as Enterprise customers do. Consequently, the focus in 2004 is to move the Client model up to near that of the Enterprise by focusing on providing more specialization into the model.

Prior to the November 2003 launch of Dell’s Enterprise Command Center, we found additional examples of Dell’s commitment to addressing customer concerns regarding telephone support. In the summer of 2003, we all remember the devastating effects of the “I love you” virus, a condition that forever changed the support model for the industry and how CIOs viewed security. By comparison, the higher call volume from the recent Sasser worm was handled more efficiently due to the lessons learned by the “I love you” virus.

Customer assurance can also be addressed to unique situations where customers need a proactive approach to replacement parts. Dell’s Parts Kiosk utilizes a hotel mini-bar model, automatically tracking inventory of spare parts. After a bar-coded part is removed from the kiosk, the system alerts Dell when it next goes online. Replacements

In typical Dell fashion, improvements have come about through experience, such as the required level of adaptability and capacity adjustment elicited by past virus experiences.

Dell plans to extend the Enterprise Command Center globally, as well as to Client PC product segments.



can be expressed to meet a ship at the next port if necessary. The Parts Kiosk has been particularly relevant in servicing overseas military operations.

5. Adaptability: Meeting Growth Rate Challenges TBR indicated in its recent analyses of the customer satisfaction data that Dell’s performance, while remaining relatively strong, has been affected by the continued acceleration of its customer growth rate. Dell’s unit shipments have increased 53% since 2001. The company increased its unit shipments by 3.6 million from 2001 to 2002 and by 5.3 million from 2002 to 2003 (Source: TBR). The influx of new customers reflects a unique challenge for Dell in that the customer mix is changing due to the addition of customers with different experiences and consequently different expectations. TBR believes this factor is becoming particularly significant in the Intel-based server arena, where most of Dell’s recent growth has been taking place. Intel-based server growth rates are more difficult to manage due to the greater complexities of customer expectations, particularly those switching to Dell from the more “traditional” server vendors that have a broader historical context, including arguably larger support organizations and more experience with software solutions. Each quarter, TBR asks respondents if their company switched vendors in the past 12 months. Over the years, TBR has tracked the progress through its Switching Index, a measure of the net gain or loss in accounts by vendor and by product line. The graph below reflects the Intel-based server brand-switching activities of our respondents for the past five years. Clearly, Dell has consistently remained in the positive column, having experienced four separate peaks of dramatic growth, the current time period being among them. While one competitor fairly consistently manages to tread water, the other has generally been losing more customers than it has been gaining, losing these accounts predominantly to Dell. The deciding factor has been the perception of Dell’s overall value proposition.

Intel-based Server Switching Index = Percent Replaced-Percent AddedFive-year Trend Lines

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Dell has learned to become flexible and adapt to changes in customer demand and expectation. Spikes in demand can mean not only problems with delivery time, but with support issues as well because the value chain is linked. While Dell has run into difficulties in the past, its level of flexibility has always been there to meet the challenge. Today, Dell is in the midst of the single largest period of growth in the company’s history. As a result, Dell has implemented an internal cultural change,

Dell continues on a rapid growth curve while competitors have either remained stable or are losing customers.

Dell has been uniquely challenged by the need to integrate new customers entering the Dell culture at a rapid rate. Many new server customers come with variable experiences and complex needs, thus intensifying the test of Dell’s commitment to increasing satisfaction.



focused on the “winning culture” – ensuring that the company successfully transforms itself during the next two to three years, as it expects to add more than $20 billion worth of revenue. Relationship management is a critical aspect of this growth, and the company has structured its plans to ensure that customers do not suffer as the company grows.

On the Client PC services side of the business, Dell concedes that, irrespective of acquisition customers versus retention customers, customer expectations around Dell service performance continue to rise in all facets of the business. By Dell’s deeper penetration of existing accounts, particularly into the higher levels of the Enterprise account, greater customer dependency and higher expectations naturally follow. Expectations not only involve an expectation of expanded services, but customers also look to Dell to continue to deliver the best value. Dell responds to these challenges with a “pleased but never satisfied” philosophy. As customers push Dell to continually do more, Dell is put in the position of driving itself to innovate. In turn, this influences the industry to change along with it, under Dell’s leadership. TBR has seen the evidence of Dell’s impetus in this industry, as focusing on the customer experience has reached all corners of the industry. In the end, it does not appear to be Dell’s rapid growth rate that is raising expectations on the vendor. It is rather the raised expectations of all Dell customers, both new and old. As Dell penetrates further up into the Enterprise of existing accounts, dependency increases and, more importantly, mission-critical expectations rise. In response, Dell is relying on its adaptable nature to enhance services and to invest in goals aimed at the common good. The Enterprise Command Center is a perfect example of this.

One of today’s unique challenges for Dell and the entire PC industry involves how to cost-effectively/profitably service very low-priced PCs ($300 to $500 units) without sacrificing customer satisfaction. While this condition primarily affects the consumer and SMB markets, Dell understands that successfully adapting to these changing conditions will have ramifications for the company overall, and its ability to serve all markets with a close eye on customer satisfaction commitments. Dell’s ability to successfully be proactive to all customer segments is critical to the company’s overall image. TBR believes Dell understands this concept fully.

6. Resilience: Rapidly Executing Improvement Programs In the first quarter of 2001, after maintaining sole ownership of the No. 1 ranking position for Intel-based server satisfaction since late 1997, Dell was displaced to the No. 2 ranking position behind a competitor. This was, however, a single-quarter occurrence. Dell rebounded in the succeeding quarter and prevented the establishment of a new trend by continuing to lead the sector for the next three years. The graph below details the weighted satisfaction indices of the three central players in the Intel-based server space for the past five years. Note the measurable Dell recovery, beginning with 2Q01 and resulting in a renewed three-year domination of the sector. While there was a similar occurrence in 1Q04, TBR found that Dell’s customer loyalty is on the rise. This could signal the emergence of another exemplary rebound. It is Dell’s unique ability to recover quickly and fully from such disappointments and to continue to redefine and lead the marketplace that will enable the company to retain its long-term leadership in customer satisfaction.

Both new and existing Dell customers continue to put pressure on the vendor to do more. Increasing expectations lead to greater dependency. Relationship management is critical to Dell and it is working to ensure that customers do not suffer as the company goes through periods of rapid growth.

When Dell lost its No. 1 ranking position in the Intel-based server satisfaction segment in 1Q01, it was a single-quarter occurrence. Dell reacted by integrating the support services under a single umbrella, thus allowing better control and accountability. TBR expects that given the ratings decrease in 1Q04, Dell will rebound to lead in customer satisfaction again.



Intel-based Server Weighted Satisfaction Indices - Five-year Trend Lines

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In 2001, Dell’s parts replacement and support services were separate units. As a result of a dip in customer satisfaction, Dell brought these units together. Now, the services group has accountability for end-to-end support. Dell’s services group uses the same approach as the company has implemented across all of its operations – standardization.

Dell is working to drive standardization in server management by driving industry standards. For example, tools today manage the hardware as a separate entity from applications and operating system. Dell believes the bigger challenge is to manage everything in the data center, not just the server. Customers need tools that will manage the entire solution in a simplified manner so that, for example, an OS patch does not need to be delivered to the server through a separate tool. Dell continues to drive the IPMI (Intelligent Platform Management Interface) initiative in which all vendors will adopt a standard for systems management as a simplified way of managing and monitoring system health. When the process becomes simplified, as we move forward through the IPMI initiative, the cost will be driven down further. This is Dell’s commitment. While systems management was once almost an afterthought for Dell, it is now in the forefront in terms of how Dell can simplify what their customers are doing from a management perspective. In the end, it is all about standardization and simplification, two concepts in their early phases of development that will ultimately benefit the customer. It is also about partnerships. Dell works closely with companies like Oracle and SAP in driving simplification and standardization; with EMC through VMWare, as well as through Microsoft, for standardized systems management and virtualization for centralized, simplified management; and with all above partnerships for cooperative support relationships.

At the same time that Dell’s No. 1 Intel-based server ranking position was usurped by a competitor, TBR found Dell customer loyalty to actually be on the rise. We believe Dell customers are responding to the value proposition inherent within the scale-out approach to server deployment, a view not entirely held by Dell’s competitors that focus on a scale-up approach for Enterprise customers. Dell has already been proactive at implementing many improvement programs, many of which have been recent investments by Dell. The results of these efforts should be forthcoming.

In order to address current concerns regarding Dell’s server management tools, Dell’s goal is on driving industry standardization and simplification of tools, with a focus on unifying standards across the software, as well as the hardware.

Once admittedly an afterthought, server manageability is now in the forefront of Dell’s commitment to standards and simplification.



Intel-based Server Customer Loyalty Ratings (Means, 1-5 Point Scale)

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IN SUMMARY Over time, no other IT hardware vendor TBR covers has approached Dell’s long-standing record in terms of customer satisfaction leadership, consistency, assurance, adaptability or resilience. Dell has determined the standard for excellence across a number of challenging areas of the customer satisfaction experience. Customers have come to understand these very high levels of service can be achieved and can be depended on in terms of future quality experience. While there have been time periods and areas where Dell has come up against some particularly cumbersome challenges, this vendor has always taken the road of listening to customer concerns and acting accordingly.

The customer experience with Dell clearly transcends a perception of the vendor as a price or value leader alone. The historical context of the ratings TBR collects each quarter is a testament to that. Dell leads the industry in terms of providing services that are made available by the vendor’s efficient operations. These include making commitments with regards to product delivery and availability, availability of replacement or spare parts, and a consistent working relationship. Dell has never suffered from inconsistencies with regards to product quality, as this attribute has virtually never been indicated as problematic, a record several competitors cannot claim.

Dell will need to maintain its promise for continued leadership in meeting customer satisfaction expectations. “We basically live in fear all the time,” Michael Dell told a crowd at the W.P. Carey School of Business where Dell was named Business Executive of the Year this past April. He was referring to the “pleased but never satisfied” philosophy that has taken Dell through the good times as well as the more challenging times in a constantly evolving market. We believe it is this challenge, and the direct acknowledgment of it, that will be key in continuing to motivate the Dell leadership and employees.

Today we are at a crossroads. Others are following Dell’s excellent example, thus considerably leveling the playing field as competitors come to understand what works in building customer relationships and trust. In a sense, this makes Dell the legacy player, the originator of the standard model, the consequence of which is that Dell could theoretically be overlooked when differences of the past begin to fade. As we move

Over time, no other vendor TBR covers has approached Dell’s long-standing record in terms of customer satisfaction leadership, consistency and resilience. Again and again, Dell has shown resilience in developing distinct customer satisfaction results.

While Dell lost its No. 1 Intel-based server satisfaction ranking position in 1Q04, following three full years of domination, TBR found that Dell’s customer loyalty is on the rise. This could signal the emergence of another exemplary rebound.



forward, will customers remember or even recognize that Dell defined this marketplace in terms of the relevance, or rather the criticality, of customer satisfaction?

TBR SATISFACTION METRICS 101 The purpose of this section is to familiarize the reader with TBR’s studies and to outline appropriate versus inappropriate ways of interpreting the results. TBR’s satisfaction metrics present a comprehensive measurement of the entire customer satisfaction experience taking into consideration the expectations of IT customers and how these expectations may vary by vendor and evolve over time. The customer satisfaction experience is comprised of measurements of expectation fulfillment across hardware integrity, delivery and availability, service and support, value, and customer relationship requirements. The purpose of this section is to familiarize the reader with TBR’s study in the context of an understanding that goes beyond the essential ranking of the vendors.

A Guide to Interpreting Our Studies. TBR’s methodology is tested and true, as 29 consecutive quarters of reliable tracking will attest. We understand that customers can sometimes feel overwhelmed by the comprehensive analyses, which need to be that way in order to assure our readers that our conclusions are solid and backed up by the findings from multiple perspectives. As with any robust research, the potential exists for overly simplistic use or interpretation of TBR results. TBR cautions against this risk and recommends that readers utilize the following guidelines:

Understanding and Interpreting TBR’s Satisfaction Studies Ineffective or Misleading Use of TBR Results Effective Use of TBR Results Reports are viewed in isolation, as static or one-time “answers.”

Readers need to recognize the dynamic nature of TBR’s results by tracking the reports repeatedly over time looking for patterns of consistency.

Choosing a vendor that has achieved a No. 1 ranking position for any given quarter assures a customer a positive experience with that vendor.

More important than the results of a single quarter is the overall performance of a vendor over time. A single-quarter exceptional or poor performance is not necessarily indicative of true trends.

The focus is on the simplistic top-level “ranking” of the vendors.

TBR’s intent is for readers to focus deeply on the ratings, strength and weaknesses in specific areas of interest.

Interviewed customers are expressing an objective reality.

TBR measures subjective perceptions and, through this, presents an objective competitive profile.

Study respondents compare the leading brands.

Study respondents evaluate their primary brand or brands separately. TBR draws the comparisons through its analysis.

Study respondents determine vendors’ strengths and weaknesses.

TBR determines each vendor’s strengths and weaknesses based on competitive performance.

The individual satisfaction attributes measured are independent of other measured attributes.

The attributes are presented separately, though they are ultimately interconnected. A customer’s overall view of their experience colors their perceptions of a vendor across individual attributes.

TBR measures customers’ subjective perceptions of their primary vendors. Through its analysis, TBR ties the trends together presenting an objective competitive profile.

TBR’s studies are not static measures where one can find one-time answers, but rather, dynamic measures of vendors’ performances in a constantly moving marketplace.



Ineffective or Misleading Use of TBR Results Effective Use of TBR Results The study covers the opinions of large corporate end users.

The study covers opinions of medium and large corporate IT managers (companies with 500 or more PCs installed) speaking on behalf of the end users.

TBR measures the vendors against a standard expectation.

Each vendor’s performance is measured against the expectations of its customer base, which may vary from one vendor to the next.

The same customers are interviewed each quarter.

TBR targets the same respondents in alternate quarters. A small proportion (15%) of the same group of respondents is interviewed in alternate quarters, making up a base panel. Respondent demographics remain consistent in each interviewing quarter.

Vendors provide TBR with customer lists for the interviews or the vendors provide TBR with direction in its studies.

TBR has developed its own proprietary database of contacts. The study is an independent, unbiased report; the methodology is TBR’s own. Study findings are compared against vendor activities and programs in order provide possible explanations for the findings.

TBR measures satisfaction, pure and simple. It is equally important to consider how well each vendor performs against the expectations of its customers. TBR’s GAP analysis considers how well each vendor meets customer expectations.

Importance of the attributes to customers is stable and comparable across the customer groups.

Attribute importance changes, based on both external and internal influences. Customers of one brand often have differing criteria than customers of others.

TBR’s metrics are in real time. Each published report includes interviews extending for six months through the end of the quarter, one month prior to publication. In this sense, TBR’s measurements may be considered lagging indicators, as three months will transpire before the succeeding reports come out to the public. TBR’s “Future Outlook” analysis attempts to look forward, by measuring the trends developing within the more recent interviews. These trends serve as predictors for future developments.

TBR’S RESEARCH METHODOLOGY The Interviews. TBR interviews IT managers and directors, those directly responsible for evaluating, recommending and selecting products and services for their organizations. Respondents are put through an extensive screening process to ensure they have the knowledge level required to fairly evaluate their primary PC vendors. The method is by telephone, where TBR believes our expert interviewers have the optimum opportunity to explain our intent and to record responses accurately and completely.

The Companies. Qualifying companies employ an average of 10,000 individuals and must have a minimum of 500 PCs installed in order to participate in the studies. The

It would be misleading to choose a vendor based on static, one- time ratings. TBR recommends evaluating customer satisfaction leadership consistency over time.

TBR emphasizes the relationship between customer expectation and satisfaction in order to provide guidance to vendors on how to improve their abilities to meet customer requirements.



sampled companies represent 70% commercial industries, 10% healthcare, 10% government and 10% university establishments. The majority of interviews (95%) are with U.S.-based companies with 5% of the sample consisting of companies based in Canada.

Frequency. Interviews are conducted on an ongoing basis, with each quarterly report representing a total of six months of data. Each quarter, the timeline is moved ahead by three months. In this manner, the data always represent moving averages.

What Is a Perception? TBR measures customer perceptions by asking study participants to evaluate their vendors on a number of key attributes. A perception may be influenced by facts, but the overall impression, that which the respondent communicates to us at TBR, is influenced by a multitude of factors, some concrete (e.g., DOA rates), some abstract (e.g., encounters with account or sales representatives), some based on recent occurrences and some on lingering impressions (e.g., negative critical incidents having occurred in the past that the customer continues to associate with the vendor or brand). It is critical that the vendor hoping to perform well in the study understands the complexities of what motivates customer perceptions.

The Reports. TBR publishes four separate customer satisfaction reports each quarter. The product-related studies (corporate desktop, corporate notebook and Intel-based servers) cover product segment satisfaction looking at everything from product quality, to value, and the services. TBR’s Service & Support Customer Satisfaction Study covers the details of the support experience, including on-site, telephone support, Web support, deployment and perceived value of support services.

The Attributes. The attributes TBR measures include services such as delivery time and product availability, replacement parts availability, support services (on-site, phone, Web), as well as hardware issues such as quality/reliability and configuration consistency, overall value, and relationship issues such as ease of doing business and relationship with sales rep. The Service & Support Customer Satisfaction Study profiles the components of the service/support experience in a detailed manner. The attributes have been adjusted moderately over time, based on respondent feedback.

The Basics: Satisfaction and Importance. TBR approaches customer satisfaction from two intersecting perspectives: (1) the satisfaction level as an indicator of how well a customer feels their expectations have been met; and (2) the importance level as an indicator of how important one attribute is relative to the other attributes we measure. By relating the distances between these two measurements, satisfaction and importance, TBR is able to track how well each vendor is meeting their customers’ requirements over time and how well each is performing respective to the industry average.

The Weighted Satisfaction Index. The weighted satisfaction index is the final measurement of each vendor’s performance, based on how well their customers’ expectations have been met. For example, if a vendor’s customers indicate less emphasis on one attribute relative to other attributes, the satisfaction rating does not contribute as much weight toward the total score as does a more important attribute. In this sense, the index is weighted. All of the attribute satisfaction ratings, weighted by the relative importance of each attribute, contribute toward this index, which is presented on a 100-point scale.

How TBR Ranks the Vendors. The vendors in each study segment are ranked according to the distances between their weighted satisfaction indices. TBR requires that a minimum distance of 1% exists between any two vendors’ indices in order for them to occupy separate ranking positions. Consequently, it is not uncommon to observe shared ranking positions in the studies.

TBR’s quarterly customer satisfaction studies are based on in-depth and ongoing interviews with IT managers at mid-sized and large North American corporations.

TBR’s Weighted Satisfaction Index is a measurement of the total customer satisfaction experience and is used for vendor ranking purposes.



Additional Significant Measurements. TBR incorporates additional measurements of customer satisfaction in its studies. As indicated above, GAP analyses consider the distances between the expectation of the customer and the reality of satisfaction. TBR utilizes GAP analyses from several different perspectives. Some GAP analyses consider how well a vendor manages the expectations of its own customers; others consider how well each vendor manages expectations compared to the industry average, while others look for areas needing improvement. Customer loyalty is measured in a number of ways: (1) by the customer loyalty rating, whereby the respondent indicates their likelihood of repurchasing the brand; (2) brand switching practices measure past-year decisions to switch vendors and the reasons behind them; (3) TBR attempts to consider whether loyalty toward a vendor can endure under the hypothetical situation that customers are not restricted by budgets. TBR’s “Strength & Weakness” analysis takes all study results into consideration and cites competitive strengths and weaknesses of the various vendors by attribute. This analysis shows customers where some vendors excel and where others fall behind.

This document is the result of research performed by TBR that was underwritten by Dell, Inc. TBR believes its analysis of the findings is objective and represents the most reliable interpretation of the data available at the time of publication (June 2004).

ABOUT TECHNOLOGY BUSINESS RESEARCH

Technology Business Research, Inc. (TBR), headquartered in Hampton, N.H., is recognized as one of the leading high-tech market research and consulting firms specializing in analyses of computer and networking equipment companies and their products in the high-technology market. Servicing an international clientele of high-technology manufacturers, IT professionals, end users and investors, the company has continually distinguished itself in the marketplace by providing timely, accurate, high-quality information and market research in a format that is uniquely responsive and tailored to clients’ needs.

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