The real cost of saving money.

Internal Dell documents indicate the company shipped 11.8 million computers  between 2003-2005 with potentially faulty motherboards using capacitors that could leak and cause the machines to fail.  According to an article in The New York Times, it appears Dell attempted to feign ignorance and sweep the issue under the rug.

It just crawled out.  Documents from a three-year-old law suit have recently been unsealed shedding light on this brand equity train wreck.

Unlike competitors who stopped shipping equipment with the faulty capacitors, Dell apparently kept pushing them out the door - mainly to large corporate customers.

It looks like Dell didn't exactly take the high road when the magnitude of the problem became known.  It's never good when employees send emails saying things like,  “We need to avoid all language indicating the boards were bad or had ‘issues’ per our discussion this morning.”  In other documents about how to handle questions around the faulty OptiPlex systems, Dell salespeople were told, “Don’t bring this to customer’s attention proactively” and “Emphasize uncertainty.”

Dell has already spent millions extending warranties and defending this suit.  Should Dell lose, they could be on the hook for a large penalty.  That figure will certainly be dwarfed by the long-term damage done to the Dell brand by this news.  The corporate customers who originally built the Dell brand will now have to think twice before specing the company's hardware.

I'm guessing the Dell manager who made the decision to try to keep a lid on this in the name of short-term cost containment had no idea he or she was making one of the biggest marketing decisions in the history of the company.

No ignoring the pain in social media

Great story today on AdAge Daily regarding AT&Ts growing social media customer care initiative.

What caught my attention was AT&T's realization that they had to first deal with significant customer dissatisfaction issues before social media could be effective as a public relations and marketing tool.  The story includes this poignant quote from an AT&T marketer - "We started using social media as a PR tool," said Susan Bean, who leads an eight-person social-media strategy and execution team within AT&T corporate communications. "With marketing, we discovered that for social media to be successful we really needed there to be customer care. Otherwise all anyone would want to talk about is: 'solve my problem.'"

One of the wonderful things about social media is the ability to force a brand to acknowledge obvious negative issues prior to engaging us with marketing. If only TV worked like this.

AT&T has a lot of work to do to improve their network performance.  An honest and responsive customer care program using social media may help the brand keep customers in the meantime.  Just responding and acknowledging an issue can earn a brand points.  It will be interesting to see if AT&T can add bandwidth (while soothing customers) fast enough to blunt the eventual defection once Verizon lands the iPhone and iPad.

As marketers we should avoid the temptation to sweep a product performance issue under the rug while  promoting our brands as usual (especially in social media).  Negative issues generally always emerge from the other side of the rug larger and nastier than ever.

A diamond in the tar ball?

Suspended plume-like, deep in the first official BPGlobalPR press release is a kernel of truth all marketers should consider:

You know the best way to get the public to respect your brand?  Have a respectable brand.  Offer a great, innovative product and make responsible, ethical business decisions.  Lead the pack! 

This advice rings true for all brands, not just the ocean fouling kind.  While obviously irreverent and occasionally sophomoric, the spoof BPGlobalPR Twitter stream is touching a nerve.  Over 110,000 Twitter followers are tuning-in to this unlikely authority.  Humor and a shared sense of outrage are certainly key drivers.  I believe the followers are also responding to the dissonance created when traditional corporate messaging with it's "put a good face on it at all costs" philosophy runs headlong into 24/7 coverage of a truly awful situation.

Social media has created a platform for viral public response that is forcing PR people to consider a new approach to "crisis management." Clearly, the old model just backfired. In a transparent marketplace, a company's words have to match the pictures.  There are no more short-term fixes delivered by a deft spokesperson.  It's not a PR problem.  It's a marketing problem and a brand's character and past behavior are the only valid tools in a situation like this.  A lack of sincerity at the press room podium will only add fuel to the fire.

See the entire press release here.