Dell’s Business Model Hinges on Crappy CSRs

And while we all darkly mull over the meaning of Dell’s built-in keyloggers, perhaps we can cheer ourselves up by at least reminding ourselves that Dell’s entire business is pretty much face down in a men’s room toilet. And if the keylogging accusations are true, maybe Dell should just have its throat slit and the toilet flushed.

Nicholas Carr has a look at just how Dell is failing as a business, and how this is causing Dell to lose money by the bucket. But for Consumerists, this is probably the most interesting point:

    So there, perhaps, is the flaw in the direct sales model, particularly when it’s applied to a commodity product like the PC: You have a cost disadvantage in customer support, which is hidden as long as support represents a fairly small portion of the each product’s overall cost. But as the price of your product falls, due to savings on the production side, support begins to represent an ever larger percentage of its cost. At some point, you cross the line: The direct model’s cost advantage disappears. Dell hasn’t reached that line yet, but it seems to be edging a little bit closer to it every day.

In plain English, what he is saying is Dell’s entire business model is based upon having bad customer support. Good customer support is an investment that would simply kill the company. The solution is to make a higher-quality product (and up the price) or to pay for better customer support (and up the price). Something to keep in mind, short of keyloggers, next time you think to yourself, “Dude… I’m getting a Dell.”

When “direct” becomes a disadvantage [Rough Type] (Thanks, Nick!)

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  1. When these budget pc manufacturers actually use quality parts and employ knowledgeable csr staff I won’t have to work so hard to internalize my frustration when customers walk in the door with a printout from dell.com and ask me to beat their price.

    I usually just give them my best price and tell them they’re just asking for trouble if they go with Dell – we include a 3 year parts and labor warranty and use name-brand parts. In addition, we know what the hell we’re talking about because we build the machines in the store.

    It’s hard to get the point across that the absurdly low prices on the website are, for the lack of a better term, just the “first installment.”

    At least we make a killing servicing the beggars every three months – just in time for their warranty to end.