1、Company ConfidentialDell Computer Competitive ReviewJune 2001Company Confidential2Early 2001 Developments“Dell takes top spot in Global PC Sales”“Dell takes top spot in U.S.server market for Q1”“Dell CEO says storage business is the next target”“Dell will be ruthless in cost cutting Its gonna be Bos
2、nia”“Compaq chief declares price war”Company Confidential3Large Corporate AccountsBusiness MitosisnCirca 1997 Dell sales segmentsn$7.4Billion annual revenue,10,000 EmployeesHealthcareConsumerFederalEducationCompany Confidential4Large Corporate AccountsBusiness MitosisnAs business units reached criti
3、cal mass,at roughly$2B in annual sales,they would be split into multiple BUsLarge Corporate Accounts$2BillionLarge Corporate AccountsEnterpriseEnterprise$2BillionEnterpriseGlobal$18Billion annual sales,20,000 employeesCompany Confidential5Large Corporate Accounts$2BillionBusiness MitosisnSplit strat
4、egy increased focus and fueled growthLarge Corporate AccountsEnterpriseGlobalPreferred Accounts$26Billion annual sales,40,000 employeesCompany Confidential6Divide and ConquernThese were all independent business units with complete sales and marketing infrastructuresLarge Corporate AccountsEnterprise
5、GlobalPreferred AccountsK-12EducationConsumerHealthcareHigherEducationCompany Confidential7Consolidation at DellnCorporate sales recently consolidated back into single business unit to reduce costs moving away from strategy that got them where they are today.Relationship Group$32Billion annual sales
6、,40,000 employees and droppingCompany Confidential8Shake-up at Dell -good time to attacknVP and General Manager of Large Corporate Accounts(Cliff Mountain)was asked to step down from his position recently.He has since left the company.nVP of Sales for Corporate Accounts(Ralph Spagnola,11 year Dell v
7、et)was unhappy with recent management changes and decided to leave the company.nTom Meredith,former CFO,chief strategist,GM Dell Ventures,and key developer of the Dell Business Model-gonenRecently promoted Regional Sales Managers were demoted back to Inside Sales ManagersnRecently promoted Inside Sa
8、les Managers were pushed back down to Inside Sales reps.nSome under-performing Account Managers were let gonAccount teams swapped around in the process disrupting customer relationshipsCompany Confidential9What do customers like about Dell?nLow cost model With no channel associated costs,only 5 days
9、 of inventory,and a highly leveraged service model,Dell is able to pass along component cost savings directly and rapidly to customers nSingle point of accountability Account Executive orchestrates all resources and is accountable to the customer for the relationshipnDirect Model=simplicity for the
10、customer no confusion or concern about where to get the best deal on the gear they buynWeb presence Premier Pages can be set up within a day by the inside sales rep and allow special priced standard configs to be ordered on-line.All pertinent customer specific information is fed to the customer from
11、 this portal as well invoices,product roadmaps,service history and live status,shipping history and status,order history and status,etcCompany Confidential10Dell Competitive TacticsnWe sold to a particular margin point across all products,roughly 20%I often bought server business at cost or below(ke
12、ep in mind a lower cost model as well)nDesktop/Laptop/Workstation margin subsidized this aggressive pricingnAs an Account Exec,all I needed to justify special pricing was a forecast over time which could prove profitable a special pricing analyst would return the pricing approval within minutes to a
13、 couple hoursnIf we knew we were going to lose a deal to Compaq we would sometimes price at 10 or 20 just to cause painnOne stop shop DellWare at 0%markup was used for value addCompany Confidential11How does Dell sellnExecutive Relationships between Account Executives and customer CxOnAcquisition di
14、nners with Dell ExecutivesnMulti-Customer BriefingsnEnterprise Summits(Multi-customer briefings for enterprise products)nAggressive up front prices with quarterly reviews for dropsnEmpower purchasing with simple web interface for purchasingnEmpower IT with easy self maintenance programnEmployee Purc
15、hase Programs for all corporate accountsnDedicated sales reps for quotes and all administrivianFrequent face to face visits by dedicated AE Deep and widenDominate accounts all product lines including MS SW,PeripheralsnSimple reporting over the web on order status,past purchases,real-time service cal
16、l status and history,even invoices are on-linenAlthough Dell is a$30B company,the segmentation and dedicated AEs help customers feel significant thats changing as theyve created fewer large segments with the recent re-orgCompany Confidential12Dell SummarynDell Account Execs own the accounts relation
17、ships and accountability at all levels,CIO to MIS buyernDell is focused and aggressive on quarterly goals this is driven by management during half yearly field training and quarterly at ops reviewsnDell Account Executives are extremely competitive!Competitive nature is cultivated by management with
18、individual awards and quotasnCompaq will be successful against Dell when we begin outselling Dell and putting them on the defensive by attacking their installed base Were spending most of our time in defensive mode.Company Confidential13Dell Special Pricing ModelHistorically,cost drops 1-2%per month
19、Dell sets Fixed price over time for standard configurationsInitially they sell at a lossGradually the box is profitableTime/PriceComponent Cost Dell rides the downward cost trend to profitabilityCompany Confidential14Dell Special Pricing ModelDell attempts to offer current technology at same price No need to pay more or less in a transitionTrap setting the follow on model is NEVER discounted at the same level as the bid boxWinning BidTransition6-18 MonthsNew Model IntroductionDell will transition when the margin is good,even if a little lowerFixed Price
