You need high tech but also high touch. The more numbers rain down upon you, the more you need to talk to someone about them. Merrill Lynch is using the Internet to give better personal service (using high technology) to its high-touch customers, but is also using it to identify those high-tech customers for whom it makes good business sense to offer high touch.
We have no hesitation in referring to Dell again as the exemplar of reconciling marketing dilemmas in internet commerce. Dell Computers had a similar high tech versus high touch dilemma. Let's look at this in more detail now.
Dell came late to the fray, as we have seen, and so had to do something entirely different, something that would distinguish the company from its competitors and something that would get around the fact that distributors were packed with rival products. It was not simply that channels of distribution were blocked. The seas of information, service, and support surrounding computing technology were ever more expansive. Even if distributors could make room for Dell products physically, could they absorb the additional information, service and support, master it and pass it on?
So Michael Dell decided to bypass distributors entirely. He would sell direct to customers, thereby establishing a unique position over other computer vendors and creating his own ecosystem apart from theirs. Direct selling had some crucial advantages.
By manufacturing to order, capital sunk into inventory would be minimized, as would stock that became unsaleable as a consequence of technological advances.
By speaking directly with customers instead of using intermediaries, information on changing customer needs reached the company more quickly and with greater clarity and urgency. It was possible to learn at first hand the strategic aims of major corporate customers.
With inventory turning over every six days, innovative technologies could be introduced very swiftly, along with any needed refinements to new models. The quicker this feedback loop, the finer the adjustments to the detail of customer requirements.
A process of mass customization became possible by which standard components were assembled in the unique configurations that customers demanded. In this way economies of scope were combined with economies of scale.
The model of direct selling received a welcome and powerful boost from the Internet, which was first used to sell a Dell computer in June 1996. Today there are more than 40,000 customized home pages, called Premier Pages, especially for corporate customers. These contain not only the details of customized configurations and instructions, but a total record of past and current transactions between Dell and each customer. One consequence of this direct link is that Dell becomes privy to far more information about its customer than would otherwise be the case. When configuring a customized package you need to know why it is wanted and how it will be used.
Dell's direct business model preceded their use of the Internet by several years, so that the almost limitless opportunities supplied by the Net came as a very welcome surprise and challenged Dell's capacity for quick adaptation.
Their salesforce initially felt threatened by the Internet. Since it was capable of creating dynamic and complete customer-client relationships, down to the purchasing of a computer, sales teams felt that their role would be drastically minimized. Field-based account managers, who "own" customer relations, were especially sensitive to how the Internet could supplant their role. Dell's management knew they had to educate their salesforce to work alongside the Internet and seize a new kind of initiative. The Internet was an inevitable and incredible development. Rather than fight it, sales representatives would need to know how to use the power of speeded-up information channels to gather better information and further enhance valuable customer relationships. And so Dell invested heavily in education and training. Michael Dell explained: "Not only did we teach them to use the Net, but we jointly invented ways to make them more effective by managing more relationships while providing value added services for the customer as well" (Trompenaars and Hampden-Turner, 2001).
The most crucial change was to start valuing and rewarding the communication of knowledge, rather than the simple registering of sales. It wasn't that sales were unimportant, but rather that knowledge applied successfully to customers was the origin of any subsequent sales. The first is prior to the second. Under the original face-to-face system in the industry, knowledge of customers' needs tended to be hoarded by the local agent and the field office. Sharing this information with others would put your own office at a competitive disadvantage. You reported your sales, not the reasons for them or the changing patterns of customer demand discovered in your territory; knowledge was considered as proprietary. After all, you had visited the customer personally and gained rare insights into how computers might be used to advance a new strategy; such knowledge is hard earned.
Sales teams were now rewarded for capturing this knowledge in machine-readable formats, accessible to all other sales teams. The more potentially valuable the information was, the more the team was rewarded. For example, a new use of software could spread rapidly through particular industries. If Dell was alerted from the moment this process started it could help spearhead the new trend elsewhere. In addition, customers are not usually confined to single sales regions. To know that District 7 of Company X has tried a new approach successfully allows you to spread the same system to all company sites. In these and many other ways, knowledge of what customers are strategizing can be systematically computerized.
Sales representatives soon stopped seeing the Internet as an adversary. They found that it could be a source of highly qualified leads, as a result of which they could close a deal with fewer calls, and have greater reach within existing accounts. Rather than being intimidated by the competition provided by the Internet, they could use it to add a dynamic dimension to unique customer relationships. The Internet became a key part of the entire business system. Dell wanted to make the Internet the first point of contact for every customer and prospect. Their information technology perspective was - and still is - to reduce obstacles to the origin and flow of information and to simplify the systems in an effort to really maximize their processes.
Brushing aside fears that employees would make "improper" use of the Net, Dell encouraged browsing and information collecting. You could make much better use of face-time if you were properly briefed (on a computer) before a meeting and if you kept careful track of the success of previous initiatives. "If you are preoccupied with the ways in which your staff might abuse technology, you're going to miss out on the benefits, while your competitors run away with the future. For us, the issue wasn't whether people would waste time on the Internet but whether they would use the Internet enough. Not to become completely familiar with a transformative business tool like the Internet is just foolish - especially when it is an integral part of the company's strategy and competitive advantage," said Michael Dell (Trompenaars and Hampden-Turner, 2001).
The dilemma Dell solved was to make personal, face-to-face knowledge, which had earlier been confined and hoarded by single sales agents, into highly relevant, networked knowledge in which the deep, personal insights of local agents become the potential inspiration for the entire community. The dilemma is set out in Figure 8.7.
Figure 8.7: Face-to-face versus Internet selling
At top left in Figure 8.7 we have the old, competitive system where agents compete on sales but refuse to share their secrets. At bottom right we have the Internet's overload of superficial and even "improper" data. Dell was unafraid of this since his people had much important information to communicate and he was rewarding them for sharing it.