The Albany County (N.Y.) Supreme Court found that Dell deprived customers of technical support that they either bought or were eligible for under warranty. The company failed to provide on-site repairs for contracts. They also required customers to wait for an extended time period on the phone without ultimately providing help.
State Supreme Court Justice Joseph Teresi ordered the computer retailer to clearly disclose that most customers don't qualify for free financing or get next-day repair service. The ruling could have negative repercussions for the brand.
"We don't agree with the decision and will be defending our position vigorously," according to a prepared statement sent to the media from Dell Corporate Affairs. "Our goal has been, and continues to be, to provide the best customer experience possible. We believe that our customer service levels are at or above industry standards."
Branding experts say articles in the press and word-of-mouth marketing carries more weight than television, radio or online ads combined, and can damage the company's reputation twice as fast. Company execs who find themselves in a situation protecting brand image need to move quickly beyond the negative publicity and focus on the positive such as services and products that once gave the company its edge.
"I have had terrific service experiences with Dell," says Mickey Brazeal, marketing professor at Roosevelt University. "People who have bad experiences, however, can become negative ambassadors forever."
It doesn't kill the brand, Brazeal says, but every person with a complaint--on average--tells 11 other people. "Dell's in an impossible position because they are trying to sell and support a commodity product at a low price all over the world," he says.
Steve Silver, president at Helios Consulting Group, New York, says: "So much of Dell's brand is built around the customer experience." "The price for computer equipment has become so competitive that it could be Dell can no longer economically deliver the experience customers have grown to expect. That's a big issue."
In Dell's case, Silver says executives should now focus on reengineering the consumer experience to bring back excellent customer service that people knew and loved. That's not a communication issue, but rather an operational issue.
Dell remains confident that when proceedings are complete the court will determine that only a relatively small number of customers were affected, according to the prepared statement.