The Wheel of Retailing Turns at Dell

“This will be our Lexus…Dell says the real feeling of luxury will come from its customer service. Buyers of the XPS laptops will be connected with a customer service representative within five minutes of calling, about half the time that regular Dell customers wait”

Dell, A Mass Marketer, Seeks The Luster Prone Customer
The New York Times, pp. C6, 28 September 2005

Michael Dell has announced he will hold a press conference at a Ritz Carlton hotel to tout a new line of "luxury" products that will have glowing lights, colorful finishes, shorter customer service wait times - and a price tag six times higher than the company's workhorse low-priced laptop products. New York Times reporter Damon Darlin likens the move to those made by purveyors of watches and purses who have "long profited from dressing up their products and company image". Dell's objective? According to Darlin, Dell's "XPS brand would be sold at higher prices - and fatter margins - than its Dimension PCs..."

Ouch. Fatter margin growth through brushed nickel finishes and glowing lights? Does Michael Dell feel that waiting on the telephone for five minutes to reach a customer service rep sets the bar for luxury? Has Michael Dell missed the point on Lexus' success in redefining the consumer's auto ownership experience?

What sets Lexus apart is not brushed nickel finishes or glowing lights. It's that they have built a truly higher quality product and all but eliminated the need for frustrating service visits. As Mercedes Benz has watched its JD Powers quality rating plummet, Lexus' numbers have soared. When a Lexus owner does occasionally need service, the company's service strategy is to reduce the "wait" time at the dealership to zero by ushering the consumer out immediately in a loaner and getting the (usually free) repair completed quickly. Of course, those are only the tip of the iceberg on the elements of a luxury brand strategy built on real value to the consumer. Window dressing it isn't.