This is one of my favorite stories to tell technology consulting and computer consulting businesses who want to market more effectively. It’s a mainstay in my seminars because it illustrates such a critical marketing point — one every business should be reminded of. Frequently.
I have included a transcription here, and I believe you’ll enjoy it. (For the original account this is based on, read Michael Dell’s “Direct From Dell” … an absolutely fantastic book for marketing strategies, entrepreneurial inspiration, and more.)
Most people don’t know that one the key marketing strategies that has made Dell Computer so unbelievably successful had nothing to do with the computer business. Dell actually discovered it as a 12-year old kid in Houston, during one of their hot, sweltering, humid, and disgusting summers.
(No offense to anyone in Houston, I’m just not a big fan of hot, humid summers.)
Anyway, he decided one summer to be a paper boy. He wanted to make some extra money, and, as an entrepreneurial kid, that means running a paper route. He went down to the paper where he received a bundle of papers and a list of names to call or visit. The names were randomly picked people who did not have a subscription to the paper.
Dell’s job was to begin calling everyone on the list and get some subscriptions sold. He sold one here and he sold one there, but he pretty soon began to notice a pattern. There were two categories of people who were much more likely to buy a subscription from him than anyone else.
First, people who had just moved into a new home.
And second, people who had just married.
It makes sense right?
They are going through life changes that dramatically increase the likelihood of them wanting and needing a paper subscription.
Most kids – and most adult businesspeople – would say, “that’s neat” and stop there. But Dell took the next step. He began to ask “how can I target these people and only these people, so that I’m spending my time, resources, and my energy where I know it’s going to pay off best?”
The answer came when he discovered public information available at the local courthouse could give him access to exactly who he wanted to target. He gathered a small army of 12-years-old kids and sent them all down to the courthouse on a regular basis. They wrote down everyone who had purchased a new home and everyone who had applied for a marriage license.
Michael Dell then spent his time selling to those people predisposed to buying. He didn’t try to be all things to all people, he narrowly and specifically defined who he wanted to spend his limited time and energy on, he had a much smaller list of potential buyers, and he did an enormous amount of business (for a paper boy!) because of it.
When summer ended and Dell went back to school, he was actually making more money from his paper route than the teachers in his school.
Most people look at Dell Computer today and think they are being all things to all people. It is an illusion created by their size. The success of Dell lies in large part with market segmentation and specialization strategies that Michael Dell learned that hot Houston summer, pioneered at Dell Computer, and that the company still does today.