Dell Marketing Strategies

in On Entrepreneurship

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.

{ 50 comments… read them below or add one }

1 Anthonyd_tt December 5, 2010 at 3:30 pm

A great story. However, the playing field is really level now, more so than in the past. As soon as you have a brillant idea, someone else comes up wih another. To survive, those who control the market must continue to innovate and create. Remember, there is no failure like success.

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2 Pamela Toppel momcan50 July 7, 2010 at 12:48 am

What is the most impotant customer benefit?
How does the company to connect ( develop a relatoinship ) with its customers?
What is the comany's chief strategic advantage over its competitors?
What features should your company build into its web site that would rival the competitor's site?

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3 ranchosantafe June 10, 2010 at 5:39 pm

That is an interesting view on things. Thanks again for sharing.

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4 Anonymous May 21, 2010 at 4:26 pm

Nice horror shot. I thought I would leave my first comment. I don't know what to say except that I have enjoyed reading.

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5 Anonymous May 13, 2010 at 9:27 pm

I love Dell for this very reason. They always let me specialize my laptop to EXACTLY what I want. I love it. I have been using Dell for 7 years now. Excellent company, others should really take note.

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6 equiver April 29, 2010 at 12:48 am

Before Dell used to drive the market, now they are being driven by the market, sadly…

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7 Varsha Nauthoo February 19, 2010 at 3:34 pm

thanxxxxx

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8 Anonymous January 6, 2010 at 8:40 am

Thank you for your effort .. Thank you for your effort .. Thank you for your effort ..

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9 liaugdgh January 5, 2010 at 3:07 am

thats crazy ! ! ! ( if its true that is )

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10 film izle December 29, 2009 at 1:33 pm

It has almost become a cliche of the ‘formative years’ stories about entrepreneurs.

realy

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11 asare November 19, 2009 at 4:40 pm

what are Dell's challenging and survival strategy

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12 film izle October 7, 2009 at 8:52 pm

I like Dell, they customize everything to the littlest detail. I’m using Dell laptop for my VoIP business.Best regards

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13 Anonymous September 23, 2009 at 10:03 pm

He was surely not alone I bet. Many, many business people have just the kind of a bent of mind, but not everyone gets successful. The reasons for success are different. But then I’m raining on what seems to be a comfy little parade.

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14 tooth September 15, 2009 at 10:19 am

Enterrenesurelif is great
i like marketing strategies

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15 michaelcage September 8, 2009 at 9:24 pm

I'd take it a step farther.

Many people have similar experiences and ideas … and very few ever do anything with them other than sit around saying, “ya know, one day we should do that.”

Of the few who actually do something with the ideas, only a fraction will put in the work … the effort … and set themselves up to take advantage of the breaks they get to turn those little insights into a significant success.

As far as I can tell, there is not any ONE secret to business success … except for being unreasonably persistent in the face of overwhelming odds.

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16 film izle August 31, 2009 at 9:30 pm

good… t may well be true, but it is funny how often one hears of young entrepreneurs making more money than their teachers/professors. It has almost become a cliche of the ‘formative years’ stories about entrepreneurs…

really..

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17 kanagaraj August 31, 2009 at 12:31 pm

got a very good info, nice article

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18 cema August 30, 2009 at 9:57 am

Michael Dell then spent his time selling to those people predisposed to buying. He didn’t try to be all things to album indirall 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.

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19 Anonymous August 24, 2009 at 1:32 pm

thanks michael good article

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20 Lori July 21, 2009 at 10:09 pm

As the world continues to get more and more complicated, it makes even more sense to segment and focus.

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21 Anonymous July 8, 2009 at 4:11 am

There is no question that dell is a genius, and from a very very early age. As he was assembling computers in his dorm room a few years after this story and quickly making millions. Then we know the rest of the story.
Innovation is the key and he has made more than a few . Use your brain and think out of the box, easier said than done. Check his book “Direct from Dell”.

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22 David February 23, 2009 at 1:29 pm

A good lesson for businesses, to be specialized and specific. A business should always know its core competencies before making expansion plans. A lot of them would just get into everything and spread themselves too thin.

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23 Mattress buying (John Warraich February 17, 2009 at 4:29 am

I agree… Market segmentation is the way to go. But then there are certain businesses where you really can’t do that because the market is already so segmented and with time it gets harder and harder to pick the trends. Still trying…
Thanks for a great post.

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24 Brian February 17, 2009 at 4:20 am

Hmm… Interesting. I’ll keep this in mind as I take the steps to start up my own business someday.

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25 Mike Ireland January 23, 2009 at 3:46 am

Michael Dell is the perfect example of an entrepreneur giving people what they want and need. Dell has always strived to supply custom made quality pc’s that are affordable.
But as far as I can see this policy is changing now in Europe anyway, when I go to local computer “superstores” I now see DELL’s along side other brands and I wonder why they have changed the way they sell to the public.
Great information
Mike

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26 Anonymous December 19, 2008 at 4:59 am

I like Dell but I think they should go into having a different OS system. The Windows system attract viruses like white on rice.  Maybe a linux add would be nice.  Also, great critical thinking on Dell part.  I would say that this is all that happened not really marketing cause I don’t think marketing exist at all.  It’s of a mind game of finding people with needs you can fullfill.  Just as a prostitue, she does not have a target market. Yet still makes thousands with the mind game of satisfy needs she can fulfil.  Marketing I guess would be explaining the needs you can fill and wait for it to happen.

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27 Anonymous December 19, 2008 at 9:59 am

I like Dell but I think they should go into having a different OS system. The Windows system attract viruses like white on rice.  Maybe a linux add would be nice.  Also, great critical thinking on Dell part.  I would say that this is all that happened not really marketing cause I don’t think marketing exist at all.  It’s of a mind game of finding people with needs you can fullfill.  Just as a prostitue, she does not have a target market. Yet still makes thousands with the mind game of satisfy needs she can fulfil.  Marketing I guess would be explaining the needs you can fill and wait for it to happen.

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28 Anonymous December 19, 2008 at 9:59 am

I like Dell but I think they should go into having a different OS system. The Windows system attract viruses like white on rice.  Maybe a linux add would be nice.  Also, great critical thinking on Dell part.  I would say that this is all that happened not really marketing cause I don’t think marketing exist at all.  It’s of a mind game of finding people with needs you can fullfill.  Just as a prostitue, she does not have a target market. Yet still makes thousands with the mind game of satisfy needs she can fulfil.  Marketing I guess would be explaining the needs you can fill and wait for it to happen.

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29 Anonymous October 9, 2008 at 8:29 am

It’s funny how all these little “stories” are conveniently remembered, post-hoc, when someone does get famous. Some of this kind of targeted thinking may have played a role in Dell’s eventual success, but he was surely not alone I bet. Many, many business people have just the kind of a bent of mind, but not everyone gets successful. The reasons for success are different. But then I’m raining on what seems to be a comfy little parade.

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30 Anonymous September 25, 2008 at 3:54 pm

Thanks Michael, I read the transcription and enjoy it, keep it on such type of article…

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31 Anonymous September 24, 2008 at 3:10 am

Been using DELL for years, not knowing the story behind it. Market segmentation and specialization strategies require great confidence and patience. Thanks.

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32 Anonymous September 24, 2008 at 8:10 am

Been using DELL for years, not knowing the story behind it. Market segmentation and specialization strategies require great confidence and patience. Thanks.

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33 Anonymous September 12, 2008 at 3:46 pm

dell is going on well ⁢providing maximum cus satisfaction

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34 Anonymous September 12, 2008 at 8:46 pm

dell is going on well ⁢providing maximum cus satisfaction

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35 Anonymous March 7, 2008 at 11:06 pm

I like Dell, they customize everything to the littlest detail. I’m using Dell laptop for my VoIP business.

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36 Anonymous March 8, 2008 at 4:06 am

I like Dell, they customize everything to the littlest detail. I’m using Dell laptop for my VoIP business.

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37 Anonymous May 23, 2007 at 7:52 pm

Maybe Dell should go back to basics now….it seems now that their main problem is lack of focus on who their target customers are….it seems like they want to grab all markets by the horns…..not a good idea.

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38 Anonymous May 24, 2007 at 12:52 am

Maybe Dell should go back to basics now….it seems now that their main problem is lack of focus on who their target customers are….it seems like they want to grab all markets by the horns…..not a good idea.

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39 Anonymous February 8, 2007 at 11:49 pm

The paperroute story reinforces my attempt to provide Michael Dell with the following story;While waiting in line to go through the airport security line the first inspector kept saying out loud that liquids liketoothpaste etc. had to go in a zip lock
bag!;like the one she held up and onto tighly. No if’s and or buts! No’baggie’? To bad!,throw your shampoo etc. in the container ‘it ain’t going with you’!

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40 Anonymous February 9, 2007 at 4:49 am

The paperroute story reinforces my attempt to provide Michael Dell with the following story;While waiting in line to go through the airport security line the first inspector kept saying out loud that liquids liketoothpaste etc. had to go in a zip lock
bag!;like the one she held up and onto tighly. No if’s and or buts! No’baggie’? To bad!,throw your shampoo etc. in the container ‘it ain’t going with you’!

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41 Anonymous April 14, 2005 at 2:04 am

dell has taught me alot in marketing and i am very interested in the company and what it produces
——-

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42 Anonymous April 14, 2005 at 7:04 am

dell has taught me alot in marketing and i am very interested in the company and what it produces——-

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43 Anonymous May 28, 2004 at 9:05 pm

[...] re: All things to all people.  On the same topic, and also of interest… this post on Dell Marketing Strategies. (Mine.) 
 
    Permalink – Targe [...]

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44 Anonymous May 29, 2004 at 2:05 am

[...] re: All things to all people.  On the same topic, and also of interest… this post on Dell Marketing Strategies. (Mine.) 
 
    Permalink – Targe [...]

Reply

45 Anonymous May 4, 2004 at 2:05 pm

A Marketing Lesson from a young Mr. Dell
An Entrepreneur’s Life offers up a great lesson in marketing fundamentals that all entrepreneurs, whether a rookie or a veteran,

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46 Anonymous May 4, 2004 at 7:05 pm

A Marketing Lesson from a young Mr. Dell
An Entrepreneur’s Life offers up a great lesson in marketing fundamentals that all entrepreneurs, whether a rookie or a veteran,

Reply

47 Anonymous May 4, 2004 at 7:05 am

Sadly, it isn’t all that hard to earn more than someone in the traditional education field. The exception, of course, being a minotiry of published authors and in-demand consultants who also happen to be teachers.

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48 Anonymous May 4, 2004 at 12:05 pm

Sadly, it isn’t all that hard to earn more than someone in the traditional education field. The exception, of course, being a minotiry of published authors and in-demand consultants who also happen to be teachers.

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49 Anonymous May 4, 2004 at 6:05 am

It may well be true, but it is funny how often one hears of young entrepreneurs making more money than their teachers/professors.  It has almost become a cliche of the ‘formative years’ stories about entrepreneurs.

Reply

50 Anonymous May 4, 2004 at 11:05 am

It may well be true, but it is funny how often one hears of young entrepreneurs making more money than their teachers/professors.  It has almost become a cliche of the ‘formative years’ stories about entrepreneurs.

Reply

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