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Beware of Reputation Lag: Dell and Hyundia are Examples
Feb
25
Beware the perils of Reputation Lag! Too often, companies continue to be perceived by how they used to make products, provide customer service, etc., regardless of the current reality.
Consider Dell and Hyundai, companies at two ends of the reputation spectrum. Dell once earned its reputation for well-priced computers and exemplary customer service—but times have changed. Talk to someone (such as myself) who has had a recent issue with a Dell computer, and you’ll learn that Dell’s customer service is now horrible—an endless loop of tiered and outsourced service reps who pass your problem around like a hot potato. I would never buy a Dell computer again, especially for my business, but Dell is still benefiting from its outdated reputation as a great service company.
Hyundai, meanwhile, continues to struggle to overwrite its reputation as a maker of cheap cars. About 10 years ago, Hyundai started its rebirth by offering 10-year warranties to inspire consumer confidence. At a time when Korean cars were the joke of the car industry, Hyundai poured money into R&D and worked to design cars that people actually want to drive. The company’s newest cars are packed with technology and safety features well beyond comparable models at the same price point, and Hyundai has won numerous quality awards from J.D. Power and Associates. This formula is very noticeable in the Hyundai Genesis, which at $30,000 has features and a design that compares favorably to cars from BMW and Mercedes that cost almost twice as much. Nevertheless, many people don’t consider a Hyundai because of the company’s reputation. And, although car quality has improved dramatically, depreciation rates remain poor, reflecting past performance. This factor does hurt the cars’ marketability.
The moral here is to do your homework. In today’s fast-paced marketplace, companies change rapidly both for better and for worse. Don’t buy a product based on reputation alone. And if you’re running a company, keep in mind that customers have long memories.
25
Beware the perils of Reputation Lag! Too often, companies continue to be perceived by how they used to make products, provide customer service, etc., regardless of the current reality.
Consider Dell and Hyundai, companies at two ends of the reputation spectrum. Dell once earned its reputation for well-priced computers and exemplary customer service—but times have changed. Talk to someone (such as myself) who has had a recent issue with a Dell computer, and you’ll learn that Dell’s customer service is now horrible—an endless loop of tiered and outsourced service reps who pass your problem around like a hot potato. I would never buy a Dell computer again, especially for my business, but Dell is still benefiting from its outdated reputation as a great service company.
Hyundai, meanwhile, continues to struggle to overwrite its reputation as a maker of cheap cars. About 10 years ago, Hyundai started its rebirth by offering 10-year warranties to inspire consumer confidence. At a time when Korean cars were the joke of the car industry, Hyundai poured money into R&D and worked to design cars that people actually want to drive. The company’s newest cars are packed with technology and safety features well beyond comparable models at the same price point, and Hyundai has won numerous quality awards from J.D. Power and Associates. This formula is very noticeable in the Hyundai Genesis, which at $30,000 has features and a design that compares favorably to cars from BMW and Mercedes that cost almost twice as much. Nevertheless, many people don’t consider a Hyundai because of the company’s reputation. And, although car quality has improved dramatically, depreciation rates remain poor, reflecting past performance. This factor does hurt the cars’ marketability.
The moral here is to do your homework. In today’s fast-paced marketplace, companies change rapidly both for better and for worse. Don’t buy a product based on reputation alone. And if you’re running a company, keep in mind that customers have long memories.
