Dell have just announced a profits jump of 46%, topping analysts’ estimates. The stock price rose to the $28 level. This chart shows the stock price’s movements over the last six months. [Data from Marketwatch]

In March 2007 Market Sentinel completed a case study looking at how sentiment was changing relative to Dell’s customer service. It is Frederick Reichheld’s contention that you can predict the future of a company by asking its customers if they would recommend it. We apply this methodology to consumer commentary online, but with a twist. We look for the reasons consumers give for their recommendation or their disparagement of a company. Our study showed an improvement in general sentiment about Dell’s customer service in 5 of the 7 key metrics we used. Customers were still irritated by the simple errors made by customer service in recording names and addresses and by the practice of off-shoring in general. But in relation to general customer service issues, speed of response, technical competence and other miscellaneous issues, sentiment had moved positively from the year before. There was also a highly positive response to Dell’s social media initiatives StudioDell and IdeaStorm.

If you have bought the stock at $22 six months ago on the back of this study, you would have been looking at an appreciation of 27%. That is ahead of the market (the Dow Jones Industrial average is up around 16.6% over this period). Our report lends additional support to Reichheld’s thesis: investors should track sentiment as a leading indicator of company value.

This entry was posted on Thursday, September 6th, 2007 at 12:06 am and is filed under Dell, net promoters, Market Sentinel. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.