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Canadian ISP business trouble

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From this week’s Globe and Mail:

Despite strong growth in operating revenues, Internet service providers in Canada continued to struggle for profits in 2001, Statistics Canada said Tuesday.
About 45 per cent of all ISPs surveyed reported a loss that year, stated the Survey of Internet Service Providers and Related Services. While operating revenues rose 27 per cent to $1.27-billion (Cdn.) in 2001, this increase was only about half the gain of 42 per cent in 2000. At the same time, industry operating expenses surged 36 per cent to $1.55-billion, a significantly faster pace of increase than that of revenues.
As a result, the operating margin of ISPs grew from a loss of 13.9 cents for every dollar of revenue in 2000 to a loss of 22.2 cents for every dollar of revenue in 2001.
The 2001 data is the most recent offered by StatsCan. Results were based on the responses of about 250 firms.
The study covers a year characterized by turbulent change in the ISP industry, when fierce competition among the major cable and digital subscriber line (DSL) providers broke out in the latter half of 2001.
A StatsCan study paper called Struggling To Remain Competitive: A study of Factors Impeding Growth for Canadian Internet Service Providers reported that the industry named five principal obstacles to growth: competition, cost-related impediments, delays in obtaining facilities from suppliers, access to financing, and access to markets.
Six out of every 10 ISPs rated competition as their chief obstacle to growth.

Jeez, do you think it might be due to treating their customers, when they can find them (because their customers certainly can’t find them) like “lusers”.

The reason the majority of ISPs are failures is because they don’t know how to sell to customers, close the sale, and if they happen to find a customer, retain them. Most of the indie ISPs haven’t got the business smarts to run a hot dog cart. They treat customers with contempt (if the customer is lucky), subject their customers to abuse and expect to live by “l33t” smarts.

Save it for Comic Book Guy. Take the example of, let’s call them CeloVet. They have longstanding customers who’ve never asked them for client support. Conversely, they have never communicated with their customers. Then there is a problem with the service.

Their web page is vacant and abandoned. The customer can’t send email (because that’s the tech problem). The customer calls the phone number on his original service pages. The phone number is disconnected.

The customer finds another phone number. Voice mail hell. The network status mailbox is broken. Tech support doesn’t answer the phone, the customer only gets “music” and repeated auto-zombie messages.

Hours later after several messages, no email, no phone call to even respond.
But that’s okay, because if customers want to get treated like crap, they can just go to another ISP, it’s just a big buffet of nothing but crap.

Mojo Nixon once wrote a song called “I Hate Banks” which included the cable company, I suspect if he is still performing the song, he’s included a verse about ISPs.

Tech edge is over, you live and die on how you acquire and treat your customers.
Stop calling them “lusers”, if you are a communications company, communicate with them. If you don’t know how, hire people who know strategic communications and usability.

Clue one, if you are an ISP and your web site is neither useful or usable, you are doomed.
Wake up and start paying attention to your customers.

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About Jim Carruthers