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Who are PN's customers - Part 2

decomplexity
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Posts: 489
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Registered: 30-07-2007

Who are PN's customers - Part 2

A few weeks ago I started a thread on PN’s business strategy which generated some interest. So I guess this thread is an elaboration.
Much of the debate on the first thread related to PN's perceived lack of focus: which market sector or sectors was it apparently targeting, whether this was consistent with Lee Strafford’s report accompanying PN's interim results and – in the view of outsiders (who may or may not be PN customers but certainly had some professional knowledge of the industry) – whether either or both were wise. It was debatable whether where PN appeared to be heading (and possibly where Lee has indicated that he wished to take the company) were sensible given the competition by well-funded competitors in the pile-it-high sell-it-cheap market. The degree of lock in inevitably experienced by different customer types was also of interest: that it was inevitably more painful for customers with more complex installations (CGI, MySQL,...) to jump ship than someone on broadband PAYG Basic whose summit of ambition was the occasional email. The 'more complex' customer probably pays more and may well have less support needs – or at least the questions won’t be of the "what is this 'ere FTP" flavour. This type of customer probably isn't a promiscuous rate tart who will jump from ship to ship to save £1, but will have higher expectations of consistent service levels. He or she (or it might be a SOHO business) is likely to be a more profitable customer to PN. The other 'more complex' customer is the power user who joined PN when 'uncapped' and 'unrestricted' were banner headlines and now complains that multi-GB peer-to-peer downloads are throttled and that gaming pings have worsened immeasurably; these customers are, one would guess, unprofitable to PN as well as a source of bad publicity.

So: first question, addressed to Lee I suppose: why not tell your customers exactly which customer sector or sectors you want PN to play in? Marketing types would reply: "…silly idea, PN wants everyone who will pay...". Wrong. If PN is be adequately profitable and to gain economies of scale by leveraging its network and server infrastructure and support centres, the right way is to hone all three to a specific niche – a broad niche but still a niche. And it wants customers appropriate to that niche, not every Tom, Dick and Harry.

Now…if (if..) the 'more complex' and more discerning customer is one which PN wish to target – and this isn't the same as saying 'we want to be Zen' (who target a different segment with higher prices for higher levels of service), it will also be necessary to move away from what these customers perceive as stratified (silo'd) service offerings. Unless everything within the network and server infrastructure were homogeneous, some parts will inevitably be apposite to certain customer needs: trying to get high availability from Wintel servers needs server duplexing, warm or hot failover, shared disks or duplexed networked storage, and so on – even when not running Windows! But most parts will be common.
What I and my colleagues (and perhaps other PN customers) would find easier to work with is some better structured 'products'. Assume for a hypothetical (and very simplistic) example that, after better customer stratification, PN ended up with only two fundamental target types: those needing high availability and those who needed 'acceptable' availability. This may sound like tail wagging the dog, but if there is a clear technical demarcation (and hence cost demarcation) between them, then this is the way PN needs to play it. I as a customer cannot move seamlessly from one to the other because it will involve significant technical reworking, but I would like to know at the outset where this breakpoint lay. And I would then expect any other changes in my usage up or down (within very broad limits) to be catered for seamlessly. The only constraint on those changes should be such that a change did not transform me into a different type of customer. I would expect to be able to ramp up (or down) the volume of internet uploads and downloads, of uploads or downloads to my own client PCs, of usage of home server webspace and CGI server space, and so on. In other words, I want to be on capacity-based charging and not encounter sudden discontinuities in the price card ("you want more than 100MB webspace? you need to be on a different product"; wrong – I want to move smoothly up and down a cost curve for each major element of capacity I use). If I were Lee, I would be leaning on my resident ACMA to ensure that these curves directly reflected the total variable and fixed (not marginal variable) costs of providing this capacity. And I would publish the tariff curves on PN's website.
If I subsequently wanted some new facility – one which is separately priced (and whose cost includes interfacing into my existing platform and service), then it just goes on the bill.
There is nothing wrong with creating bundles of sub-products and branding them ("SuperDuperNet Home PAYG with Grade B support" etc) but these should correctly reflect the underlying cost curves. And creating bundles should not take away my ability to specify exactly the service I want at a particular price point. It’s a bit like visiting Mesh or Evesham to 'design' my own PC – only more flexible since a d-i-y configured PC is made up of a set of discrete major components (and hence costs), not a set of price points in a continuum.
Ah...can I hear a muffled whine from Marketing? "What about our glitzy promotions? our free modem (if you stay five years)? our free transfer (if you sign up for eternity)? bogof offers (for spouses and civil partners only)? But these are typically aimed at the pile-it-high etc brigade – not Lee’s desirable "discerning customers". Discerning customers will see through them; that is why they are discerning. How about a spot of heresy for a change: describe the products PN is selling (including support expectations) clearly, unambiguously and in simple (and syntactically and semantically correct – pay attention Potesta Jr in the back row...) English. And perhaps even offer a translation of all (or key points) to other minority languages common in the UK. Technical websites with or without impenetrable legal footnotes are difficult enough in English; imagine how they appear to those whose first language is something else. If you need to offer customer support in languages other than English, then...you already know the answer: put it in the tariff! You might just have a sizable number of potential 'discerning customers' out there.

But back to business. Since our new PN price curves now correctly reflect the costs of doing business, any swing in my capacity usage which took me to the extremes of my customer type (which, for example, took me near the 'power user' sector), would be penalised in an overt way and in a way I should expect. If the charging curves (and these are curves, not straight lines) fly off towards infinity as I suddenly download 1000GB, then that is my choice – assuming I am provided with the tools to monitor such usage and can set my own alarm points which may or may not cause me to be throttled or capped at that point. But this should be my decision; (OK – implementing alarming is relatively easy but implementing auto-throttling is admittedly much harder). This "let the user drive the account himself/herself with automated tools" is very much in line with PN's original strategy.
Since the curves are strictly cost-based, the issue of 'to prebuy or not to prebuy' (for example, do I contract for xGB monthly downloads with the excess charged at a higher rate or do I contract for almost nothing with all downloads charged at the higher rate) then becomes irrelevant and would be scrapped.
At present, any change of 'packaged offering' (PAYG Basic to Plus, for example) needs the intervention of Customer Service. Similarly, any unexpected excess usage may lead to queries ("why wasn’t I informed?" etc). All this should vanish.

Finally, since I am (hypothetically) one of the desirably profitable "more complex" customers, I can reasonably be expected not just to understand cost curves (and the their advantage over stratified package offerings) but actually to appreciate their advantages to me.

Well PlusNet?

[Part 1 http://portal.plus.net/central/forums/viewtopic.php?t=46900&highlight= was posted on 15th August in this forum]

Moderators note by John (johnessex) Link to part 1 above edited to make it work.
Zen from May 17. PN Business account from 2004 - 2017
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Re: Who are PN's customers - Part 2

I have to admit that I am still at a loss as to whether PN is or was going to change the type of customer it was aiming for, or whether it was just trying to be all things to all customers. Certainly seems to be a competitive business at the mass-service end of the market; might the troubles of Tiscali (to lay off up to 40% of UK workforce)
http://business.timesonline.co.uk/article/0,,9076-2378855,00.html
provide an impetus for PN to move back from this sector of the market and towards the type of service suggested by decomplexity ?


Quote

Much of the debate on the first thread related to PN's perceived lack of focus: which market sector or sectors was it apparently targeting, whether this was consistent with Lee Strafford’s report accompanying PN's interim results and – >snip< whether either or both were wise.

[Part 1 http://portal.plus.net/central/forums/viewtopic.php?t=46900&highlight= was posted on 15th August in this forum]

Moderators note by John (johnessex) Link to part 1 above edited to make it work.