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Who are PN's target customers?

decomplexity
Rising Star
Posts: 490
Thanks: 26
Registered: 30-07-2007

Who are PN's target customers?

PlusNet is, one assumes, run as a business. Businesses usually want one of two things: to make maximum profits (the only issue is when – now or later) or to jack up their stock price ready for being bought out. Since the AIM-listed shareholdings have short-term golden handcuffs and since their share price is languishing anyway, it would be reasonable to assume that PN would – for the immediate future anyway – want to maximise their profit, either now or – deferred satisfaction – have a larger one tomorrow.

So who are their customers? More pedantically which market segment do these customers come from? Taking current service offerings as a guide (and this only gives an indication of current customers and not necessarily the customers PN would like to have), PN:

a. are primarily head-to-head with other pile-it-high-and-sell-it-cheap ISPs catering for domestic users at lowest cost. These customers will use limited additional facilities (email, probably PN antivirus and possibly web-space for photos and simple FTP’d blogs, but don’t, for example, touch the CGI server or import domain names for hosting). This use of limited services makes it easy to be a rate tart: if Whizzonet is £1 p.m. cheaper, they ask for their MAC and are off like a shot to pastures new. PN at one time won media reviews for the excellence of its customer service. But having responsive and knowledgeable customer support staff available within a few rings or within 15 minutes on email and make an acceptable profit from this market segment needs sufficient size to leverage investment in call centres and shared network infrastructure, and PN simply isn’t big enough vis-à-vis its primary competitors for this, in spite of its latterly 75% annual growth to nearly 200,000 broadband customers (helped by its swallowing Metronet’s 16,000 users in November). PN’s development of automated CS tools and the portal was obviously the right way to go; but others are fast catching up and can carry on developing them in the knowledge that they can amortise the cost over a larger customer base. PN’s attempt to reduce its network costs for (primarily) this segment via the LLU deal with Tiscali was right in principle (given that a huge proportion of its variable costs comes from bought-in carrier service) but poor in planning and execution (especially the establishment of robust PN-Tiscali support processes), and has left a bad taste in many mouths and reduced PN’s credibility even to those who weren’t affected.

b. have some price-sensitive SOHO customers who can manage – at a pinch – without service level agreements, backup and support for CGI servers and so on. It is more difficult for these customers to move elsewhere than for most domestic customers, and they are more concerned with ‘acceptable’ levels of service than securing a £1 p.m. discount. If the difference were £10 per month, a one-person business might move, but a larger one would find that the cost of paying someone to move them would make a move uneconomic. But, if the service degrades to the extent of losing them business, they will find arguments for a move very compelling. PN may well for all I know have some larger business customers as well, but the lack of SLAs, co-location services and so on do not make PN the obvious choice. Large businesses will, anyway, have agreements with MCI, AT&T et alia for private MPLS circuits, and will expect duplexed or triplexed internet gateway services to be provided as part of the contract since the bearer circuits to the gateways will be provided by the telco and it makes establishing end-to-end SLAs (the Internet itself excepted) a lot easier.

c. have some power users, and although there is probably no archetypal power user they may be characterised as either downloading unusually large volumes of data, using peer-to-peer services, gaming (needing low latency) or any combination. Many are technically knowledgeable and some air their views on the service – some highly cogent and some rants – on this board. The oft-aired plaint is some flavour of "when I signed up in 200x, my contract says the service was uncapped, unshaped, un-interleaved, un-contended,…. – and now it isn’t". It is difficult to see how PN could provide the service they want at the price appropriate to the 'low cost domestic user' segment price since the latter is itself fiercely competitive. As Lee Strafford has said, "uneconomic customers always appear and have to be managed", but it would be reasonable for PN (but not felt that way by the customers concerned) to re-jig their pricing scheme either to make such customers economic or to give them an incentive to use another ISP.

In desultory terms, based on the June interims, PN hasn’t had a bad six months, with gross profit up 32% y-on-y and EBITA up 45%, but whether the fluctuations caused by competitive launches – voice services for example – will at some point cause the cash balance (halved since 2005) to vanish (and predators circle…) is worrying.

Strafford positions PN to be the 'price value leader for the discerning customer'. But the discerning customer discerns on value for money – not cost, not quality of service, but both – that’s why they are discerning. Rate tarts are typically not discerning customers but cost led. There is nothing inherently wrong either in being a rate tart or in being an ISP which caters for one, but PN appears to be attempting to cater for them at the expense of the market segment which Strafford says he targets.
M&S tried this between 1996-8 in order to hit £1bn profit. In 1998 their stock price was at its highest and their sales margin was 14% - far higher than any other competing retailer. But this was at the expense of the quality and product line expected by their core customers. As everyone remembers, six months or so later the wheels fell off; things can happen that quickly, even for someone of the size and long-term credibility of M&S. By counter-example, Tesco started out 'pile-it high and sell it cheap' but as their customers became more discerning, Tesco responded with changes to stores and product quality with goods at 'acceptable' prices – acceptable to these more discerning customers who perceived good value for money. And even Tesco might come a bit unstuck (only temporarily, knowing them) as they branch out into product segments such as flooring which demands detailed product knowledge and experience, and where the customers for these are currently accustomed to informed personal service at John Lewis.

So – PN – you get good marks for the original concept (the portal and automated tools to allow growth without proportionate increase in costs), middling marks for a reasonable financial performance over the past year (in spite of your current stock price!), poor marks for planning and pilot testing of the move to Tiscali LLU and the implementation of DSLmax (although BT must bear much of the blame for this) and a thorough flogging ('bend over Strafford') for those at the top unable to supply their 'discerning customer' target segment with what they expect.

If all this has the ring of truth, what is PN going to do about it?
Zen from May 17. PN Business account from 2004 - 2017
15 REPLIES
sinewave
Grafter
Posts: 297
Registered: 17-08-2007

Who are PN's target customers?

I'd just like to say how nice it was to read such a well written and intelligent post.

I share your views very much. How plusnet 'fit into' the industry will dictate how they fair in the future and from our perspective its hard to see what their intention is.

FWIW this is what I think.

Plusnet began as small "indie" internet provider. It was populated, it seemed to me, by staff who shared the same desires and needs of its customers wrt the net. Their idea as to what the internet experience should be like was shared by its customers. They were in touch with their customers because they were the same types of folk as their customers. All worked well and everyone was happy.

There was clearly "a change". The powers that be saw a way to make PN a major player in the BB industry and expanded big style. They were highly ambitious and believed they could do it. They probably had the technical knowledge but I doubt they had the experience. They could hire in expertise but even that process needs expertise and experience! They have certainly learned many lessons along the way - thats for sure. They tell us this every time something goes wrong;-)

I believe (and PN have said as much) that their ideal customer is Mr Average. That is someone who just uses email and www. Someone who does nothing much more advanced than a basic blog for his friends perhaps. If he logs in to find there is no email service he doesn't worry or dash to support, until a few days go by. He likes netting but its hardly a priority in his life.

The first problem came when the "new plusnet" began failing its existing customers that were much more demanding than Mr Average. Those customers now had to compete in the support phone queues with Mr Average who needed his hand holding to set up his email software. They had to swallow the fact that bandwidth would be limited and caps were needed to control the extended user base etc etc etc. PN tried to do their best for the more advanced users but this could make things more complicated for Mr Average and they certainly didn't want to alienate those folk (I'm thinking about the complex product lines, the complex portal etc). Its easier to please your userbase if everyone's demands are similar. PN used to have lots of "geeky" home users and a few small business users. these folk have similar requirements. Introduce a huge load of Mr Averages and you have a very different beast to manage.

One eg is how just getting loads of new support staff in to handle the hundreds of calls from Mr average about how his browser keeps crashing, resulted in chaos. The staff were incapable of answering the more advanced questions they got (less often) from the more demanding users and things started to go wrong (to the point where they have sacked a load of CS and started recruiting again - but in a different way).

It must be hard for PN to get things right as they are in a very complex industry. It seems to me if you want to operate in a complex industry, it makes sense to keep your own operations simple and be very clear about what you intend to do. I fear PN's customers are a wide ranging bunch with wide ranging demands that make life all the more complex for PN. Complexity it can ~really~ do without. This is why I have doubts to whether or not PN will actually get through these "difficult times". I feel there will be more disappointment for some customers in the future as PN adapts and evolves.

PN clearly wish to make money and they now have share holders to answer to if there is any doubt about that. There are people at the top who don't give a fig about what PN actually do, so long as there is profit - its just business.

If PN get through this is will be partly down to the fact they have got rid of the non-Mr Average. There has been a steady stream of migrators out of PN for a while now if the forums are to be believed and most of them I'm sure ain't Mr average.

Of course those who aren't Mr average are going to be disappointed, they'll be sad and frustrated to see their ISP change so much. But its only a company after all. Do folk have the same passion for whoever supplies their water or electricity?

Right now, I feel strongly, after recent times, that if any internet services are essential to your life (or business) you should look to other companies to provide this. For eg's: have your own domain name with the ability to access email without going via PN servers; don't use PN for website hosting. You've now no choice but go third-party for binary (or just reliable) usenet. I certainly feel their services are adequate for Mr Average's "family holiday website" - but little else.

I can see a time, once the industry has settled down, that we'll do this anyway, regardless of what ISP we use. We'll use x-co for internet provision, y-co for email and z-co for website hosting etc etc. Those companies that offer everything in one package will be still be there and useful to Mr Average. Its like the fact that B&Q is great for us occasional diy-ers but you'd never see a professional builder (or the "serious hobbyist) equipping himself for a job in there.

I say the quicker PN announce their official B&Q status the better it will be us ~and~ them.
N/A

Who are PN's target customers?

Brilliant post. I wanted to find a bit to quote and discuss, but the whole argument just runs beautifully..
I will jut say that I think the realization (maybe not explicit yet) that PN has got its business model wrong and apparently do not realize it (unless they read your post!) is behind the relentless fall in the share price.
On a personal level I will add that I think that they should take note of your remark that they should make it easier for disatisfied customers to leave (I am tied in to a year's contract and had a rather unpleasant call when I tried to cncel it).
kitz
Rising Star
Posts: 817
Thanks: 46
Registered: 08-06-2007

Who are PN's target customers?

Interesting discussion.

Not much seems to have changed since my dont forget the geeks post 10 months ago... except more "geeks" have moved away and more low users are onboard.

http://portal.plus.net/central/forums/viewtopic.php?p=237554

adsl aint what it used to be thats for sure :/
N/A

Who are PN's target customers?

>snip<Not much seems to have changed>snip<
Thanks for the link to your post.. I was happily paying for a dial-up connection then and did not frequent these forums (wish I had!). Since I realised the problems here at PN were not just a lot of noobs complaining I did actually read your post though. I think what decomplexity is emphasising is that while it might have looked like PN (plc) was chasing profits by turning its back on founder (geek) members it now looks like they have lost their way and may become vulnerable to a take-over bid.
Anyway I would classify myself as a wannabe geek, though I am certainly not afraid of Linux. I would like to use the extras needed for own hosting etc. (as described at http://kitz.co.uk/adsl/how.htm
That's not you then?)
I won't be reading any posts here for a few days but will read any comments posted here later... I think this topic really matters.
N/A

Who are PN's target customers?

I missed Kitz' original post, but I'm definitely a geek.
My computer use started relatively late, only a decade ago, and it instantly doomed me to geekishness because I was lazy. I bought my first computer, it didn't work, so I fixed it because I was too lazy to return it. In those days the fixing included low-level formatting, formatting, installing DOS, installing Windows over DOS, and it wasn't plug and play, it was plug and pray.

I'm still with PlusNet although I'm becoming more and more frustrated. I rarely need support, in fact the only time I needed it before it headed south was for a rather technical problem regarding bringing my domain in and DNS records. Now that there are so many problems I'm raising several tickets every month, most probably the type that Mr Average wouldn't even be aware of.

So I am not an ideal PlusNet customer, and I don't know if I'll stay or not.

One reason for staying is that I paid the very high fee to renew my domain a few months back, and I don't want to lose that money. I intend to move it to a professional hosting company, one that doesn't give themselves as the owner, but I don't want to give PlusNet over £52 for nothing.

Other complaints, the way that all users suffer because of the p2p community. I do use p2p, but very rarely, and always use ftp instead if I can because it's a lot faster. I'm involved in development for one of the Linux distros, so I have to download a number of gigabytes of files every month, and I've noticed something strange.

I avoid peak times as much as possible, and due to the cap I have cut my downloads, but every month I am told I've used more bandwidth than the month before, and more peak bandwidth too. I have mysterious amounts of usage for protocols I don't use, and strangest of all, the 'catch-all' called 'other' is over 3 GB so far this month. That is one of my open tickets right now.

I came from BT, which I abandoned due to poor customer support, and a lack of facilities for web sites and domain-specific email, and I thought I was paying too much for a poor service, especially when Yahoo got into the act. I also had an AOL account, in fact I still have a very cheap email-only BT account and a slightly more expensive one, both with dial-up numbers if I need to use them, for back-up. I don't trust any ISP to provide permanent connectivity. I also have three webmail accounts, just in case.

I see the number of ISPs catering for people like me reducing almost daily, and there weren't that many to start with. On the other hand, there are so many that cater for the 'average user' that I don't think PlusNet can compete, especially now that we have 'free' ISPs.

I see a future of either a takeover or a liquidation.
But I also see a possibility of PlusNet moving into a niche market, one that it has abandoned in order to get low use, high maintenance customers who will leave as soon as they see something cheaper.
A number of 'geeks' (leechers not wanted) would pay more for their needs to be met. As time goes by, less ISPs cater for this group, and some of those who are starting out now will become the geeks of the future. That could be a market for PlusNet, a one-stop shop for the geek user.
The alternative for the non-average user would be a cheap, unlimited as possible, pure internet connection from one company, email from a second, web space from a third, news and nntp from a fourth, VOIP from a fifth.. and so on. For that to be a reasonable proposition for somebody who is listed as 'IT Consultant' in the address books of friends, family, and employer, but does not have their own business, all of these services would have to be cheap enough to cost not too much more than Premier costs now.

Just my pennyworth.
sinewave
Grafter
Posts: 297
Registered: 17-08-2007

Who are PN's target customers?

Quote
Not much seems to have changed since my dont forget the geeks post 10 months ago... except more "geeks" have moved away and more low users are onboard.


Most interesting reading to see where we were just 10 months ago. A lot has happened since then! Unfortunately not much has happened since then to put a smile on my face.

I was pretty excited about adslmax like most geeks. Shame it never quite lived up to expectation.

PN have such huge competition. I wouldn't like to compete with the likes of Murdock. Even some big players like Cable and Wireless (Bulldog) and AOL(UK) are getting out of the mainstream BB market. Its like watching the runners of a marathon at the starting line all jostling for position, waiting for the off. We now seem to be in that rush to provide ~everyone~ with BB - all those potential customers, just waiting to be roped into some long term "relationship" with a supplier. I just cannot see PN remaining independant (as in not being bought out) and competing alongside companies who could afford to give the service for free just to kill off a few rivals. Come on, get real PN you've no chance.

The only way to do it is to provide something that the big players aren't providing. VOIP is not the way to go. Video on demand is not the way to go. Cheap and cheerful internet? These are all things that will be provided by far bigger, more powerful companies.

I feel PN's strength is that it is a big company when you take away the major players. It has resources and talent that could be exploited far more than just to expand the n00be userbase. If PN isn't careful all the hard work will just get swallowed up by some corporate monster.

So what should they do?
I feel they should be exploiting the technologies to the max and provide services to customers interested in such stuff (ie not the n00be's or even Mr average). Perhaps they could learn from Apple (admitedly much bigger than PN) who managed to hold on in the looming shadows of Microsoft, and provide a genuine alternative. Perhaps they could learn from Google, Flicker etc who essentially created a market for something before even the customers knew they needed it.

How about some sort of user friendly FTP type facility that allows customer computer back-ups straight forward; a simple website builder that actually looks good and is easy to use; a way of sharing photos on the web? Yes, there are already such solutions but having them all central and connected to the PN portal etc would be very attractive to many I'm sure. Customers would be choosing PN because they liked the website templates and not just because of cheap prices. It would decrease customer migration as they'd have more to loose than an email address. It would make us feel like PN were on "our side", trying to make our life easier, and not just some provider trying to take as much money from us as they can get away with.

Its going to take imagination and innovation to survive in the BB market in next few years. Working out what folk really want (and perhaps before they know what they want!) is the answer and often that answer can be found in the Geeks and what they get up to - certainly not from Mr Average. Its the geeks that founded the internet after all. Is it wise to alienate them right now?
Simon_M
Grafter
Posts: 684
Registered: 05-04-2007

Who are PN's target customers?

The Directors' first responsibility is to the shareholders.

I don't know what the shareholder profile is, but their objectives are likely to be maximising income and/or capital growth over the short to medium term.

There are two alternative business plans.

1. Proceed as outlined in the thoughtful & constructive posts above to become a medium sized niche player, offering good value for money to the discerning customer. Probably only two of three serious competitors in the market place. Be a good & exciting company to work for & with a loyal appreciative customer base.

In a fast paced industry such as this, this is a high risk strategy that could produce good but probably not outstanding returns to shareholders over the medium to long term. Very sensitive to a change in the market place.

2. Aim to maximise the customer base over the short to medium term with a view to a sale to a larger competitor willing to buy market share.

Option 1 is likely to be favoured by 95% of the customer base, all staff below director level & those shareholders who are interested in the business for what it does as well as for the returns it produces.

Option 2 is likely to be favoured by the majority of the shareholders without a personal interest in the business itself & therefore may have to be the preferred option of the directors, whatever their personal feelings.

Maybe we should all be buying shares & attending the AGM. Of course, if it then all goes horribly wrong, you lose your money as well as your ISP.

Before we all criticise the majority shareholders too much, remember that it's probably your pension fund that they are trying to maximise.

But even if my pension fund does hold some shares, I'd still like to see Plusnet going for Option 1.

Good luck guys.

Simon
Ianwild
Grafter
Posts: 3,835
Registered: 05-04-2007

Who are PN's target customers?

There's some quality discussion in this thread!

I think there are some misunderstandings about what our mission is. We know what we can achieve do in this industry, and we want to talk about it - I'd like to correct the misconceptions about who are customer base are, and talk about where we believe it's going in the future (The 3 - 5% of users you might think are 'power users' will be 10 - 20% of broadband users in a few years). I'm not going to do all that in one post here, but I think it is most important that over the next 3 months, as a team, that we make it very clear what we are here to do (and not do). In many ways I think you might be surprised. I'm really excited about what we do have planned to (and realistically can) deliver over the coming months.

You can argue that, in terms of support, we lost our way or that we got it wrong in some other way (it's clear we made some major errors that have resulted in the less than satisfactory situation support is in currently). That really isn't about budget or low cost though. Yes, we have a predominantly self service model, and always will, but that doesn't mean people shoulden;t get an excellent service when they do call us. All I can ask is that people don't look at the hear and now when they consider where we want to be...

The process of returning to the company we want to be, and getting those things right, is taking time to be visible. It really feels like progress is rapid from where I am though. PlusNet is a very exciting place to work, and although I'm sure some people have found the last few months VERY stressfull, I have certainly never worked with a more qualified, intelligent and driven set of individuals.

PlusNet is like no other company in fact (I have a friend who works at Google, and that's more similar to what we do than you might imagine). We are still the same bunch of people who care deeply about the customer experience and want to do nothing less than provide the level of service we'd expect ourselves, at the price point we would want to pay.

Value and Quality of support are both seriously possible to achieve within the model we have... I personally believe it's through past neglections of our model that the things which went wrong did so in the way and with the impact they did. I really believe we're back on track now and although we're never going to be perfect, there is no shortage of focus and investment being made in the right places, in order to set things back on the right path.

Obviously some customers will choose not to trust us or me on this. That's understandable given the circumstances. All I can say is that in the coming months, the face of PlusNet will change beyond recognition from what we have today (And the existing model, when followed correctly, will be responsible for that).

Cheers,

Ian
N/A

Who are PN's target customers?

Quote

Value and Quality of support are both seriously possible to achieve within the model we have... I personally believe it's through past neglections of our model that the things which went wrong did so in the way and with the impact they did. I really believe we're back on track now



Ian


Yeah right, read the forums and weep buddy!!!! Evil
sinewave
Grafter
Posts: 297
Registered: 17-08-2007

Who are PN's target customers?

Quote


Yeah right, read the forums and weep buddy!!!! Evil


I think Ian was referring to what it will be like in the future, not what its like now.
lenseman
Grafter
Posts: 158
Registered: 01-08-2007

Who are PN's target customers?

Ian Wild said:

All I can say is that in the coming months, the face of PlusNet will change beyond recognition from what we have today.


I think Ian said something similar about eighteen months ago, just before he left Plusnet. When He said it then He was right, Plusnet changed for the worse. Surely He cant be right again this time, it cant get any worse!!
Simon_M
Grafter
Posts: 684
Registered: 05-04-2007

Who are PN's target customers?

I prefer to think that that might tell you something about the reasons why Ian left & also about the reasons why he came back again.

Maybe I'm an optimist or maybe I just can't be ar**d to change ISP, but I have always thought that Ian's ideas about the way things should be done are correct, so I'm going to stick around & give PlusNet every encouragement to get it right this time.
Firejack
Grafter
Posts: 921
Registered: 26-06-2007

Who are PN's target customers?

Moving ISP's is a minefield and honestly I don't want to go anywhere else. Everyone is providing these cheap all-in bundles with telephones calls or whatever that offer low priced/free broadband that has pages of small print you'll never understand about service restrictions. Plus.net used to offer a fast, reliable service backed up by solid support. This is what I'm hoping they will return too, and why I stick around.

An observation I have about the turning point when Plus.net lost its good form was the introduction of 2MB unlimited broadband. At the time I can remember the "Wow"'s from all the different UK Internet sites like ADSLguide. However within 6 weeks you noticed this influx of parasites. That is exactly the client base which Plus.net had never appealed too before. Previously they would go to likes of AOL or Wannadoo and overrun their service with P2P rubbish. But the cut priced deal, which was too good to be true, meant huge amounts of heavy-usage people came to Plus.net in a short period and this flooded the system and had a negative impact on the service. Such as the "bad-boy" pipe being introduced for the P2P leeches.

Plus.net need to get back to offering something extra, something original, that sets them apart. Before it was excellent personal service. Way back when I signed up to Plus.net I'd been around several ISP's BT, Freeserve etc etc and then one post on Plus.net section of ISPreviews forums was answered personally by the same Mr Ian Wild in this very topic (glad you're still around. you give everyone a lot of confidence in the service!) and I signed up the same day, because of the human response.
Now though Plus.net need to get back to basics. Give us all a month or two of fast/ stable service with good support then start thinking about what their customers want.
For me thats discussion on new Internet technologies like ADSL2+ or WiMAX that could offer even faster upload speeds.
blowdart
Grafter
Posts: 93
Registered: 04-08-2007

Who are PN's target customers?

Quote

PlusNet is like no other company in fact (I have a friend who works at Google, and that's more similar to what we do than you might imagine). We are still the same bunch of people who care deeply about the customer experience and want to do nothing less than provide the level of service we'd expect ourselves, at the price point we would want to pay.


Well I guess you can argue this is true. google roll out new services, such as the updates to bloggar, google analytics, writely etc. then sit back only to have them crash and burn within 24 hours because they're not scalable. They don't answer support emails, ignore the complaints and generally hide until the intial demand dies down and they can slowly roll out again hoping they might have enough servers this time.

Although google never lost email.

It's funny, I switched over near the start of the year, before things starting going wrong. And I regret it. Deeply. Not because it's gone wrong for me, but the way that users are treated and fobbed off with platitudes again and again and each problem seems to point to yet another scalabilty problem somewhere inside Plusnet. Oh well, 6+ months to go I guess, I hold out little hope that I won't end up loosing my connection at some stage for some idiotic reason.