Chris Kranky

The CEO/founder was personally involved in a re-write of their company’s website. Like every CEO, he was an expert at marketing, but he asked me for some help anyways.

One of my first questions was, “What are your competitive advantages?“. He beamed proudly. “Chris, we have great service, our customers just love us“. Fantastic. I quickly asked if his competitors were advertising that they had ‘bad’ service. I got a bewildered look in return. I loaded a competitor website and BIG SURPRISE, they said they had great service too. So how are you better?

I dug a bit more. “What do you that provides great service?” Does your personnel answer phones 24 x 7? Do you have a faster time to clear a trouble? Can you describe the metrics that define great service? “Chris, we could get into legal trouble if we put metrics on the website”. I see. A quick view of another competitor defined their great service as answering their service line within 20 seconds with a live company employee, 24 x 7. Sounds like a metric to me.

“But Chris, we have really great people”, he offered. Ah, so the other companies gets to hire all the morons? Do you have more employees per customer than the competition? Don’t know. Are your employees better educated? Wasn’t sure. Do you pay more than your competition? Definitely not. So you do have great people.

I wasn’t prepared to give up. The CEO now clearly in defense mode, quickly listed off a number of marquee customer names. Fantastic. But then I asked, are you specializing in services to only certain types of customers, meaning you’re an expert in that space. Hell no. Any customer with money was a good customer.

If everyone has the same capabilities, how is this a competitive advantage and more importantly why would you waste precious marketing space to promote marketing dribble that has no impact. It’s a lot easier to market hard facts. We’re the cheapest in town. We have the best value package. Something where you can write down what you get. Or you can appeal to a specific customer group. An all things to all people with a vanilla offering is a tough one though.

In 1996, Webex was founded offering web conferencing services.  Webex had an immense challenge, they not only had to develop the software, they also had to educate the market on what exactly web conferencing was. Educating a market takes tremendous marketing dollars and Webex’s $49.95 a month plan was quite profitable and the business case was a simple – save as little as one business trip a year and you’ve paid for the service. If you know what web conferencing is (duh), you can thank Webex for educating you.

The #2 player, Go2Meeting, entered the market and like all number two players, they didn’t do much innovation, nor did they do anything to disrupt the pricing. The market was huge and with a bit of advertising and sales push, plenty of room for both of them charging a princely $49.95 per month.

Microsoft with Sharepoint shows up in their well worn marketing model of being a day late and dollar short and haplessly tries to convince enterprises to save the $49.95 a month by installing one of the world’s most complicated pieces of software to enable web collaboration which is supposed to be a whole lot better than mere web conferencing (sic). Along with Microsoft, a slew of other web conferencing providers have shown up, DimDim amongst them, basically offering poor 2nd choices for web conferencing. Not a really good business model.

As I’ve written, in an existing market, you’ve either got to be measurably better or measurably cheaper, in order to gain share. Not marginally better or marginally cheaper. It’s got to be a no-brainer.

Enter the folks from Logmein, the guys who offer a remote PC control service. Established public company, they know marketing. They needed to expand and since web conferencing looks a lot like remote PC control, why not. So they created www.join.me as a new web conferencing service. Using newer Flash technology, a very streamlined and slick host interface and the participant doesn’t have to download a thing. The service works quite well and was also quite fast, handling both simple two-party as well as multi-party conferencing. As well, they have an optional audio conferencing service.

But wait — that’s not all.

Obviously the marketing minds at Logmein scratched their heads and asked how there were going to make a dent in the crowded and established web conferencing space. Sure the software is slick, but I’m pressed to say it’s measurably better. So true to form, they decided to focus on measurably cheaper. Cheap in like FREE. Yup $0 a month. Similar to Logmein’s PC control service, they appear likely to offer decent web conferencing for free while enticing those free users to upgrade to more advanced features (as yet undisclosed).

If you have 10 employees using Webex, you’re paying close to $6,000 a year for web conferencing. That sure sounds like a big number and a potential for big cost savings. $6000 is a lot of money considering it’s only serving 10 employees!

Clearly FREE doesn’t allow for much by way of marketing expenditure. But FREE tends to work well for ‘word of mouth’ (see I’m telling you about it). We all like to get something for nothing and particularly something that we’re paying for.  The challenge for Logmein will be to get some likely single digit % of the FREE base to convert to the paid service and that remains to be seen how they’ll pull it off and with what.

No matter, join.me works well today and if you’re paying for web conferencing, here’s a great reason to switch and save money.

Anyone over 40 was witness to the drastic reduction in per minute long distance calling rates, they fell like a rock and today long distance telephony costs are no longer a cost concern for most corporations. Along the way, numerous LD companies got killed, but the survivors got horribly efficient, drastically cutting costs in people and capital expenditures. We, the consumer, won and now none of us think much about making an national or even international call. Low long distance rates spurred increased communications, likely increasing the overall efficiency of a business.

A broadband company recently asked for my take on broadband pricing trends. The picture starts to look a lot like long distance telephony and the same economic pressures and actions will occur. Just a few short years ago, companies were paying in excess of $500 a month per Mbps for Internet access. Today, you can easily purchase a single T-1 of Internet access (1.5 Mbps) for $250 a month or $166 per Mbps. A dramatic reduction, but is more coming?

In most major metro areas, you can find higher speed Internet access at rates around $100 per Mbps. So if you need a 10 Mbps effectively Ethernet rate Internet connections that ‘s a easy $1,000 a month. These services are delivered via broadband wireless, inbuilding fiber optic cable or Copper over Ethernet (bonding leased copper pairs of wire to achieve higher speeds). These Internet Service Providers don’t own cables into your building and instead continue to lease them from the local telco. A leased copper pair is ~ $20 a month and can support speeds of above 2 Mbps. Thus in this example, you’d need 5 pairs to support 10 Mbps. Thus your ISP has underlying costs of $100 with revenue of $1000. A nice business.

But your ISP doesn’t ‘own’ any of the actual facilities and thus the opportunity for price to decline further. Verizon FIOS now offers business services and for a mere $189 a month, you get 50 Mbps connection (20 Mbps). Even if you only count the 20 Mbps up, that works out to be < $10 per Mbps.  ISP’s will be quick to say that FIOS isn’t the same as ‘their’ Internet. But at 90% less money, who cares.

The future is all about more for less and clearly a number of non-facilities ISPs will simply be unable to play at this poker table of low priced Mbps.  At a competitive disadvantage, they will either sell out or simply vanish. While clearly some losers, the winners will be American businesses who will suddenly find that 100 Mbps Internet connectivity is an easy economic decision.

What will people do with this new found bandwidth? Who knows for sure, but history has shown that when inexpensive resources are available, applications appear to take advantage of it. Clearly, low cost bandwidth will be a boon to SaaS type applications, back-up, off site storage, running your applications in some far off data center. In fact, it’s not hard fetched to imagine a company doing away with it’s inbuilding data center and simply outsourcing all the necessary hardware components.

I have a Rogers Canada account.  Why I don’t know, they’re certainly not deserving of it. With $3.0b in revenue, predominately from consumers, you’d think they’d mastered how to provide their customers with a web portal. Sadly, they haven’t.

For the last month, I’ve been trying to access my account online and each time I’m greeting with the text “We are currently experiencing problems accessing your account. Please try again later.” Later would seem to be something on the order of 1 month. So I decided to charge Rogers some money and called their customer support line. Figure on a good day it’s costing them $.80 a minute to talk to a customer. Since I wasn’t planning on giving them more money, clearly my call would be at a loss to them.

The hapless customer service rep clearly had heard my complaint before, likely hundreds of times, he explained that yes they were having a problem, yes they knew about and no, he had no idea when it would get solved. You know you’re having serious trouble when you create a special graphic image to say you’re having a website problem. His recommendation, which clearly wasn’t part of his script, was to try access my account “early in the morning or late at night”. So there you have it, Roger Canada has one of the best online portals provided you only want to use during specific hours.

Another month has passed and I was left wondering how many thousands of customers had called with this problem. Figure my call at $0.80 per minute for 5 minutes cost them $4.00. Rogers Wireless has 6.2 million wireless subscribers and figure worse case, perhaps 5% of them have called, so this has cost Rogers something on the order of $8 million.

Now a month later, I’m seeing the same messages, my immediate thoughts are these guys are a bunch of idiots, if they can’t run a website, god only knows how they run the wireless network. I’ve thoroughly enjoying telling all my friends my experience with Rogers with the ending recommendation, don’t buy, if you did, switch.

Likely the executive team, busy enjoying the 3 weeks of Toronto summer, are clueless that they’ve been advertising daily to about 310k subscribers (5% of their total), that they really don’t know and really don’t care. In likelihood, some senior manager in a cubicle is charged with the website and he/she lacks the internal power to authorize the use of force to get it fixed. So it remains broken.

The senior manager works for a Director who works for an Asst Vice President works for a Vice President who works for the General Manager who works for the President. Somewhere along this long (probably not very far), they stopped caring. So I will switch and say good bye to Rogers, sure I won’t be missed.

Best Buy announced a few weeks back they were getting rid of Speakeasy, the Seattle Washington based provider of hosted VoIP solutions to small and medium businesses. I said getting rid of, different publications had different thoughts. The VoIP technology trade journals tried to make it sound like it was a merger, which sounds like you had a car accident. A local Seattle business news sections simply said, it was divestiture.

Best Buy acquired Speakeasy in March of 2007 for $97m and likely pumped more money into it. The divestiture press release doesn’t quote any financial terms, which basically means Best Buy took a bath. Since none of the existing Speakeasy management was quoted, I suspect they’re none too happy that Best Buy has thrown them to the wolves. The ‘net is, Craig Young at Megapath bought a customer base which he can now milk

You always shoot the dog and Best Buy at $50 billion in revenue looking at likely $50-80m revenue Speakeasy and said (1) you’re losing money, (2) your revenues are growing exponentially and (3) you’re not strategic to what we’re doing. Thus some hapless corporate BD guy was given the mission to go dump this mutt to whatever buyer they could find for whatever they could get.

Megapath will likely whack all the costs, sharply curtail marketing expenses and put the entire business in glider mode and simply milk the cash out of it. This, by the way, is exactly what Vonage is or has been doing for the last few quarters, while investors hail merry that the CEO is some brilliant god. Sadly, as I’ve written years ago, voice is not a stand alone business. I’m getting fearful that neither is data as well (read posting on broadband costs).