The top Internet access provider in the world has customer satisfaction issues that rival service providers could take advantage of—if you are willing to make customer service something more than lip service at your ISP.

by Jim Wagner of internetnews.com [October 4, 2001]

For years America Online has been the undisputed worldwide heavyweight of the dialup ISP industry. AOL blows away the rest of the competition when it comes to customers, serving more than 31 million worldwide users—second-ranked Microsoft Network serves only 6.9 million subscribers. But when it comes to customer service, AOL seems to employ a let-the-customer-be-damned attitude smacking of pride-filled arrogance that goes way beyond caveat emptor—let the buyer beware.

And you know what? For the past six years they've been able to get away with it. Not only has AOL kept a sizable share of its subscribers hypnotized like devoted followers, it's been acquiring new users at a blistering rate. Selling its ease of use, AOL lures new users into its fold only to hold them spellbound with sticky gimmicks like "You've Got Mail" and instant messaging (IM) "Buddy Lists."

Trust factor
But all is not well among AOL's users. An August survey by Gartner Group indicated that many consumers have a higher level of distrust for AOL than other service providers. According to the survey of online adult consumers, AOL Time Warner is the least trusted company on the Internet when compared to banks, brokerages, credit card companies, Amazon.com, large retailers, and Microsoft.

AOL earned very poor trust marks with 37 percent of all online consumers claiming a high level of distrust for the company. Microsoft fared better, with 29 percent who are highly distrustful of the software giant. On the flip side, 17 percent of consumers say they have very high levels of trust in Microsoft while 15 percent say the same about AOL.

Then there are price and service issues for AOL. According to Gartner, Microsoft received higher consumer satisfaction ratings than AOL did on its ISP and e-mail services. That's how much abuse AOL customers seem to take. Not only is the ISP taking its time resolving ever-present customer support issues, they are the benchmark in the industry for raising rates.

There are scads of websites like AOLWatch devoted to nothing but publicizing how its customers can find another service provider. The number of anti-AOL critics is growing, but the media giant barely acknowledges their presence—shrugging off criticism like it's business as usual.

Through all the quibbling and commentaries AOL has thrived, even when the rest of the ISP industry scorned the company for its hypocritical flip-flop on open access to cable systems when AOL acquired Time Warner. America Online is the "Teflon Don" of the ISP world—seemingly untouchable and unstoppable.

Or maybe it isn't?

The awakening
Recent rumblings among independent ISPs hint that AOL is showing its weak spot—a small, but growing crack in the provider's very foundation. Some customers are finally catching wind of the fact that AOL isn't really providing much for them that any other services couldn't do, too—often providing superior services and for less money than AOL each month.

If your ISP support staff hasn't already heard an AOL user say, "but I thought America Online was the Internet?" then your operation is part of a slim minority. AOL customers are notorious for their novice opinions of what the Internet is. They seem shocked when they learn that there is something called the World Wide Web existing far outside of AOL's channel sites.

For some AOL users, customer service issues and inflated fees combined with the knowledge that there are other ISPs willing and able to connect them to the Internet is like an epiphany—a catharsis and awakening to all that the Web holds for them

Tom Eldridge, owner of Internet Horizons, Inc. operating from Napanee, Ontario, said he loves it when AOL announces a pay hike or distributes another mass mail version of its starter kit that includes hundreds of free hours of access. Eldridge says that as soon as the party's over—when the fee increase starts or the free hours end—AOL users start looking elsewhere for an ISP.

"We always see an increase from AOL every time the free disk makes its rounds and the free trial ends," Eldridge said. " I enjoy AOL, they are great to us ISPs. They get the customers hooked, they get the customer's net savvy, and all we have to do is reap the rewards when the free trial ends."

Eldridge said customer support is the main reason why users switch from AOL to other providers.

"Up here in Canada, it is the same with the Telco's as it is with AOL," Eldridge said. "They send out freebie disks and the moment the customer tries to contact customer service or tech support, some waiting more than 30 minutes—we get a new client." It sure cuts down on our need to spend money on marketing."

Self-contradiction
The fact of the matter is that AOL Time Warner throws away millions of marketing dollars cross-promoting its ISP service over Time Warner's extensive media holdings that spans the gamut of television and print publications. The campaign sends a surge of new users its way and that's when the ripple effect begins. AOL is inundated and can't support the tsunami of new users flooding its dialup, customer service, and tech support lines. America Online gets the newbies, but it can't possibly keep them all happy.

Lisa Gurry, MSN product manager, said it too has been the lucky recipient of former AOL customers who've seen the light and are looking elsewhere for Internet services.

Last May, MSN mounted a massive campaign to lure unhappy AOL users away from its sect by offering three free months of service, when customers signed up for two-years of service at $21.95 a month.

It's done wonders for MSN, according to Gurry, culminating in nearly one million new customers—subscribers that must stick around for at least a couple of years. According to survey results taken by all new MSN customers, approximately 80 percent of its new users came from other providers and of those, 42 percent were former AOL users.

"Customers that are thinking about MSN as their ISP want the Web to be useful, not just easy," Gurry said. "We think that these users are moving away from AOL for a number of reasons. Feedback shows us that they are frustrated with the poor quality of service that they were receiving from AOL as well as not getting the full set of services that the Internet has to offer."

Gurry said AOL users just don't see the value of its service offering. "Primarily, they felt that the price was too high for the service that was being offered," she said.

What is AOL's response to these issues?

Smug defiance.

It would be an understatement to say Jim Whitney, AOL spokesperson, was concerned about the MSN data. The numbers, he said, don't account for the seven million new customers AOL acquired over the past year.

"AOL membership growth has never been stronger. In the past year alone, AOL has added seven million members," Whitney said. "AOL offers value unmatched on the Internet."

Inside the numbers
MSN claims they've gained nearly one million customers this year. We'll give them the benefit of the doubt and make it an even million—it makes the much math easier for me.

Eighty percent of one million is 800,000—so far, so good. Of these 800,000 customers that switched to MSN, 336,000 came from AOL. Multiply these former AOL users by $23.90 and the total comes out to be about $8 million. That's $8 million a month in lost dialup revenues for AOL. Extrapolate that over one year and America Online looses more than $96 million in revenue to MSN alone each year.

The bottom line is that AOL loses millions every year because it doesn't want to address support problems created by its marketing campaigns.

AOL has shareholders, right?

Informing shareholders that your business lost more than $96 million because of bad customer support is not a good thing. At some point, AOL is going to have to acknowledge its customer support problems.

Daryl Schoolar, an analyst at research firm Cahner's InStat, said AOL isn't likely to feel the heat of losing customers to ISPs like MSN in the face of its continued expansion elsewhere.

"It think as more users come online, and some smaller ISP go out of business, all of the major ISPs will gain in total subscribers," Schoolar said. "However, there is no reason to believe that AOL will lose its position as king of the hill"

So, for the time being AOL will continue to acquire customers worldwide while rival ISPs simultaneously take its uses away. At some point, when the entire world is connected to the Internet, there will be no more new users. Perhaps then AOL will have to address its service issues.

Until then, ISPs can differentiate their offerings from AOL and grown their businesses by focusing on what has customers leaving in droves.

Your ISP can provide local numbers for dial up access that doesn't disconnect customer connections to make room for other users. And your ISPs support staff should be at the ready—answering potential customers questions within three minutes of their initial phone call—without putting them in queue for a tortuous tour of hell via hold music.

So violate AOL user's expectations today. Answer phone calls quickly and don't annoy users with a constant barrage of self-serving advertisements. Former AOL users will be stunned in disbelief as your support staff gives them what they really need - a human helping hand. Then let AOL do your marketing for you. You've got money to make.

— End