The Pitch to Switch

New switching tools makes changing Internet service providers easier than ever for the average residential users. But does facilitating customer disloyalty help or hurt ISPs?

by Patricia Fusco ISP-Planet Managing Editor [November 18, 2002]

National Internet service providers are doing it. Local ISPs are doing it. Even ISP start-ups have recently gotten into the act. Tapping into the pool of discontented America Online subscribers has never been easier, with the arrival of new switching tools from TrueSwitch, a service designed to make changing service providers nearly hassle-free.

MSN and AT&T WorldNet were two of the first national ISPs to sign up for the TrueSwitch service. Offered as an online account-switching assistant, the TrueSwitch customer account migration platform provides a streamlined process for AOL users to convert their Internet access connections to other ISPs.

MSN first adopted TrueSwitch back in May as part of a massive marketing campaign to lure AOL users its way. As part of the original promotion, MSN offered AOL users $50 worth of connectivity services as an inducement to switch. At the time, Richard Bray, MSN vice president, said the TrueSwitch platform made its pitch to switch a simple process.

"With the availability of these new switching tools, we are empowering AOL customers to choose a superior alternative by making it incredibly easy to switch to MSN," Bray said.

Easy does it
Jerome Hromiak, TrueSwitch vice president of sales and operations, explained how the three-step service works.

"For AOL users to switch to MSN or another TrueSwitch client, all they have to do fill out an online form," Hromiak said. "We take it from there. We complete the data migration and take care of e-mail set ups, and then cancel the AOL account."

The TrueSwitch customer account migration platform extracts data from each AOL user's e-mail inbox, as well as contact list details and calendar information, so all personal settings are automatically transferred to the new account. An e-mail address change notice is sent out to friends, family and business associates, based on contents of the user's address book. TrueSwitch also provides e-mail forwarding services for 30 days.

This is not to say that TrueSwitch relieves AOL subscribers of the entire burden of switching providers. Canceling an account with an ISP is often tricky and frustrating for subscribers. If the cancellation is not done properly, an AOL user could end up paying for services they think they have cancelled. Hromiak said TrueSwitch clears the first account-canceling hurdle by automatically sending a request via fax. After that, it's up to the AOL user to confirm the cancellation.

"Users are informed that if they don't receive a confirmation notice in 72 hours, they need to follow up with AOL on their own," Hromiak said.

The fine print
One possible glitch in the system is that AOL users must provide accurate information in order for the entire process to work. This includes providing personal information that only the individual who initiated AOL service can provide—like the last four digits of the charge card used for paying monthly service fees. If any of the data is incorrect or missing, the AOL account can't and won't be automatically cancelled.

In order to facilitate the switching process for its clients, TrueSwitch builds a co-branded site for each ISP that signs up for its services. Depending on the size of the ISP, co-branding fees can run anywhere from $3,000 to $20,000. After that, ISP's pay $10 per switched subscriber. Given current costs of acquiring new users, which also varies with the size of the ISP, the TrueSwitch program could turn out to be a boon for the right ISP business.

The TrueSwitch service was originally designed for large, national ISPs. But Hromiak said that the company would be releasing a downscaled version of the TrueSwitch program designed for smaller ISPs—those with fewer than 10,000 subscribers—sometime this month. There is one caveat: ISPs must support Outlook Express—no other mail client can be used with the TrueSwitch program at this time.

ISP startup iVillageAccess believes it will benefit from utilizing the TrueSwitch program. An offshoot of iVillage, the popular women's web destination, iVillage recently entered the ISP arena offering an affordable $17.95 a month dial-up alternative to AOL and MSN. Since it has nowhere to grow but up, it's imperative that iVillage makes it easy for visitors to switch to its brand of Internet services.

Double-edged sword?
The question remains—is encouraging customer disloyalty good for ISPs? Daryl Schoolar, InStat/MDR analyst, said it could be a dangerous business practice for ISPs.

"Like credit card programs that offer low interest rates for a limited time, encouraging customer churn could be a dangerous business tactic for ISPs," Schoolar said. "A credit card-switching subculture has already sprung up. Customers just change companies when the terms expire. I can see the same thing happening for ISPs: a growing group of subscribers that change ISPs when discounts disappear or free usage expires."

The fact that MSN put a bounty on AOL users does not help matters. Imagine a day when subscribers could roam from ISP to ISP, never actually paying for any services. They could just stick around until the free service term expires and use a Web-based e-mail service for the sake of continuity.

While it's possible that ISPs may eventually establish switching penalties, much like the $50 fee incurred by customers that want to change long-distance carriers, there's nothing stopping a rival ISP from picking up the tab.

Could all this mean that ISP slamming looms on the horizon?

Maybe.

But the best way for AOL—or any ISP for that matter—to fend off these types of churn-promoting programs is to provide subscribers with services they value. For AOL, this could be its family appeal. Similarly for iVillageAccess, the value is being a part of the women's online community.

What do your subscribers tell you they value most about your ISP business? Maybe it's just that at your ISP, you don't treat your customers like a commodity.

— End