Applications

Finding the Value in Value-Added Services

Dialup acceleration, spam filtering, photo tools, blogging or mobile IM to phone. Which value-added services will be useful to your customer base, and more importantly, which services will increase your bottom line?

by Mike Cassidy Managing Partner, ISP-Market [November 20, 2003]

The ISP environment today is one where offering superior services goes well beyond just Internet access, hosting and support. Many providers are delivering 20 or more services in addition to the basics. While this is not a realistic strategy for everyone in the ISP business, there is no doubt that there are a handful of easily implemented services that would be useful to your customer base and many of which the customer would be more than happy to pay for.

It should come as no surprise that the largest ISPs in North America have been implementing new value-added services faster than they can announce them. Staying competitive with the larger ISPs is one way of keeping customers and reducing the most overused word in the ISP industry, "churn".

But adding new services isn't just about staying competitive; it's about creating new revenue streams while delivering a better quality service to the customer. When assessing new value-added services, choose the ones that are relevant to the customer's needs, which will ensure customer loyalty and retention.

It's about the money
It's no secret that access alone has little value to a subscriber and your customers can easily switch from one provider to another. Offering value-added services that become a part of the user's online experience can create a perceived value that can easily exceed the $5 to $10 per month that they will save by switching providers.

Being the only provider in town to offer a certain service can give you the advantage you need to grow your business. If you stay one step ahead of the competition and choose the correct services for your customer base you can create a perception of leadership in your market. As customers become more Internet savvy, they look to their provider for more services. You as an ISP are a trusted advisor for the customer. You are their link to the Internet and many times they have never been connected through anyone else. They have trusted you to provide Internet connectivity; they'll trust you when choosing new software or services.

Today there are many more value-added services available and by either offering stand alone services or bundling services as more significant offering you can add to your bottom line. Consider increasing the value of commonly free services by offering them only in conjunction with newer fee-based services. You can bundle acceleration and pop-up blocking or anti-virus, firewall and spam filtering together as a security package.

In evaluating all of the extended value-added services, we at ISP-Market have defined four categories of services:

Standard service enhancements
Things that are an extension of basic services provided.
Examples: dialup acceleration, spam filtering, content filtering

Security services
Services designed to protect both your network and the customers desktop/software
Examples: personal firewalls, e-mail virus scanning

Entertainment services
The majority of consumers are online for entertainment; they want news, weather, stock quotes, jokes, horoscopes, music, videos etc.
Examples: customized content, Internet radio, MP3

Productivity services
These are tools to help users manage their time and get the most from being online. These can be the most appealing when it comes to increasing your perceived value.
Examples: calendar, reminder, caller ID

Here is a breakdown of each the four categories of value-added services:

Standard service enhancements
Web-based e-mail
spam filtering
Content Filtering / Parental Controls
Dial Acceleration
Hosting / Storage
Roaming E-mail Mailboxes
Free Support 24/7

Many of the standard services are things that consumers now look for when choosing a provider. Therefore, among our four categories, they have the most impact on customer acquisition. These are often the features by which your service is measured against your competitors.

Webmail, spam filtering, and content filtering are expected services. Web-based e-mail is even more important. It is a service that users have come to expect and rely on and can be used in place of a roaming service. Dial acceleration, while a relatively new service offering, is a service NetZero has advertised extremely well.

Hosting, storage, and extra mailboxes are some of the oldest services offered and experienced users have expectations and may be looking to switch providers to meet their storage or e-mail needs. The more you offer, the better, considering most users will never use what you offer anyway.

In the case of free support, if you don't have the staff, outsource it. New users require handholding and while it's not fun, it is important. Build, buy, borrow or partner to have a solid online knowledge base to eliminate basic OS and browser questions.

Security services
Pop-up stoppers
E-mail anti-virus
Personal firewall
Spyware blocker and Remover
PC checkup

Security services can be used as both customer retention and customer acquisition tools. They come in may shapes and sizes. Some providers are strictly resellers for McAfee and Symantec while others are purchasing software that will protect their user base and eating the cost.

With the Internet as dangerous as it is, with all the viruses and other attacks, this category of services is the most important. ISPs should use security services to protect themselves even more than their customers.

Eliminating spam and e-mail viruses can help protect your network and save time and money on storage space and IT resources. Personal firewalls and antivirus software will help cut back on technical support calls from users with hacked and infected systems. Spyware blockers and removers and PC checkup services can be sold to users who call in for support and have infected systems.

Entertainment services
MP3 (legal downloads)
Radio
Movie and video
Photo tools
Custom and personalized content
Blogs, journals, and other publishing tools

Entertainment services are a luxury (whereas security is necessity). But entertainment services are finally showing potential and ISPs are in a position to be the perfect partner and distributor for media companies.

Music, radio, and video services are springing up every day with many leaders already emerging. Partnering with these inexpensive (as low as 79¢ per song to $5.95 per month) services and taking a cut of the action can provide long-term recurring profits.

Other tools such as photo printing, editing, and posting services are also available from quality partners.

Custom content is an excellent tool to maintain customer interaction and create a channel to promote new value-added services as they are added. If you do not offer a starting point for your subscribers with customizable or localized content, you are missing a key sales tool in up-selling customers to new services.

Blogs are quickly becoming a hot tool for the wannabe author. Knowledge of HTML and graphics are no longer needed to create a basic blog. Look for blogging to become a standard part of the more popular web publishing software packages

Productivity services
Calendar
Reminder
Call waiting
Caller ID
Mobile/IM to phone
Switching tools

While many of the tools in this category will do little to attract new customers, productivity tools can play a major role in customer retention. Customers will come to rely onfferings like calendar and reminder services that integrate into a their lifestyle.

Services such as caller ID and call waiting are especially important to dialup subscribers, allowing them to enjoy their online experience without having to be concerned about missing calls.

Newer services such as instant messenger forwarding to phones also increase productivity, allowing subscribers to be reached anywhere and to communicate with friends and family while online or not.

Switching tools make it easier to switch providers and join your ISP. These tools range from text instructions to software that will automatically reset parameters for your new connections as well as remove any software installed by other providers.

Why offer these value-added services? Why not? Customers may be shopping around for a new provider and you may lose them because you don't offer acceleration, etc. and the competition did. Many of these services are pretty simple to implement and there are many freeware solutions you can use to offer even complex services such as spam filtering, VoIP, etc.

Now that we've identified some of the opportunities for adding new revenue streams and strengthening your hold on your existing customer base, the question is, what value-added service do you start adding first?

— End