Applications

Using Managed Services to Retain Small Business Customers

Dave Brown of EmergeCore says that ISPs can lease equipment to their business customers and manage the equipment as well, raising ARPU and lowering churn.

by Alex Goldman ISP-Planet Managing Editor [May 24, 2004]

Boise, Idaho-based EmergeCore's "IT In a Box" solution is built to deliver everything a small business needs, including: Wi-Fi LAN, DNS, e-mail, file sharing, webhosting, and more.

But the company's CEO, Dave Brown, who founded and sold the ISP Cyberhighway Internet Services, says some ISPs don't seem to realize that a basic box can be the best value-added service they could ever offer a small business customer.

To see the value, just run the numbers.

"When we built custom Linux boxes, I did this. You sell a lease. The lease is $125 for all the features in the box plus the bandwidth. $125 times twelve is $1,500, and you can stretch that into a two year or three year lease. Instead of $3 per month in profit, you're now averaging a lot more."

He says that the $125 per month fee is $25 for DSL and $100 for the box (which costs about $1,200). "After the first year, it's all profit."

The more valuable the services on the box, the less likely the customer will churn. "If they've got their files and everything else on the box, and the ISP manages the box, they're not going anywhere. That's customer lock," says Brown.

Of course, you do have to provide good service. Service, today, is all about the Internet.

In their book FutureWealth, venture capitalists Francis McInerney and Sean White, say that organizations that utilize the Internet well are organized to deliver customer service. Such organizations have to be:

1. Vertically and horizontally disintegrated
2. Decentralized
3. Flat, with no more than four layers
4. Designed to deliver customer service

For serving small business customers, that means that the customer must be able to complain to the ISP and get service, and it means that the people actually managing the service must be empowered to make decisions and must have the skills to make decisions.

Many ISP-Planet readers are small businesses themselves. Just think about how your equipment vendors deliver service. Those that do it right are giving you, for free, valuable business intelligence. Actually, those that do it wrong are also providing valuable information.

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