Interview: Iain Johnstone, Zen Internet -- "Superior customer service"
Internet Protocol is specifically designed to abstract away as much as possible of the underlying transport infrastructure. Thus if you're in the business of retailing connectivity, you have to find some means of differentiating yourself in addition to the technical aspects of the product. Zen Internet is a medium-sized UK ISP that was conceived around a strategy of superior customer service. They sell into both the residential and business markets. Their success in executing this service strategy is evidenced by the many industry awards that Zen has received, as well as its commercial success.
We interviewed Iain Johnstone, who is Sales and Partner Program Manager. Given the price wars in the UK broadband market, we wanted to know more about what Zen do differently that enables them to maintain margins and profitability.
This is an edited version of the conversation, and is not a verbatim transcript. As always, we have no commercial interest in the companies we highlight unless disclosed - although one of the Telco 2.0 team is a satisfied Zen domestic customer.
Who are your customers?
We aim to be the #1 ISP for business users. We aren't in competition with the AOL/Time Warners of the world.
What does Zen do differently to create "superior service"?
Firstly, we recruit differently. Our customer have access to the best-qualified technical support. Most are degree-qualified, and all have an interest in the Internet. Many have run their own business. They relish finding answers to customer problems. We have a stringent recruitment process.
All our service agents are UK-based. They understand the accent, dialect and culture of the caller (and vice-versa), and thus understand the problem being described.
We use an 0845 number, not an 0870 number. [Note to non-UK readers - 0870 numbers, used by most industry players, are around US$0.15/minute to call; 0845 numbers half that; normal geographic landline numbers are too cheap to care about cost.]
When someone calls into us, we don't use the standard call centre metrics to drive our business. The person who takes the call is responsible for that customer issue, and deals with the problem from start to finish, however long it takes. We do monitor call times, but don't use them to drive agent behaviour.
We also offer to call users back, as well as having a support channel via instant messaging, which has proven surprisingly popular.
We answer all calls within 90 seconds, with 90% answered within 15 seconds. We will divert resources within the business or recruit additional staff to maintain these standards.
How do you market your product differently?
Our business is based on referral. We aim to be the #1 choice of IT managers. That means the referrer must have total confidence in our service. Customers contact us because they have already heard that we offer good service. [Telco 2.0: This obviously reduces marketing costs, increasing profit in a virtuous circle.]
Many customers come to us having had poor service with another ISP. A large proportion of our business is therefore migrations.
Some customers find us through services like adslguide.org.uk, where again we score highly on customer service.
Our success at winning service awards from the ISP Association also reinforces this message.
We do promote referral activity to existing customers.
Overall, we have a very small marketing budget - just a PR and communications team, which is in-house to ensure best results. We are good at copywriting, and as a result customers tend to read what we send them.
What about customer communications?
We have a unique "Rod's Newsletter" that goes out containing interesting links from the Web, and nothing else. [Telco 2.0: It keeps Zen in the minds of users, as a kind of permission marketing technique that offers value in return for attention.] This raises awareness. We do no traditional explicit marketing.
We have a partner program, with more traditional sales messages, as well as a business letter to out top 200 customers on a quarterly basis. The theme is always "What are we doing to keep you happy?".
How do you sell your product differently?
We don't sell broadband - we sell service. The price increase needed to support this is small in the eyes of our customers, for whom broadband is an essential part of their business. We are rarely cheapest, but instead aim to be best value. That means it's OK for our sales team to lose a deal on price - but never on service.
We never sell the customer something they don't need.
What's different about your corporate culture?
Since founding in 1995, we've always had the same consistent approach. We are an independent company still owner by its one founder.
How do you go about product development differently?
We actively build in sales and support processes before deployment. Product management won't launch a product until all the tech support staff are trained. This means we can be weeks or months "late" to market, but this isn't an issue to us.
How are you positioned compared to your direct competition?
Our competitors are good companies, also aiming to deliver good service. They have technical expertise and network differentiators. Some aim to max out their network, whereas we treat ours as being fully utilised at lower usage levels.
What's the bottom line from all this effort and differentiation?
We have annual churn of under 10% in an industry where 30%+ is common.
Is the current rush of "Free (but read the small print)" broadband offers to residential users hurting?
Not really. We are developing a VoIP platform [to enter the same n-play space], but are significantly differentiated. No small print, straight pricing. Customers are increasingly coming to us with multiple needs, such as home workers. Zen was born in the shadow of Freeserve, at a time when the dial-up market was going through the same transition, so we've been here before.
What are the limits to growth of your business?
Many customer use sites like uswitch to compare prices, only to be later let down on poor customer service, so we don't see any imminent limits to our "service" message. We want to grow from a £25m business in 2006 to £100m by 2010.
Markets are getting more sophisticated. Users need a wireless router, own 3 PCs. Good ISP employees crave staying at the forefront of technology.
What are the wider issues facing the ISP industry today?
I still don't know what BT's 21st Century Network will give me to sell.
There's a lot of information and content on the Internet, such as World Cup football from the BBC, that is bandwidth-hungry. There is a cost to providing this which decreases margins. We need to have closer relationships with content providers, as we don't want to have to throttle football to maintain our 9am-5pm business SLA. There's also a sales opportunity here to host that content nearer the user.
"Convergence" is late arriving, and we're still waiting for things to happen in that space.
There's a big issue around security. Who is responsible for spam? How should sharing of wireless access points be governed?
Our thanks to Iain Johnstone and Zen Internet for taking the time to share their strategy with Telco 2.0 readers.