Analysis: People power still rules in the ISP world

 

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Posted on 30 Jan 2007 at 16:57

If you bought a new car and, on taking charge of the keys, found that it only had one seat and three wheels, you'd be more than a little miffed.

Without a doubt, you'd have words with the dealer about the fact that you clearly hadn't received what you paid for and that one seat is of no use unless the vehicle was purchased with the sole intention of very bumpy lonely drives for one.

Internet service provider (ISP) Pipex recently found itself in a similar situation when it paid £12.5 million to acquire Bulldog's 110,000-strong customer base.

At the time of the purchase, Pipex's chairman Peter Dubens said: 'The acquisition of Bulldog brings further scale to the Pipex Group and we are delighted to welcome all the Bulldog customers.'

A shrinking ship

Just a few months later, on the eve of concluding the deal, Pipex discovered that the Bulldog user base it is about to purchase has shed some 30,000 users - over a quarter.

In a recent interview with the Times, in which it was revealed that Pipex is negotiating a lower acquisition price of less than £10 million, Dubbens said: 'We have had to do a clear-up of the Bulldog customer base,' but Pipex spokespeople did not want to comment further on the situation.

The clean-up involved, according to media reports, expelling customers who are receiving the Bulldog service but aren't being billed.

But, threads on the Bulldog forum suggest that, despite many being unhappy with customer service levels, users are happy to pay if only Bulldog would take their money.

'To be blunt I signed up for internet connection and a phone line, not to waste my time with these people', said one poster.

'I remain with Bulldog for the moment but having been through so many problems with them in the past the next time something goes wrong or if they cap usage I will be switching from them to an ISP that is able to provide a reasonable service and is also competent at billing.'

Aside from the billing cleansing activity, it is likely many disgruntled customers used the acquisition as an opportunity to jump ship if they could do so.

According to Sue Richardson, an analyst at Gartner, some Bulldog customers had already experienced a fairly rough ride as the ISP increasingly turned its attention to wholesale rather than retail activity.

Granted, it hasn't been stated whether Pipex made the purchase thinking it was getting a top of the range Ferrari or a more mainstream model, but nonetheless it clearly hasn't got what it paid for.

Customer focus is key

The current debacle leads onto a wider issue of how companies are meant to get a handle on customer retention when people bail out before the ink is dry.

'I believe there were some customer service issues on the Bulldog side so it is not that surprising that some customers have left,' said Richardson.

'We've also seen lots of examples in the past 18 months of providers with very fast rollouts and, in some cases, the customer service aspect has lagged so users have had a bad experience. Even if they're tied into a contract, if they have a bad experience they're pretty damn sure to switch at the end of that contract if not sooner.'

She added: 'It's also a timing thing. I believe Pipex has a good standing in customer service and it could be that the Bulldog customers [who left] were so fed up that they didn't, importantly, realise that Pipex may have had a beneficial effect.'