To all:
INTRODUCTION
=============
I wanted to send an email message to all of you reviewing my thoughts on our
relationship, your businesses and the future. Normally I like to talk in
terms of "we" in my communication. Today I will often speak in the first
person quite purposely. I note that our customers form such a heterogeneous
group that it is difficult and dangerous to generalize, but I will do so to
some extent here. It is the similarities, not the differences that are
important.
I apologize for the length. I have included headings to allow for easier
skimming.
What I will try and do in this message will be to provide context. I think
it is important that you all understand the way we see you, what we think
makes you successful, your place in our world, our view of our place in
yours and how we think we can best help. To be clear upfront, help means
help you win the battle for customers, to run and build successful
businesses and to do it all in a way that can be enjoyed.
First, let me thank you all for being involved with us. You are an amazing
group of people who are in the main intelligent, thoughtful, know how to run
a business and have a strong positive ethic. This last point is most brought
home to me whenever we take the high road on an issue and you, as a group
respond positively and in an appreciative fashion. I get the opportunity to
interact with many of you and nothing makes me prouder than when you tell me
what a great group of people we have. Believe me, it happens often, and it
never fails to warm me.
WHO YOU ARE
===========
Often when describing who our customers are to third-parties I will
conveniently say "small and medium-sized ISPs and web hosting companies".
While this captures the two largest groups of customers, it doesn't describe
nearly half of you. You are an incredibly heterogeneous group. You are
located in over 110 countries around the World, can provide marketing and
customer service in just about every conceivable language and have a great
appreciation of your users issues. You innovate and problem-solve.
The definition of a reseller that I find most accurate is "companies
building recurring revenue streams over the IP network by providing Internet
Services".
What I most like about this definition is it captures the important fact
that the services that are provided is a dynamic and changing set. This is
extremely important in understanding what I view as our role as a supplier.
GROWTH IN INTERNET SERVICES
============================
Going forward, I forsee huge growth in the market for Internet services.
People's interaction with the Internet is on the cusp of exploding. I expect
the number of personal web pages to increase dramatically. I expect
personalized email to increase dramatically (spurred on by the recent moves
by Yahoo, Hotmail and othersto limit free service). I expect the number and
use of domain names to increase dramatically. All of these trends bode well.
In addition, I expect a whole new raft of services to emerge. I cannot tell
you if it will be music subscriptions, IP telephony or something none of us
have yet conceived of, but I do expect a continuing stream
of innovation. It has always been the case in the Internet economy, and
IMHO, we are barely at the beginning.
It is also extremely important to understand that in my view todays Internet
Services become tomorrow's commodities. As an ISP in Toronto in 1995 the key
differentiators were i) no busy signals ii) being able to provide good
scripting for Trumpet Winsock iii) having a great library of init strings
for those lovely 14.4 modems. The value of all of these things was gone
within a couple of years.
All of us in the Internet Services business have watched today's innovation
become tomorrow's commodity. The only constants are innovation and the fact
that these innovations make most users feel stupid. That is why customer
service is, IMHO, the key to a successful Internet Services business. The
provision of any technical service is about solving problems, not brand and
not feature comparisons (think about how people sell hosting today and this
point is especially stark, they sell it like it was a database circa 1993).
There can be no bigger problem than "I don't get this!". Solve it, and keep
solving it, and you have a customer for life.
LONG-TERM OUR CUSTOMERS CAN AND SHOULD WIN
============================================
I believe that you all make up potentially the most powerful distribution
network in the Internet economy. You each touch thousands of end-users who
look to you for the most important Internet Services today. You have an
ongoing financial relationship with your end-users and provide first-touch
customer service. These last two characteristics combine to give you a
unique ability to sell additional services to your end-users.
In my view retail Internet Services businesses are about attracting and
retaining customers. Marketing and customer service. This view comes from my
years of doing it and years of supplying into it and watching who has won
and who has lost.
The biggest fallacy, IMHO, is that customer service for Internet Services is
viewed as a commodity. Customer service is incredibly differentiable.
Customer service is best served in small increments. It is not amenable to
scale. Systems that help support customer service benefit from scale, but
they are much less important than effort and attention. They also tend to be
too far removed from understanding the real problem when employed by large
companies. If you want to convince yourself of this point think about the
customer service that you provide or that you believe many of the folks on
this list provide. Now think of the customer service provided by telcos or
cablecos or AOL or............
WHO OUR CUSTOMERS WILL BEAT
============================
It is clear to me that the competition here, in the near term, will be AOL,
Microsoft and Yahoo. The good news is they have little to no idea they are
competing with you, and even if they did they would neither fear nor respect
you. This is always an advantage when competing, believe me.
It should also give you confidence in that two of the three are known for
poor customer service and the third has never provided any.
WHY OUR CUSTOMERS WILL BEAT THEM
=================================
I believe our most successful customers are those that focus on attracting
and retaining customers. Thus, marketing and customer service. I know many
of you have different businesses and business models, so please do not take
any of this to be exhaustive. I generalize quite conciously here.
Great customer service leads to high customer retention ratios ("CRR").
Great customer service leads to a higher degree of word-of-mouth customer
acquisition and word-of-mouth customer acquisition costs nothing. The more
of this you have the lower your customer acquisition cost ("CAC"). One thing
I know for sure, any Internet service retailer that has a relatively low CAC
and a relatively high CRR will be very successful. This is easy. If you
manage to these two variables, either explicitly or implicitly, and you do
well at them you will win.
By being closer to your customers you will provide better customer service.
This may be because of unique language needs. It may be because of unique
usage needs. It may be because of persoanl relationships. There are
countless reasons. I do know that the closer you are to your customers, the
better you will appreciate their problems, the more you are able to solve
them. This is simply innovation existing at the edge of the network. This is
the beauty of the Internet.
WHAT WE DO, WHAT YOU DO
========================
So here is the meat of the issue. If you are in agreement with the general
thesis above than the below will hold together well for you.
What we do is manage data for you and simplify complex business processes
while providing a high-level of customer service around the tools we
provide. We provide tools that are hopefully infrastructure or building
blocks as parts of Internet services, but not "finished goods" in and of
themselves. For instance, it is extremely difficult, bordering on impossible
for an end-user to become a reseller for their own purposes unless their
volumes are very high and their level of technical sophistication or access
to same is also very high. Virtually all of our wholesale domain
registration competitors offer "plug-and-play" solutions where they often
take the credit card and provide end-user customer service. This makes no
sense to me, for us, if you play it back against the thesis above. I am
unclear as to what value-add those resellers could really provide to their
customers in the long run. Therefore I am unclear as to what they could
provide as business partners for us in the long run.
There are many elements of your businesses that can and should be thought of
as repititive, best centralized and therefore prone to outsourcing. This
obviously applies to many elements of domain registration like base renewal
messaging functionality or implementing a new registry protocol. Why should
5,000 people do this when it can be done once and generalized. That is
efficiency. I love to think about spam filters like this. Spam filters are
not about brilliant technology, but are about keeping a constantly evolving
set of rules fresh and updated. 5,000 companies need not do this. Imagine a
service built on Spam Assassin rules as a base and supplemented by the
experiences of the 30-40 million end users that we collectively reach. Now
that is magic.
We should enter areas where we can provide value based upon the above-noted
premises (manage data and simplify complex business processes) as well as
where we can bring scale to pricing or regulatory issues. This does NOT mean
we will neglect important innovation or functionality in our core domain
services. It does mean that we need to do everything we can to help you all
maximize your customer relationships and build long-term businesses for
yourselves.
That is what we do. You in turn provide your end-users with the highest
level of service possible. Internet services are not dial-tone. They are
complex and becoming moreso. End-users interaction with the Internet is not
simplifying, but is instead becoming more complex. Complexity requires
service. It needs love and care and you all can provide that. This is why
the markets for web services have NOT been dominated by large telcos and
cablecos, but are instead all empirically extremely competitive markets.
I will expand a bit in the next section on what this means and what it
doesn't. To me, the most important point is you have the opportunity to be
extremely close to your customers and to know what their specific issues
are. This means you have the greatest ability to address them. Remember that
today most users (individuals and businesses) have multiple suppliers of
Internet Services. You need to be the one that is thought of as the "problem
solver". Sometimes this may seem thankless, in fact often it is thankless,
but it is also the role that makes you indispensible. This is what
guarantees not just your survival, but your success.
"MARKETING" and "CUSTOMER SERVICE" VS "TECHNOLOGY"
===================================================
I want to direct special attention to a point that I felt was implicit in a
few of the initial comments about our new email service which seemed to
imply that I felt that your role was to answer the phones, smile and be
nice. I spent many words above talking about marketing and customer service.
Let me be as clear as I can be. I do NOT in any way suggest that this
obviates the need for technical skill on your part. It does not "level the
playing field" for any "Tom, Dick or Harry" to offer services. Many of our
competitors do this with their "insert logo here" offerings. We are not
really looking for those folks as long-term customers.
I would strongly argue that the points I make above infer a PREMIUM on
technical proficiency.
Let me be more specific. It is the case with Internet services that things
that are magical today become commodities or irrelevant tomorrow (see the
Trumpet Winsock example above). Things are innovative in these marketplaces
ever so briefly. You guys have to be the ones running at the front of the
pack.
It is the case that there has been virtually NO significant innovation in
the marketing of domains or web hosting in the last 24 months. There has
certainly been some evolution, but nothing that looks like revolution. This
is astonishing. To me, if Tucows is removing the need for you to run a mail
server and operate spam filters, for instance, that time can now be spent
working on the following:
- what other services can I include in a standard domain name or hosting
package that provides more value to end users?
- what tools can I create that will incent my customers to make more use of
their domain name/email box/website (because usage is the greatest
determinant of renewal)?
- what tools can I employ to help me interact more with my customers so I
can better understand their problems?
- what tools can I employ to either make my direct marketing more effective
or to allow me to get started with some direct marketing (think here about
measuring conversion and numerous other variables and think about Overture
and Google and local and....)?
- what tools can I push out to my customers that will reduce my customer
service costs and increase my customer satisfaction?
and there is of course much more. Any of you who say "I don't need to do any
of that or don't want to do any of that" are fooling yourselves. That is
where the winners and the losers will be determined. There will be elements
of the above that we can and will assist with, but again it will be in the
form of tools (think about useful data that will make some of the above
tasks easier) that you will need to supplement.
We need you to deal with local language, local marketing, currency and
taking payments, helping us understand and respond to local issues (and this
is local as opposed to global not national or regional). These are all
non-trivial.
I really want all of you to be able to look at a new service like email and
say "great, I can offload this burden and spend more of my time innovating
and differentiating". I know that I am both a purist and an optimist, but
such is my curse.
DISCUSS-LIST AND NEED FOR ALTERNATIVE CHANNELS
===============================================
I do want to talk a bit about discuss-list and other means of communication.
First, I am perhaps the luckiest CEO in the World in that I am able to see
every day what my customers are thinking about in real-time. This is a huge
benefit. I appreciate that any list has its share of lurkers and folks who
are very vocal. This is simply a filter that need be placed on the data. The
list is an invaluable resource to me and the rest of the folks here, as well
as to all of you IMHO. That being said, it is now a much broader community
than simply OpenSRS resellers. Most every competitor, competitors customers,
suppliers, registries, regulators, press, analyst and other folks interested
in DNS issues now either subscribes to the list or reads it in archive form.
That can make communication a little bit more challenging for us. We need to
find a way to keep the list the vibrant community and resource for our
customers that it is, while finding a way to discuss other issues in a more
discrete environment.
With email, we engaged in surveys, held focus groups at a few different
stages and had a number of one-on-one discussions. We plan to do much more
"offlist" communications going forward. This is not to replace the list, but
to supplement it. If you EVER want to be more involved or more aware of any
issues I encourage you to speak to an account rep to and let them know you
want to do focus groups or simply to have a dialogue.
CONCLUSION
============
I want to stress that the comments above are truly macro comments. We have
thousands of customers so I have no choice but to generalize. There are of
course exceptions. This is akin to someone being a great golfer with an
unconventional style. Please take these comments in that spirit. They are
macro not micro.
Many, if not most of you are able to do work you enjoy on your own terms.
You are able to help many people, employ others and make a good living while
doing it. Anyone in this situation is indeed very lucky. I know I feel
lucky. There is no question in my mind that an entity providing a full suite
of web services to a few thousand people is a viable business and can
support a nice life.
I believe, we believe, that you can win the battle for the hearts, minds and
wallets of end-users. Our role is to bring some of the elements of scale to
you so you can compete on a more even footing.
I am very excited about the future. I have seen extremely positive signs in
the last little while that lead me to believe you will all be able to expect
an even higher level of service and innovation than you have received to
date. Remember that while Tucows has been around a long time as a business,
OpenSRS and Internet services are still relatively new (a couple months away
from celebrating its third birthday).We all truly believe that our business
is simply an extension of yours. By thinking about the health of your
business we are taking care of
ours.
While I know all of you will not agree with the above, I hope it will at
least help you understand our thinking. As always, please pile on with
comments. Thanks again for being part of us.
Regards
Elliot Noss
Tucows inc.
416-538-5494
