ISP price war + special offers - doing the math ?

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bb_matt

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The recent "price war" that has ignited over SAIX account reductions leaves me wondering exactly how big the slice of pie the various small ADSL resellers are after, is ?

I can only surmise that the initial slice is tiny and not really worth much, but the long term benefits may be worth more, but only if they get loyal customers.

The month by month "no contract" offer I don't see as being beneficial to anyone but the consumer and I dought if it will last, because it makes the whole idea of customer loyalty redundant. I hope it does, but that would require more product variation.

If they are reselling the same product, which requires little to no customer service, the customer is always going to go for the cheapest option.

Looking at the latest Web Africa special, R199 for 3 months is an offer I simply cannot refuse. But how many customers will Web Africa get for those 3 months that will remain with them ?

Judging by the live IRC interview last night, Web Africa will get at least 20 customers from that, but that means nothing. They would need 200 customers to turn any kind of profit.

So the only reason for the offer I can surmise is the hope of customer loyalty and the potential of a knock-on effect where customers are attracted to their other products.

The other angle is the possibility of more flexibility offered by SAIX for the various ISP's, which would enable them to offer products which are tailored differently to their competitors.

Whichever way you look at it, the consumer is finally starting to see progress - lets hope it stays that way.
 
I think it is really good to see some sort of competition, you probably will find that some people will be changing isp's every month, it just puts in the effect that the isp has to really work hard because they know 1 mistake and there goes customers
 
This is an incredibly smart move by Web Africa. They will undoubtedly get many, many signups. All they have to do is offer a really good price (equal or similar to other ISP's) and the people who signed up for the special will carry on with them.
 
VQuest, you miss my point.

I'm saying that people will only carry on with them if the price stays right.

I've been with Axxess for two months, I'll wait for them to match the offer and if they don't, obviously I'll move over to Web Africa - it's a no-brainer.
 
They don't have to match that offer, but if they don't, anyone who signed up with axxess last month is going to sign up with Web Africa this month.

I think Axxess have more than enough leeway to counter that offer.
 
I don't see many people "ISP hopping" once things settle down. Just imagine the schlep of cancelling your debit order, signing a new one etc just to save a few bucks. At first people will hunt around for the best deal and then settle with the ISP they think will give them the best support etc. This is of course if prices have settled :)
 
I do know what you mean bb_matt. As I mentioned in another thread, customer loyalty is one thing, but if you're saving R150 p/m thats something completely different. So all they have to do is offer a good price after the 3 months are up and the customer base they got from the special offer will stay with them. If their pricing goes from R199 per month back up to R500 no one is going to stay with them if they can get the same account from Axxess for R349 or at SAOL for R299.
 
Will be interesting to see what the others, like Axxess, do. WA's r150 per month savings is quote substantial even if its only until the end of october.

Obviously WA is relying upon retention after October, and why move from them then if their rates level out with the others provided they offer decent customer service.

Going to have to give this some consideration over the weekend.
 
When product A's value is Perceived to be exactly the same as product B's value i think they only thing to do to set the products are part is to throw in a bit of emotional value. We are swayed by sentiment. Personally Axxess have done a pretty good job convincing me "on paper" that they have the upper hand. To such an extent that when I get my ADSL in August they were the first ISP i thought of signing up with.
But then Web Africa appear to be just as good, so they have done a good job convincing me to give them a second look.
 
lukev said:
I don't see many people "ISP hopping" once things settle down. Just imagine the schlep of cancelling your debit order, signing a new one etc just to save a few bucks. At first people will hunt around for the best deal and then settle with the ISP they think will give them the best support etc. This is of course if prices have settled :)
Click to expand...

lukev - read my post - there are NO contracts.

It's as simple as doing an online order.
 
Although Axxess are technically competent and have excellent customer service they really have very little way of differentiating themselves from every other SAIX reseller. The upshot of that is that it is very easy for us, as customers, to change providers whenever someone has a better offer.
 
Exactly Spamtheman.

In the live interview last night, Web Africa indicated that they have only been in the ADSL reselling game a short while, as have most resellers, but that their big hope is the ability to add value to their ADSL offerings.

Currently, a reseller can't really add much value, but if the local loop is unbundled, it will allow these small ISP's to customise their offerings with packages to suit everyone.

Until that time, savvy customers will just jump to the cheapest offering.

Of course, this isn't a big issue right now as the numbers of users wanting 30gig are tiny - there's only 70 000+ ADSL subscribers, a lot of whom are business customers and the uptake of ADSL is hampered by Telkoms glacial installation pace.

Given the fact that it takes over 1 month to get an ADSL line installed and that there's only a 50% chance of getting one in the first place, it's going to be a Long time until significant numbers of ADSL users will take up offers like this.

Possibly now is the time when companies like Web Africa and Axxess consolidate their brands and reap the rewards in brand recognition later.

Right now, it's small potatoes.
 
bb_matt said:
lukev - read my post - there are NO contracts.

It's as simple as doing an online order.
Click to expand...

Hey bb_matt, I was talking about cancelling a debit order and signing a new one, don't you still need to sign something after doing the online order?
 
I think what makes most "average" DSL users want to stick with an ISP is the email side of things.
Loyalty has something to do with it too, but really the biggest hassle is email.
Personally, changing my personal email address every few months is a BIG hassle and a definite reason to find a well-priced ISP that offers decent enough service.

Some users have webmail/gmail and thus don't have this issue - but I'm talking more about your "normal" users here.
 
What is going to happen is that the 70000 base of ADSL customers is going to increase significantly, just because of the "ISP Wars".
Remember Telkom is still taking the Lions share of the equation with the rental and the more people sign up the more they can gain from line/connectivity rentals.
As nobody in the near to distant future can provide a line to your house, it looks like Telkom are still the winners. But let’s wait for next month and hear what they have to say.

At home, I know of 2 people this week alone that have signed up for Axxess Accounts plus one more considering. So if that is just me and the few people I know, I reckon the take up of ADSL is going to increase dramatically. Hope the Telkom Techies have been equipped to deal with the demand?
I think what makes most "average" DSL users want to stick with an ISP is the email side of things.
Click to expand...
I must be an average user then. :D
Downgraded my original ISP to dialup status and I am sitting on the fence.
My business email is not something I want to change every other day. So I am markinig time and watching how things pan out over the next few months. I am considering using a POP3 account a friend offered and be done with a ISP based email account.
 
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