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Dial-up ISPs – The compelling sum

by Rudy Nadler-Nir

Science fiction author Ray Bradbury named his masterwork “Fahrenheit 451” after the temperature of the fire used to burn books. Book-burning has tickled the imagination of every dictator since books appeared in print and Bradbury offered a bleak view of a society in which a fireman’s job is to start fires – and use them to burn books.

Fahrenheit 451, Bradbury’s “melting point for paper”, became a concept denoting the point of no return where societies turn on themselves and implode in a huge cloud of self-destruction, annihilating their own literary lore.

I thought about Fahrenheit 451 when I noticed what appears to be the emergence of a host of new Internet Service Providers (ISP), all of whom claim to be a viable alternative to the two major players (namely M-Web and World Online) – good service at cheaper rates.

ICL, running Absa’s Internet backbone, plans to offer connectivity at R59 per month. MyConnection, a planned project from Interprise plans to do the same: a R59 per month service. Then, Insurance company Auto & General offers its clients access. The cost? You guessed it: R59. Finally, A local student portal, Get a Life, announced that it will offer basic connectivity facilities for R39 per month with an alternative unlimited access package for R75 per month (this brings the average cost to R54 per month).

These new offers come on the heels of an announced increase in monthly subscription rates announced by the big ones – they plan to increase current subscription rates to around R130.

Here is an interesting thought: imagine that an increasing number of alternative ISP will offer their services at R59 per month (assuming we’re talking serious players, not fly by nights). With time, it’s very likely that users will view this amount as an acceptable alternative to the major ISP.

Users will think: “M-Web charges R134 per month. ICL charges R59 for the same service. ICL is not a here-now-gone-tomorrow operation. This is not free Internet – so they’re in for the business.” The rest, as they say, is only a click away.

Should R59 become an acceptable alternative, it’s easy to see how anything above this amount could prove lethal: a melting point, a Fahrenheit 451. The thinking is simple: since R59 is the amount (almost) everybody is happy to charge, and since it’s so much cheaper than mainstream ISP, it must be the “compelling sum” to pay – that magic sum that cancels all others.

Users are likely to have a question for M-Web and World Online: “If I can get service at R59, why do you guys charge double that amount?” The ISPs will probably play the premium card: “we give you top-quality service, superb connectivity, world-class speed.”

Originally, M-Web planned to be an OSP (Online Service Provider) rather than an ISP. The model envisaged can be seen as something similar to the “make you own pizza” model – you pay for the basic configuration, then add whatever you wish and pay extra for the various “add-ons”. On its initial announcement of this business model, M-Web’s basic pizza was still around R89.

So, what happened? Well, on top of that, M-Web added services such as virus checking on all email, access to all Encyclopaedia Britannica content, and all the other extras it packs into that all-consuming box we see in its TV ads. This, one would imagine, is M-Web’s premium card – the reason for the additional R45 you will pay each month.

Are users likely to be so impressed by these services that they’d be happy to fork out what amounts to 50% of the basic costs for such services? Not likely. Remember that the pizza model allows you to pay only for the basics – while M-Web’s pizza is an all-or-nothing deal. You simply cannot “make your own OSP”.

I believe that such un-subtle attitudes will cause users to define their “non-negotiables” (for example – ease of connectivity, speed, security) and come back to those who offer connectivity at the compelling sum – R59.

Users will then, probably, ask two final questions: “Can I get my basic needs for R59 per month?” and, if so, “Where do I sign?”

Why is this so important? Because on the 10th anniversary of South African Internet, we are yet to find a successful online business model – seeing that the dial-up model took a knock through rate increases and that the revenue-from-advertising model is battling market apathy.

R59 per month is the Fahrenheit 451 of our industry because it re-defines the value of the service we get. I need to pay for good-quality connectivity and speed of access, and I can live with that. Problem is that there is very little to justify an additional R70 per month – and that is where M-Web and World Online can
expect the largest churn.

Rudy Nadler-Nir is an independent e-strategist and Brain-for-Rent. Check Rudy’s personal Website, at http://eclectic.co.za or email your arguments to him at mailto: rudyn@eclectic.co.za

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Viral Marketing: How to achieve your objectives

Viral marketing generates action with very little money, relying on the masses to spread its message – or so people believe. JACKI DANIELS explains the principles that make a viral marketing strategy work.

The concept of viral marketing seems very simple – just as a virus
piggybacks on other hosts and uses their resources to increase its tribe, so does viral marketing encourage individuals to pass on a marketing message to others, creating the potential for exponential growth in the message’s exposure and influence.

The fact of the matter is that viral marketing campaigns are not only very difficult to get started, but can also be potentially difficult to spread.

A carefully designed viral marketing strategy could ripple outward extremely rapidly. The challenge is making your marketing message interesting enough for people to want to spread it. Once it has been jump-started, your offering must be supported and maintained through quality and service.

It is essential that your campaign enables people to spread your message easily. Take Hotmail for example – it grew by leaps and bounds by doing something simple. At the bottom of each email message, there was a small line promoting Hotmail: “Get Your Private, Free Email at www.hotmail.com.”

The recipient of the message quickly understood that he or she could get an account easily by visiting Hotmail. This led to a phenomenal 12 million people signing up in the first year and a half. An uncomplicated principle – amazing results.

The problem with developing a viral marketing campaign is that not everyone has a product like Hotmail which by its very nature is viral. Hotmail is a communication medium so you cannot help spreading their marketing message by using the product.

So how do you accomplish viral marketing if your product is not about
sending messages? The answer lies in including viral marketing principles in everything that you do to make it possible for people to spread your message.

There are the four basic elements to consider when determining your viral marketing strategy, and even though it need not contain all these elements, the more elements it embraces, the more powerful the results are likely to be.

Incentivise

“Free” is one of the most powerful words in a marketer’s vocabulary and is sure to attract eyeballs. Viral marketing programs are based on giving away valuable products or services to attract attention, so offer something worthy of sharing – a valuable discount, vital information – or offer an incentive for sharing.

It would be foolish not to incorporate value in some shape or form that
would inspire the forwarding of your message. You may not profit today, but by providing something free, interest will be generated in what you have to offer. Without a doubt, you should reap the benefits of reaching more than your target market soon enough. After all, producing a message with a quality offer or an incentive for pass-along is what viral marketing is all about.

Provide an effortless transfer to others

During flu season, everyone offers this advice: stay away from people who cough, wash your hands often, and don’t touch your eyes, nose, or mouth. Viruses only spread when they’re easy to transmit.

The medium that carries your marketing message must be easy to transfer and replicate, be it e-mail, your web site, graphics or a software download. Viral marketing works amazingly on the Internet because instant communication has become so easy and inexpensive. From a marketing standpoint, you must simplify your marketing message so it can be transmitted easily and without degradation. Short is better.

Exploit common motivations and behaviours

Clever viral marketing plans take advantage of common human motivations. Greed drives people. So does the hunger to be popular, loved, and understood. The resulting urge to communicate produces millions of web sites and billions of e-mail messages. Design a marketing strategy that builds on common motivations and behaviours for its transmission, and you have a winner.

Utilise existing communication networks

Social scientists tell us that each person has a network of 8 to 12 people in their close network of friends, family, and associates. A person’s broader network may consist of hundreds, or thousands of people, depending upon his position in society.

People on the Internet develop networks of relationships, too. They collect e-mail addresses and favourite web sites. Affiliate programs exploit such networks, as do permission e-mail lists. Learn to place your message into existing communications between people, and you will rapidly multiply its dispersion.

Viral marketing takes advantage of what the Web does best – communicating one-on-one. People will talk about something if it has a true intrinsic value to them, and the broader the appeal, the greater the likelihood that more people will talk about it.

By taking online advertising to a higher level, it is possible to engage consumers in your campaign. But remember – viral marketing is a mindset. It is a tactic, a strategy, and an integral element of your offer – one that works toward achieving your objectives.

Jacki Daniels is joint MD of DigitalGear, a specialist online marketing and media company that concentrates on driving traffic to web sites and, through incentives, generating a permission database.

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Jack Welch worked for me

by Orrin Klopper

As the managing director of a developing IT support company with a strong entrepreneurial and high energy culture, I found Jack Welch’s book, “From the Gut”, an awesome inspiration.

Personally I find management books rather boring, but Jack Welch’s book is filled with personality, passion and fire, and it is through this medium that any manager or CEO can pick up many useful tips, no matter the size of their organisation.

There are three particular learnings from the book that I have implemented in my company and the results have been phenomenal.

The first, and probably the most profound tip Jack Welch gives, is firing your bottom 10%. Our management team sat down and went through all our staff and isolated what we called dead wood and non-performers (I in turn did the exercise on our management team). We tried to add an element of attitude and various other subjective measures to make the rankings fair.

After the exercise, approximately 8 out of 40 staff members either resigned or were dismissed. It had an enormous impact on the business. One of our regional branches did a full 180 degrees turn in two months. We replaced most of the staff using a new recruitment procedure that was not in place when the original staff were hired. It also sent a very serious message through the organisation: that we were very serious about our performance culture and that we would not carry anyone.

The second learning that I have implemented is a typical “Jack Welch” measurement criterion that is now included in all our line management meetings. When reading the book it is very clear that one of the key success factors in Jack Welch’s career was the fact that, in his career at GE, from his first day to his last, he was anti-bureaucracy, impatient and entrepreneurial. He instilled small business fire and passion into one of the largest companies in the world. He measured this in what he called the the 4 Es:

* Energy – does the manager have high energy levels?
* Energise – does the manager energise those around him/her?
* Execute – does the manager deliver?
* Edge – can the manager make tough yes-no decisions?

We ran this exercise during an internal strategy session where each member of our management team had to rate all the other members out of 10 according to each criterion. The results were very enlightening.

Finally, in the chapter, “What this CEO thing is all about”, Welch gives an excellent list of tips that I found very useful.

One specific tip he gives is to encourage staff and the company as a whole to ask themselves, “Are you celebrating enough?” Far too many people go through their entire lives never really celebrating their achievement and victories at work. This relates to advice from another book I read, Gung-ho, by Ken Blanchard and Sheldon Bowles. I think it is an awesome concept. Use every achievement and victory as an opportunity to celebrate – from birthdays to closed deals.

We do, and it works for us.

Orrin Klopper is managing director of netsurit. He can be contacted on mailto:orrin@netsurit.com

Other responses from Jack Welch’s readers:

Alan Tamaris, Dartex (Pty) Ltd

I only wish I had read Welch’s book 20 years ago. I fully believe in his philosophy. And I am a director of one firm with such excellence of (executive) employee that it is truly a stimulating experience to attend a Board Meeting and debate with them. Their philosophy is that in the event an executive should leave (rare) this represents an opportunity to replace him with someone even more proficient.

Unfortunately, especially in this country where we have such a drastic shortage of talent, it often the case that one deals with an executive who has risen to the level where he has become incompetent. And in the smaller business where excessive salaries are unavailable, it may be difficult to attract and retain excellence.

Gary Bryant, Unilever

I would imagine that the majority of people who join GE, actually want to work there and are made aware of the policy on performance. If they don’t agree with it, then they wouldn’t join the business. With regard to waste on human resource: They have to train everyone to see if they have the potential, given the tools, to succeed at GE. Yes 10% of the people they train are fired, but again what would the natural attrition rate be and how many would be lost in this manner? They are also making sure that the very best talent rises to the top of the ladder and that they are retained in most cases. As they say a fish always rots from the head. GE seems to have a fantastic management team and the results speak for themselves.

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A billion monkeys, Part 2

by Rudy Nadler-Nir

Molecular monkeys scouring around inside your body…

“Breakthrough of the Year 2001” – a selection of the most relevant scientific inventions published by the American Association for the Advancement of Science – listed various scientific milestones, including making public the detailed sequences of the human genome, “correcting” cells that cause cancer, and the international statement holding humans responsible – at least partially – for global warming.

But the real winners, say the list’s compilers, are scientists who worked on the smallest computers ever invented. Called nanocomputers, these are molecule-size processors that can float in our bodies, testing for various information – and initiating action. The name is indicative of the technology’s potential – a nanometer is one billionth of a meter (it’s about 3 – 4 atoms wide).

No wonder the American Association for the Advancement of Science is bewitched – this is a powerful facility that turned on major IT players – from HP to IBM to Lucent. Making microscopic, molecular wires, switches and processors mean that future doctors could ask us to swallow nanocomputers that will collect information about our bodies.

These nanocomputers could test, for example, the sugar level in our blood and respond with internal injections of Insulin. Vanity nanocomputers could test our exposure to harmful sun rays and coat the outer layer of our skin with the required sun-screen.

Molecular monkeys scouring around inside our bodies will surely generate even more information. Aside from the moral and legal questions this type of information “harvesting” and storage will surely raise, nanocomputers are destined to turn the economy on its head – just as the printing press did.

Will we have a second industrial revolution? Probably. It will be acutely reliant on information, with nanoeconomy and nanotechnology as driving forces. Questions like “Still building cars when you could grow them?” will dominate our thinking. Atoms and molecules can be made to interact with each other – allowing you to grow your car, your shirt, your house. Using the correct technology and software, you’d be able to make any food, create any raw material and clone perfectly any product.

In addition to unlimited availability – your product could also have a self-obliterating facility – you may have no more garbage, no more pollution; as soon as you finished your food, it disintegrates (minus the portions you save for your cat.)

Our monkey’s parable is almost unrecognisable in its nanosuit – we now have multibillion tiny computers using themselves — and other computers, at a never-ending technodance. Never mind writing Shakespeare’s sonnets – nanotechnolgy will have the ability to create the bard himself.

* Related links:

1. Special Issue: Breakthrough of the Year
http://www.sciencemag.org
2. How Much Information? – EMC-funded University of California at Berkeley study
http://www.sims.berkeley.edu/how-much-info/
3. The Parable of the Monkeys – selected quotes
http://www.research.att.com/~reeds/monkeys.html
4. The Nanocomputer Dream Team
http://www.nanocomputer.org/nanohome.cfm

Rudy Nadler-Nir is an independent e-strategist and Brain-for-Rent. Check Rudy’s personal web site, at http://eclectic.co.za or email him at mailto: rudyn@eclectic.co.za

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The Big Change is a business strategy blog and newsletter published by Arthur Goldstuck, managing director of World Wide Worx, a leading technology research organisation based in Johannesburg, South Africa.

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