Plug n' Play cuts down on tech-support demands, says Simonds. Hudson tracks customers' common questions in order to incorporate solutions into future releases of Plug n' Play, which he plans to update about every three months.
"People who have the packages installed stay with us," says Simonds. "Turnover is about 1% to 2% with them and about 20% with the Unix users." That's low compared with the industry standard of 10% to 15% across the board, but Simonds is shooting for even less. InterAccess also battles customer turnover by emphasizing tech support. To help educate new users, Hudson writes a monthly on-line newsletter offering tips and new Internet information, and soliciting customer feedback and requests.
Customer-service calls last from five seconds to an hour. Traditionally, service providers hire expensive computer programmers to handle tech calls, but Simonds wants to set up his tech help as a turnkey operation. He's planning to create an indexed computer file for customer-service employees. So when customers call for help, entry-level workers will be able to read instructions from the screen, and Simonds will save on labor expense. Currently, he, Hudson, Norton, and a paid intern divide the calls among them. They also run Saturday classes at $2 a person for users who want live hand-holding.
Hudson used shareware to develop Plug n' Play because Simonds is gambling on the future of "open systems," or no-royalty software platforms used for Internet applications. Most programmers writing E-mail or other software for the Internet base it on some type of open system. But some emerging service providers, like New York Cityñbased Pipeline, use proprietary software for communication between their customers' computers and their network. That means their users can't run shareware like Mosaic, since it was written to work with open systems, not with their own proprietary software.
Unlike many other dial-up providers and on-line services, InterAccess charges a flat monthly rate. Plug n' Play customers pay $26 a month plus a onetime $15 installation fee; traditional Unix accounts pay $23 a month. The company's customer base is split evenly between the two. "We have to keep pricing flat because that's our competitive advantage against services with add-on fees," says Simonds. It now costs him about $70 to acquire a new customer, figuring in phone lines, hardware, tech help, and marketing. So he has to keep that customer for three to four months before he makes a profit. "That cost will go down with the economies of scale," he says. "When we reach 5,000 customers, hopefully by December, it will be $35."
Those customers are staying on-line an average of 15 hours (Unix users) to 40 hours (Plug n' Play users) each month. InterAccess pays ANS a yearly rate based on the amount of data that flows along its connection, but Simonds says all that customer time doesn't usually eat into his profits. "The people who are on-line the longest are those doing nonintensive activities." In other words, they're sending E-mail (little bits of information) instead of downloading files (huge chunks of information). Sometimes, though, even the low-maintenance customers can add up. "Our record was a customer who was on-line for 300 hours in one month," says Simonds. "I know we lost money on that one."
One of the biggest monthly expenses is supplies and postage for billing 900 customers. "We're trying to build incentives for customers to pay by credit card," says Simonds, who mails out 30 bills each day. Phone charges add up as well, costing about $2,000 each month. In the company's first year, Simonds paid himself with deferred stock. Huyler, Hudson, and Norton earned a mix of cash and deferred stock; the intern and Simonds's brother earned straight cash. This year Simonds is devising a stock-option plan. Total payroll is about $4,000 per month.
"Cash flow will keep us alive," says Simonds. "But we'll need capital to grow." It probably won't come from the venture-capitalist crowd, which is sticking with the high-capital, high-return dedicated-provider industry. But Simonds says there's been plenty of interest. "People take me to lunch and say, 'Hey, let me know when you need investors.' " That may be sooner than he thinks if his advertising campaign wins Chicago over. New equipment and tech help add up quickly, and the company recently upgraded to tonier digs in Northbrook, Ill.
Another expense will be the seven or eight satellite point-of-presence, or POP, sites that InterAccess is setting up in customer-dense areas. Users will be able to dial a local number to a nearby site instead of paying for a long-distance call. The sites will be unstaffed initially, costing about $25,000 each for equipment and phone lines.
The future may also hold more corporate clients. Rather than using in-house sales staff to pursue corporate business, InterAccess plans to develop partnerships with businesses experienced in local area networks to sell corporate accounts on commission. "We're just learning how to do it," Simonds says. "We get lots of requests for information from businesses or organizations in the medical-related fields." Currently, the company has relationships with two companies that act as InterAccess corporate-sales agents. To date, those companies have signed up only three customers, but Simonds expects that number to grow as the Internet's security issues are addressed.
While InterAccess tries to build its fortress, other hopefuls are slipping into town. Local competitor MCSNet signed up its first Internet customer before InterAccess existed, in February 1993, and now has almost 1,600 customers.
Simonds also expects a string of basement dial-up services to hook up phone lines any day now. He admits he can't win a price war with the basement crowd, so he'll fight back with friendly customer service and his pretty interface. "Many Net providers market Internet access as if it's a commodity, but it's not," he says. "There are too many variables in a connection." And the Internet is still too overwhelming to the average user, who will continue to pay for value-added service for a few more years.
