Believe it or not, this is how America Online became the world's most powerful, most important Internet portal. Consider, for a moment, what AOL did wrong:
Abysmal customer service. According to the most recent Inverse rankings of ISPs, AOL is worst in reliability. AOL routinely finishes dead last in surveys of this type. Misleading advertising. AOL has been sued three times in less than three years over billing problems and access glitches.
Deceptive privacy practices. More than once, AOL has been caught making unethical use of its members' names, only to back down in the face of customer outrage.
According to business textbooks, these crimes should have sunk the company long ago. Instead, AOL has become the dominant online service. So let's look at what it did right -- so right it cancelled out the company's mistreatment of customers.
Focus on ease of startup. Others concentrated on ease of use. Or quality of content. AOL focused on making it easy, easy, easy to get started. That's because the company always knew it was going to...
Aim at mainstream consumers. AOL targeted people who wouldn't know any better. People who would be afraid and confused to switch once they finally got online. And then it delivered simple, everyday services those consumers could use and understand. Taken together, these first two moves let it...
Rely on customer lock-in. Mainstream consumers will put up with almost anything -- poor reliability, bad service, higher prices -- rather than go through the pain of starting over again.
In the early years, whenever Steve Case had the choice between improving customer service or sending out more signup disks, he chose the disks. Case understood the overwhelming importance of market share.
It's easy to believe new markets are about quality and customer service. But look at previous media revolutions. Movies. Magazines. Television. Yes, the content has to be good enough. But the battle is won by controlling the distribution network. Movie studios. Magazine distributors. Television networks. Those are the true power brokers in those media.
And America Online is the first true power in the Internet era. Because it realized that it is much better to have lots of unhappy customers than a few happy ones.
Where do you think AOL will go next? I see signs it is finally focused on better service and content. Is this the right strategy now?