I was thinking about Vonage the other day. And what I'd do if I were their advertising agency. I'd do something dumb. I'd tell them to spend their money elsewhere.
Last year, Vonage spent more money in online advertising ($185.7 million) than anyone else. Unfortunately for Vonage, they've had a churn rate of 2.11%. Meaning they lose about 30,000 customer a month. That's a lot of customers when you're working with a base of just over one million. Today their long-term viability is in question.
So here's my point. Vonage has been acting like a new age marketer with regards to its media spend. But they forgot that in the Participation Age, messaging is less important than performance. In other words, they messaged well--people were interested in Vonage and signed up, but they performed like crap. So people left the company.
So here's what I would do if I were their advertising agency. I'd say take half of the $185 million you spend on getting new customers and build the world's greatest customer service organization. Become the Nordstroms of telcos. Become a brand people love and recommend.
As an agency, my revenue would decrease. But my guess is, in the not-so-long-term, I'd make even more money. And so would Vonage.
