Monday, June 4, 2007

Do Something Dumb.

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.


Moda di Magno said...

The customer service theory...I like it!

Banjo Patterson said...

I can think of a hundred other companies that need to do this. So, in the age of agencies trying to maximize revenue, coupled with clients who 'don't get it', what's the solution? Because frankly, this is what brands need to do.

A footnote, Delta airlines lost my luggage for two weeks last month. WORST customer experience of my life. After waiting on hold for an average of 38 minutes, I was passed from Jackson to Veronica to Monique to DAWSON (yes, from the creek, I'm sure). All in India. All didn't care. All lied to me. All failed miserably in satisfying, assisting or easing the worries of a paying customer.

The salt in the wound? Delta posts a 1.77 Billion dollar profit for 2Q. They're making money. Their customer service practices will never change, and when they lose my bags again, I'll be waiting on hold to speak with Pacy, Shaniqua, or even the venerable Bob.

I think I'm moving to Canada. Oh, wait. AirCanada's lost baggage hotline is available via satellite as well.

MSCOTT said...

There's nothing like threatening people after you leave Comcast cable TV service for a better home far, far away in another galaxy, using DirecTV satellite service. No comparison!!! Comcast doesn't get it; after I turned in all my Comcast black boxes and paid my last service bill, for May -- in April -- Comcast owes me nearly $200.00 and STILL keeps billing me!!! I sincerely feel that this has become a case of fraudulent billing.