Upgrading Vonage Customers - NYU Grad School Presentation

13

Transcript of Upgrading Vonage Customers - NYU Grad School Presentation

OVERVIEW

• Competitive Landscape

• Data & Analysis

• Consumer Segmentation

• Marketing Plan

• Plan Execution

• Tracking Performance

• ROI

COMPETITIVE LANDSCAPE

To some extent:

…and many,

many

more VOIP

providers

THE MARKET

Vonage 5 year stock chart

Industry Trends:

• Cell phone service costs decreasing

• New(er) communication methods

• More mobile phone usage globally

• More data and tracking

SWOT ANALYSIS

STRENGTHS

• Reliable, Quality Service

• Lots of available features (e.g.

free 3-way calling, unl. US

calling)

• Strong Brand Equity (est.

2001)

WEAKNESSES

• Ultra Competitive Market

• Cheaper alternatives available

• Contract Required

• Dependent on internet

connection

OPPORTUNITIES

• Upsell current customers

• Expand to new markets,

industries

THREATS

• Few barriers to prevent new

entrants

• New Communication methods

(e.g. WeChat, fb chat, etc.)

Our focus

OBJECTIVE

Upgrade Vonage World customers to the Vonage World Plus service.

Images taken from: http://getvoip.com/blog/2013/07/24/voipo-vs-vonage

Frequency (# of calls) Monetary Value #Users

0-19 $24,308.50 583

20-39 $20,542.00 190

40-59 $25,636.50 130

60-79 $26,422.10 97

Totals $96,909.10 1000

ANALYSIS

RFM Correlations

Frequency vs. Monetary 0.99

Frequency vs. Recency 0.01

Recency vs. Monetary 0.01

Customers who make high frequency of calls tend to talk the longest on the phone

SEGMENTATION SCHEME

Monetary Value #Users Monetary Value/User Index (to Avg. Monetary Value)

Frequency (# of calls)

0-19 $24,308.50 583 $41.70 43.03%

20-39 $20,542.00 190 $108.12 111.57%

40-59 $25,636.50 130 $197.20 203.51%

60-79 $26,422.10 97 $272.39 281.11%

Totals $96,909.10 1000

Univariate Analysis

High Value Medium Value

Extremely Low ValueUpper Low Value

Next, we segment the low value customers into two groups. The extremely low

value customers use less than 250 international minutes, so are unlikely to upgrade.

Ext. Low 116

Upper Low 467

Average Monetary Value /user $96.91

MARKETING PLANGOAL

• Convince Vonage World Customers to upgrade to Vonage World Plus, which will provide them

with 250 additional minutes to mobile phones in over 40 countries

STRATEGY

• Segment customers into high, medium, and low/ext low value and solicit them over the next 12

months

TACTICS

• Send high value customers two direct mail packages, 6 months apart

• Send medium value customers one direct mail package, followed by an email 6 months later

• Send upper-low customers two emails, 6 months apart

• Send extremely low value customers one email

CALL TO ACTION

Direct Mail

• Visit website or call

for more info

• Call to upgrade

today

• Fill out Business

Reply Card to

upgrade

Email

• Click for more info

• Click to upgrade

• Download free

brochure

• Sign-up for

newsletter on the

latest news and

discounts

Messaging

• 2nd direct mail

package and 2nd

email will have more

urgent tone (“Don’t

miss your chance to

upgrade!”)

• Customized email

messages

(customers who call

for family VS

business)

KEY PERFORMANCE INDICATORS

• Percentage of customers that upgrade to Vonage World Plus monthly

• Revenue from each segment semi-annually

• Response rates for Direct Mail

• Open rates and click-through rates for E-mail

• New upgraded customer retention rate

ROI PER CUSTOMER

E-mail Once E-mail Twice Direct Mail Once Direct Mail TwiceDirect Mail Once &

E-mail Once

Cost to Solicit 1 2 6 12 7

Response Rate 1.00% 1.99% 5.00% 9.8% 5.95%

Total Responses 0.01 0.0199 0.05 0.0975 0.0595

% Conversions 75% 75% 75% 75% 75%

Total Conversions 0.0075 0.014925 0.0375 0.073125 0.044625

Profit after upgrade $150.00 $150.00 $150.00 $150.00 $150.00

Profit per Conversion $1.13 $2.24 $5.63 $10.97 $6.69

ROI = Profit/Cost $1.13 $1.12 $0.94 $0.91 $0.96

Ext Low $130.50Upper Low $1,045.50Medium $1,519.48High $2,084.06

1st yr Profit For House File 2nd yr Profit For House FileExt Low $261.50Upper Low $2,090.99Medium $3,038.96High $4,168.13

Ext Low $652.50Upper Low $5,227.48Medium $7,597.41High $10,420.31

Ext Low $65,250Upp Low $522,748Medium $759,741High 1,042,031

5th yr Profit For House File 5th yr Projected Profit

for 100,000 Prospects

PROJECTED 5 YR PROFIT 100,000 CUSTOMERS

Projected Profit for 100,000

Extremely Low $65,250

Upper Low $522,748

Medium $759,741

High 1,042,031

Total $2,389,770*

Prospects Acquisitions

Extremely Low 116 1

Upper Low 467 7

Medium 190 8

High 227 17 *$477,954 1 yr profit

Weighted ROI:

$1.04

• Biggest Asset: New Acquisitions

• Bonus: This does not even factor in the 25% of customers

who haven’t converted yet, but plan to switch plans