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Upgrading Vonage Customers - NYU Grad School Presentation

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Kabeer Malhotra
Kabeer Malhotra

The objective of this project was to analyze hypothetical data for Vonage and determine how to segment customers. Then analysis must be conducted to decide which segment should be the primary marketing target

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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 PLAN GOAL Convince Vonage World Customers to upgrade to Vonage World Plus, which will provide th 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 nex 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 late 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 (Dont 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 Twice Direct 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 $130.50 Upper Low $1,045.50 Medium $1,519.48 High $2,084.06 1st yr Profit For House File 2nd yr Profit For House File Ext Low $261.50 Upper Low $2,090.99 Medium $3,038.96 High $4,168.13 Ext Low $652.50 Upper Low $5,227.48 Medium $7,597.41 High $10,420.31 Ext Low $65,250 Upp Low $522,748 Medium $759,741 High 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 custome who havent converted yet, but plan to switch pla

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Upgrading Vonage Customers - NYU Grad School Presentation

  • 2. OVERVIEW Competitive Landscape Data & Analysis Consumer Segmentation Marketing Plan Plan Execution Tracking Performance ROI
  • 3. COMPETITIVE LANDSCAPE To some extent: and many, many more VOIP providers
  • 4. 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
  • 5. 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
  • 6. OBJECTIVE Upgrade Vonage World customers to the Vonage World Plus service. Images taken from: http://getvoip.com/blog/2013/07/24/voipo-vs-vonage
  • 7. 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
  • 8. 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
  • 9. MARKETING PLAN GOAL Convince Vonage World Customers to upgrade to Vonage World Plus, which will provide th 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 nex 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 late Send upper-low customers two emails, 6 months apart Send extremely low value customers one email
  • 10. 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 (Dont miss your chance to upgrade!) Customized email messages (customers who call for family VS business)
  • 11. 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
  • 12. ROI PER CUSTOMER E-mail Once E-mail Twice Direct Mail Once Direct Mail Twice Direct 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 $130.50 Upper Low $1,045.50 Medium $1,519.48 High $2,084.06 1st yr Profit For House File 2nd yr Profit For House File Ext Low $261.50 Upper Low $2,090.99 Medium $3,038.96 High $4,168.13 Ext Low $652.50 Upper Low $5,227.48 Medium $7,597.41 High $10,420.31 Ext Low $65,250 Upp Low $522,748 Medium $759,741 High 1,042,031 5th yr Profit For House File 5th yr Projected Profit for 100,000 Prospects
  • 13. 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 custome who havent converted yet, but plan to switch pla