Jeff Citron, here's your answer
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I briefly met with Vonage at the Consumer Electronics Show, and I talked to the nice, smart people in your booth. They were demonstrating some good-looking equipment that could do neat new things, and I even gave them a few good ideas to take it a step further. (They thought the ideas were good, too, so this is not just me bragging).
Vonage does indeed have a great brand, a good market base (although, at the present time, a base that could easily walk away) and a great band of people. It's just in the wrong business.
So Jeff, let me make it easy for you. Here's what you do:
Stop trying to get new customers. Your marketing expenses — Web estimates place them at $250 to $300 per customer — are insane and not supportable.
Change the rules of the game. You are sitting on a great base of early adopters. Exploit that. Become the brand that actively caters to the early-adopter space: those users who can deal with quirks in technologies that don't work exactly as they should and who always want to be the first on the block to own the best new gadgets. This is actually a very large user market that Apple exploits all the time. Who else would buy a cell phone based on the last generation of broadband data but those who need the next big thing?
Court the new technologies on the market. Stop beating your head against the triple play. Create the septuple play: landline voice, wireless/mobile voice, broadband data/Internet, video/TV, shopping, gaming and home control/automation. Don't like my service mix? Change it. The point is that you have to stay out in front of the telecom and cable companies, not behind them. Your current offering is too small; it has no future.
These are going to be huge in 2008, so jump on them: femtocells, free-space controllers, motion-activated toys, alerting networks, energy management — anything Best Buy sells. Let other people handle the technology development. You should just adopt these new technologies and merge them into your mix.
Think outside the box — and make it a big box to start with. You spent a lot of money creating a presence on the desktop for your V-Portal, so now do something with it. Why can't I vote for the next American Idol over my V-Portal (as I suggested to your staff at CES)? RSS-enabled digital picture frames were a hit at the show this year — where are they in your mix?
Above all, create for me the Vonage lifestyle. Instead of camping out with the budget brands, start camping out with the premium players. There is no premium early-adopter brand in telecom. Helio is about as close as it gets, and they are, like you, thinking too inside the box, too single play. Apple's doing the best in consumer electronics and getting better. There's not a lot of churn in lifestyle.
Making these changes is no more expensive than your current marketing approach. You might be surprised how compatible all this could be with your current subscriber base. I bet a significant percentage of your base also has widescreen TVs and nice cars. This approach has worked for brands such as BMW and Brookstone. For almost any part of the multiplay spectrum, there is a clear early technology leader that can be exploited, but no one is doing so. The M&A activity here could be insanely cool and Wall Street-pleasing.
So step up to the plate, Jeff Citron. Reinvent Vonage. It can have a future well beyond where you are today.
Danny Briere is CEO of TeleChoice. He can be reached at dbriere@telechoice.com.
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