The Andy Analysis
By Andy Abramson
CIRCUIT CITY OR THE SALES SUBURBS
What Will It Be For VONAGE?
VONAGE wants to the broadband users’ phone company. And they are doing just about everything they can to find a way to get you to dial with them.
A few weeks back I reported on VoIPWatch that Viper Networks had penetrated CompUSA stores for a test market program. Now, VONAGE has hit the bigger time with their announcement that the service will be sold through Circuit City stores. Sometimes being second is better than being first.
But what this clearly means is that the commercialization of VoIP is upon us, and that alternative carriers have figured that the model is mass, not niche.
In the old days of alternative service providers much of their marketing was cold calling, one on one selling or working with the Amways and other Multi-Level Marketing groups to get people to sign up for alternative long distance services. With the move into retail, VONAGE gains a lot of marketing clout very quickly. But with the acceptance by the Circuit City merchandise buyers comes a heavy burden. VONAGE has to now sell through, not just sell in. That means VONAGE has to be a lot more like a real telephone company, not just an alternative that is less expensive and cool because the phone calls ride on the Internet.
Recently a reporter friend in Nashville moved across town. He had VONAGE on his cable modem and when he went to his new home, once COMCAST got his cable up and running, he could not get the VONAGE line to work despite hours of attempts with VONAGE's online support group, (an organization which I too experienced a back and forth without any clarity or conclusion on their end regarding the Vonage Pocket PC software ever being really available and where to find it.) He had to use email support because his phone line didn’t work and he didn’t own a cell phone.
The bottom line is that this non-techie type reporter dropped Vonage and went back to SPRINT, using a pre-paid cell phone in the interim because he couldn’t get the help he needed. I’m sure he’s not the first, and now, certainly not the last who will experience this type of problem.
So while the analysts worry about number of subscribers, churn, growth, penetration and all the terms that get thrown around as VONAGE starts thinking IPO, the investing public and buying public has to think deeper than just about numbers, price and technology. They think about service, reliability, ease of installation and repair.
In the Investor Relations world advisors say start behaving like a public company when they are private. In the consumer marketing arena companies that behave with a customer care attitude are the ones that succeed. Sure it has a price, and like Dell and Gateway who have learned to add on higher levels of support for a price, people will pay for it. But for phone customers, the support has to be free, because that’s what people are used to getting when they dial 611.
So, for VONAGE, it has to be not only about selling phone service. It’s about selling customer service too. That’s something the old telcos always understood, and what the cable industry spent years learning, to the point where they now get it.
For VONAGE to really succeed, and I hope they do, they have to become more than just a company that is about the numbers. VONAGE needs highly trained and well informed, real time live phone tech support, correction, customer assistance, if they want to be a phone company for the masses. And the masses shop at Circuit City, which is what they are called mass merchandisers.
You see, at that level it's more than just selling subscriptions and gaining market share. As the customer base becomes more and more "bubba and Geraldine," as it has with cell phones, DVD's and PC's the product and the service has to be dumbed down, while the support and assistance has to be smartened up. If not, they sales will become returns, and then Circuit City will hang up on VONAGES and send them packing, back to the techie suburbs.
So, while I applaud VONAGE for selling in, I'll save my victory cheers for when the really sell through!