vonage, please meet or beat the competition

Posts: 4 · New Forum Member Joined: Feb 01, 2006 Posts: 4

someone sent me a referral for SunRocket which has 1 virtual number FREE with it's own Voicemail, DO not Disturb, Anonymous and Selective call REJECTION. Come on Vonage, give us loyal customers these added features too.

Posts: 60 · Full Forum Member Joined: Apr 21, 2005 Posts: 60

Vonage doesn't care about loyalty nor being competitive. They just want to get their IPO out the door and then abandon ship. Vonage already has a 25% churn rate which will probably increase with more competition and a total lack of customer retention strategies.

Posts: 35 · Vonage Forum Junior Joined: Jan 21, 2006 Posts: 35

dcongrav wrote:

Vonage doesn't care about loyalty nor being competitive. They just want to get their IPO out the door and then abandon ship. Vonage already has a 25% churn rate which will probably increase with more competition and a total lack of customer retention strategies.

Where do you get a 25% churn rate? All the docs they've posted for the IPO show a churn rate of well under 3% - 2.11% to be exact :

Loyal Customer Base. We believe that we have a satisfied, loyal customer base, which is evidenced by our rate of customer terminations, or average monthly customer churn, and customer referral rates. During the nine months ended September 30, 2005, we experienced average monthly customer churn of 2.11%. Our churn rate among those U.S. direct and retail customers with us for more than six months was lower. During this same time period, approximately 13% of our overall net subscriber line additions resulted from referrals from existing customers through our Refer-a-Friend program. See footnote 6 to "Summary Consolidated Financial Data" for a discussion of how we calculate our churn.

http://www.sec.gov/Archives/edgar/data/1272830/000104746906001567/a2167036zs-1.htm

And what makes you think an IPO will be successful if the company isn't looking out for the future? It's not like they can IPO, shut the doors and have everyone walk away rich.

Posts: 60 · Full Forum Member Joined: Apr 21, 2005 Posts: 60

The source of the figure in question is: Business Forum Specifically this excerpt: A quarter of its customer base abandons the service each year – they must be replaced, just to maintain the status quo, let alone achieve growth.

After reading your reply, I also began to doubt the % but even at 2.11% which is Vonage's claim, the figures are extraordinarily high after reading the following: Vonage in its S-1 filing that it lost 115,000 customers to churn. Given that it costs Vonage about $213.77 in marketing expense to win a new customer, the cost of replacing those 115,000 customers is about $24.5 million. That churn cost the company about $27.6 million in revenues (@ $26.63 a month per customer) for the nine months ending September 30, 2005. The churn cost the company about $52 million (in the first nine months of 2005.) The problem is that the churn is not going away and is in fact rising — from 1.7% in first quarter 2005, to 2.08% in second quarter to 2.26% in the third quarter of 2005. The irony of this is that if the current trends continue, it would become a mud-pit without a bottom.

My impression after reading a dozen or so reports is that Vonage is not a good long term bet and they haven't really done anything to differentiate themselves from the bunch except spend all they can on Marketing. R&D and customer service seems to be way down the totem pole and their long term viablility is in question.

Here's a last minute citation from Skyp Journal UPDATE: One to watch for. When companies say “our churn rate is X”, you need to ask yourself is that voluntary churn (people who quit), involuntary churn (folk who don’t pay their bills and get cut off), or both? As noted, the Vonage figures exclude those who return the product in the first 30 days. Also watch out for the “non-activations”, which are a useful pile of folk who buy the hardware and are too afraid to turn it on. (Hope you’re reading this Dad — the cell phone’s probably fully matured and ripe for using now.) They can be included or excluded to massage the figures a bit. And the cost per gross add is easy to fiddle, because you can so easily move costs between the generic marketing bucket and the customer-specific acquisition cost. Even revenue per user can be messed with, because if people won’t pay their bills there can be a big gap between billed and collected revenue. So basically don’t believe any headline numbers until you read the small print.

Posts: 1123 · Vonage Forum **MVM** Joined: May 26, 2005 Posts: 1123

To everything "churn, churn, churn"

There is a season "churn, churn, churn"
Very Happy

Posts: 35 · Vonage Forum Junior Joined: Jan 21, 2006 Posts: 35

I don't know if I'd invest in them, either - but a 2.1% monthly churn rate isn't bad at all. That's comparable with well-established cell phone companies like Cingular and T-Mobile. Given that Voip is pretty new technology, and given the mass advertising Vonage is doing trying to convince people it's 'just like a normal landline phone, only cheaper' when it's not, and 'it's super simple - just plug it in and go' when that's not always the case - I'm surprised the churn rate is as low as it is.

I'm sure Vonage can tweak the numbers to tell a story, but I doubt they tweak them much more than any other voice provider out there.

I may be wrong, but I don't think Vonage is trying to compete against other 'pure' Voip providers. I think they are making their value proposition against POTS providers like SBC and 'packaged' Voip from cable cos. From a feature/cost standpoint, Vonage does well against those competitors. I doubt the vast majority of folks out there have heard of Sunrocket or Voicepulse or any of the other pure Voip players that are competing more on a feature/cost standpoint.

Posts: 35 · Vonage Forum Junior Joined: Jan 21, 2006 Posts: 35

Oh - and to keep this thread on topic - I'd -really- like to see outbound callerID with name! That's a feature that seemingly -everybody- but Vonage has, and could cause me to contribute to the churn rate one of these days if they don't eventually offer it! Smile

Posts: 60 · Full Forum Member Joined: Apr 21, 2005 Posts: 60

I think that's in our nature to be loyal to a person or company but if it is no longer convenient or even detrimental, then we "add ourselves to the churn".

Just read Mark Evans Blog, and this is what he says:

Do 1.5M Vonage Customers Matter?
by Mark Evans on Wed 01 Mar 2006 01:27 PM EST

Vonage has just passed through the 1.5 million lines in service barrier but does it really matter? I mean, what's a big number mean if you need to spend $200 million a year on marketing to attract them? And does 1.5 million customers make the impending IPO easier to complete? I hate to sounds like a broken record but a companies that bleeds badly even if it has lots of customers isn't a business.