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

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 (“Don’t
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 haven’t converted yet, but plan to switch pla