Vonage Gives Itself Away

Posted by John Carney, Oct 17, 2007, 12:33pm

screwedcrackcharttoast.JPGIt's been a while since we said anything at all about Vonage. Mostly because we were starting to feel like rubber-neckers staring at a car accident. And there was no-one left to convince that the company was screwed on crack, toast, over.

Well, apparently they still exist. But not in a money making way. This morning we spoke to a customer who recently attempted to cancel his service and discovered that Vonage is offering incredibly steep discounts to customers in order to avoid losing them. They are basically making Vonage free.

The deal this customer was offered was a $5 monthly plan, plus a $60 credit to his account. After we plugged this in to the DealBreaker Financial Modeling Device, we discovered that $60 is twelve times $5. Which means that Vonage is giving away a year of service in order to keep its customers.

How long can Vonage continue without customer revenue? How many customers are getting this discount? More importantly, if Vonage keeps losing customers, will they start paying people to use their service?

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Comments

Posted by Johnny Canuck, Oct 17, 2007 12:46PM

Skype sold me one year of unlimited calling anywhere in the U.S. and Canada plus 100 minutes of international calls for $18 CAD back in January.

I have no idea how Vonage can compete with that, but then I have no idea how long Skype will last, either.

Posted by inIT4the$, Oct 17, 2007 12:46PM

satellite radio does the same thing (not to that extreme). Just try and quit, they'll give you a discount.

Posted by , Oct 17, 2007 1:02PM

Call up your cable company and ask to order NFL Sunday Ticket.....guarenteed discount

Posted by what?, Oct 17, 2007 1:17PM

take the Usin out of business, you get BESS

Posted by , Oct 17, 2007 1:24PM

you are better off taking the free service than disconnecting. I tried disconnecting and got charged $42 as early disconnection fees......shadyyyy

Posted by Anal_yst, Oct 17, 2007 3:11PM

@Anon 1:24 - You've found Vonage's secret to profitability. Now, all they have to do is get every customer to disconnect and voila!

Posted by deal breaker, Oct 17, 2007 3:31PM

I call B.S.

Posted by , Oct 17, 2007 7:51PM

Verizon does the same thing, call them up and ask them to cancel your service, they will give you credits galore.

Posted by , Oct 18, 2007 12:29PM

yea just about anyone with any intelligence offers a cancel discount. some income is better than no income when your cost to attain a customer is high and cost to keep a customer is virtually nil. be careful with this advice, you might just succeed in business.

Posted by Dave Beck, Oct 19, 2007 3:11AM

Since the cost of adding a Vonage customer is probably 3 or 4 times $60, I'd say it's a good business practice.

Ever do much high churn business, think not or maybe you just write what you read, sheep.

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