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Etrade during the dotcom boom would pay new clients hundreds of dollars to sign up for a new stock trading account. The reasoning was that otherwise the company would have to pay an equal sum on traditional marketing to lure in new clients.
Vonage should consider adopting a similar strategy, now that the company's customer acquisition costs have jumped to $306 for each new account. At $25 per month, the company will suffer a loss on every client that cancels his account within one year – not factoring in maintenance, network traffic and customer service costs.
22 Feb 2007
Instead of spending hundreds of dollars on television commercials and seedy adware banners, Vonage might just as well pay new subscribers $200 for a two year commitment.
The provider doesn't seem to have much choice. Deep pocketed providers such as cable provider Comcast have kicked off an aggressive VoIP offensive that makes Vonage look pale by comparison.
(disclaimer: I cancelled my personal Vonage account earlier this year after the company claimed it would take 1.5 months to port over my number to a competing service)
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