J2 not getting enough new subscribers to eFax...
A few years ago I delved into J2's metrics in a big way. Their eFax acquisition strategy was nearly entirely based upon their free fax service, and then upgrading those free accounts to paid. It was free, who didn't have an account. In the end, they would upgrade roughly 5% of these accounts and make a handsome reward on the paid accounts. Paid accounts that cost 30% more than what would one could get at another comparable service.Today, go try to find a free account, let alone a 30 day free trial period. I couldn't find the free offering, probably gone. I did however find a way to get the 30 day trial... start a signup and then try to stop, or "chat" with one of their online customer service reps;-)
I just read a Barron's article that said that J2 executives acknowledge a slow-down in customer acquisition and plan to increase prices to cover up for poor projected growth in Q3 '06 - "J2 Needs to Fix Its Fax-Services Growth". Say what? They're completely missing the point! So, what we're to deduce is that the same brainiacs who came up with the scheme that drove acquisition down are now responsible for the next decision that will sink the company... increasing prices.
This incredibly poor business strategy reminds me of the NY subway system... since they were losing money, they decided to increase prices. The issue was ridership, not revenue per rider. So, increasing prices would naturally reduce ridership, making other forms of transportation relatively cheaper, and ultimately reduce financial performance even further as the number of riders fell.
Go figger... I wonder if these J2 execs used to work at Vonage:-)
posted by TelephonyBuyersGuide @ 1:00 PM
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