Four reasons why Vonage IPO's email and phone pitch is the wrong strategy
This week, I am going to count down the Top 10 most-read items on this blog during 2006.
I made this post back on May 10. Given the pending lawsuits filed by disappointed Vonage investors against the IPO, the post has equal if not greater relevance today.
Here's the post lede as well as the four reasons I cited:
Yesterday, IPO-bound Vonage sent out emails and even some voice mails to many of its customers touting its Directed Share Program common stock offering. I got that email, a portion of which I’ve screen-capped above.
Although the Directed Share Program is perfectly legit, and Vonage has every right to keep its customers informed about the opportunity, I think the email and voice mail contacts send the wrong message.
Here are my four problems with the Vonage DSP and the way they are communicating its availability:
It sounds like a bail-us-out beg. Vonage may want the offering to sound like a magnanimous gesture of appreciation to its customers for getting the company to the place where an IPO is possible. Yet to me, the DSP sounds a lot like an effort from a company whose underwriters are not confident they can raise the amount of capital they need thru standard IPO avenues. Going to your customers devalues this IPO of the mystique the more successful IPOs have managed to capitalize on over the years.
The emails remind me of penny stock pitches. I get these in my Inbox every day, and so do you. While Vonage’s offer is unquestionably legitimate- which not every single penny stock offer is- hundreds of penny stock spam emals over the years have conditioned me to look askance at that type of marketing.
Neither the emails and voice mails mention the big kahuna. As Vonage does say in their prospectus, that’s the overwhelming probability that the stock price will decline significantly after the IPO round. To me, this is more than fine print. Vonage may not be required to state this up front, but it would have been a good gesture if they did.
Don’t spam over Vonage Voice Mail. I happen to think that Vonage’s voice mail feature is superbly configurable, flexible and effective. Putting this pitch on a Vonage voice mail message seems too much like telemarketing to me. It is one thing to telemarket your likely customers. Don’t telemarket to your existing customers who have placed enough faith in Vonage’s Voice Mail that they trust they won’t get these pitches. It devalues the customer relationship, and then gets the customer dreading the next voice mail spam and wondering what that message is going to pitch. Being able to skirt telemarketing calls is a reason why some folks have decided to change their phone number and go with Vonage.
The actual post contains the text of this voice mail, as well as additional data. You can read the original post here.