Answerdash Company Marketing

UCLA ID -403976830

Answerdash has developed a unique and differentiated product to provide answers to customer-questions by clicking on the company’s website. This integration of their product to websites has had a successful initial stage with satisfied clients. However, their unclear marketing strategy and no segmentation has led them to their current position where it’s difficult to retain customers as seen when its first client Ben bridge leaves and the lengthy process of 4-6 months of acquiring new customers.

The product’s current target segment is anyone they can demo to. However, targeting everybody is not a good solution since their current client base was mostly people they knew, which indicated that it was difficult to get new customers onboard. The absence of focus results in brand dilution and higher acquisition costs. Their current costs to acquire is 1500$ and their tiered pricing model of $99, $399 and $1499 based on usage has its pros and cons. The pros are that the pricing structure is based on pay per usage and it auto renews. However, the structure is billed annually and paid upfront which is a huge cost and not favorable by businesses. Lastly if the paid usage is exceeded then the company cannot add question and answers and analytics is turned off. This is also a cons and should be changed to adding additional fees in case the situation arises.

The company’s marketing effort has shown a viable solution by integrating Answerdash in the website demos rather than using verbal communication. Answerdash is also doing social media and PR strategy to gain more customers. Lack of focus has resulted in them presenting to everybody, that dilutes their attention to the actual customers. Their target audience is also middle managers and not the authoritative powers of the companies making it a lengthy process of approval.

Based on the current model, the lifetime value of Answerdash for its most expensive contract is negative 9548 (Exhibit 1). Hence under the current pricing model, Answerdash is not profitable. Answerdash needs to increase it pricing model in order to be profitable since the Economic value it provides the e-commerce companies is much higher than what it charges. The economic value for ecommerce industries added by Answerdash is between $50,000 to $100,000 per month as calculated from revenues of a 1M industry and an increase in revenues per customer of 13%. For Saas considering a firm with revenue of 1 million, we calculate the economic value as $100,000 monthly as well. However the adoption of startups for e-commerce companies is low as seen from the case. The e-commerce site is also very dynamic which makes the adoption of Answerdash very low validated by the case as well – only 4 customers until now. Therefore, SaaS market is a better option for Answerdash to explore.

Of the three options Answerdash is contemplating, it should go forward with enterprises because they would provide the economies of scale and more visibility. Answerdash is a real need for big enterprises as it solves a problem by answering queries and eliminates customer support personnel. The other 2 options are not a viable strategy for Answerdash as targeting the customers at support level by reducing the number of decision makers would limit the products visibility. For the enterprises, Answerdash should have a very clear positioning statement such as ‘Service queries quickly and efficiently through smart - self service. We increase sales by a marginal value as proven by our past customers. We answer without any delay.’ If Answerdash captures the enterprises by focusing on the big industries, it can create a higher revenue and stronger brand recognition. Based on the economic value added by Answerdash, it is currently underpricing itself and should be charging a % of the increased revenue or $5000 on a monthly basis (whichever is less). This will ensure that it makes considerable revenue to thrive in the market and raise more money to get funding. For example acquiring 100 customers would result in 5000 x 12 x 100 = $6Million which roughly approximates to a company value of 20 Million. This would make the firm credible and get more investments.

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