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Kenedei Faber

AnswerDash Case Study


February 26, 2018
MKTG 4020: Professor Chatterjee

Value Proposition
AnswerDash’s value proposition includes, reducing customer support costs, increasing
sales, and increasing customer retention. This all can be possible by improving customer
satisfaction through simplifying processes for the consumer and providing online help desks.

Positioning Statement
The type of positioning statement that I would construct would include AnswerDash to state that
their customers included, by not limited to, any company that has a website or e-commerce site.
Every single business eventually need some form or method of answer potential and returning
customers’ questions. AnswerDash provides a method as this—it is simple and answers
questions on the spot for quick satisfaction. An example positioning statement could look
something like:
AnswerDash provides an easy and satisfying customer service solution for companies
that would like to improve their consumer’s online experience by supplying answers and
information at the user’s convenience.
Consumers are buying a customer service product. The service is an experience that will
answer their questions and in return will ultimately increase customer retention. Consumers want
to find information quickly, sufficiently, and want specific questions answered.
There are many reasons to believe in this service. One of those reasons are, AnswerDash
gives companies a competitive advantage by creating an enjoyable and quick satisfying shopping
experience for the consumer and ensures that consumers will have a positive customer service
experience. Companies will spend less time and money because they do not have to train or hire
any other employees that work in customer service departments.

Which Future Go-To Market Option?


After comparing all future go-to-market options, I believe that Doctor Wobbrock and
Doctor Ko should choose option 3 because it is going vertical and it would be wise to target each
market segment uniquely. E-commerce companies have unique needs that differ from the
requirements of SaaS companies. Market segmentation would allow each segment to understand
why AnswerDash would be beneficial for them. If AnswerDash continues to not segment their
market, potential customers will continue to have difficulty understanding how AnswerDash
could apply in their specific industry. With AnswerDash’s vague disposition, it does not seem
like a close-fitting solution for a variety of industries. Specific savings per industry would allow
potential clients to see real savings and decide if it is right for their company. However, if
AnswerDash were to make a series of videos on their website of how they could function in
different industries, I believe it would draw in a lot of potential customers.
1. AnswerDash’s value proposition consists of reducing costs associated with customer support
and increasing sales through greater customer retention for ecommerce sites

2. When considering the position statement, it seemed liked there really needed to be two
different options since there was really two main segments it was used in. The first is for
businesses with ecommerce sites. The second is for businesses trying to reduce costs in
customer support.
For businesses with ecommerce sites AnswerDash is the best way to maximize profits
among self-service support systems because they are able to answer inquiries instantly,
reducing shopping cart abandonment substantially.
For businesses with customer care AnswerDash is the way to reduce time and money
spent among customer service teams because they can answer almost all of customers
questions from a single dashboard tab.

3. After analyzing all three of the go-to-market options I think AnswerDash’s best opportunity for
success lies in going vertical. Option three is the best option because targeting their most
profitable segments, SaaS companies and ecommerce companies, will allow them to dial in their
efforts. Right now, AnswerDash has spread themselves too thin by going after every industry.
Because they have spent so much time chasing every potential business opportunity, it has
caused their customer acquisition cost to rise to $1,500. This is unsustainable. The two areas
previously mentioned are the by far most effective use of AnswerDash, therefore, this is where
clients will find the most value. Similar to the experience the VP of Marketing for Ben Bridge
Jeweler had, companies will see what AnswerDash can do and they will have no problem paying
the monthly fee. This in turn will decrease the customer acquisition cost and increase profits.
Question1: Analysis of current marketing strategy?

Answer: Answer Dash delivers self-service customer support answers. It helps other

businesses to embed questions and answers directly on their websites, so that

customers can easily find answers without looking for extra help.

Product: It is a simple product that any customer would use without any programming

experience. The company provides a JavaScript code that customer would embed into

their original company website. Then Answer Dash would scan the website content and

enhance the presentation of question and answer. Company also developed two

programs in order to help their customers:

 Analytics Dashboard- shows visitor’s reactions to answers, the visit time and

other actions.

 A/B Testing- tool that allowed their customers to compare two versions i.e. one

with embedded Answer Dash code and one without.

Sales: Company marketed their product to anyone they were able to reach. The

founders of the company use “Minimum Viable Product” approach i.e. put out their

product in the market and make changes to it based on customer feedback.

 Let customer’s interact- If customers were unable to find the answer. Then they

can submit a question through email or live chat. After that it is AnswerDash

decided if they the answer visible to their future customers and at place they will

be able to find the answer.

Promotion: Their main approach was providing a free 30-day trail and the use of A/B

testing tool to their visitors. Some of the other approaches they used are inbound

marketing techniques, social media and also hired a PR firm for media exposure.
However, they expected customers to sign up on their own on company webpage, due

to which they were not getting new customers.

Pricing: Company created three pricing tiers that companies can choose based on the

usage. The basic pack at $99/month if company gets up to 2,500 tab clicks, pro at

$399/month if up to 15,000 tab clicks and enterprise at $1499/month for unlimited tab

clicks. The problem with this method was that if the company decided on any of the first

two price points but their tab clicks surpass that, what AnswerDash would do.

Question2: Current customer lifetime value

Answer: For calculation purposes, I will be using the data for RedAwning:

 Profit generated by the customer each year = $17,988 ($1,499 x 12)

 Customer lifetime = 5 years (assumption)

 Customer acquisition cost = $1,500

Customer lifetime value (CLV) of this customer would be: (Annual profit X Customer

lifetime) - Acquisition cost

CLV= (17,988 x 5) - $1,500 = $89,940 - $1,500 = $88,440

Question3: Economic value for customers, separating between cost savings and

revenue lift benefits?

Answer: For this calculation purposes, I am using RedAwning data from the case

study. It is a booking site that offers hotel-style reservations worldwide. The company

used A/B testing tool to measure the performance and comes up with:

 Visitors: Tens of thousands of visitors. So, let’s assume 100,000 annually.


 50% reduction in customer support tickets. Let’s use $6 per ticket for call center

customer service representative. Therefore, 50,000 tickets reduction, which leads

to $300,000 savings (50,000 x $6)

 Reduction in live chat tickets from 150 to 20 per week i.e. 7800 to 1040 annually.

I am using $5 per ticket charge from the table provided in the case study.

Therefore, cost went down from $39,000 (7,800 x $5) to $5,200 (1,040 x $5) and

resulted in $33,800 annual savings.

 Total annual savings for RedAwning comes to $338,800 ($300,000 + $33,800)

Economic Value to Customer (EVC) = Tangible value the product provides +

Intangible value the product provides = $338,800 + 0 = $338,000

I used $0 for intangible value because even though we know that while using A/B

testing tool, RedAwning “saw an increase in sales conversation rate of 31 percent.

Users also stayed on those pages 7.6 times longer.” There are no numerical numbers

provided. Therefore, I am calculating absolute EVC, where we add up savings form the

product and then compare them with the cost. If the product offers enough benefits to

justify the cost, company will purchase the product.

Cost for choosing pro package i.e. $1,499/month or $17,988 annually, since there

annual visitors are 100,000 annually (assumed).

Absolute EVC = Product’s EVC – Cost

= $333,800 - $17,988 = $315,812

Since, absolute EVC totals to $315,812, RedAwninh has an incentive to purchase

AnswerDash services.
Question4: Comparing three proposed options?

Answer: For the valuation of needs, I will be RedAwning again. They found that

customer support calls from their respective clients are repetitive and it was adding a lot

of labor cost to their business. To show how much RedAwning will be able to save by

doing business with AnswerDash is $315,812 annually (absolute EVC).

It will be hard to calculate to RedAwning perceived valued because some of the benefits

doesn’t have monetary value attached to them such as increase in sales conversation

rate of 31 percent and users spend 7.6 times longer on the company website. Let’s

assume RedAwining is earning $100,000 due to use of AnswerDash. If we add up

benefits and RedAning’s absolute EVC, the perceived value swells $415,812 ($100,000

+ $315,812).

After losing their first client, Dr. Jacob O. Wobbrock (co-founder and CEO), Dr. Andrew

J. Ko (co-founder and CTO) and Ken Myer (board of director) decided they need to

make changes in order to build a profitable business. The decision making process,

three agreed on:

 Identify the problem- The price point for the services was low, lengthy and costly

sales process and there were not targeting specific businesses.

 Come up ideas- management team established three options and identify their

advantages and disadvantages.

 Option1: Lower acquisition Costs: Reduce the number of stakeholders involved

in the decision

o Advantages- By reducing the number of friction point, company will be

able to reduce acquisition time and cost associated with it.


o Disadvantages- No amount of changes will allow a customer support

manager to adopt their product further approval. Every manger has to

answer to someone and this is a big change on company webpage, so

they will need permission from their superior.

 Option 2: Move Upstream: Focus on selling to enterprises

o Advantages- Focus on a relationship-building sales approach, by hiring

salespeople.

o Disadvantages- Here, AnswerDash is only targeting at larger enterprises

and will be missing out on a first relationship with start-ups that grow fast

relatively quickly.

 Option 3: Going Vertical: Targeting specific customer types or industries

o Advantages- Focusing on targeting specific market segments instead of

wasting money in hopes of reaching every segment in the market.

o Disadvantages- Prioritization criteria, going extra step while going vertical

would make them loose customers whom they should focus on earlier

such as start-ups.

 Decide on the alternative that minimize risk and costs and maximize benefits-

Here, I would recommend going vertical approach i.e. targeting specific

industries. However, don’t use prioritization criteria and focus on building a long

term relationship with their customer. They should definitely hire a special sales

force to make sales calls on regular basis to their respective clients. Even though

hiring a salesforce will be adding cost, however, they will get the benefits in the

near future by increasing the customer lifetime value.


The specific objective for the given marketing strategy is to collect the relative data on

all three options and decide which one or combination of two or three will work. Then

they should implement it as fast as they can, in order to not loose anymore clients and

stay one step ahead of their competitors i.e. Nanorep and Elevio. After implementation,

company should be able to increase their profit margin by 10% (assumption) and obtain

two more customers (assumption) by the end of this year. However, there are some

barriers to consider such as their current customers may not like company’s new

approach, price points as company is not making enough money.

Question5: Comprehensive marketing plan for chosen option?

Answer: As I stated in the previous answer, I would recommend AnswerDash to follow

vertical approach with the help of special sales force. It will help the company in

maintaining long-term relationship with their target market such as businesses in

telecommunications, hospitality and financial services sectors. However, company need

to make important changes in their pricing criteria. They should focus on quoting each

client according to their needs. By quoting each customer separately, it helps the

company in getting more business as small companies won’t feel like that they have to

pay same prices as a large enterprise. Also, it will help their customers because they

don’t have to figure out which plan to purchase a head of purchase or make changes

after they reach their limit for prepaid clicks. Here, salesforce team plays an important

role by constantly contacting their customers and making changes to their plans

according to needs.
Whenever companies try to make new marketing strategies or try to make changes to

their current ones, there will be always some challenges. In our case, growing

competitors firms such as Nanorep and Elevio brings in great challenge. This marketing

strategy will help AnsweDash focus on:

 The only way to grow in today’s economy is through big idea innovation which

AnsweDash already has and their new marketing strategy will help them stay on

top.

 AnswerDash should ask their current customers about their feedback on their

product. After changing their strategy, they should start getting feedback

quarterly; this will keep company in touch with their customers. Also,

incorporating customer insights enable company’s growth.

The new marketing strategy will help AnswerDash with overcoming the barriers that

were discussed earlier. Their new clients will understand company’s need to change the

strategy and stay ahead in the market. AnswerDash should offer their current clients

with the option of staying with previous plan since company has already overcome the

cost or see they can save more money with the new quote. This strategy is also

enabling AnswerDash to meet their set objectives by making changes to their prices

and their sales people target the above selected markets.