Vonage's Customer Focus: Retention

The struggling Web-phone-service provider aims to improve customer satisfaction with V-Portal, a gadget to simplify setup and use of the service

by Olga Kharif

After narrowly surviving the near-death legal ordeal that was 2007, Vonage (VG) is bent on proving its Internet phone service is a viable business, and not merely as takeover bait for an eager cable or phone company. A major challenge will be stemming the tide of customer defections, whether due to service problems or the lure of bundled phone, TV, and broadband service from rivals.

The company's response, dubbed MyVonage, is to make its service easier to use and easier to customize with products such as V-Portal, which it's unveiling Jan. 7 at the International Consumer Electronics Show (CES) in Las Vegas. The gadget is designed to assist with basic troubleshooting and serve as a hub for features, such as tracking the duration of calls, that were previously accessible only through Vonage's Web site. The $80 gadget, available to new customers for $10 with a one-year commitment, will be sold on Vonage's Web site starting Jan. 9 and in stores by midyear.

Color-Coded Customer Care

Vonage hopes the new device will lower the number of calls to customer care, especially for new subscribers. Users have long complained of difficulty setting up their Vonage adapters. V-Portal's backlit LCD screen alerts customers to basic problems and provides clearly worded, easy-to-follow instructions for resolving the issues.

Similarly, borrowing a page from some computer makers, the ports on the device are color-coded to match cables of the same color. The port for a second Vonage phone line is covered with tape in an effort to reduce the number of customer service calls from users who have accidentally plugged their phones into the wrong port. "It goes with our plan of fixing the fundamentals," says Mary Grikas, executive director of device development at Vonage. "[V-Portal] is a simple product, but it's a cornerstone of our effort." (However, this reporter's efforts to set up Vonage's service with a V-Portal test unit still required a call for help to resolve a minor glitch.)

Brand-New

Vonage says V-Portal also marks the first step in a plan to sell devices under its own brand, vs. selling adapters from manufacturers such as Motorola (MOT). "The momentum is now to have Vonage-branded products only," Grikas says. To that end, the company has hired seven hardware and software engineers to develop user-friendly products in-house. To craft the look of the new products, Vonage brought in frog design, which has also worked with Hewlett-Packard (HPQ) and Logitech.

Frog, which worked on V-Portal, also helped design a higher-end concept device showcased at last year's CES that Vonage has yet to introduce. That router-like box featured a flip-out color screen to display pictures of callers during calls and serve as a digital picture frame when not on a call.