Course name: IT for Business CASE ANLYSIS: ezboard: Making Customers Pay
FAS Group No: A2 Name of the Students Aakanksha Thete (15F101) Antony Attokaran (15F110) Rajgopal Balabhadruni (15F140) Sachin Kulkarni (15F142) R. Swetha (15F156) TERM 3 T A PAI MANAGEMENT INSTITUTE, MANIPAL
Ezboard: Making Customers pay PROBLEM STATEMENTRobert Labatt, CEO of ezboard, planned to boost revenues by launching a new subscription model when the company rolled out Version 8.0. To achieve this goal, Labatt and his team had to answer a few important questions1. How to revamp the company’s subscription model and bump up revenues? The management had to decide whom to charge and how to charge. 2. The right rollout strategy at launch of Version 8.0 which will offer ezboard its best chance to squeeze as much revenue out of the discussion board business as possible. REVAMPING THE REVENUE MODELRoughly 57% of ezboard’s revenues at the end of 2004 came from discussion boards and user subscriptions. Advertising accounted for 33% and private licensing the remainder. The management should go with a hybrid model charging all the three major sources of revenues. Ezboard had about 10 million active users of which 5 million were registered, making it possible for ezboard to generate advertising revenue from them. To alter the subscription model of big communities who took up considerable bandwidth, ezboard had started offering discussion boards a new payment plan known as “Gold Community” in exchange for no advertising at all and a couple of additional features. The discussion board that subscribed to Gold Community plan accounted for 75% of total subscription revenues. Of 75000 active discussion boards, 23% of them subscribed to Gold Community and gold boards represented 65% of page views on website. Hence, the management must focus on Gold Community as it accounted for the majority of total revenues. As for how to charge the users, depending on the usage of the blogs and boards and the frequency of usage, the users can be charged. Ezboard had a system of unregistered, registered and paid users. The management would have restrict the content available for view to the unregistered and registered users and allow free access to the paid ones. Also, as a part of revamping, the unregistered users could be allowed to post limited messages per month. Other factors including the amount of access to blogging and social networking capabilities, if introduced, can be decided based on the above mentioned conditions. NEW ROLLOUT STRATEGY-
The management had 2 options- either go for a “big bang” or “go-slow” approach. Given the fact that ezboard had several unhappy customers following the software problems from SmallTalk at the end of 2002 and the temporary shutdown of ezboard’s website while switching data centres, the management had to gain the trust of its customers to attain long term success. Under the “big-bang” approach the company would launch the changes across the board and introduce new subscription model to all of its customers. If it worked, after two months management could refocus attention and cash reserves on generating revenue streams. However if one thing fails then the updated business and subscription model will be risking the company’s future. Also, huge amount of resources and numerous hours would be spent on fixing the error and revamping the strategy again. With a “go-slow” approach, which showed less concern for quick subscription conversions and an unsuccessful subscription model, the management could weigh various options they had, test the software product and subscription scheme on selected boards and update them on those models that were most compatible. Moreover, if the roll out does not work out, the cost of fixing it will be lower compared to the big-bang approach. Also, the mangement can manitain good relation swith the existing customers. Although the management may not see higher revenues immediately, the go slow approach will allow them to do any course corrections as needed prior to the full scale roll out. Therefore, the management must opt for “go-slow” approach and launch business model on appropriate cutomer pools.