Answerdash Case Analysis

AnswerDash Case Analysis

        AnswerDash, launched in 2012, is an online customer support solution that “enabled users to easily find answers to the questions they had while browsing websites” (Ofek, pg 1). Early adopters of the product had seen significant decreases in customer support costs because users were able to find relevant answers to their questions without having to type in a search, leave the webpage, or contact a customer support representative. Other early clients also experienced increased revenue because users could easily find the information needed to complete a purchase. However, by early 2014, AnswerDash only had four paying customers and had struggled to acquire and retain new clients. AnswerDash’s current marketing strategy had multiple flaws. Most notably, they had not identified a target market segment and pursued any client who would be willing to listen through introductions from their contacts. Similarly, because they had not specified target customers, they also couldn’t develop a coherent brand message or properly execute their marketing plan to acquire new customers. Therefore, the founders, Dr. Jacob Wobbrock and Dr. Andrew Ko needed a new strategy to take their product to market.

        To determine a target segment, we can examine data based on their current customers. Two distinct types of companies can be identified: e-commerce and software as a service (SaaS). TireBuyer, one of AnswerDash’s customers, is an example of an e-commerce site (Ofek, pg 20). Based on initial product testing, AnswerDash could be attributed to an average increase in revenue of 12% (Ofek, pg 7). This was due to improved sales conversion rates from site visitation to purchase with AnswerDash helping to reduce shopping cart abandonment (Ofek, pg 5). Comparing this to one of AnswerDash’s prospective SaaS clients, in a pilot program, they saw a 73% reduction in costs of their live chat tickets (Exhibit 1). It showed that AnswerDash could successfully answer the low-added-value repetitive questions and allow the high-value support tickets to come through (Ofek, pg 6).

In addition to comparing the economic value delivered to both customer types, AnswerDash also completed an assessment of vertical segments. Between SaaS and e-commerce segments, software as a service customers has the highest attractiveness as a customer because of the high importance of customer satisfaction and high growth in the industry (Ofek, pg 20). This also makes it a great fit for the AnswerDash product. Based on these assessment factors and the high cost reduction compared to the lower revenue increases of e-commerce sites, it is recommended that between these two segments, AnswerDash should target the SaaS customer segment.

        While we’ve identified the segment which would gain the most value from the AnswerDash product, we also need to consider the AnswerDash’s company profit. Using the current pricing tiers, the customer lifetime values (CLV) are shown in Exhibit 2. Based on the current pricing, customers purchasing the Basic or Pro plan are not profitable. Though the Pro plan eventually breaks even after 31 months, the CLV is still negative. Therefore, we should refine our target market segment. For SaaS enterprise customers, AnswerDash is the company amongst other online support solutions capable of providing a product which not only improves customer satisfaction with an easy to use interface, but also provides relevant answers to users’ questions online. AnswerDash reduces the time and cost of assisted-service support solutions, having demonstrated significant cost reduction and customer satisfaction.