Dropbox is a company that enables users to save their files over the internet and access them whenever they need them at wherever they are at any given time. The company started in 2007 and managed to grow the number of its users significantly over a short period (Alon Para. 2). Although the company has been able to increase the number of users that do not pay for the services they get from the company; it has not been able to convert these users to customers. Literally, majority of the people that use Dropbox do not pay for the services they get from the company because they are basic users. As a result, the company does not benefit significantly from the high number of users it has right now (Darrow Para. 2). The issue under consideration in this essay relates to how the company can convert majority of its basic users to customers so that it can benefit from them.
2.0 Issue details
As indicated earlier on, Dropbox has a high number of users estimated to be over 300 million. Nevertheless, from this high number of users, the company only enjoys a small number of paid businesses. According to Darrow, although back in 2013 the company had over 100 million users, the company only enjoyed about 2 million paid businesses from these users (Darrow Para. 2). Since then, the trend has not changed significantly because majority of basic users do not pay for the services they enjoy from the company. In spite of this fact, the company relies solely on the paid businesses it obtains from the users that pay for their services. In relation to this fact, the company must do something if it is to increase its revenue. The most efficient method of doing this would be to convert basic users to customers that pay for the services they enjoy from the company. This way the company would increase its revenue because increasing the number of basic users without converting them to customers does not benefit the company in any way.
2.2 Strategic impact
In terms of strategic impact, the issue at hand affects the company in the sense that the high number of basic users increase the company’s spending without benefiting the company directly. For this reason, even if the company wishes to grow its business, the company is concerned about its high number of basic users that do not benefit the company directly. In other words, even if the company may wish to increase the number of customers, the company has to consider the financial impact such strategic move would have on the company. This being the case, the company may be limited in terms of expansion because it incurs unnecessary expense when it installs more devices for storing files for basic users. As such, the company has to come up with a strategic plan of dealing with the issue at hand.
The stakeholders in this issue are the basic users together with other people that may become basic users in the future. This is in relation to the fact that these people are the ones that do not benefit the company directly from the services they obtain from the company. In addition, the company’s employees are also stakeholders in this issue because they are the ones to implement the strategic plan (Hossenlopp 168).
The first alternative would be to give users more storage spaces for referring friends after they convert to customers or after they upgrade their accounts to either Pro 50 or Pro 100. This alternative would work simply as the former strategy the company has been using with the basic option that is free, but it would differ slightly. In other words, rather than working for more storage space for free by referring more people, the company would encourage basic users to convert to customers and give them more storage spaces for referring more people. This means that Dropbox should discourage free subscription by encouraging users to upgrade their subscriptions to either Pro 50 or Pro 100 (Lamont 55).
The company should do this by offering more storage spaces to users in either Pro 50 or Pro 100 that refer more friends. In order to implement this strategy, the company should target basic users rather than targeting users that are already in either Pro 50 or Pro 100 category. In particular, the company should include a promotional button on its website urging users that have not upgraded their accounts to upgrade them. In addition, the company should on weekly or monthly basis send email reminders to basic users urging them to convert their accounts to either Pro 50 or Pro 100 to enjoy more free spaces (Aoaeh Para. 4). This way the company would increase its income if some of the basic users would convert their accounts to either Pro 50 or Pro 100.
The second alternative would be to do all the above, but fail to focus the attention on the basic users. In other words, it would be to include a promotional button on the website urging users to upgrade their accounts, but fail to focus much of the attention on the basic users.
4.0 Preferred alternative
In relation to the company’s strategic plan that aims at increasing its income while decreasing spending, the first alternative would be the preferred alternative. This is in relation to the fact that other than simply urging users to upgrade their accounts, the alternative is specific on the people it targets to upgrade their accounts. In simple terms, the alternative specifically addresses itself to basic users that are likely to benefit the company directly if they upgrade their accounts (Lamont 55). Urging users to upgrade their accounts without targeting any group may not benefit the company significantly even it would benefit it to some extent. For this reason, the first alternative is the preferred one.
If the company is to implement the first alternative, then it is likely to convert majority of the basic users. In particular, the company may encourage basic users that want to upgrade their accounts to do so because they would not lose the storage space they have acquired over the years they have been referring their friends. From a strategic viewpoint, this would be the case because of the following reasons. First, the company would be able to prepare beforehand by identifying the purpose and impact of the strategic plan. Second, the company would be able to assess the impact that previous measures have had on the company’s conversion rate. Third, the company would be able to create its strategic plan for the first six months in question, and will thus be able to communicate the strategic plan to its employees that would implement the strategy. Fifth, the company would be able to implement its strategic plan based on the responses it would get from basic users. Finally, the company would be able to evaluate the effectiveness of the strategy based on the conversion outcomes it would receive after six months.
6.0 Works cited
Alon, Shai. How Dropbox messed up conversion rates but had a secret weapon. Totango, 15 Nov. 2o12, web. 18 May 2015. https://www.totango.com/2012/11/how-dropbox-messed-up-conversion-rates-but-had-a-secret-weapon/
Aoaeh, Brian. A note on viral marketing – part III: how Dropbox grew. Innovation footprints, 26 March 2014, Web. 18 May 2015. http://innovationfootprints.com/note-viral-marketing-part-iii-dropbox-grew/
Darrow, Barb. Exclusive: Dropbox seeks partners to convert free users to paying customers. Gigaom, 20 May 2013, web. 18 May 2015. https://gigaom.com/2013/05/20/dropbox-seeks-partners-to-convert-free-users-to-paying-customers/
Hossenlopp, Rosemary. Organizational Project Management: Linking Strategy and Projects. London: Management Concepts Press, 2010. Internet resource.
Lamont, Ian. Dropbox in 30 Minutes. Lexington, Ky.: i30 Media Corporation, 2012. Print.