Classmates.com 2005 Annual Report Download - page 10

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We use a variety of marketing channels to promote our pay access services. Prospective users can obtain the software necessary to run our
access services by either downloading it from the Internet or by using a CD to install it on their computers. Our traditional marketing activities
are designed to drive prospective accounts to either visit our main Web sites and download our software, to call our toll free numbers to purchase
our services or order a CD containing our access software.
We have also entered into a variety of distribution relationships where third parties assist in the marketing of our software and services.
Such arrangements include distribution of our Internet access software on CDs at retail locations, the preloading of our software on personal
computers and partner CDs, and links to our services on partner Web sites. In most cases we pay a per pay account acquisition fee to these
distributors. We intend to continue to evaluate and engage in a variety of distribution channels to enable us to make our services better known
and available to a large population of potential users.
SALES OF ADVERTISING INVENTORY
We have an internal sales force dedicated to selling our Internet advertising products and services. While we derive a significant portion of
our advertising revenues from transactions directly with advertising customers, we also sell a portion of our advertising inventory through
wholesale resellers. We have an agreement with Yahoo! Search to place search boxes and links to their search services on certain of our Web
properties, and substantially all of our search revenues are derived from this agreement. We have an advertising operations group that works with
our sales force to serve and monitor the performance of all of our advertising inventory. In addition, we allocate a portion of our advertising
inventory for the purpose of marketing and selling our own services.
BILLING
The vast majority of our pay accounts pay for our services in advance with a credit card. Other payment options for some of our pay
services include ACH, personal check or money order, or via their local telephone bill. Pay access accounts that elect to pay with a personal
check or money order are not provisioned until their payment is received and they are required to sign-up for one of our prepaid multi-month
billing plans. Fees charged to accounts for live telephone technical support are generally billed to a credit card and are charged on a per-minute
basis.
We utilize a combination of third-party and internally developed software applications for customer billing. Customer billing is a complex
process and our billing systems must efficiently interface with third-parties’ systems, such as our credit card, ACH and telephone bill processors’
systems. Our ability to accurately and efficiently bill and collect payment from our accounts is dependent on the successful operation of our
billing systems and various third-party processors. In addition, our ability to offer new pay services or alternative payment plans is dependent on
our ability to customize our billing systems.
CUSTOMER SUPPORT AND RETENTION
Our customer relationship management and support infrastructure includes employees at our facilities in Hyderabad, India; Woodland Hills,
California; New York, New York; Renton, Washington; and Orem, Utah. However, we outsource substantially all of our telephone support to a
third party. We offer a variety of online and offline “self-help” tools for our access services, including our offline “Quick Help” software that is
loaded onto a user’s computer when the access service is initially installed. This tool can be accessed without connecting to our access services
and provides valuable troubleshooting for connection-related inquiries. Our Web site, automated email response system and self-help tools are
all designed to provide comprehensive tutorials, advice, tips, step-by-step solutions and answers to many frequently asked questions. These self-
help tools are also designed to assist users in updating and verifying billing information, downloading and operating our software and setting up
their email accounts. In addition, we provide traditional email support where our personnel generally respond to users within a day of receiving
an inquiry.
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