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Table of Contents

I. Executive Summary. ..p. 2

II. Introduction. ...p. 3

III. Situation... ...p. 3 - 4

IV. Background & Analysis.... .. .p. 4 - 7

V. Recommendations...
..p. 7 - 9

VI. Response......p. 9 - 11

VII. Conclusion..
...p. 11

VIII. References. .p. 12 - 13

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Executive Summary

Through the analysis of PayPal Holdings Inc., our team has discovered a disconnect between
PayPals internal and external narratives. Our team found that PayPals internal narrative is to
provide online payment processing platforms to democratize financial services while putting
people at the center of everything they do. Although PayPal wants to put the consumers values
first and at the center of everything they do, consumers feel as though they are being
misguided and have a lack of trust with PayPal. Through this disconnect the key issues this
company faces is their software freezing accounts without probable cause, and users finding
themselves victims of phishing scams. These main issues affect three main groups of external
stakeholders, which are current consumers, potential consumers and merchants. The internal
stakeholders consist of the CEO Dan Schulman, technical support staff and investors. After
analyzing Paypals stakeholders and current consumers, we found two important
communication aspects that should be communicated to our customers. First is the
implementation of the new technology support line, which will focus on frozen accounts and
scams, while also providing our customers with up to date notifications on important account
information. The technical support line will be a new division to our existing customer support
lines with a primary focus on frozen accounts and phishing email scams. PayPal should also
upgrade their automatic account updates, to let consumers know if there is suspicious activity
on their account. These updates should also allow the customer to respond to these updates
before automatically freezing customer accounts. Additionally significant investments will be
made in R&D in order to improve user security. Ultimately PayPal should convey these
measures being taken through facebook to highlight changes and rebuild trust. As a company
we need to take action to gain back lost trust with PayPal consumers and rebuild a positive
company image. Taking the next steps to create a division dedicated to frozen accounts and
updating customer notifications received, will communicate to our customers that they are at
the center of everything we do. Positive user experiences with are new support line, account
updates and increased account security will benefit Paypal buy regaining customer trust in their
product and ultimately retain and gain new users.
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Introduction
Over the past few weeks, our team has researched and performed an extensive analysis on the
company PayPal Holding Inc. The research can be found below. This report contains
information of PayPals internal and external narratives, major company issues, the internal &
external stakeholders, as well as, a potential communications plan. This communication plan
will help align the two conflicting narratives at PayPal. This plan contains an estimated budget
and Return on Investment (ROI) analysis, steps to ensure the plan is sustainable, and the
expected benefits as a result of successful implementation.

Situation
The internal and external narratives of PayPal stem from contrasts in how PayPal views itself
and how consumers (potential and current) view PayPal. There is a distinct disconnect between
PayPals values/mission statement and what PayPal can actually offer to consumers. The
following section will break down the opposing narratives that, ultimately, lead to some of the
detrimental issues the company has to face.

Internal Narratives
PayPal views itself as a company that offers an accessible payment platform that puts
consumers at the center of everything it does. The company wants customers to feel as though
their product and services cater to a variety of consumers and satisfies their payment needs.
PayPal practices these values by offering services whenever and wherever users choose;
whether it be in person, through apps or online to efficiently and securely move and manage
their monies. PayPal hopes to further democratize financial services so all people can thrive in a
global economy. PayPal believes they have an obligation to empower people to exercise this
right and improve financial health through the use of our powerful technological platforms and
strategic network of partnerships.

External Narratives
Although PayPal wants to put the consumers values first and at the center of everything they
do, the external views of the company outshine their mission. The key external narratives from
consumers is the lack of trust with PayPal and users feeling misguided.

PayPal began a charity donation service called The Giving Fund. Through the giving fund users
are able to make donations to small and large charities directly through their PayPal accounts.
However, there were several lawsuits and reports filed against PayPal because the money
consumers donated was either being withheld or rerouted to the wrong charity. This scandal
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invoked a negative impression of misguidance for many PayPal consumers and tarnished many
customer relationships which PayPal is trying to build.

Since this payment platform is so easily accessible, the high volume of users leads to many
technological issues and/or scams that can quickly spread to a vast majority of users. In the
past, PayPal has had several issues along the lines of scams, frauds, phishing emails or even
simple issues like consumers accounts be frozen for what seems no reason. With prominent
issues, like fraud users start to have a lack of trust in the company and feelings of misguidance.

Background and Analysis

Company Issues

The key issues this company faces is their software locking accounts without probable cause,
and users finding themselves victims of phishing scams. The external narratives of mistrust and
misguidedness are a direct result of these two major issues.

Frozen Accounts
PayPal has been subject to public scrutiny for locking users accounts and not allowing access
for extended periods of time. Understandably, accounts are frozen whether fraudulent or odd
behavior is suspected, however, thousands of accounts have been frozen without probable
cause. Users end up having to jump through many hoops and waiting weeks- even months - just
to verify themselves and regain access to their money.

The process to unlock an account is very tedious, if there is even the slightest discrepancy
between verification records, users can expect to wait for another few weeks. For being such a
big issue, PayPals help forum is extremely vague and does not offer users any insight as to why
their account might be locked. Some of the reasons we have found that will result in a locked
account are: fraudulent behavior being detected, user logs in from an unknown device or
location, users end up making more than what was expected, and other reasons like
questionable content on business websites. These are just a few of the many ways you can get
your account frozen.

Phishing Scams
PayPal currently has 210 million users and is one of the most popular online payment service
platforms today. Because of PayPals popularity it has become a well known target of phishing
and other forms of scams.
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One of the most recent phishing scams discovered by experts at ESET, an internet security
company, shows how elaborate phishing can be. The scam involves a professionally written,
trademarked email sent to the PayPal customer notifying them that there is a problem with
their account and that they need to take action immediately. The email directs them to a PayPal
login button where they are then taken to an off site web page which looks extremely similar to
PayPals but, of course, is not. From this site the scammers are able to direct funds to accounts
which are not set up by the PayPal administrator.

Security and phishing scams like these are huge issues which have led consumers to formulate
negative connotations about PayPal. Due to the fact that PayPal is such a large online payment
platform, it will undoubtedly continue to be subject to phishing and other scams.

External Stakeholders

When considering the external stakeholders of PayPal and the company issues, three major
groups come to mind: current customers, potential customers and merchants.

Current Consumers
One of the key external stakeholders is current users. These current consumers are people who
actively use their PayPal accounts on a regular basis. These consumers constantly deal with
PayPal and issues regarding their accounts. These current consumers are likely to dismiss
phishing scams if they are not personally affected by the scam. Although consumers are not
likely to drop the company as a whole, this does bring about feelings of lost trust. The negative
image of targeted scams wards off potential consumers who are skeptical of PayPal holding
their money in an account they do not believe it is secure.

Potential Consumers
Another important external stakeholder of PayPal is potential consumers. These potential
consumers can be categorized as anyone who looks into using PayPal and anyone uses a
competitor company for online payment transactions. PayPal has had trouble trying to reach
the millennial demographic, specifically, in converting their Venmo users into using only PayPal
for mobile transactions. Millennials having a high sense of brand loyalty are unlikely to become
potential consumers, especially when there is negative media. Millennial psychographics relate
to things they are interested in like technology, and, like most consumers, millennials are going
to do some research before putting their money into a company, like PayPal.

Glassdoor is a website where you can search for companies and view multiple customer
reviews. When someone searches for PayPal reviews, they tend to find many that are negative,
which is disheartening for new or potential customers. If reviews are constantly negative,
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potential consumers researching PayPal are likely to not trust the company. Unless PayPal acts
quickly to convert these negative reviews, they will continue to turn away potential consumers.

Merchants
The third external stakeholder of PayPal are the merchants. Merchants are categorized as small
businesses who use PayPal as an online payment processing which they can receive and give
payments. Despite increasing popularity, many small business owners argue that PayPal is not
the perfect solution for everyone. Merchants have noticed their customers growing demand to
pay with their credit cards, the need to efficiently integrate scheduled payments, booking, and
operational systems. Additionally, merchants seek to speed up their cash flow. There are four
main obstacles, however, that deter many companies, as well as their clients, from utilizing
these kinds of services today: ease, integration, internal control, and security.

For disbursements, internal control remains a key aspect in a small business owners decision to
integrate PayPal as a payment processor. Oftentimes, small business owners who use PayPal
face challenges when accepting payments from clients. According to consumer testimonials,
merchants are limited in terms of use and are subject to account suspensions at any moment,
which can ultimately result in frozen funds for extended periods of time.

Ultimately, this lack of trust translates to decreased usage and potential loss of sales for
businesses. Having PayPal as a primary payment method can be discouraging for some
businesses and potential customers from completing their transactions.

Internal Stakeholders

Dan Schulman, CEO

Earlier this year, PayPal CEO Dan Schulman appeared for an interview on CBS This Morning in
hopes to clarify some security concerns pertaining to phishing emails and other scams.
Schulman mentioned a collaboration with VISA that promised a product description as a
quicker experience for consumers who choose to pay with their Visa card at retailers that
accept PayPal. What the description failed to mention was that current PayPal users received
no upgrade or benefit of this deal were to unfold. Since Schulman was unable to effectively
explain this in the interview, consumers ended up feeling more concerned.

Technical Staff
At PayPal technical support, the most common troubleshooting function that staff members
encounter are frozen accounts. In fact, during technical support training, frozen account
troubleshooting is the longest process covered. The derived demand for PayPals technical
support staff resulting from frozen accounts is the main reason for backed up ques.
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Through the key external consumers and internal consumers there is a common theme that
affects PayPal and its consumers. PayPal faces daily troubles regarding locked accounts and
users falling victim to phishing scams.

Investors
Currently the company faces a 10 million dollar class action lawsuit that is led by a group of
misguided users. On February 1st, the day that the class action lawsuit was made public share
prices hit a record low. This sudden drop in share prices lowered investors ROI, fortunately
prices have since rebounded.

Recommendations

After an analysis of or company stakeholders and current consumers, it is evident that as a

company PayPal needs to take measures to create better communication channels to serve
customers. We found two important communication aspects that should be communicated to
our customers: the implementation of the new tech support line, which will focus on frozen
accounts and scams, and providing our customers with up to date notifications on important
account information.

Technical Support Line

PayPal needs to inform current customers of the new technical support line which will include
support for frozen accounts as well as technical support focusing on scam related account
issues. Communications through email and texts to current customers should address the
benefits of the technical support line, which include quicker response times and the ability to
speak to a specialized customer service representative who knows hot to handle frozen
accounts and scam issues.

Account Updates
The second recommendation we are suggesting to PayPal is the use of account alerts and
updates which are sent to customers who are experiencing suspicious account activity or
account freezes. These alerts should clearly communicate the reasons for the alerts and provide
customers options to respond and verify that account activity which may be fraudulent or that
all account transactions are valid. These account updates will allow customers the power and
option to place their account on a freeze or not, rather than automatically by PayPal.
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Communications with Stakeholders

Exiting PayPal customers are required to have their personal contact information on file when
they sign up for a paypal account. Using the existing customer database it will be most efficient
and and effective to communicate to our current users through the use of email and text
messages. To connect with potential users of Paypal it will be most effective to use our
company website to introduce our new division as well as communicate frozen account policies
and procedures.

Social Media Usage & Potential Consumes

The use of social media to advertise to younger generations in past years has been an effective
tactic to reach the millennial audience. PayPal should increase its presence in social media to
target millennial audiences to advertise new features of PayPal that make it more appealing,
safer, more reliable and easier to use.

Frozen Accounts & Account Updates

As stated in the background and analysis section, a common issue consumers deal with is
accounts being frozen without probable cause. We have some recommendations to help this
issue that is occurring. The first step would be before consumers accounts are frozen, PayPal
should send a notification email explaining what PayPal sees as the issue with the account and
why it could be frozen. This email will also ask the consumer to report activity in question as
account fraud or confirm that the specific cash flow in question is a legitimate.

Upon the receipt of this email the consumer would have 24 hours to respond. If they do not
respond, the account will be be frozen, as precaution on behalf of the consumer. Following this,
a second notification email would be sent to the consumer informing them of the action taken
and PayPals reasoning for doing so. Incorporating such a security measure into our
communication plan expresses to consumers that PayPal not only puts them at the center of
everything we do, but we are equally as invested in our consumers money as they are.

Continuing with the issue of frozen accounts, consumers and employees have repeatedly
reported this being such a common issue at PayPal. It would be in our best interest to set up a
separate line extension for technical support just related to frozen accounts.

PayPal would have a section of employees on the technical support team run the side of frozen
accounts. These employees would go through intensive training on how and why accounts get
frozen. These employees will know the ins and outs of getting accounts unfrozen in a timely
manner and will be able to answer consumer questions along the way.
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This reiterates to consumers the value and care Paypal has for their consumers while keeping
their best interest in mind, like preventing any potential fraud. Ultimately, this line extension
would clear up wait times for resolving consumer account problems. Making a seamless and
easy process to unfreeze accounts will make it easier on consumers and have them leaving the
extension line feeling relieved to easily fix their issues.

Response
As a company we need to take action now to rebuild lost trust with PayPal consumers and
rebuild a positive company image. Taking next steps now to create a division dedicated to
frozen accounts and increasing advertisements to reach a younger target audience, should
increase a positive user experience and attract new users.

Expansion to technical support staff

In order to alleviate the technical support congestion associated with frozen accounts, we
suggest a. This increase would involve the hiring and training of roughly 600 new employees,
this group will specialize in frozen accounts. This new hire would cost the company roughly
$30,000,000 dollars over four quarters. We suggest the hiring process should be done by the
end of quarter four, with the team coming into effect by January 2018.

In order to improve security we recommend a 20% increase in R&D which will cost 46.4 million
dollars. This investment will be geared towards the implementation of artificial-intelligence and
deep learning to protect our users as well as identify potential security threats before they
occur. By reducing the number of occurrences of all types of scams, we hope to increase the
level of customer trust and sense of security they have with our product.

Marketing Costs
In order to position PayPal as a company that embodies customer security and privacy we
suggest running a Facebook campaign targeting millennials. Master Card card ran a brand
awareness campaign on Facebook that cost 5 million dollars. We propose launching a similar
campaign with a budget of 5 million dollars. We aim to attain similar results as MasterCard and
reach 70% of our target market, and connect with 28 million people which equates to 20.44%
of the current market share. We can assume that this increase would translate to a 20.44%
increase in usership.

ROI
PayPal expects the hiring and training of the additional new employees to be an operating
expense, because the department in and of itself isn't going to generate any new revenue.
Rather the department will help with the customer service congestion. Additionally, PayPal
does not expect R&D to start generating new cash flows until the third quarter. This is due to
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the latency between developing technology and launching it to consumers. Our team expects
that PayPals greatest returns will be generated from an increase in users resulting from
marketing efforts. Mastercard grew their user base by 28%, we expect slightly less growth for
PayPal at 20.44% increase in usership. This 20% increase would result in a projected gain on
investment of $84 million. From the entire investment of $81.4 million PayPal could see a
return on investment of 3.19% in quarter one.

Time Frame
We hope that PayPal will immediately implement the communication plan upon the official
approval from the director of communications, Franze Paasche. With this approval we will
unlock legitimate frozen accounts as well as increase security measures to hinder consumer
scams. By the prompt implementation of this communication plan we expect to see an increase
in user current user activity this year and are projecting to see an increase in new account user
activity within the year of 2018.

1. Establishing a new sector of customer support

a. Define the goals of this special sector
b. Define the budget and costs to implement plan
2. Improve our current updating program with consumers
a. Allow patrons to verify large or odd transactions through text and emails
b. Provide direct access to our new technical support sector
3. Hiring Process and Selection
a. Extensive process that ensures background checks and history of customer
support skills
b. Recruitment will contain an internal and external search. External search should
look for highly motivated employees who specialize and have work experience in
the technical support aspect. Internally we will look for current employees in the
technical support staff who excel with frozen accounts and scam security.
c. To continue with the hiring process PayPal should conduct a structured interview
process containing behavioral and situational questions. PayPal should also test
the knowledge of potential employees with cognitive tests and work samples to
determine if the employee if right for the job.
4. Training & Development
a. Comprehensive programs that teach employees how to deal with our two main
issues of frozen accounts and phishing email scams.
b. One section of the training program will be in a classroom setting. This lecture
style training will be about the knowledge of why PayPal freezes accounts and
what specifically triggers a freeze on an account. This training portion will also
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contain information about typical phishing emails and scams that happen to
consumers.
c. The second portion of this training program will contain work and job sample
situations, where employees will put into stimulations of example issues
consumers will face and will practice fixing account issues. As well as, helping
and walking consumers through different scenarios.
d. Overall the entire training program will take four weeks for employees to
complete. Two weeks regarding the lecture and classroom portion and two
weeks for the job situation and real life training.
5. Send out mass email to active consumers (consumers that have used their accounts
within 1 year) that contains information about new account updates and the new
customer service extension line within PayPal.
a. In addition to sending out an email to our current consumers with information
about the updates, PayPal will also add advertising about these new updates on
their website to alert potential consumers about the changes that have been
made.

Conclusion
After completing a comprehensive analysis of the the primary issues disconnecting our internal
narrative to the external narrative perceived by our key stakeholders, it is clear that we must
take precise and effective actions to regain a positive external image of our company. WIth the
implementation of the technical support line, account updates and increased security,
providing a clearer communication channel between PayPal and PayPal customers will increase
user frequency and regain lost trust with current customers. With these implementations
Paypal should retain current users while simultaneously gaining new users, once again putting
people at the heart of everything it does.
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