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PAETEC Accelerated ROI Strategies

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PAETEC Accelerated ROI Strategies

  1. 1. PAETEC Strategic Partnership How To Leverage PAETEC To Accelerate Technology ROI & Increase Project Margins Mark Lawrence Peay Director, Business Development West Region December 3, 2008December 3, 2008
  2. 2. Agenda ƒƒ PAETEC AtPAETEC At--AA--GlanceGlance ƒƒ Partnering with PAETECPartnering with PAETEC ƒƒ Equipment / Software for ServiceEquipment / Software for Service Accelerated ROI ProgramsAccelerated ROI Programs ƒƒ Next StepsNext Steps
  3. 3. Company Overview PAETEC is a Leading CommunicationsPAETEC is a Leading Communications Solutions ProviderSolutions Provider ƒ Headquartered in Rochester, NY ƒ NASDAQ: PAET ƒ 4,000 Employees ƒ $1.6 Billion Revenues* ƒ $240 Million EBITDA* ƒ $100+ million Cash Flow* ƒ Double digit “organic” growth * Run-rate business with projected synergies
  4. 4. Company Overview (Continued) ƒƒ Serving 82 of the Top 100 MSAsServing 82 of the Top 100 MSAs ƒƒ 4.4 Million Access Line Equivalents4.4 Million Access Line Equivalents ƒƒ Over 115,000 TOver 115,000 T--1s Installed1s Installed ƒƒ 77 Voice Switches77 Voice Switches ƒƒ 39 Soft Switches39 Soft Switches ƒƒ 17,000 Owned Fiber Route Miles17,000 Owned Fiber Route Miles ƒƒ 3 Network Operation Centers (24x7)3 Network Operation Centers (24x7) ƒƒ 2 Customer Data Centers2 Customer Data Centers ƒƒ ISO 9001:2000 CertifiedISO 9001:2000 Certified
  5. 5. The PAETEC Difference ƒƒ National network presenceNational network presence ƒƒ Focus on businessFocus on business--classclass customerscustomers ƒƒ Dedication to providingDedication to providing unmatched serviceunmatched service ƒƒ Comprehensive suite ofComprehensive suite of communicationscommunications--relatedrelated solutionssolutions ƒƒ Trusted business partnerTrusted business partner Our goal is to beOur goal is to be THETHE premierpremier ““National ILEC AlternativeNational ILEC Alternative”” in the U.S.in the U.S.
  6. 6. Go-To-Market Strategy
  7. 7. Agenda ƒƒ PAETEC AtPAETEC At--AA--GlanceGlance ƒƒ Partnering with PAETECPartnering with PAETEC ƒƒ Equipment / Software for ServiceEquipment / Software for Service Accelerated ROI ProgramsAccelerated ROI Programs ƒƒ Next StepsNext Steps
  8. 8. ƒƒ Stay Focused on Your Core BusinessStay Focused on Your Core Business PAETEC provides support throughout the entire sales process, allowing you to stay focused on your core business. ƒƒ Utilize PAETECUtilize PAETEC’’s Product Portfolio Sales Team Expertises Product Portfolio Sales Team Expertise New cutting-edge products enable the applications your clients demand. Complement your technology solutions with PAETEC network services. PAETEC’s Equipment for Services (EFS) program provides a solution for overcoming your customers’ budget constraints. ƒƒ Exceed Your CustomersExceed Your Customers’’ ExpectationsExpectations Dedicated Account Management Team focused on your customers. Customer Care is answered by a person as opposed to an auto-attendant. ƒƒ Drive More RevenueDrive More Revenue PAETEC can expand opportunities for your products services Value-Driven Relationship
  9. 9. Agenda ƒƒ PAETEC AtPAETEC At--AA--GlanceGlance ƒƒ Partnering with PAETECPartnering with PAETEC ƒƒ Equipment for Service ProgramsEquipment for Service Programs Accelerated ROI ProgramsAccelerated ROI Programs ƒƒ Next StepsNext Steps
  10. 10. Old paradigm: budgets, budgets, budgets … „„ How many deals have you lost because you wereHow many deals have you lost because you were unable to differentiate yourself from the competition?unable to differentiate yourself from the competition? „„ How many deals have you lost due to a clientHow many deals have you lost due to a client’’ss financial restrictions?financial restrictions? „„ If budget was less of an issue, what equipment orIf budget was less of an issue, what equipment or software would your clients and prospects purchase?software would your clients and prospects purchase? „„ What is yourWhat is your mostmost frequent objection?frequent objection?
  11. 11. PAETEC = Solutions Partner Personalized Solutions What if PAETEC could helpWhat if PAETEC could help EXPANDEXPAND the clientthe client’’s technology budget?s technology budget?
  12. 12. PAETEC = Solutions Partner Personalized Solutions „„ 1. Comprehensive Telecom Service Auditing1. Comprehensive Telecom Service Auditing „„ 2. Competitive Voice Data Solutions2. Competitive Voice Data Solutions „„ 3. Equipment For Services (3. Equipment For Services (EFSEFS) Customer Incentive) Customer Incentive ProgramProgram PAETECPAETEC’’ss Accelerated ROI StrategiesAccelerated ROI Strategies
  13. 13. PAETEC = Solutions Partner Personalized Solutions „„ 1. Audit offered to clients1. Audit offered to clients free of chargefree of charge „„ 2. Detailed examination of all services from all carriers2. Detailed examination of all services from all carriers „„ 3. Audit conducted to verify if client billing is3. Audit conducted to verify if client billing is A. fair accurate,A. fair accurate, B. for relevant services, andB. for relevant services, and C. in alignment with contractsC. in alignment with contracts „„ 4. PAETEC will perform audits free of charge4. PAETEC will perform audits free of charge even ifeven if the client is under contract or otherwise is not readythe client is under contract or otherwise is not ready to change carriersto change carriers 1. Comprehensive Telecom Service Auditing1. Comprehensive Telecom Service Auditing
  14. 14. PAETEC = Solutions Partner Personalized Solutions Why Do A Telecom Services Audit?Why Do A Telecom Services Audit? •• Free valueFree value--added service to create strategic selling advantageadded service to create strategic selling advantage •• Gain valuableGain valuable intelintel on current voice data network designon current voice data network design •• ““Bell CompanyBell Company”” billing is a nightmare for most clientsbilling is a nightmare for most clients •• Carrier bills generated from multiple billing platformsCarrier bills generated from multiple billing platforms •• Product pricing inProduct pricing in contractscontracts typically not aligned withtypically not aligned with billingbilling •• IT/Operations/Facilities staff often have limited billing expertIT/Operations/Facilities staff often have limited billing expertiseise •• Accounting staff often usesAccounting staff often uses ““ stare comparestare compare”” strategystrategy RESULTRESULT: we often identify 10: we often identify 10--30% overspending30% overspending in billing errors, obsolete services, outdated configurationsin billing errors, obsolete services, outdated configurations
  15. 15. PAETEC = Solutions Partner Personalized Solutions We help clients go from this:We help clients go from this:
  16. 16. PAETEC = Solutions Partner Personalized Solutions …… to this:to this: Giving youGiving you ANDAND the client a clearer picture of their currentthe client a clearer picture of their current expenses, with savings recommendationsexpenses, with savings recommendations
  17. 17. PAETEC = Solutions Partner Personalized Solutions „„ 1. PAETEC Network Solution designed in alignment with1. PAETEC Network Solution designed in alignment with technology upgrades proposedtechnology upgrades proposed „„ 2. Innovative Dynamic IP (MPLS/IP/Voice/SIP) services2. Innovative Dynamic IP (MPLS/IP/Voice/SIP) services can be offered to converge voice data networkscan be offered to converge voice data networks „„ 3. Competitive usage rates and streamlined network3. Competitive usage rates and streamlined network solutions typically reduce client costs 20solutions typically reduce client costs 20--30%30% 2. Competitive Voice Data Solutions2. Competitive Voice Data Solutions
  18. 18. Products Solutions Core ServicesCore Services ValueValue--Added Products ServicesAdded Products ServicesSolutions DataData CommunicationsCommunications     MPLS VPNMPLS VPN     Dedicated InternetDedicated Internet AccessAccess BusinessBusiness ContinuityContinuity     EE--mail / Web Securitymail / Web Security     Fixed WirelessFixed Wireless SecuritySecurity     MPLS VPNMPLS VPN     EE--mail / Web Securitymail / Web Security     Network FirewallNetwork Firewall     CPE FirewallCPE Firewall ManagedManaged ServicesServices     Managed RouterManaged Router     Expanded RentalExpanded Rental     Network PerformanceNetwork Performance ReportingReporting FinancingFinancing EquipmentEquipment     Allworx Phone Allworx Phone Network SystemsNetwork Systems     Network EngineeringNetwork Engineering Consultation Consultation     Network MaintenanceNetwork Maintenance Support Support     Network Engineering Network Engineering ConsultationConsultation     Network MaintenanceNetwork Maintenance Support Support     Allworx Phone Allworx Phone Network SystemsNetwork Systems     Equipment for ServicesEquipment for Services     Equipment RentalEquipment Rental ApplicationsApplications     PINNACLEPINNACLE CommunicationsCommunications Management SuiteManagement Suite Data CenterData Center     Colocation ServicesColocation Services     Dedicated ServerDedicated Server     Data Backup Data Backup RecoveryRecovery     Data Backup Data Backup RecoveryRecovery     Colocation ServicesColocation Services     Dedicated ServerDedicated Server     Data Backup Data Backup RecoveryRecovery     Shared Web HostingShared Web Hosting VoiceVoice     Dynamic IPDynamic IP     Conferencing ServicesConferencing Services     IP Hosted TelephonyIP Hosted Telephony     Trader Voice ServicesTrader Voice Services     Local, Long DistanceLocal, Long Distance Toll Toll--Free ServicesFree Services     IP Contact CenterIP Contact Center ServicesServices     TollToll--Free RoutingFree Routing ServicesServices     Direct Trunk OverflowDirect Trunk Overflow     TollToll--Free RoutingFree Routing ServicesServices     Direct Trunk OverflowDirect Trunk Overflow     IP Hosted TelephonyIP Hosted Telephony     IP Contact CenterIP Contact Center ServicesServices
  19. 19. 3. Equipment for Services (EFS) Personalized Solutions W hat is EFS?W hat is EFS? PAETECPAETEC’’ss EFSEFS programsprograms are profit sharingare profit sharing mechanisms that provide our customers with amechanisms that provide our customers with a unique method for acquiring technology forunique method for acquiring technology for their business.their business. PAETEC offers prospective clientsPAETEC offers prospective clients technology upgrade incentivestechnology upgrade incentives in exchange for extended voice datain exchange for extended voice data service agreementsservice agreements
  20. 20. EFS/SFS Overview ƒƒ Over $60 million in equipment andOver $60 million in equipment and software have been funded through oursoftware have been funded through our EFS programsEFS programs ƒƒ On average, 70% ofOn average, 70% of ‘‘bundledbundled’’ monthlymonthly lease payments are subsidizedlease payments are subsidized ƒƒ Average $ amount financed per EFSAverage $ amount financed per EFS customer is $16,000customer is $16,000
  21. 21. EFS/ SFS Options Personalized Solutions „„ Fair Market Value and Dollar Buyout options are availableFair Market Value and Dollar Buyout options are available „„ PAETEC will set up a lease with the finance partner (AEL FinaPAETEC will set up a lease with the finance partner (AEL Financial)ncial) „„ PAETEC will perform the billing and collecting function for tPAETEC will perform the billing and collecting function for the bank leasehe bank lease via the customervia the customer’’s PAETEC services invoices PAETEC services invoice „„ A full or partialA full or partial credit towards the leasecredit towards the lease is then reflected on the customeris then reflected on the customer’’ss monthly PAETEC invoice once services are installed and actmonthly PAETEC invoice once services are installed and activatedivated Version 1 ~ BUNDLEDVersion 1 ~ BUNDLED:: Version 2 ~ UNBUNDLEDVersion 2 ~ UNBUNDLED:: „„ PAETEC will apply aPAETEC will apply a monthly incentive creditmonthly incentive credit towards the customertowards the customer’’s invoices invoice for a purchasefor a purchase –– either made with cash upeither made with cash up--front or secured external fundingfront or secured external funding Please Note: For the Bundled and Unbundled options, credit canPlease Note: For the Bundled and Unbundled options, credit can be applied to alreadybe applied to already purchased equipment. Credit will vary based on the individual cpurchased equipment. Credit will vary based on the individual customer’s needs.ustomer’s needs.
  22. 22. EFS Finance Partners AEL Financial is part of the IllinoisAEL Financial is part of the Illinois--based Forsythebased Forsythe Group of companies. The Forsythe Group includes aGroup of companies. The Forsythe Group includes a diverse portfolio of companies in numerous industries,diverse portfolio of companies in numerous industries, including banking, financial services, energy services,including banking, financial services, energy services, industrial power equipment, sports and entertainment,industrial power equipment, sports and entertainment, agriculture, and real estate development. AELagriculture, and real estate development. AEL Financial specializes in the leasing and financing ofFinancial specializes in the leasing and financing of software and highsoftware and high--technology products through itstechnology products through its Total Solution Financing programs.Total Solution Financing programs.
  23. 23. Clear Invoicing – Bundled EFS • In this example, the client decided to incorporate multiple vendor invoices onto one lease – then bundle it all onto the PAETEC Network Services invoice for simplicity
  24. 24. Clear Invoicing – Bundled EFS • In many cases, PAETEC can actually subsidize the entire equipment payment, inclusive of interest and taxes
  25. 25. Clear Invoicing – Unbundled EFS • If the client prefers to capitalize the equipment themselves or finance through a 3rd party, PAETEC will offer the incentive as a monthly recurring credit over the Network Services agreement term
  26. 26. Customer Referral Partner Leasing Company PAETEC Customer Signs Service Agreement With PAETEC with Minimum Monthly Fee Master Service Agreement PAETEC pays the Monthly Lease Payment to Leasing Company on behalf of the customer and Acts as a Billing and Collecting Agent Leasing Company Pays Vendor upon Receipt of Delivery And Acceptance Form (DA) Customer Signs Lease with Leasing Company Customer Signs Vendor Purchase Agreement Bundled EFS / SFS Structure: How Does It Work?
  27. 27. Why Does PAETEC Offer These Programs? Benefits to the Partner:Benefits to the Partner: ƒƒ Market DifferentiatorMarket Differentiator ƒƒ Reduced Customer Budget ConstraintsReduced Customer Budget Constraints ƒƒ PAETECPAETEC’’s Network Becomes Technology Solution Enablers Network Becomes Technology Solution Enabler ƒƒ Longer Term Service Contracts (Services, MAC,Longer Term Service Contracts (Services, MAC, Maintenance)Maintenance) ƒƒ Sale of More Equipment At Higher MarginsSale of More Equipment At Higher Margins
  28. 28. Why Does PAETEC Offer These Programs? Benefits to the Client:Benefits to the Client: ƒƒ UnifiedUnified--vendor solution strategyvendor solution strategy (equipment/software, network, financing)(equipment/software, network, financing) ƒƒ Cost savings / reduced budgetary constraintsCost savings / reduced budgetary constraints ƒƒ Improved network efficiencies effectivenessImproved network efficiencies effectiveness ƒƒ StateState--ofof--thethe--art technologyart technology
  29. 29. Why Does PAETEC Offer These Programs? Benefits to PAETEC:Benefits to PAETEC: ƒƒ Significant Market DifferentiatorSignificant Market Differentiator EFS allows PAETEC toEFS allows PAETEC to ‘‘fight unfairfight unfair’’ against competitors.against competitors. ƒƒ Strengthen Partner RelationshipsStrengthen Partner Relationships Instead of paying for expensive ineffective advertising, PAETEInstead of paying for expensive ineffective advertising, PAETECC increases market share nationwide through Referral Partners byincreases market share nationwide through Referral Partners by offering to subsidize client technology upgradesoffering to subsidize client technology upgrades ƒƒ Customer RetentionCustomer Retention Our programs are designed to create a tiedOur programs are designed to create a tied--in commitment to bothin commitment to both equipment/software upgradesequipment/software upgrades andand network servicesnetwork services ƒƒ Longer Contract TermsLonger Contract Terms With an extended contract term, the lease payment decreasesWith an extended contract term, the lease payment decreases -- allowing PAETEC to subsidize a larger portion of the clientallowing PAETEC to subsidize a larger portion of the client’’ss monthly lease payment.monthly lease payment.
  30. 30. EFS Success Stories ƒƒ Call CenterCall Center (1 site)(1 site) -- Calabasas CACalabasas CA Total EFS Incentive = $86,481 Contract Term = 60 months Monthly EFS = $1,771.36 Monthly Revenue = $7,500 ƒƒ Law FirmLaw Firm (7 sites)(7 sites) -- Los Angeles CALos Angeles CA Total EFS Incentive = $150,000 Contract Term = 60 Months Monthly EFS = $2,500.00 Monthly Revenue = $8,500 ƒƒ Defense ContractorDefense Contractor (5 sites)(5 sites) -- Santa Ana CASanta Ana CA Total EFS Incentive = $88,995.28 Contract Term = 60 months Monthly EFS = $1,483.25 Monthly Revenue = $25,000 ƒƒ Aluminum ManufacturerAluminum Manufacturer (23 sites)(23 sites) -- Monterey Park CAMonterey Park CA Total EFS Incentive = $330,000 Contract Term = 60 months Monthly EFS = $5,500.00 Monthly Revenue = $31,000
  31. 31. Agenda ƒƒ PAETEC AtPAETEC At--AA--GlanceGlance ƒƒ Partnering with PAETECPartnering with PAETEC ƒƒ Equipment / Software for ServiceEquipment / Software for Service ProgramProgram ƒƒ Next StepsNext Steps
  32. 32. How do we get started? ƒƒ Immediate Areas Of OpportunityImmediate Areas Of Opportunity What do you have in your ‘stuck’ funnel? Which of your clients/prospects have multiple sites? What are your hot ‘upsell’ products? Which clients purchased ‘solution B’ instead of your original intended design? Which vertical market segments are you targeting?
  33. 33. How do we get started? ƒƒ Questions for IT Decision MakersQuestions for IT Decision Makers Is your network ready for Voice / Video over IP? When was your last voice/data network audit conducted? How do you manage your voice / data network? What are some of your biggest network challenges? What applications leverage your current network?
  34. 34. PAETEC Sweet Spot ƒƒ A qualified prospect will be T1A qualified prospect will be T1--eligible,eligible, and has one or more of the following:and has one or more of the following: 20-30+ Employees Multiple offices Centralized WAN applications Call center / help desk with toll free numbers
  35. 35. Knowing the Score ƒ What are your sales goals for 2008? Average revenue / deal x Number of opportunities x % of opportunities that close = Total revenue target ƒ Improve your ‘score’ by leveraging PAETEC Have PAETEC conduct an audit for qualified prospects determine EFS subsidies available just to see how the numbers play out Why not also do the same for any qualified clients in your current base of accounts? Let’s see how many accounts we can help you upsell! ƒ Increase average revenue per deal by designing solutions based on needs not just budget

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