Unified Communications Performance Metrics Mike Wilkinson Mark Llewellyn
Analyst View of Growth WORLD HOSTED/CLOUD BUSINESS TELEPHONY Extensions/User Licences Installed Base, by Technology - 000s 46,043 36,248 41,226 Public Multi- Tenant (User Licences) 31,162 23.5% Growth YoY 57% 26,073 59% 60% 21,098 62% 16,072 64% 6% 6% 12,007 5% 66% 5% 5% 70% 5% 5% 5% 4% 5% 4% 75% 19% 23% 26% 27% 28% 29% 30% 32% 3% 2% 2011 2012 2013 2014 2015 2016 2017 2018 Public Multi- Instance (User Licences) Public Single- Instance (User Licences) Private Single- Instance (Extensions) #BC14 BROADSOFT CONNECTIONS 2014 PAGE 2
Revenue (US$ Billions) Analyst View of Growth $14 Hosted IP PBX/UC Market Size and Forecast by Region $12 $10 $8 13% Growth YoY $6 $4 $2 $0 CY12 CY13 CY14 CY15 CY16 CY17 CY18 Hosted PBX Hosted UC Source: Infonetics 2014 #BC14 BROADSOFT CONNECTIONS 2014 PAGE 3
Example Growth From BroadSoft Base 250000 200000 150000 100000 50000 0 BroadSoft 4, Inc. Proprietary and Confidential, do not copy, duplicate or distribute. #BC14 BROADSOFT CONNECTIONS 2014 PAGE 4
Growth Comparison Q2 2014 to Q2 2013 1400% 1200% 1000% 800% 600% 400% 200% 0% -200% #BC14 BROADSOFT CONNECTIONS 2014 PAGE 5
Top Accounts Business Strategies Micro SMB Ent Channel Mobile White Label Large CLEC X Incumbent X X Large CLEC X Large CLEC X X Incumbent X Large CLEC X X Incumbent X X MSP X X Large CLEC X Incumbent X X Incumbent X X Large CLEC X CLEC X X X X X BroadSoft Data: June 2014 #BC14 BROADSOFT CONNECTIONS 2014 PAGE 6
Average Size of Deployments Little difference between Europe/APAC/US site size 200 180 160 140 120 100 80 60 40 20 0 Average Site Size BroadSoft Data: June 2014 #BC14 BROADSOFT CONNECTIONS 2014 PAGE 7
Fastest Growing Customers with Large Base of Seats Growth YoY New Segment Incumbent 50% X Organic Sales Prog Channel Mobile Incumbent 218% X CLEC 142% X X X CLEC 245% X X X CLEC 71% X X Incumbent 97% X X CLEC 92% X BroadSoft Data: June 2014 #BC14 BROADSOFT CONNECTIONS 2014 PAGE 8
Sales Per Month Metrics (seats per month) Definition Average number of user seats sold per month by a service provider Highest values are for large service providers in deregulated markets CLECs are achieving nearly 10,000 seats per month in some markets 2500 20,000 Tier 1 Sales Per Month Average Best in Class 2000 10,000 Tier 2 Sales Per Month Average Best in Class 800 3500 Improvement Strategies Ensure product is competitively featured and priced for the target market Sales should be fully trained on the product and can configure solutions plus provide a strong demo Sales should have the UC service as their work system Sales should have incentives to focus attention on the UC product Ensure there are customer programs for phone swap outs Tier 3 Sales Per Month Average Best in Class #BC14 BROADSOFT CONNECTIONS 2014 PAGE 9
Win Percentage in The PBX Market Definition Defined as the percentage seats that have been won on the hosted service versus the available market of premise based PBX seats The percentage taking hosted is normally a factor of the maturity of the market and the size/effectiveness of the players promoting hosted solutions Metrics 15-20% >45% Win % of PBX Base Average Best in Class Improvement Strategies Develop a comprehensive portfolio of hosted products to meet the needs of the micro, SMB and mid-market segments Customers with stronger mobility components to their offers are gaining market share more rapidly than those with just fixed offers For customers above 1000 seats prepared to buy-back or redeploy existing premise based phone estate Customers with an active roadmap are more effective winning in the midmarket where large seat gains can occur #BC14 BROADSOFT CONNECTIONS 2014 PAGE 10
Dutch Hosted UC Market Case Study Example of the market share growth of BroadSoft customers selling Hosted UC in the Dutch Telecoms market Market for PBX extensions in the Netherlands is approx 660k a year Hosted growth has been 60% 1H 2014 versus 1H 2013 Hosted is now taking almost 35% of the Dutch market every quarter 40% 35% 30% 25% 20% 15% 10% 5% 0% Q4 2012 Q1 2013 Q2 2013 Q3 2014 Q4 2013 Q1 2014 Q2 2014 Source: Market Figures from MZA, Dutch customer data from BroadSoft own figures #BC14 BROADSOFT CONNECTIONS 2014 PAGE 11
Impact of UC
600% Does UC Impact the Growth Rate? UC Enabled Accounts Versus Industry Average 500% 499% 400% 300% 245% 200% 100% 0% 142% 37% 16% Account 1 Account 2 Account 3 Account 4 Industry Average #BC14 BROADSOFT CONNECTIONS 2014 PAGE 13
Ratio of Fixed to Mobile Clients Activated 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Mobile Fixed #BC14 BROADSOFT CONNECTIONS 2014 PAGE 14
Ratio of UC Clients Shipped to All Seats Deployed (2014) 300% 250% 200% 150% 100% 50% 0% 2/2014 3/2014 4/2014 5/2014 6/2014 7/2014 8/2014 #BC14 BROADSOFT CONNECTIONS 2014 PAGE 15
Customer Journey
Customer Journey Aquire Deploy Manage Lead gen strategies Cost of acquisition Lead conversion Sales effectiveness Speed of deployment Customer satisfaction Feature utilisation Customer upsell Cost of customer management Customer lifetime value #BC14 BROADSOFT CONNECTIONS 2014 PAGE 17
Product Metrics Definition Defined as the number of month in the contract Number of Packages and the number of handsets used in the packages There are no real best in class figures for number of devices and packs this is dependant on the market and segment Metrics 24 months 60 months Average Contract Period Average Best in Class 2 Packs, 6 Devices N/A Average Number of Handsets Improvement Strategies Generally for SME service providers should focus on less packs and devices Xcelerate recommend 1 pack for th emicro business, 2 packs for SME and 3 packs for the mid-market For devices we would recommend no more than 6-8 devices including all phones, soft clients and ATAs Average Best in Class #BC14 BROADSOFT CONNECTIONS 2014 PAGE 18
Number of Service Launches Per Year Definition Defined as the number of service releases added to the service per year Typically customers with more service releases in their roadmap are much more successful in selling hosted Having an aggressive roadmap is an easy way to attack premise based PBX vendors Metrics (# of releases) 1.5 >3 Service Launches Per Year Average Best in Class Improvement Strategies Employ BroadCloud PBX solutions for faster time to market. Typically BroadCloud PBX can deploy >2 feature releases per year Add features into existing service packaging rather than creating new packs Utilise Xcelerate pre-baked content to speed up user documentation and marketing materials Synchronise the product packaging to current IT implementations Typically service providers with a smaller base can be faster to deploy new services to market. 19 #BC14 BROADSOFT CONNECTIONS 2014 PAGE 19
Sales Close Ratio and Average Number of Sales Per Person Metrics Definition 15-20% >35% Defined as the ratio of closed sales to sales qualified leads Is normally a direct measure of the sales competance in selling a hosted product Best in class figures normally apply to a sales force with a smaller portfolio of products to sell Close to SQL Ratio Average 20-30/year Accounts Closed /rep/year Average Best in Class >100/year Best in Class Improvement Strategies Develop a comprehensive sales education plan than provides continual training on the hosted product Ensure that sales have a strong cache of backup content to develop the sales cycle. This should include brochures, case studies and multimedia online resources Sales should be able to deliver a compelling demo of the product. Best in class teams have the hosted product installed as their business UC/phone system 1-2 days 4 hrs Time to return a quote from 1 st contact Average Best in Class 20 #BC14 BROADSOFT CONNECTIONS 2014 PAGE 20
Number of Sales People Training on the Product and Frequency of Training Definition Defined as the percentage of sales people trained on the hosted product Defined as the number of sessions per year Customers with a higher frequency of sales training improve sales close rates by at least 100% compared to organisations who train once per year Quota relief is defined as the percentage multiple of the hosted sale is attributed against the sales person s target Metrics 80% 100% % Sales People Trained Average Best in Class 1.5 SPY >4 SPY # Sessions Per Year Average Best in Class 100-150% >300% Quota Relief Per Hosted Sale Improvement Strategies Ensure sales have the hosted product as their desk phone or UC system. They will become much more effective at giving demos. Start simple and focus on the benefits of hosted Utlise computer based training or electronic learning systems to increase the frequency of training Link sales accreditation to access to selling products with higher quota relief Utilise the foundation sales training programs available from BroadSoft on the Xcelerate site Average Best in Class #BC14 BROADSOFT CONNECTIONS 2014 PAGE 21
Number of Channels Trained and Selling the Service Metrics (# of Pieces) Definition Defined as the number of channels taking a hosted product to market Some of the fastest growing hosted players are those who have aggressive channel acqusition and stimulation strategies Number of months of contract revenue to rebate into the channel 30-50 >1000 Number of indirect channels supported Average Best in Class 2-4 >8 Rebate to the channel Improvement Strategies Create a defined channel acquisition and on-borarding program Channel success is often closely linked to the level of support at the CXO level. Ensure channel sales focus on the CXO in the channel Ensure channel compensation is competitive to premise based PBX solutions Take advantage of Xcelerate content to develop your channel program Stagger channel financial compensation to channel commitment to the product Average Best in Class #BC14 BROADSOFT CONNECTIONS 2014 PAGE 22
Average Sales Commissions Source: Pacific Crest SaaS survey. ACV: Annual Contract Value CAC: Cost of customer acquisition #BC14 BROADSOFT CONNECTIONS 2014 PAGE 23
Number of Content Pieces to Support the Hosted Service and Number of Events Definition Defined as the number of pieces of content that are available to sales to support a hosted sale Content pieces include product datasheets, brochures, case studies, videos, TCO tools & white papers Content pieces allow your service to be positioned as a thought leader in the hosted industry Customer events would be trade shows or own customer events like a user conference Metrics 5-7 >20 Number of content pieces Average Best in Class 5-10 >20 Number of events Average Content Check List Brochure Datasheet White Papers TCO tool Case studies Best in Class Improvement Strategies Utilise the reference content on Xcelerate to develop sample pieces of content for your service Available pieces include datasheets, brochures, white papers and TCO tools Contact the Xcelerate team at Xcelerate@broadsoft.com for the forward list of new content being developed Assess the impact of content by monitoring the number of downloads or sales usage. Purge old or underutilised content #BC14 BROADSOFT CONNECTIONS 2014 PAGE 24
MQL Lead Generation To Close Ratios Metrics Definition ~15:1 <10:1 Defined as the ratio of marketing qualified leads to closed business For example 18:1 would be eighteen marketing qualified leads yielding one successful sale MQL to Close Ratio Average Best in Class Improvement Strategies Close rate is closely aligned to the competancy of the sales force so ensure sales education stats are managed Online programs can be heavily influenced by the capabilities of the web site and the number of content pieces that are available on the site BroadSoft has also entered into a number of demand gen activities with customers and provided guidance on the relative success of programs PPC Tele-marketing Demand Gen Effectiveness Average Best in Class Pre-script tele-marketing programs. There are message guides available on Xcelerate #BC14 BROADSOFT CONNECTIONS 2014 PAGE 25
Cost of Customer Aquisition Definition Defined as the marketing and sales costs incurred to add one additional seat to a Cloud service $200+ Metrics ($/seat added) $80-100 <$50 Improvement Strategies Analyse the effectiveness of all marketing spend with ROI metrics Focus on matching good quality leads to channels with strong close performance Utilise channels with pre-established customers to lower cost of acquisition Cost in marketing per seat added Average Best in Class #BC14 BROADSOFT CONNECTIONS 2014 PAGE 26
Hosted UC Slightly Better than SaaS Average Source: Pacific Crest SaaS survey. ACV: Annual Contract Value CAC: Cost of customer acquisition #BC14 BROADSOFT CONNECTIONS 2014 PAGE 27
Upsell is Effective in Lowering CAC #BC14 BROADSOFT CONNECTIONS 2014 PAGE 28
First Time Successful Installation Percentage Defdinition Defined as the percentage of accounts that have been installed successfully with acceptance of the hosted product Metrics (% accounts) ~90% >98% First Time Installation % Average Best in Class Improvement Strategies Ensure that the product is supported by high quality usage documentation Lock down installation processes and train staff to ensure they fully understand the processes Ensure that quality monitoring/service assurance is in place to manage issues For larger deployment service providers should have project management support For SMB deployments keep the customer detailing as lightweight as possible. Example detailing info available on Xcelerate #BC14 BROADSOFT CONNECTIONS 2014 PAGE 29
Installation Time Per Customer Definition Defined at the time elapsed from taking the customer order to delivering the service and the customer accepting Timing varies depending on size and complexity of the deployment (multi-sites, number of user features) Also variation with port timescales on a per country basis Metrics (days to install) 15 days <5 days Days to Install Average Best in Class Improvement Strategies For larger deployments customers are recommended to have some form of project management for the installation Pre-installation site surveys are extremely important. There is a reference document on Xcelerate for best practice Invest in user training during and post installation. Example documents are available on the Xcelerate web site Deploy IP service assurance/monitoring for sites to quickly identify and manage issues Figures quoted do not include porting #BC14 BROADSOFT CONNECTIONS 2014 PAGE 30
Customer Service Performance Metrics Definition NPS is defined as a percentage of customer promoters less the number of detractors Churn is defined as the percentage of accounts that have decided to move off the service in one year Churn rates can be influenced by the contract duration with shorter contracts attracting higher churn rates In the micro business market churn rates are lower with bundles of services 30-40% >85% Net Promoter Score Average Best in Class ~10% <5% Customer Churn Per Annum Average Best in Class Improvement Strategies Ensure that the product is supported by high quality usage documentation Tier customer support activities with FAQs through to level 3 with rapid escalation Ensure that quality monitoring/service assurance is in place to manage issues Maintain a healthy roadmap to keep the product up to date Revisit customers at least 6 months prior to end of contract for a service refresh Increase the number of services in the contract to increase resistance to change #BC14 BROADSOFT CONNECTIONS 2014 PAGE 31
Pricing
Service Only Rental Packages Call Minutes Included All Inclusive (h/w, clients, Calls) UC Market Pricing United Kingdom Hosted UC End User Retail Pricing Ranges (Per User / Per Month / UK s) 0 to 10 11 to 20 21 to 30 30 to 45 2 4 3 3 5 3 3 1 1 1 M M MZA Average Price 2 Wholesaler All Inclusive, single offer 4 Mobile All Inclusive 1 Large Fixed Operator Multiple offers based on features 3 Hosted Challenger Multiple offers based on Additional minutes, etc 5 Hosted Tier 2 Single offer #BC14 BROADSOFT CONNECTIONS 2014 PAGE 33
Service Only Rental Packages Call Minutes Included All Inclusive (h/w, clients, Calls) UC Market Pricing Northern Europe Hosted UC End User Retail Pricing Ranges (Per User / Per Month / US $ s) $0 to $10 $11 to 20 $21 to $30 $30 to $45 6 6 6 3 5 3 1 4 2 2 2 2 M M 1 MZA Average Price Swedish fixed/mobile operator 2 Swedish mobile Operator multiple feature packs 3 Norwegian Incumbent 4 Mobile Challenger 5 Danish Incumbent 6 Dutch Mobile Operator #BC14 BROADSOFT CONNECTIONS 2014 PAGE 34
Service Only Rental Packages Call Minutes Included All Inclusive (h/w, clients, Calls) UC Market Pricing United States Hosted UC End User Retail Pricing Ranges (Per User / Per Month / UK s) $0 to 15 $15 to 30 $30 to 45 $45 to 60 2 2 2 5 3 3 3 1 4 4 1 Verizon VCE 2 3 Comcast BVE pkg pricing tied to volume Ring Central Office Std Prem. & Enterprise 4 Cox VM Office, VM Anywhere 5 8x8 Virtual Office Pro #BC14 BROADSOFT CONNECTIONS 2014 PAGE 35
SIP Trunking
Average Number of Channels per SIPT - US 50 45 40 35 30 25 20 15 10 5 0 BroadSoft Data 37 #BC14 BROADSOFT CONNECTIONS 2014 PAGE 37
Average Number of Channels per SIPT - UK 45 40 35 30 25 20 15 10 5 0 EMEA1 EMEA2 EMEA3 EMEA4 EMEA5 EMEA6 BroadSoft Data July 2014 #BC14 BROADSOFT CONNECTIONS 2014 PAGE 38
Service Only Rental Packages Call Minutes Included All Inclusive (access, clients) SIPT Market Pricing United States SIPT End User Retail Pricing Ranges (Basic Channel / Per Month / US $) $10 to $20 $20 to $30 $30 and above BEST 2 5 1 8 4 6 Non BEST 2 5 Flex Reach 1 3 Enhanced Flex Reach 7 1 Level3 3 XO 5 ATT 7 MegaPath 2 Verizon 4 CBeyond 6 TWT 8 Bell Canada #BC14 BROADSOFT CONNECTIONS 2014 PAGE 39
Service Only Rental Packages Call Minutes Included All Inclusive (access, clients) SIPT Market Pricing United Kingdom SIPT End User Retail Pricing Ranges (Basic Channel / Per Month / UK s) 0 to 3 3 to 6 6 to 9 9 to 12 1 5 1 Resilience 8 1 3 6 2 7 4 1 Resilience 2 CLIP Option 2 CFWD, ACR 1 Gamma 3 ihub 5 Timico 7 BT One Voice 2 Intechnology 4 hso 6 Spitfire 8 Virgin Media #BC14 BROADSOFT CONNECTIONS 2014 PAGE 40
Unified Communications Performance Metrics Mike Wilkinson
Summing Up If cannot measure, you cannot manage Build metrics into your business and track your performance relative to the market BroadSoft can supply benchmark data #BC14 BROADSOFT CONNECTIONS 2014 PAGE 42
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