Expanding Market Share

1. Expanding Market Share GenTelCo Sample

2. Table of Contents Executive Summary . . . . . . . . . Situation Analysis . . . . . . . . . . . . . . . . Conditions at the Time . . . . . . . . . . . . Objectives . . . . . . . . . . . . . . . . . . . . . Methodology . . . . . . . . . . . . . . . . . Internal Teams . . . . . . . . . . . . . . . . . . Initial Questions . . . . . . . . . . . . . . . . . Market Research . . . . . . . . . . . . . . . . Focus Group Parameters . . . . . . . . . . Recommendations / Results . . Required Elements . . . . . . . . . . . . . . . Action Plan . . . . . . . . . . . . . . . . . . . . . Initiative Results . . . . . . . . . . . . . . . . . Going Forward . . . . . . . . . . . . . . . . . . Brand Promise . . . . . . . . . . . . . . . Initiative Rollout . . . . . . . . . . . . . Lessons Learned . . . . . . . . . . . . . . . . Voice of the Customer . . . . . . . . General Attitudes . . . . . . . . . . . . . . . . . Dependability, Reliability . . . . . . . . . . . Branding GenTelCo . . . . . . . . . . . . . . . . . . . . The Sales Experience . . . . . . . . . . . . . Churn . . . . . . . . . . . . . . . . . . . . . . . . . . Billing . . . . . . . . . . . . . . . . . . . . . . . . . . Price . . . . . . . . . . . . . . . . . . . . . . . . . . Customer Service . . . . . . . . . . . . . . . . Myths . . . . . . . . . . . . . . . . . . . . . . . . Hunches . . . . . . . . . . . . . . . . . . . . . . General Attitudes Re: Industry . . . . . . . Attitudes and Perceptions . . . . Dependability, Reliability . . . . . . . . . . . The Sales Experience . . . . . . . . . . . . . Churn . . . . . . . . . . . . . . . . . . . . . . . . . . Up Market / Down Market . . . . . . . . . . Customer Service . . . . . . . . . . . . . . . . Market Data . . . . . . . . . . . . . . . . . . . Who is the Competition? . . . . . . . . . . . Green Zone Penetration . . . . . . . . . . . Yellow Zone Penetration . . . . . . . . . . . 3 5 6 7 8 9 910111213131414151718 22232425262728293031353638394041424445464749

3. Executive Summary

4. Executive Summary SUMA Partners collaborated with GenTelCo’s Houston office to find untapped segments of Houston’s telecommunications market, and to produce a strategy for GenTelCo to capture these key market segments. GenTelCo management was particularly interested in reduc-ing churn and identifying the “Sweet Spot” in terms of market segment and GenTelCo products and services. The ultimate goal of successfully implementing this strategy is realization of double-digit growth in GenTelCo monthly revenue.

5. Executive Summary • Situation Analysis • Ambitious revenue goals (double-digit growth) for the coming months. • Recent corporate moves offer potential multiplier effect for increasing sales • New products and services offer untapped revenue potential. • Shift in regional competition. Some local companies have gone out of business. SBC may be making aggressive moves (bundling, reduced pricing, win-back). • Outdated market perceptions of GenTelCo • New products and services may not have maximized their revenue potential (e.g., audio conferencing). Other products and services are in development. • Investments are being made into “last mile” for selected locations, to enhance long-term margins. • Recent local initiatives: 3rd Team, external telemarket- ing group to qualify leads, reinstating external group to assist in New Hire Training, co-marketing with property managers.

6. Executive Summary • Conditions at the Time • inadequate understanding of local competitive landscape • unclear on beliefs / motivations of prospects, including: • - reasons behind purchase decisions • - perceptions about the telecom industry • more than 130 products / services led to: • - overwhelmed new hires • - veterans selling in comfort zone • no strategic sales approach • inefficient approach: • - replacement selling / relegated to price only • - no compelling reason to buy • poor account representative participation

7. Executive Summary • Objectives • SUMA Partners designed a multi-faceted market research approach to: • identify key decision factors / behaviors of current customers, former customers, and prospects. • portray the competitive landscape for Houston telecommunications. • understand current market perceptions of / feelings about telecommunications. • determine market perceptions/knowledge of GenTelCo (products, services, market conditions, positioning, competitive landscape). • identify attributes/products/services most valued by targeted customer groups; test value propositions. • create effective, efficient, integrated approach that brings more Houston customers/revenue to GenTelCo.

8. Methodology

9. Methodology Internal Teams The GenTelCo Core Team provided a national perspective on key market drivers, market traction, and churn issues. The team included representatives from GenTelCo national / regional sales divisions, as well as the GenTelCo General Manager. The GenTelCo Acceleration Team provided leader-ship and input on strategic sales initiatives, market data, and implementation priorities. The GenTelCo Implementation Team provided a local perspective on GenTelCo’s sales, marketing, and operations. The team included individuals from GenTelCo’s direct and indirect sales, customer service, and operations. • Initial Questions • Meetings with the internal teams provided information about GenTelCo’s strength, weaknesses, opportunities, and challenges vis a vis the market. • Which factors are the leading indicators for where GenTelCo wants to be? • How can GenTelCo capitalize on new opportunities to achieve market growth in Houston? • What is the “value proposition” for each of the tar- geted customer groups? • What are the priorities for taking action toward achieving the GenTelCo Communications Team’s objectives?

10. Methodology • Market Research • SUMA Partners’ research focused on customer attitudes and behaviors in the Houston telecommunications market. • Survey of current GenTelCo customers • - overall customer satisfaction • - ranking of 38 distinct telecommunications products / services • - perceptions of telecommunications firms’ performance in the Houston market • - ranking of GenTelCo versus competing firms in seven general product / service categories • Facilitation of focus groups with former and potential GenTelCo customers

11. Methodology Focus Group Parameters

12. Recommendations / Results

13. Recommendations • Action Plan • GenTelCo’s must “customerize” and fully integrate sales, cus- tomer service, technical support, and billing. • The clear differentiators for GenTelCo must be woven into an aggressive, well-managed strategy for increasing awareness in the following markets: 1) Vendors and agents) 2) Business purchase decision-makers (targeted, not broadcast) 3) Referrals from current customers 4) general business community. • Specific suggestions include: • targeted sales pitches that maximize yield • customer service/sales/operations workshops • defined roles and processes • re-designed incentives / compensation / measurements for sales and customer service personnel • educational materials for prospects and customers • bankruptcy information blitz • defined sweet spot • branding and win-back initiatives • Required Elements • The concept of quality is defined by a combination of the following factors and attributes, none of which is mutually exclusive: • no down time • clarity • reliability / dependability • efficient, effective, timely customer / technical service • coverage • reputation • price / value

14. Initiative Results • Outcomes Realized • clear understanding of market “Sweet Spot” • strategic sales approach • direction for new hires • reduced sales cycle / improved efficiency • increasing revenues • - increase close ratios • - more up-market sales • - more “bang” for marketing dollars • improving account representative participation • consistently in Top 5 • “Hybrid Tier 1”: considered Tier 1 (awaiting changes) • Going Forward: Goals • 1.5% market penetration • revenues ≥ 5% increase (over normal run rate) • sales participation ≥ 70% • sales productivity ≥ $4,000 • churn reduced to < 1% • number one market in U.S

15. Brand Promise The translation of refined analysis of market data into a branding statement for GenTelCo, addressing the highest-priority customer issues that emerged from SUMA’s research

16. Brand Promise • GenTelCo Communications is… • A data-savvy national company with a big Houston heart. • We promise to provide service that is “always up.” • Because we have our own switch, we can reduce the risk of downtime. • RELIABILITY • We specialize in reliability, security, and just as much redundancy as you need to keep your systems up and running. All the time. Because we understand that telecommunications is the lifeblood of your company. • PRODUCTS AND SERVICES • Our products and services have been judged to be the best in market in terms of flexibility and the ability to meet your business needs. • MASTER DIAGNOSTICIANS • We pride ourselves in our diagnostic skills. We listen carefully so we can understand your needs and anticipate ways your business might change and grow over time—so we can grow with you. • CUSTOMER INTIMATE • Our promise goes beyond our technical expertise and killer applications . . . we focus on our relationships with our customers and our community, on the our long-term commitment to being the Houston market leader, and on promise to help our customers achieve market leadership, too. • GenTelCo Communications… • always up.

17. Initiative Rollout

18. Initiative Rollout “Seizing Untapped Market Opportunities” was introduced at a one-day, hands-on workshop on January 16, 2004. The four main areas of focus included: • Double-Digit Growth: accelerating sales productivity, gaining market share, reducing churn. • GenTelCo’s Sweet Spot in theMarket: GenTelCo’s “killer differentiation” message, signals to give that communicate “GenTelCo is the one,” creating a multiplier effect. • Customer-izing GenTelCo’s Shop: practical, implementable ways to improve the customer’s experience throughout the lifetime of the relationship. • Ramp-up of new hires: What sales team leaders can do differently to increase productivity and awareness of strategic positioning among new account executives.

19. Initiative Rollout: Lessons Learned What GenTelCo team members told us they learned during the rollout session: Competitive landscape for telecom- munications GenTelCo participants gained new insights into how cus- tomers view the firms who are competing for their business, and how GenTelCo is viewed among this group: “Don’t automatically assume that price is the key differentiator.” “Customers aren’t concerned with Tier Levels – the leading firms are those who deliver on their service.” “We have fewer true competitors than I assumed, but they are also more aggressive than I expected.” “GenTelCo has huge market opportunities in data and on-net buildings.” “We have a strategic advantage in offering switch tours.” Customer perspectives on telecommunications GenTelCo participants were shown what lies just beyond the customer’s perception of telecommunications as a “necessary evil.” Breaking through the customers’ dislikes about telecom creates opportunities for a skilled sales force to sell solutions: “Telecommunications changes every day, and customers need to be educated.” “Perception of telecom IS reality - so find out what the perception is and take advantage of it.” “The majority of providers can deliver – it’s a matter of who really listens to the customer.” “Customers trust the advice of their vendors more than I expected.”

20. Initiative Rollout: Lessons Learned GenTelCo’s sales strategy GenTelCo participants became more attuned to customers’ needs regarding overall solutions and reliable service: “We must thoroughly understand our prospects needs and focus on providing a total solution.” “Probe - close the gap between face value and added benefit.” “Make it simple, keep it simple.” “Leverage GenTelCo assets and reinforce the GenTelCo brand.” “Use a consultative approach; be more aggressive in targeting the Green Zone.” Information that will help in their jobs. The majority of participants noted the Green Zone penetration figures and the benefits of positioning GenTelCo as a data-savvy firm. Other helpful information included: “We can get good client testimonials from satisfied customers.” “There is emerging demand for data; the switch sells!” “The video and analysis from customer focus groups will help me drill down on my current engagements more effectively.” “Utilize the switch; work with peers to boost product knowledge.”

21. Initiative Rollout: Lessons Learned What they will do differently based on this new knowledge GenTelCo participants want to listen better, apply a sharper analysis of their customers’ benefit signals, and capi- talize on opportunities to up-sell. “Work the Green Zone more, find the ‘Sweet Zone.’” “I will improve my product knowledge, focus my prospecting, and make a knockout introduction as to who GenTelCo is!” “I plan to simplify my approach, use less industry jargon.” “Think carefully, analyze data, re-position in either vertical or horizontal marketing, drive up-market sales.” What participants need from GenTelCo to help them meet their 2004 goalsGenTelCo focus on increasing visibility, better installation and service team follow-through, and more product training topped the list: “A brown bag lunch once a week, with a product training session.” “Keep the product promos fresh and allow the reps some flexibility.” “Shorter provisioning time; GenTelCo needs to get a good handle of the order process and management of orders so I don’t have to.” “We have the tools to sell—we need flexibility in packaging the products.” “Keep moving in the current direction—we have a great leader.”

22. The Voice of the Customer The framework for findings and conclusions.

23. The Voice of the Customer: General Attitudes • The term “Tier 1” does not resonate with the customer. • Participants’ groupings don’t match actual Tiers. • Tier 1 is associated with name recognition, size of company, and advertising dollars spent • Residential experience affects buying groups in lower end. • Customers don’t really know what services are offered by their providers. • There is a lot of confusion with customers re: wire- less vs. traditional providers. • Customers (lower MRC) are not educated in telecom. • “Word of mouth” is powerful: One bad experience can influence an entire group even if they have never heard of your company. “Telecommunications is a necessary evil . . . A nightmare scenario.” “Telecom is an expensive black box we don’t understand.” “It’s too complicated.” “They’re not Tier I in our eyes, even if they are in the industry.” “If they have to say they’re Tier 1, they’re probably not.”

24. Voice of the Customer: Dependability, Reliability • Dependability and reliability are the overall top deal- makers and deal-breakers. • Definitions include (perception of) size of vendor, reputation, coverage, technical response, up time, customer service • There is a perceived link between declaration of bankruptcy and decreased dependability. • Potential risk of company going under isn’t worth it to most customers. • [telecommunications is the] “Lifeline of the business.” • “Without our communication system, we don’t work.” • “Reliability means constant up time.” • “Telecommunications is the backbone of company.” • “I worried about GenTelCo; I was afraid they were going under.”

25. Voice of the Customer: Branding GenTelCo • Participants either have never heard of GenTelCo or do not know what value it offers. • Customers believe GenTelCo needs to advertise. • Problems raised seem to be universal across all carriers —the industry as a whole contributes to the negative perceptions about GenTelCo. • The market is “ripe” for marketing initiatives. “We can’t buy you if we don’t know you.” “Distinguish yourself from the pack.” “Didn’t GenTelCo go under?”

26. Voice of the Customer: The Sales Experience “Deliver what you promise.” “Explain product without using terminology that most people wouldn’t understand.” “Sell me what I need, not what you can sell me.” “Throw sales promotions in the trash; I don’t want to become a customer based on that.” “I don’t’ like it when they use all those acro- nyms and technical terms--I feel like they’re talking down to me.”“ • Customers want sales reps to be technologically knowledgeable. • People buy because they think the rep / vendor is honest. • Especially lower end customers are confused about broadband vs. data. • SLA’s are especially important to data people. • Timing is everything.

27. Voice of the Customer: Churn • Most customers who had switched to CLEC had done so more than once. • Some switched because they liked the sales rep. • Switched because it was the “right” time. • Most are open to retuning if they’ve switched before. “I don’t want to get out, I just want good service.”

28. Voice of The Customer: Billing • Bundled services and one provider are as important as ever to customer. • Billing was a general problem with all participants. • Customers want a clean bill. “It took thirteen months to correct our billing problems.” “I’m still getting bills, and we don’t even use their service anymore.”

29. Voice of the Customer: Price • Customers are more interested in quality / customer service. • Price is tied to quality / expectations. • Customers will pay more for dependability. “Give me simple, definitive pricing.” “Price isn’t always the issue—it’s quality of service.”

30. Voice of the Customer: Customer Service • Customers want one contact. • They are frustrated with the chain of companies forrepairs. • The issue isn’t whether there are problems, but HOW the problems are handled. “Customer service is everything.” “It’s OK to make mistakes--just take responsibility, be honest, and fix it.” “Every time I called GenTelCo, I got mad.” “It’s a nightmare where one maintenance agreements stops and the other picks up.” “Customer service reps can’t solve problems.” “I just want to talk to somebody.” “No one accepts responsibility.” “If you say you’re going to call me, CALL ME!”

31. Myths Beliefs commonly held by GenTelCo personnel and customers

32. Myths

33. Myths

34. Myths It’s all about the switch

35. Hunches SUMA and GenTelCo project team assumptions, generated throughout the early and middle stages of the project. The most significant hunches were catalogued and tested against research findings.

36. Hunches General Attitudes re: Industry

37. Hunches General Attitudes re: Industry, continued

38. Hunches Attitudes and Perceptions re: GenTelCo

39. Hunches Dependability, Reliability

40. Hunches The Sales Experience

41. Hunches Churn

42. Hunches Up Market / Down Market

43. Hunches Up Market / Down Market, continued

44. Hunches Customer Service

45. Market Data Key findings based on original research of the local telecommunications market and industry trends

46. Market Data “Who is the competition?” Four GenTelCo internal teams plus the GenTelCo General Manager were asked to name and rank GenTelCo’s local competitors. The internal perceptions do NOT track with the customer perceptions.

47. 1 to 5 6 to 10 11 to 15 16 to 20 21 to 49 > 50 Market Data Green Zone Penetration Number of Lines Houston-Area GenTelCo Penetration Prospects Customers 50,566 268 0.5% 9,176 104 1.1% 3,682 66 1.8% 1,594 36 2.2% 2,111 55 2.5% 639 21 3.2%

48. 1 to 5 6 to 10 11 to 15 16 to 20 21 to 49 > 50 Market Data Monetization of increased green zone penetration FOCUS ON THE GREEN ZONE. GENTELCO HAS SUCH A SMALL PERCENTAGE OF MARKET SHARE THERE THAT AGGRESSIVE MARKET PENETRATION WOULD YIELD SIGNIFICANT SUSTAINABLE REVENUES. Number of Lines Customer Prospect 5% of Potential $134,000 $13,551,688 $677,584 $78,000 $954,304 $47,715 $66,000 $243,012 $12,151 $45,000 $57,384 $2,869 $82,500 $116,105 $5,805 $36,750 $13,419 $671 Totals $442,250 $14,935,912 $746,796

49. 1 to 5 6 to 10 11 to 15 16 to 20 21 to 49 47,176 44 0.1% > 50 6,667 29 0.4% 2,672 13 0.5% 1,175 8 0.7% 1,506 16 1.1% 402 9 2.2% Market Data Yellow zone penetration XYZ-Area GenTelCo Number of Lines Prospects Customers Penetration

50. 1 to 5 6 to 10 11 to 15 16 to 20 21 to 49 > 50 Market Data Monetization of increased Yellow Zone penetration Number of Lines Customer Prospect 5% of Potential $22,000 $2,075,744 $103,787 $21,750 $193,343 $9,667 $13,000 $34,736 $1,737 $10,000 $9,400 $470 $24,000 $24,096 $1,205 $15,750 $3,618 $181 $106,500 $2,340,937 $117,047 Totals