Product Marketing Research Overview

1. Product Marketing Research Overview Topic: User Cases & Other Trends in Hosting August, 2009

2. Agenda User Case Research Project Overview Research Results Overall Trends 7 Use Cases • Description • Examples • Most Effective Sales Approaches Summary of 7 Use Cases Supporting Trends & Research Recommended time: 1.5 hours

3. Hosting Market User Case Research Project • Project Mission • To gather a complete and clear understanding of uses and purposes SMBs have for their websites to and the role web hosting plays. • Methodology • Conducted phone-based interviews of both Verio customers and non-customers about their use of the web. • Developed specific real-world use cases based on research. • Mapped use cases back to Verio’s product line to determine the best product fit, sales/marketing outlets and positioning messages. • Post Research Actions • Hone marketing messaging, product roadmap priorities, packaging and sales processes to better take advantage of the evolving market.

4. The Use Case Building Process • Verio’s Interview / research process: • To insure appropriate interview sample coverage across all channels, a call matrix was created taking the following into consideration: end users, partners, low and high end shared hosting products, VPS/VWS and MPS/MWS, as well as Windows vs. Unix. • To improve the consistency and completeness of the information gathered during interviews: Verio created 2 separate interview guides: one for end users and another for channel partners. • To assist with compiling interview data, answers were summarized into a number of spreadsheets in preparation for creating use cases and other summaries.

5. The Results 7 Primary Customer Types (Use Cases )

6. The Evolution of SMB Web Hosting Needs • What SMBs want: Research shows that while 40% of SMBs have yet to build their first web site, much of the SMB market is fast evolving their needs from simple “business card” sites to increasingly interactive and dynamic content sites. • Demand is growing for greater security, scalability and privacy. • Companies are moving from static to dynamic and 1-way to 2-way communication. • SMBs are demanding tools – both open source and proprietary – for accomplishing their goals without increasing technical expertise.

7. The Evolution of SMB Web Hosting Needs • The role of technology: This demand for more sophisticated capabilities has translated into a need for providers to deliver more scalable platforms and simple tools for managing their service offerings that SMBs can use. • Scalabilitymeans enabling seamless and pain-free hosting plan scalability with additional features without having to migrate from one hosting platform to another • Tools refers to providing customers with feature-rich plans that include both “plug and play” applications such as website builders and marketing tools designed for a non-technical SMB audience; plus access to a wide variety of open-source applications suitable for more technical audiences that want to get more complex.

8. Use Cases Overview – 7 Types Identified Shared Hosting Customer VPS/MPS Customer Use Case Amateur Pro Amateur Business 1.0 Business 2.0 Corp Web 1.0 Corp Web 2.0 Plain Ol’ Web Complex architecture demands complete control Business is integrated with web strategy Site has specialized apps & complex dynamic content Complexity of the Website Site includes Dynamic Content Site invites 2-way communication Site is for Information Sharing Online Business Card Low High Evolution of Business’s Online Needs

9. Type 1: Plain Old Web = Online Business Card Business Need and Value • < 4-page content only site • Simple email solution • Low importance of hosting • Not a revenue generator • Minimal marketing effort Application Usage • Site Building Tool • No other applications Resource or Product Requirements • Domain Name • Email • Simple and Easy support (Below Tech I) • Trigger Point to move up • Need to do more with their site Simple Contact us

10. Type 1: Plain Old Web – Effective Sales Approach Focus on build and find site not hosting Build your Website! Get Found online! Start now! Three simple steps and you have a web presence See it in action before you tell them anything about you • Three Steps to your success • Choose a design • Customize your site • Make it Live Free trial – play with it. See Industry relevant sample templates Test it now Free! Promotes upsell. Check out the templates Secure your domain Want help buiding it? Review our 200+ design templates now. Click to scroll through a sampling of them. Let us help – we have the professionals and we can do it for you – many options. Find out what is available and secure your domain now. • Positioning • This can be sold online with ease. Win vs. Linux platform agnostic. Offer multiple viewing options from your site to see / try the product. • Offer the chance to view the templates or other live sites from your site. • Offer audio/visual powereddemo at front with audio to show how easy it is to use with an example • Offer the chance to use the tool (but they must give you their info to do so) – and use the full product for x days without giving credit card. Follow up with them before it expires. • Actions: • Follow up by phone shortly after demo starts to check in -- especially if activation not in motion. • On the front page make symbiotic offers that upsell – aka to help build it ortake to next level when they are stuck • If the client is not using the site in two weeks once purchased or trial begins, proactively reach out to offer a web design option • Offer domains for sale as a way “in.” This drives sales, then you can upsell immediately with phone reps (< 50% of domain sales should net hosting sales). • Competitors www.intuit.com, godaddy.com

11. Type 2: Amateur = Information Sharing Business Need and Value • Simple 10 Page website • Simple Email solution • Content and interaction is minimal • Don’t really understand the features they have • No value consideration of hosting • Importance of hosting very low Application Usage • Easy email • “More Info” form submission on website Resource or Product Requirements • Easy sign-up and install tools • Low Price • Consumer grade support Trigger Point to move up • Desire to track visitors, orshare or gather information with visitors.

12. Type 2: Amateur –Example Input form for follow-up Gathering specific information about interest area

13. Type 2: Amateur – Effective Sales Approach Everything you need to start and grow your business online! Just Getting Started? Get Your Site Found Enhance Business Productivity Secure your Domain Build your Site Get company email Online Backup Collaboration & File Storage Tools Reach new Prospects Market Your Site Sell products & services onilne Promotes upsell. Easy installation tools Positioning: Similar to “Plain Old Web” but messages should go beyond “build a web site” to “grow your business online”. Content needs to be instructional and demo-focused. Use audio, video, Flash and more to both sell and support customers. Win vs. Linux platform agnostic. Description: While sites are more interactive , owners still have no technical skills nor a sophisticated web development effort . They will be attracted by simple features such as a dynamically generated “map to my business” page on the contact us form, a database-supported online feedback form and other widget-oriented functionalities they can access through the DIY tool or a control panel widget. Products: Beyond web site builder, prospects may be enticed into items such as marketing tools that further business goals. They see the web as a valuable resource beyond a web site hosting but need to be led there to purchase any other online-based services. Good options include online backup, online marketing (SEO as well as email marketing), online file storage. This group has a greater potential for growth than the lowest category as they have “caught the bug” and will want to evolve. Actions:Treat this group with potential to grow. Frequent follow up with new offers is recommended. Competitors : godaddy.com , 1and1.com, networksolutions.com

14. Type 3: Pro Amateur = 2-way communication Business Need and Value Simple website; starting to learn and dabbling adding complexity or portals Using standard applications such as blogs Forced to learn and understand features Beginner technical knowledge Low importance of hosting Hosting is not a revenue generator Application Usage Easy email (may start dabbling in corporate email) Blogs and feedback forms Resource or Product Requirements Easy signup and install/tools Low Price No limit on the number of web pages Documentation, online help or tutorials Consumer grade support Trigger Point to Upgrade Need for more complex standard applications Maxed out key resources Blog and RSS Ties into other social media

15. Type 3: Pro Amateur – Effective Sales Approach Quick Blog can be added to account through customer control panel Applications can be installed as the user becomes more interested Positioning: Tout your tools! Organizations will move up from CMAG DIY tool to here and want to replace or add to it. To succeed, tout pre-installed hosted applications, CMS tools, podcasting and blogging tools, etc. While this group still does not have access to sophisticated web development guidance, they are more inclined to try new things on their own or with the help of a trusted technical resource. Win vs. Linux most likely platform agnostic. Description: This group has started embracing the web as a tool for driving business. They seek to manage upgradeability through the control panel. They may use the DIY development tool but also may use a tool such as Joomla or WordPress, both of which will be available through their control panel. Action: To keep them, educate them and have simple apps they can use themselves as they dabble. Also make sure this group has room to grow with options for upgrading in the control panel . Always be recommending the next step. They may not have time to do it today but may later . Competitors : godaddy.com , 1and1.com, networksolutions.com

16. Type 4: Business Web 1.0 = Dynamic Content Business Need and Value Mix of simple and complex website Visitors interact more with the website See intermediate value of hosting Beginner to intermediate technical hosting knowledge Understand most hosting features Medium importance of hosting (aware of uptime and the importance that it works) Application Usage Standard “off-the-shelf” + some custom Resource and Product Requirements Corporate email Easy signup and install/tools Interactive and dynamic content (search, catalog, cms, role based logins) Business account rep and customer support Price sensitivity Trigger Point to move ups Sluggish performance Need for custom or a specific applications require change Communication area for US Distributors Login to Distributor Area Link to Xango Online Shop Applications on home page BUY NOW !

17. Type 4: Business Web 1.0 – Effective Sales Approach Control panel is source for learning & potential account upgrades Tech consultation or face to face may be helpful Solutions library Positioning: We can scale and grow with you– talk of scalability and reliability and privacy and security. We can offer all that you need. They have technical needs for more control (read root) but may not be technical themselves. Will need more detailed online info and may need more than single close phone sales /consultation. Win vs. Linux may have platform preference, but may not. Description: this customer may or may not use DIY tool to build site, and may be suited to a custom web site build in partnership with a developer. The buyer may be the developer on behalf of the customer. Action: Offer a structured and also not so structured DIFM web development model they can grow into as needed. Show how they can access your applications (control panel) as well as move into VPS if they want to use their own. Competitors : 1and1.com, liquidweb.com, mediatemple.com (focused on developers)

18. Type 5: Business Web 2.0 –Specialized Dynamic Content Business Need and Value Use both simple and complex apps. Demand more interactive and dynamic content More advanced technical hosting knowledge Strong vendor relationship Intermediate value of hosting Medium importance of hosting and awareness of uptime Application Usage Corporate email, Ecommerce Standard and custom combos Resource Requirements Root access or the ability to work around non-root Tech II and possibly development Certain features become critical Security, SSL and backups Trigger Point to upgrade Resource needs change Custom applications require change Now require root access

19. Type 5: Business Web 2.0 – Example More database integration Custom inventory search script Off-the-shelf payment calculator

20. Type 5: Business Web 2.0 – Effective Sales Approach • Seamless Business Email • Get Professional email with Microsoft Exchange • 1GB plans • Personalized address • Enterprise level mail, small business price • Shared calendar, tasks, address book Adding database functionality via control panel Corporate level email Positioning: Promote VPS / MPS as the best choice as it gives them complete control of their hosting environment. Advantages that resonate include: security, flexibility, isolation and control at economy price. Buyer is likely to be developer on behalf of company (either internal or external developer). Will have platform preference based upon apps they are building. Description: These are companies who are taking advantage of the web’s capabilities to streamline their business or drive sales and service. Definitely will desire to add their own applications. As a result, will need root access and thus VPS solution. Beyond hosting they are also prospects for corporate collaboration and email among other apps. Action: Show technical competency for supporting VPS but also package offers to sell beyond VPS to increase ARPU. Show how they can access your applications (control panel) and promote other offerings online. Best for outside sales w/ access to sales engineering or development team for backup. Web can play role for education + sales. May need to have Sales Engineering part of sales process and it will not be one-call close. May require some proposal. Competitors : mediatemple.com, liquidweb.com, 1and1.com

21. Type 6: Corporate Web 1.0 – Business Integrates w/ Web Business Need and Value Needs and use vary significantly Back office integration Strong understanding of features and resources Importance of hosting varies from some what important to very important Intermediate technical hosting knowledge Application Usage Ecommerce Many applications possible both standard and custom Resource and Product Requirements Corporate email Root access critical and complete configuration control Monitoring and reporting of resources and site availability Flexible hosting platform Customize plan capabilities Tier II support Trigger Point Resource needs increase Changing needs introduce architectural complexity Industry specific custom applications Back office integration

22. Type 6: Corporate Web 1.0 – Business Integrates w/ Web Flexible hosting environment Easily installable core applications Access to install what is needed Positioning: Its ok to talk technical now, but couch it in benefits not features. These buyers want specific databases and coding / programming languages, and demand the flexibility to install anything they desire (VPS / MPS is a must). Keys are security, flexibility, scale at economical price. Show sophistication of control panel to help them achieve their goals with ease. Will have specific platform demands on Windows vs Linux. Description: Buyer is developer Action: Show technical competency for supporting VPS. Buyer is most likely technical minded around web applications and less focused on achieving more broad based business goals (that would lead into products such as email etc). Web can play role for education + sales. May need to have Sales Engineering part of sales process and it may not be one-call close. May require some proposal. Competitors : mediatemple.com, slicehost.com

23. Type 7: Corporate Web 2.0 – Optimized for Single Use Business Need and Value Use varies from simple to very complex Increased customizable security Back office integration Strong understanding of features and resources Importance of hosting is high Value of hosting maybe low they make money on something else Intermediate technical hosting knowledge Application Usage Ecommerce Varies significantly - could be 1 application or many Resource and Product Requirements Corporate email (could be a server dedicated to email service) Root access critical and complete configuration control Monitoring and reporting of resources and site availability Flexible hosting platform Tier II support Trigger Point Resource needs increase Architectural complexity is mandatory Customer login to upload audio files for transcription and download text files Server optimized for uploading and downloading files

24. Type 7: Corporate Web 2.0 – Optimized for Single Use Clarity around who manages what Solutions optimized for single uses Positioning: This is in essence managed hosting – or a VPS that is optimized for a specific use. Rather than buying a service, prospects are buying a server that is maintained both physically and with some limited software by us, but the customer manages all the contents. Of high importance is the server maintenance and environment we provide. Upgrade offerings are typically around more RAM, storage, hardware, software, bw, monitoring & security. They will have platform (Win vs Linux) specific needs. Description: Buyer is developer or IT dept. May be using it for a specific application such as email server, online storage server. Action: Upgrades are focused around adding more resources to the server – processes, ram, storage, Competitors : rackspace.com, softlayer.com, theplanet.com

25. Use Cases Overview – 7 Types Identified Shared Hosting Customer VPS/MPS Customer Use Case Amateur Pro Amateur Business 1.0 Business 2.0 Corp Web 1.0 Corp Web 2.0 Plain Ol’ Web Complex architecture demands complete control Business is integrated with web strategy Site has specialized apps & complex dynamic content Complexity of the Website Site includes Dynamic Content Site invites 2-way communication Site is for Information Sharing Online Business Card Low High Evolution of Business’s Online Needs

26. Summary: The Shared Hosting Landscape Overview Tracking & Applications Adding dynamic content, ecommerce, catalogs, CMS, role based logins. Site and lead tracking is imperative, pay-per click advertising, SEO email mktg may be desired. Products / Services Needed Communication Tools Add blogs, forums, corporate email or other communications functions. Need site tracking and SEO tools. May or may not use template web site builder. Content & FormsAdd online forms & easy-install applications Basic toolsTemplate web site builders w/ simple Hosting, email & domain Dynamic Content Key storefront, lead generation site and/or communication tool. Solid integration with business strategy. MAY need custom apps (VPS) or not. 2-way communication Prospecting & engaging customers. Possible online sales. Beginning to link to core business strategy. Site Goals Info sharing site Showcases company capabilities, philosophy & work samples, offers online contact forms. Online business card Helps people find my business, check my hours, reach us. Plain Old Web Amateur Pro Amateur Biz Web 1.0

27. Summary: The VPS/MPS Server Landscape Overview Complex Architecture Demands Complete Control Monitoring, reporting sophisticated Tier2 support, mission critical backups. Products / Services Needed Custom Configuration Will use many applications both custom and standard offers. Integrating back office with web. Critical to have root access and custom configuration, site monitoring. Possible Custom Apps May mix custom + off-the shelf apps. May require root access or ability to work-around. Private SSL, security and backups. Ecommerce, dynamic content, advanced technical. Optimized for Single Use Use varies but need full server to selves. Offer dynamic content, provide a key storefront, lead generation site and/or communication tool. Solid integration with business strategy. Business Integrates w/ Web Strategy Back office integration through custom apps, constant site monitoring, multiple applications to achieve specific goals. Site Goals Offer Specialized Dynamic Content Ecommerce, Intranets, custom scripts, database integration. Business Web 2.0 Corporate Web 1.0 Corporate Web 2.0

28. Supporting Trends & Research

29. Hosting Trends Verio is Witnessing Firsthand • Increasing requests for Ecommerce and merchant services • Customers moving towards more sophisticated websites • Need for private SSL certificates • SQL Express is no longer good enough they need a full instance of SQL DB • Increased awareness and requests for SEO and SEM • Increased requests for CMS • Customer mix evolution from 70% traditional hosting and 30% value add, now they have 40 % traditional hosting with 60 % value added. • Customers are using more prebuilt tools and adding depth to websites • Customers are more willing to spend time on site analytics and analysis of traffic • Customers are beginning to think about blogs, Twitter, and other Web 2.0 options

30. Secondary Research – General Trends • Internet Security: ecommerce Growth Drives SMB Security Concerns • Source: Ca.com • Date: 2008 • Statistics: • Small and midsize businesses (SMBs) are more reliant on the Internet than expected • While many SMBs rely on the Internet in some way, over half actively use the Internet to transact their day-today business. Those who rely heavily on the Internet expect to significantly increase their usage within the next two years. A total of 608 IT and business professionals participated in the survey. • “Communication, image, and practicality are significant factors driving the growing SMB use of the Internet.” • “A resounding 91% have a worldwide website. While the midsized businesses polled were more likely to have a website (94%).” • “84% of small businesses also have and actively use their own websites.” • “It seems a new trend is emerging and SMBs are increasingly taking advantage of the opportunity to sell online…” • “SMBs also look to the Internet to improve customer and employee communications. For example, 38% percent employ extranets to communicate with partners, suppliers, and customers, and 72% already use intranets to facilitate communications with employees.”

31. Secondary Research – General Trends • CRM Trends for 2009 Include Social Networking • Source: Web Host Directory • Date: January 2, 2009 • Important Info: 1. "During this economic downturn, customers tell us they need bulletproof financial arguments to get funding for their projects," William Band, Forrester vice president and principal analyst, said in the report. 2. Customers are getting harder to win and keep, Forrester said, and the solution is improved customer experience. "Good customer experience is highly correlated to customer loyalty," Forrester said. To improve the customer experience, enterprises will integrate CRM functionalities better with their back end enterprise resource planning (ERP) and supply chain management (SCM) systems, Forrester said. They will focus more on agile and usable solutions tapping these back end systems to support customer-facing applications. 3. Another way to improve customer experience will be to incorporate social networking capabilities in CRM applications, and Forrester predicts that enterprises will begin doing this in 2009. This will be the expansion of a trend kicked off by Salesforce.com (NYSE: CRM) when it implemented social networking features, in Force.com for Facebook recently. 4. Enterprises will look at trends like service-oriented architecture (SOA) and software as a service (SaaS) to bolster negotiations with vendors on pricing and licensing in 2009, while key vendors such as SAP (NYSE: SAP), Oracle (NASDAQ: ORCL) and Microsoft (NASDAQ: MSFT) will be pressuring them to upgrade, Forrester predicts.

32. Secondary Research – General Trends • Tech Fights Effects of Frail Economy • Source: Philstar.com • Date: January 12, 2009 • Important Information: • With the global economy in crisis, even the new technologies could feel the crunch. A new IDC report finds more concern about the economy among SMB’s worldwide than interest in the most potentially innovative new technology. The study covered SMB owners from different regions to assess their current level of interest in or concern about future economic growth and business conditions, as well as four technologies (“green technology, SaaS, virtualization and online business resources) that could be considered “cutting-edge” for SMBs • “While there are differences across regions, SMBs in general are currently apathetic when it comes to new and emerging technologies, but are showing a great deal of concern when the discussion turns to economic issues.” • “Despite the economic down turn, higher demand for outsourcing combined with increasing externalization of custom application developments will drive IT services spending upwards by five percent this year.”

33. Secondary Research – General Trends • SMB Online Resources 2009: Next Generation Promotion and Business Development • Source: Ray Boggs, VP SMB Research IDC • Date: May 2009 • Although the growth in the number of new Web sites being created annually has slowed down, many of the current home pages are still very rudimentary and SMBs will need to invest in home-page upgrades and maintenance in order to enhance their online presence. The smallest firms will continue to prefer the do-it-yourself approach to website creation, but the very basic template-driven web sites often do not offer a sufficiently sophisticated image. • The opportunity to provide Online selling resources to SBs with websites continues to be significant -- only 16% of small firms with an Internet preserve are selling online.

34. Secondary Research - Application Usage • “SMBs as well as Enterprise companies will delay custom development projects and reduce costs by making due with off-the-shelf applications.”Ray Boggs IDC VP, Small/Medium Business and Home Office Research March 2009