[voice over regarding recording]

Peter Koning: All right, Janine, do we have you there?

Janine Soika: Yes, I am here.

Peter: Great, so Janine I think we'll just dive right in here, and maybe you can tell the audience just briefly what your role and title is at Verio? And then a little about your philosophy on the channel marketing, -- resellers, affiliates, partners -- and then get into some more specifics on your programs?

Janine: Sure, sounds good. I'm Janine Soika, I'm the marketing leader for our channel marketing program. What that means is that we have basically three ways that we provide our services to the market today. We sell direct to small and medium sized businesses through the verio.com website. We also sell indirect through channel partners. We have two indirect channel partner streams.

We have the affiliate and resellers and then we have the OEM channel partners. The OEMs are large telecommunication companies, basically household names. Telecommunication companies you would readily know/ However, I can't name them specifically due to NDA.

The area that I'm responsible for is the affiliate or referral partner program and the reseller or wholesale partner programs. So, I'm responsible for generating new partner recruits that sign up to become partners in our program, as well as providing additional value and benefits into our existing channel partner program.

Peter: And how long has Verio had these programs?

Janine: The affiliate program and the retail program have basically been in place for at least seven years. They've been around almost from the time Verio has been established as a business. The difference lately has been that there's more of a renewed focus on growing Verio's business through indirect channels. In the beginning of January, 2009, the executive VP Steve Renda.  He's the executive VP of global sales and marketing - announced a formal strategy that Verio was going to try to drive all of their business through the indirect channels, through our channel partners. And we've made significant investments and hired dedicated resources just to support our affiliate and channel partner programs, so that we can move the company in that direction.

Peter: So there's definitely an increased spotlight on your affiliate and reseller programs?

Janine: Absolutely, it's a focus of the organization. It is a key strategy for how we're going to grow and expand our business in the marketplace. Right now we have strong penetration within the North American market. In 2010 we're going to start more aggressively marketing internationally and globally into the Asian markets as well as the European markets.

Peter: Would that mean you would be interested in hearing from partners, whether affiliates or resellers, in, for example, the Asian market? Or would it mean that you'd be offering North American affiliate market to Asian customers in those markets? Or is it a bit of both?

Janine: It's more of the former than the latter. So it's actually launching marketing campaigns where we would attract international based partners, partners that live and reside in Asian or European countries that want to sign up and be a part of our partner program community. Indirectly we will be helping existing U.S. based partners also expand their business and grow globally. But really, our global approach is one more of marketing to those local partners in those international markets and getting them signed up with us in our partner program.

Peter: Great. One of the questions a lot of people always have is: how do you manage all this, just from a technology point of view? Do you have your own custom platform inhouse or are you using an affiliate network? How is the back end being managed both for yourself and for the affiliates?

Janine: That's a great question. For the affiliate program, which we refer to as our VIA one partner program, we do have a third party tool that we have implemented this year to improve our ability to track and to make the commission payouts to our affiliate partners. This tool is one of the best of breed in the marketplace and we have successfully implemented it over the summer. What it does is it allows us to have new affiliates sign up with us. They go through a formal sign up process where they fill out what we call a partner agreement. And they register and get assigned a specific URL that is designated for their company only.

And whenever they refer an opportunity to us through their own marketing efforts or on their website, there's a cookie that's attached to these referrals that come to us that identify these referrals as referred customers from this particular partner.

So we're able to more accurately, and in a more automated manner, track the referrals that come to us through the affiliate partners and ensure those affiliates are being accurately paid for the business they're sending over to Verio.

Peter: And do you have any feedback from your VIA one program affiliate partners on the new platform?

Janine: Yeah. The feedback that we've gotten is that existing partners of ours -- in what we used to call the Warp program -- they've noticed an increased improvement in the tracking and also in the payouts they've been getting. So, they like the new tool. They like the new system that we have in place. And the same goes for new partners. We haven't had any complaints or problems coming from any of those. So we're really happy with the tool that we implemented and it's working very well.

Peter: That's great, because as you know, it's important for affiliates to have that feeling of trust with the merchant that they are going to be rewarded for their efforts, right?

Janine: Absolutely, and the one thing I can say to that is that when there is any kind of question that is raised, we will always decide in favor of the partner. Because we are so channel-centric, and so committed to growing Verio's business through our channel partners, we want to do the right thing for our channel partners. If there's ever a dispute or a question about a payment, we will always err in favor of the partner and on the side of the partner. We recognize the value they bring to our organization and to helping us exponentially grow through their sales efforts and initiatives.

So, we want to compensate them and treat them with the respect that they deserve, and give them the consideration they deserve for the effort they're putting out there to promote our services.

Peter: That's good to hear, especially for the new ones that you'll be approaching in these other markets. I think affiliate marketing, although it's still kind of new here in North America, in Europe and Asia it's kind of the leading edge marketing concept. And the fact that you're willing to stand behind your affiliates out there, I think that's going to help reassure them it's a solid business model and that you'll be there to support them.

Janine: I also want to note that, although I said that we're going to aggressively pursue international markets, we already have a significant international partner base in both our VIA one affiliate partner program and our VIA three reseller partner program. And that's just, really, by happenstance. I think that just having our name out there and getting the word out there on our website, and some of the online marketing activities that we've done. We've picked up some international opportunities just as a byproduct. So I'd say about 25 percent of our existing partner base is already internationally located. And then moving forward, we want to further grow that and increase that.

The other thing I wanted to elaborate on, is that we talked about operational tools that we have in place for partners, but we didn't talk about the sales organization and the marketing organization that we have available. And I just wanted to touch on that a little bit, as well.

Peter: That was my next topic anyway, so go ahead.

Janine: I'm getting ahead of you. What we've done is something very unique, that I've not come across in the industry or in the marketplace. I don't see any other managed computing or web hosting service providers doing what we have done. We literally reorganized our sales team around the need to support our partners and their businesses. And what I mean by that is, we formed what we call Viaverio Sales Teams. The acronym is VST's.

The Viaverio Sales Teams consist of four to five team members, each of which has in-depth expertise on specific product areas that we sell. They're all assigned what we call a Channel Account Manager who oversees the VST team and helps give them direction and guidance regarding the Verious partners that they support.

All of our partners, when they sign up with us, whether they're a V01 affiliate partner or they're a Vua three reseller partner, they all are assigned a dedicated Verio sales representative. Our strategic accounts, those would be partners that provide the highest volume of business to Verio. They're assigned what we call a Channel Account Manager and the other partners are assigned Verio sales reps.

So everybody has a designated point person within Verio. These point people act as their personal consultant to help them understand the Verio product offerings that they can re-sell and to also help them strategize on how they can grow their business.

So for instance, if they're a partner who's used to selling. Let's say, our Shared Hosting Plan, these sales reps and CAM's as we call them, Channel Account Managers, can help our partners expand their offering beyond just Shared and start selling the mid range hosting service which is called VPS, Virtual Private Service or even the higher end hosting services which are called MPS which stands for Managed Private Servers.

And we also have some add on services, DNR and DNS services. We have some staff offerings. So these assigned Verio sales reps can help meet and consult with their partners one on one, understand where their personal business goals, what do they want to achieve as a business owner.

What type of end customers are they going after? How can they best market to those customers and what additional product offerings does Verio have available might align best the needs of their end customers?

In addition to all of that, we also allow our partners some leverage, these VFT's, to do outbound calls to prospects and/or existing customers to help increase their sales.

So in other words, a partner can come to us with a marketing campaign idea and we'll work with them to help solidify and validate that campaign. And if they need help identifying a prospect list we can lend them that support. If they need help with the creative or even the campaign strategy we can help give them guidance on that, as well.

Then they can watch the campaign and they can leverage the Viaverio sales team as a virtual sales team that makes outbound calls and follow up calls to the prospects and/or customers that they want to campaign to, to help them increase the likelihood of closing additional business with them.

So these two things alone really make our program stand out from all of the other service providers out there.

Peter: Definitely. I haven't heard of such a sort of organizational structure and view, on how you can support your partners. Normally, I take equal things as partners as doing all that on their own. And for in and outsource marketing arm of the merchant, in this case, of Via Verio, but it sounds like you're almost flipping around some cases where you're like the marketing department for the partner, right?

Janine: Yes we certainly lend a lot of support in that area.

Peter: Now would that apply to affiliates as well or is that more targeting the resellers and the higher end partners that you're talking about?

Janine: No, this support is available to both type of partners - the V01 partners, the affiliates and the referral partner program as well as the reseller. Affiliate partners can also take advantage of these marketing and support sales opportunities that we have available to partners.

Peter: Excellent. That's wonderful. That's great to hear. Do you have some maybe little success story you might want to share with us as far as how a partner might have either been supported and results that they got or some other success stories around the partner program that you have?

Janine: Yeah, we've had a number of partners. This is a new benefit that we launched the beginning of this year. We had about six partners take advantage of this managed campaign support benefit that we provide. And all six of them participating in this have seen a lift in their revenue and their sales by at least 20 percent lift. So it's been phenomenally successful. I think a lot of that success is due to the commitment both by the partner and the Verio team that is supporting them in doing the campaign.

There are steps that we go through in this process to insure that the campaigns are successful. We don't want to waste our partners' time nor do we want to waste our valuable internal resources time. So we spend a lot of time up front, making sure that the campaign is a rock solid campaign that is well thought out and well executed upon. And because of that we've achieved really great results to date.

Peter: OK. Great. I guess, in general, how would you - obviously Verio is, like you said at the beginning, putting a stake in the ground as far as trying to grow your business through indirect channels. Do you have some, you don't have the numbers, but do you have some information you could give us as far as how the partner program compares to e.g. your direct marketing campaigns you might have just reaching out into the market place?

Janine: I can say that, again prior to January 2009, a lot of Verio's business came through the Verio website from direct end user customer opportunities, direct S & B's basically. And I don't have the exact numbers but I would say that probably 80 percent of our overall business came through direct and 20 percent came through indirect. Since we made the change in January 2009 and as you can imagine this is a significant change for any organization to go through and make a commitment to become 100 percent channel centric .

I would say that we've shifted that revenue split to be at least 50 percent or more of our business now coming through indirect channel partners and half of it is still coming through direct.

What I want to note, though, regarding the business that is coming through still as direct business, what we're doing now with those direct opportunities is we still have the inside sales team taking those inbound calls. But now they are qualifying those opportunities and they're handing over ready to purchase sales opportunities to our partners.

So this is not even a lead generation program where you just get a warm lead or cold lead that some other client might be doing. This is an actual ready-to- buy opportunity handed over to a partner.

So where it makes sense and where the partner can fulfill the needs of that end customer, we are sending over those as direct business directly to our existing partner base. Another unique benefit that Verio's providing that, as far as I know, no other provider in the marketplace is doing today.

Peter: Definitely, and it's kind of interesting because just in general, when you think about online marketing. Everybody has been talking for about 20 years, since the Internet came out, about how the Internet will cut out the middleman, right? And then kind of allow companies to deal direct with customers, But what I'm hearing from you is actually an interesting twist on that, which is, sure, you definitely have direct channels here to your markets, to your customers. But you're leveraging the partner program to contribute even more to your sales. That's kind of an interesting outcome, I think, considering what I said earlier about how people viewed the Internet as being kind of cutting out the partners but it's actually going the other way with you guys.

Janine: Yeah, you're absolutely right with that observation in the market. However, in the managed computing or web hosting space that we operate in, we as an organization recognize that it is a very fragmented industry. There are literally hundreds of providers out there and players in this space. Really to grow our business at the pace that we want to grow, working through indirect channel partners is really the best option and the way for us to develop and grow our business moving forward.

What it does is it allows us to take advantage of the increased market exposure that the partners provide. They have the relationships with the end customers that we want to reach and they act more or less as an extension of our sales organization.

So we don't have to invest in hiring additional sales team to try to get more feet on the street, to try to get the word out and sell more Verio products.

We have channel partners that are doing that for us. And in the way that we strengthen our relationship with the channel partners is that we keep building in additional value into our partner program that makes it easier for them to sell and service our products to their end customers.

So it's a win-win relationship for everyone involved. The partners get outstanding benefits and support from Verio. Verio gets the benefit of the partners' relationship with the end customers which further increases our sales revenue opportunities.

We also provide very attractive, very competitive partner commissions and margins. In our VF3 partner program our partners are able to purchase our plans for up to 45 percent off our suggested retail price.

And the reason we can do that is again, we are off loading some of the business responsibilities onto those partners. They're taking on the sales responsibility. They're taking on the billing responsibility, and they are also taking on the technical support responsibility for those end customers. Therefore, we pay them quite handsomely for their ability to do that.

And in turn, they get to make an incredible margin on reselling our solutions.

Likewise in the Via three partner program we also have very attractive program benefits for those partners. If you shop and compare other hosting providers that are out there in the marketplace you'll find that a lot of them are offering a one time payment for referral opportunity.

Peter: Right. Like a CPA type or pay-per- lead type of deal.

Janine: Absolutely, that type of compensation. All we do is we make it a recurring, ongoing, monthly commission payment. So for most of our products that are VF1 reseller partners can resell, they receive a commission payment of 15 one size percent of the suggested retail price of the product that they refer to us. The customers that they refer to us, the product they buy, they get the 15 percent monthly recurring commission payment.

Now it varies a little bit from product to product, you know, on all of our shared BTS product offerings they get that 15 percent.

On our MPS which is the managed private servers, our higher end hosting product and our Microsoft-hosted exchange product, they get a 10 percent commission.

So extremely generous commission payments for those products and the reason the commission payments are slightly less on those products is those products quite frankly are more costly for us to deliver. We can't allow or provide the same margin as the other offerings.

But still when you factor that and you think about somebody who really wants to build up a referral business, you can see very quickly how they can reach some significant monthly recurring revenue volume by just adding a handful of customers that stay active or add additional plans to their account.

And that's one thing we also do and other programs don't. If you refer a customer to us and they buy the thing, our share plan, you know our low end $9.95 a month plan, that's nine dollars and ninety-five cents a month.

If they buy another product from us, you still get the commission payment for those additional subsequent products they buy. So it's just not that one product that's sent over to us that they buy, you get paid on all the services they buy from Verio for the life of that account. Extremely generous affiliate partner programs compensation.

Peter: So I am going to...at the bottom of this interview when I publish it, I will have a link for people that urge to them being affiliates to find out is there something. Is there some other channel or some other way we want to...

Someone is listening to this and they are beyond maybe an affiliate?

Maybe let's say, some kind of a...you know a data storage consulting company and they have maybe some, quite a few customers that might want some hosting. So maybe they're better suited to the reseller or maybe even possibly the VF3 program, is there some way that I can refer them to you or to in addition is there somewhere else on the site we should be sending them?

And I can put that link on the bottom of this interview transcript, but I just was wondering if there's some...should they all go through the same affiliate partner first or what do you think is best?

Janine: There's actually two different sign up processes for the via1 program, from the Via F3 program. And we have an 800 sales number that they can call. And they can speak to a new partner recruiter who can advise them as to which program is best suited for them.

Really the key differentiator from going into Via one versus Via 3, is can they provide billing and can they provide end user customer technical support.

If the answer is yes, they are most likely best suited for a VIA three partner, reseller program. Because they'll receive the highest commission payments in that program.

If they cannot do the listing, or they cannot do the technical support, they have to do both, the billing and the support.

They can't do one or the other, then they need to go into the VIA one affiliate partner program. And again, our new partner recruiters, can consult with them, find out which program is the best one for them to go into and then help them enroll. Help them get signed up.

So yeah, we do have links, we can send them to the link where they can sign of for the Via 3, we have a link where they can sign up for the Via 1, but maybe the best way to do it is just to put that 888 number down, that sales number, so that they can just call directly and consult with a new partner recruiter.

Peter: Yeah. I'll do that for sure. I'll make sure I get the right number after the call and put that down there. So that's awesome Janine. I think we can wrap it up soon. I know you have another call to go to. Is there anything else you wanted to add as far as the Verio partner programs?

The philosophy, what makes it different?. You truly answered the uniqueness part, definitely there is some key apps up there as far as support you are giving them.

Janine: Yeah I can't think of anything. I mean is there anything that stands out in your mind?

Peter: Not really. I'm just surprised to hear there's so much there. Verio in my experience has been a little bit under the radar. People don't even realize that it's powering Twitter and some other major sites out there. And this is what I think another little sort of gem discovered about the full partner program. So that's all really I had to add to it. But I'm likely surprised, I think that you know there's so much available there to support someone who wants to get into this business.

Janine: Yeah. There is a lot of support. And we are trying to get that word out in different online marketing mediums that we're using and press releases and stuff like that. Granted, our website could probably do a better job at promoting it as well. We are re-launching and redesigning the ViaVerio website which will be either two hand scooters, a public facing front which will be our marketing recruitment tools when we do online partner recruitment campaigns we'll send folks to the public ViaVerio site to learn more about the VIA one and VIA three partner programs and to enroll and then there's also the private portal that all of our partners have access to.

I guess I didn't talk about that on the interview that in addition to the sales and marketing support that I already discussed there's also the private partner portals where they have additional access to training webinars, specific marketing collateral that's pretty much drop your company name and logo and go.

You know you can print any...you can leave, private label it for your own end customer marketing campaign. And then there's some other tools in there like the Via mail tool that lets them create direct postcard campaigns, mail campaigns you know within minutes.

And they can launch a campaign within literally minutes. And some other tools available in there as well.

Peter: That's great. Awesome. Well, thanks so much Janine for your time on the call and I'll get that 1-800 number off to you afterwards and get it up on the blog as soon as I can and really appreciate taking the time to talk some more about the Verio partner programs.

Janine: Why thank you Peter.

Peter: OK. Thanks. Talk to you soon.

Janine: Bye-bye.

Peter: Yeah. Bye.

• Call toll free 888-224-9346. 
  
• or visit www.viaverio.com