Businessmodel of Paycom

Customer Segments

Paycom has a mass market business model, with no significant differentiation between customer groups. The company targets its offerings at firms of all industries and sizes.

Value Proposition

Paycom offers three primary value propositions: convenience, risk reduction, and brand/status.

The company offers convenience by making life simpler for customers. It provides an end-to-end solution that covers all parts of the employment lifecycle, including Talent Acquisition, Time and Labor Management, Talent Management, Payroll, and HR Management. In addition, the system is based on a single platform, so clients do not have to access, update, or integrate multiple databases.

The company reduces risk by maintaining high quality and security standards. It uses 256-bit encryption technology, 24/7 system monitoring, and multiple offsite backup locations. It also has ISO 9001 and ISO 27001 certifications and completes SOC1 reports  and SSAE16 attestations of its internal controls every six months.

The company has established a strong brand due to its success. It has over 15,000 clients and serves customers in all 50 states in the U.S. It has an average annual revenue retention rate of 91% from existing clients. Lastly, it has also won many honors, including the following:

• Recognition as one of the Fastest-Growing Private Companies by Inc.
• Recognized as one of the Best Medium-Sized Companies to Work For by Glassdoor
• A Stevie Award for Sales Department of the Year in the Financial Services category
• EPCOR David DeMarea Payments Innovation Award
• Leadership 500 Excellence Awards from HR.com ### Channels

Paycom’s main channel is its direct sales team, which includes field sales and inside sales employees. The company promotes its offerings through its website, social media pages, search engine marketing, e-mail and direct mail campaigns, industry-specific print advertising, and trade shows.

Customer Relationships

Paycom’s customer relationship is primarily of a self-service, automated nature. Customers utilize the service through the main platform while having limited interaction with employees.

The company’s website has a “Resources” section that includes useful tools such as white papers, calendars, podcasts, infographics, webinars, calculators, and videos.

That said, there is a personal assistance component in the form of support from a dedicated specialist and Paycom University, a free training and certification resource that shows customers how to optimize their HR technology.

Key Activities

Paycom’s business model entails maintaining and updating its platform for customers.

Key Partners

Paycom’s key partners are the suppliers that provide it with the materials it needs to maintain its platform.

Key Resources

Paycom’s main resources are its human resources, namely the technology employees that maintain and update its platform, the sales personnel that promote it, the training employees that provide instruction, and the customer service employees that provide support.

It maintains important physical resources in the form of data centers located at its corporate headquarters.

Cost Structure

Paycom has a cost-driven structure, aiming to minimize expenses through significant automation. Its biggest cost driver is sales/marketing, a fixed cost.

Other major drivers are administrative and research/development expenses, both fixed costs, and cost of revenues, a variable cost.

Revenue Streams

Paycom has two revenue streams:

• Subscription Revenues – Revenues it generates from fees it charges clients for subscribing to its main platform
• Service Revenues – Revenues it generates from fees it charges clients for implementation and other services