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How Infor Protects its Reference Budget in a Downturn

Posted by Bill Lee on December 3, 2008 at 12:53 PM

Following is the most powerful justification I’ve seen for protecting a reference program’s budget and headcount during a downturn. Infor’s Abby Atkinson – who’ll be presenting at the 2009 Customer Reference Forum - used it to reverse a request that she cut discretionary spending by 10%, and instead received a 64% increase in funding for her program.

She did this by answering two critical questions, using both internal research,  and external research from other reference programs:

1. What is the impact and cost of having a sales rep hunt for his or her own reference?  That is, what would it cost to have no reference program, or an underfunded one?

2. What does it cost to have her reference program fulfill such a reference request?

Abby showed how much time each reference request fulfilled by her reference program saved a sales rep – time better spent out selling (especially precious in a downturn) rather than digging for references. Multiplying that by the number of Infor reps worldwide, Abby showed that freeing up that amount of time would result in $3 million in extra sales using conservative and well accepted  assumptions.

As a result, the request that she cut discretionary spending in her program by 10% was withdrawn, and instead she won a 64% increase in funding for her program.

Abby will present at the 2009 Customer Reference Forum (February 18-19). See my interview with her, below.


Abby's been working in marketing for high tech companies throughout her career, and has helped evaluate and initially develop reference programs with previous employers. 

Infor makes business software better by acquiring and improving proven, functionally-rich software backed by domain experts. Infor improves it via continuous innovation, faster implementation options, global enablement, and flexible buying options. In a few short years, Infor has become one of the top 3 leading providers of ERP business software. Infor's revenue is $2.2B and it has over 70,000 customers and 125 direct offices.


Q. In the face of proposed budget cuts to your reference program, you developed an analysis showing cost of a dedicated reference team vs. having sales people hunt for their own references. Can you flesh that out for us?


A. While we were developing our fiscal plans and budgets, we felt we needed a thorough analysis of our program costs in order to build a justification case for this year's budget. We compared the program costs (and efficiencies) against having no program / database, in order to give a good picture of the overall value of our program and staff. We concluded that by  having a program in place, we saved the company over $600,000 in total for the year. The impact of those figures certainly influenced our budget approval.


Q. You were also able to analyze how frequently sales people were able to match reference requests before the Infor reference program got started vs. how often the program is able to provide reference matches now.


A. What we actually analyzed was the impact and cost of having sales reps hunt for their own references. Based on the number of reps in our company and an average time for a typical search, we determined that sales reps would spend over 13,000 hours (globally) trying to fulfill their own reference requests. That's a significant amount of time the reps would spend NOT focused on selling. In fact, that represents the number of hours that six newly hired sales reps would spend annually to bring in an additional (and very conservative) $3M. In other words, if sales were to fulfill their own reference requests, the firm would lose $3M in sales per year, in addition to the actual cost of processing each request.


Another issue is that sales reps would end up with a high degree of frustration trying to manage this aspect of the sales cycle. In addition, there would be no monitoring or managing the utilization of our customers, and the customer burnout rate would be extremely high. 


In contrast, by having a formal reference program and dedicated team to handle fulfillment, it actually saves the company money, while also protecting the customers and offering a consistent approach to messaging and building relationships with these valuable accounts. By having a reference management system in which all references and activities are tracked, we're able to fulfill over 75% of all reference requests within a short timeframe. In very simplistic terms, we found that the discretionary budget for our formal program was less than a quarter of the cost (we took half the time it took a sales rep to find a reference -- at half the cost).


Q. Can you give us an idea of how much the proposed budget cut was, and how much it was increased, after you provided these analyses?


A. Initially, we were asked to cut discretionary spending by 10% compared to the previous year. Because we could demonstrate the massive savings the program will deliver to Infor (and by providing detailed metrics), it made sense to increase funding for the program. As a result, we were able to secure approval for a 64% increase in funding for the new fiscal year.


Q. Tell us a bit about your monthly reference program reports. They tend to be quite diagnostic, allowing you to pinpoint and correct problems with the global program. Can you give us some examples of problems you've identified? What actions are you taking to correct them?


A. It was very important for us to model our measurements against our company's business plan. We compared the percentage of total revenue goals per region against the number of requests per region and determined that one region was significantly under utilizing the program. We also were able to show that because that same region had fewer qualified, approved references in their area, the time to close each of their requests was considerably longer than other regions. This provided us with the insight and ammunition needed to address the issues with that region.


Our monthly reports also help us perform gap analysis and identify those key areas where we have a high volume of requests with an insufficient number of qualified references. Since this flags a potentially serious problem of customer burnout, we launched 1-to-many forums (which we call Customer in Action Forums) for these key products to alleviate the burden on the customers, while at the same time providing sales reps with a tool to proactively use references in the sales cycle.


Q. You've also used your monthly reporting to get an increase in headcount for your program approved. Can you flesh that out for us?


A. Using historical data, we showed a projected increase in the number of reference requests we expected to handle month-over-month in the coming year. Using queuing theory to predict reference manager utilization capacity, we provided quantifiable evidence that additional staff would be needed at specific intervals during the year.


Also, as a manager, I use the monthly metrics to monitor my employees' performance levels. The detailed measurements allow me to set very specific goals and objectives for each reference manager and check their progress throughout the year.

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