Leaf Software Solutions is a value-added reseller that offers full service implementation, training, support, and services for both Microsoft Dynamics GP and Microsoft Dynamics CRM. Facing downward pressure on IT spending among customers and prospects, Leaf’s management reasoned that the only way to increase profitability was to drive more volume—adding new customers quickly by focusing on smaller deployments and smaller deal sizes. The volume approach required the company to transform many aspects of its Microsoft Dynamics business, changing its approach to marketing and sales. The strategy has paid off, delivering short-term gains—Leaf has added twelve new ERP customers in the past twelve months—while laying a solid foundation for recurring revenue from managed services and cross-sell opportunities for years to come. Situation
Two years ago, Leaf Software Solutions had reached an inflection point. The company’s Microsoft Dynamics business had been flat or declining for about a year, and management knew they needed a fresh approach to the enterprise resource planning (ERP) market.
In business for 25 years, Leaf offers full service implementation, training, support, and services for both Microsoft Dynamics GP and Microsoft Dynamics CRM. Customers tend to be small- to mid-sized companies within a few hours’ drive of Leaf’s central Indiana headquarters. Because of slowing economic growth over the past few years, Leaf had seen customers and prospects in this segment become slower to spend and increasingly reluctant to commit to major IT projects.
|We’re willing to grow with our clients. We’ve never had an issue talking to high-growth companies about small deployments.|
| Dave Reed|
Director of Business Development
Leaf Software Solutions
Facing downward pressure on IT spending among customers and prospects, Leaf’s management reasoned that the only way to increase profitability was to drive more volume. “We needed to add customers, and we needed to add customers quickly,” summarizes Dave Reed, Director of Business Development at Leaf. “This required a fundamental change in the way we approached the ERP business.”
Leaf Software focused business development efforts on opportunities they knew they could close in a compressed sales cycle, determined to add customers in ‘waves’ that would generate immediate revenue, as well as providing a dependable long-term annuity stream as Leaf continued to service these customers throughout the ERP lifecycle. The strategy required sweeping changes in Leaf’s approach to marketing, sales, and even certain aspects of service delivery. The results are undeniable: in the past twelve months, Leaf has added 12 new ERP customers, while shortening the sales cycle from an average of six months to less than 90 days. Solution
The transformation resulted from a major shift in how everyone at Leaf thought about the ERP business. Rather than pursuing the biggest deals, Leaf’s management places priority on closing more, smaller sales. In the short term, Leaf places more value on adding new, fast-growing customers than driving high-revenue implementations. Over the longer term, these customers represent substantial opportunity for additional services and software sales, creating a dependable source of on-going revenue.
“We’re willing to grow with our clients,” says Reed. “We’ve never had an issue talking to high-growth companies about small deployments; for us, it’s more a question of what does the company do, and how strong is their leadership. If they have the potential to grow, it makes sense for us to invest in them as a client. We’ve had some very small, local deals that grew into very large, long-term accounts.”
A New Approach to Sales
The volume approach started with Leaf’s business development team, who are willing to pursue a smaller customer or a five-seat deployment with the belief that as Microsoft Dynamics GP helps Leaf’s customers grow, the size of accounts will grow as well. This mindset required a shift in sales tactics, as the business development team sought to support broader sales with limited deployments—at least in the initial engagement.
This typically means that sales conversations focus on a single business problem or a narrow set of users to close the initial deal. “We’re committed to the Microsoft Dynamics GP space, which tends to be a smaller number of licenses,” explains Reed. “So, while we’re adding more customers, they might be smaller in terms of the number of seats they license initially.”
Reed notes that sales people show limited software demos, presenting a subset of ERP functionality that relates directly to a particular prospect’s business challenges. “Before, we were guilty of ‘show up and throw up’ syndrome,” he recalls. “Today we spend a bit more time on needs analysis and qualification before we show them anything at all, and we show them much less when we do. Our typical demo showcases only the particular features of Microsoft Dynamics GP that are important to the customer, and it’s almost always out-of-the-box, with no custom functionality.”
Effective In-Bound Marketing
Striving for volume also required a shift in how Leaf marketed services, and even how the company represented its brand. In the past, the company had spent on direct mail, direct email, and telemarketing campaigns, with limited success. And it knew that the relatively high cost of these traditional marketing efforts wouldn’t scale to the new philosophy. Instead, Reed set out to strengthen the in-bound marketing engine and bolster Leaf’s digital presence while building awareness in the community.
To tackle in-bound marketing, Leaf first relaunched its web site, including a search engine optimization (SEO) effort that consistently ranks the company in the top-ten local results on major search engines. The site also displays links to social media channels, including YouTube, Facebook, LinkedIn, and Twitter, which help the company connect with new prospects as well as long-time clients.
Leaf maintains brand awareness by advertising on radio and online. To reinforce the company’s thought leadership locally, Leaf founded a Microsoft Dynamics user group and reached out to the Microsoft representatives in the region. Today, Leaf maintains a pipeline with a steady stream of prospects obtained through these referral channels as well as a lead subscription service that generates three to four qualified leads per month.
“We attacked lots of different avenues,” says Reed. “We needed to let people know we were available and in the market. We needed to build name recognition in our community. Before, people didn’t know who we were. Now, when people locally talk about Microsoft Dynamics, Leaf Software is a name that’s recognized.”
Consistent Service Delivery
Leaf’s consultants have always received glowing reviews from clients, and the company was careful not to interfere with a proven model for service delivery. On the execution side, the company’s transformation is reflected in the adoption of packaged offerings and special offers as an entry point with new clients, along with a deliberate effort to identify each customer’s future enhancements or upgrade path. In addition, Leaf has identified an additional service model that will be driven by the rapid growth of Leaf’s customer base.
Start with a packaged offering or special offer. While many partners eschew packaged solutions for fear of commoditizing their services, Leaf has embraced packages, along with special offers promoted by Microsoft, as a low-risk way to open a conversation with a prospect—and a faster way to close.
|Microsoft promotions have driven lots of smaller deals for us. Generally speaking, if the program is good, then the leads are good, and it shortens our transaction time substantially.|
| Dave Reed|
Director of Business Development
Leaf Software Solutions
“In the end, 99% of your customers need a unique solution,” reasons Reed. “So why not use the package or the offer as a conversation starter? Microsoft promotions have driven lots of smaller deals for us. Generally speaking, if the program is good, then the leads are good, and it shortens our transaction time substantially.”
And while the size of an individual deal may be smaller, the increased volume has ensured that Leaf’s utilization rates are higher than at any time in the past, which has enabled them to protect their rates and maintain billings throughout the recent downturn. “In the end, our customers hire us to solve business problems, not just to install some software,” says Reed. “So, they expect to pay an hourly rate that’s commensurate with any other professional services provider. “
Work with the customer to develop a roadmap. Particularly with smaller customers or on smaller deployments, Leaf consultants work with clients to develop a technology roadmap. The advanced planning not only helps clients manage IT costs over time, it provides Leaf with concrete long-term projections of cash flow from existing accounts.
Reed recalls a client who took advantage of a recent special offer to deploy five licenses of Microsoft Dynamics GP for US$3,000. “They’re implementing Microsoft Dynamics GP Advanced Management this summer,” he notes. “But we’re planning to deploy payroll in December, and then we’ll add Microsoft Dynamics CRM in the first half of 2013. So, while it was a very small deal up front, the amount they’ll ultimately spend with us is significant.” Benefits
Leaf Software Solutions’ new approach to the ERP market delivers short-term gains while creating a solid platform for sustaining future growth.
Dramatic growth. Since recommitting to the Microsoft Dynamics practice, Leaf has recorded 25% year-over-year growth, and forecasts over 30% growth this year. The company has added 12 new Microsoft Dynamics GP customers in the past year, with eight of those in the last six months. In addition, it maintains staff utilization rates consistently above 85%, with a backlog of implementations scheduled nearly three months in advance.
Shorten sales cycle. As the number of deals has increased, the duration of the sale—from initial conversation to signing the contract—has shortened substantially, from an average of six months to just under 90 days.
Lower cost of sale. In addition to shortening the time it takes to close an ERP deal, Leaf has reduced the cost-of-sale for each engagement by nearly 15%. Cost savings can be attributed to the increased effectiveness of in-bound marketing efforts (while abandoning more expensive, less successful efforts like direct mail and telemarketing) as well as limiting the scope of customer demos to a narrow set of relevant, out-of-the-box features.
Sustainable, long-term growth. As Leaf helps its customers grow, the company will be well positioned to grow alongside them. Given the traditional longevity of the ERP customer and the relatively low cost of marketing to existing customers, the rapidly growing customer base will provide tremendous opportunity for up-sell and cross-sell opportunities, along with recurring revenue from subscription-based services. Microsoft Dynamics
Microsoft Dynamics is a line of integrated, adaptable business management solutions that enables you and your people to make business decisions with greater confidence. Microsoft Dynamics works like familiar Microsoft software such as Microsoft Office, which means less of a learning curve for your people, so they can get up and running quickly and focus on what’s most important. And because it is from Microsoft, it easily works with the systems that your company already has implemented. By automating and streamlining financial, customer relationship, and supply chain processes, Microsoft Dynamics brings together people, processes, and technologies, increasing the productivity and effectiveness of your business, and helping you drive business success.
For more information about Microsoft Dynamics, go to:
www.microsoft.com/dynamics For More Information
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