In my last post and in response to a friend’s question about how to size an AR team, I offered some criteria for consideration. This time let’s turn the equation around and discuss worst practices that often lead to wrong-sizing and related performance issues with AR. Here they are in no particular order.
1. Early Stage Vendor Leans on Agency PR to do AR
The analyst relationships required to establish interest in an early stage vendor among the sometimes cynical lot of industry analysts requires trust – where the AR person obtains the proverbial “seat at the table” with the analysts. PR agencies often over-depend on social media, hard pitches, or analysts who only play to the media. The by-product is the start-up flies under the radar of the analysts with sway with real customers or potential partners. Emerging vendors are better off with a part-time AR contractor, or letting a product manager or product marketing handle the AR work; it more important to be real than over-hyped during the early stages.
2. Too many AR bodies in a single market
I know of a vendor that competes in a single market, but has 6 FTE AR personnel on staff. They have splintered their market so far that they end up confusing analysts, while spending more on headcount than any AR ROI metric could support. For most IT markets a vendor vies in, you need one AR lead, and one or a half-time backup if it is complex or covered by many analysts, or if you believe in back-ups (I do). The revenue and/or geographic diversity has to be there to support that additional requirement for AR bodies for a single market.
3. The wearing of two hats – AR and PR
Pretend an AR team has 9 full time bodies, but 6 of them have PR backgrounds, and the PR team constantly dips into that well of expertise to handle PR body shortages – which seem endless. On paper you have 9 AR heads, but in reality you might have 1 or 2! Why 1 or 2? The remaining AR types are so over-burdened by covering for those donning PR frocks, the AR types fry. I know of several cases, names omitted to protect the guilty, where this was rampant, and the AR program struggled even on blue sky days.
4. Drawing an exclusive correlation between revenue and AR headcount
Often AR team sizing discussions begin and end with relative revenue. However, a $30b vendor with a single product line sold primarily through channel might get away with a two decent AR people. A $10b vendor with several billion dollar product/service lines, mainly selling direct and taking AR seriously may legitimately require 7 AR people. Revenue is a factor, but it is not the only factor.
5. Forgetting about corporate
Pretend an IT vendor earns $5b in annual revenue, while competing in 3 distinct markets. One might guess that 3 to 5 headcount is needed, one lead for each market and maybe one or two junior folks acting as back-ups and handling operations. Ah, but what about STRATEGY?! What about the most influential analysts in the world who don’t just focus on a single market, like Crawford Del Prete of IDC, Ray Wang of Constellation, Rob Enderle, a bevy of the Gartner fellows, Ted Schadler or Chris Mines of Forrester, etc.? What about green, giving, R&D, sales, marketing, finance, operations and board structure and performance? An effective AR program has somebody, often the lead or one of the senior-most AR types, who handles the “corporate” role. Often that “vision” rating depends or is influenced by the effectiveness of a corporate AR practice. If the analysts never hear from the senior executives about strategy, vision and execution at the corporate level, the analysts will assume the worst (i.e. there is no strategy, vision or execution), which is never the right approach. So the worst practice is to not factor in headcount to handle the corporate AR functions.
Note: This is also posted on lefturnresearch, the blog of Evan Quinn, an IIAR board member.