If analysts use punitive pricing, then take the hint

In the follow-up to our post on high costs of analysts as speakers, there’s been a good follow-on question. If analysts’ managers don’t want analysts there, then there’s an opportunity for price-gouging. However, what does it mean for a vendor’s relationship with analyst firms? If analyst firms don’t want their analysts being used as speakers, perhaps you should take the hint and go elsewhere?

Managers at the analyst firms are, perhaps, conflicted: they want the analysts at work not at the podium. If you buy the analyst for two days, they will just deliver two days later on all their deadlines. The extra money improves the revenue but undermines some operational targets. Face-to-face engagements and vendor briefings take them away from their publishing targets, now set really aggressively at 30 Research Notes per year at some firms .

The high pricing for events reflects Gartner’s observation that marginal profitability is much higher on services with a low marginal cost, like research, than on consulting and speaking engagements. That’s a position we’ve commented on many times before. Other firms, such as Forrester, take a much more flexible approach to speaking engagements: clients can use service units to buy analysts time, leading to better value.

Many major analyst firms have the same issue: hitting targets for face-to-face engagements produces a double contradiction.If you sell and analyst’s time for custom preparation, travel and face-to-face work then that is not time they can spend on syndicated research. If you take the client’s money for a custom engagement, then perhaps that money is not available for more profitable research contracts: selling engagements means that analysts – and salespeople – can fail to meet their targets for research.

We can dispute how much analysts’ research relevance depends on face to face contact, but certainly their relationships with clients is greatly amplified by personal contact. Salespeople can only partly play that role of showing the analyst’s value to clients. As a result the analyst is similarly conflicted; it’s often not very interesting to speak at conferences and other events, but it can boost the ego, meet targets and lead to serendipitous connections.

So, this means that relationships with analyst firms, and analysts, just might be undermined, under some circumstances, by taking analysts away from pressured research schedules and buying their time as speakers.

P.S. I’ve edited this, and added the section in italics.

Duncan Chapple

Duncan Chapple is the preeminent consultant on optimising international analyst relations and the value created by analyst firms. As the head of CCgroup's analyst relations team, Chapple directs programs that increase the value of relationships with industry analysts and sourcing advisors.