Save the analysts: professional selling is needed to understand new needs

The world economy is now in a downward spiral which was avoidable but now places significant challenges for industry analysts and the ecosystem that exists around them. With this post we’re start a new series, Save the analysts, to outline how analysts firms need to respond. The starting point is that consulting and analysts firms need to start selling in a different way.

For almost all of the last decade, analyst firms have faced a continuous flow of demand. Now active demand is close to zero, especially for small and mid-size firms. Firms need to sell more actively, but many managers underestimate the challenging environment outside the pool of their strongest account. More hunting for business isn’t enough because the percentage of proposals that lead to sales is declining. Clients increasingly don’t have the budget, and need to use the analyst firms to help them to make the case to other colleagues for the budget to be released. Rather than selling one proposal in two or three, it’s now perhaps one in ten.

That is much more challenging for analyst-managed businesses. Analyst directors might have spent one day a week selling and the rest of the time following the market, working for clients and guiding their colleagues. Now that 20% is not enough and, indeed, it’s not just a question of time any more. Many firms just can’t conceive of the dramatic change needed in the way they need to sell.

The sellers of analyst services desperately need coaching and mentoring, especially now intermediary firms are taking bread from their mouths by advising clients on how to cut their spending with analysts. The profitability of each contract falls and, as we’re starting to see, some analysts and analyst firms are exiting the market as the volume and profitability of work declines.

Analyst firms are considered by some to be arrogant, and that self-orientation is reflected in their proud selling style. They won’t call back – especially the smaller firms. They don’t have the same motivation to go around gatekeepers. They are not so keen to get training, coaching and mentoring to see how to work better.

That creates an opportunity for the larger analyst firms, which are more professional in their selling, and for those analyst firms which are able to respond thoughtfully and strategically to the new environment. The go-to-market strategy of analyst firms needs to be more narrowly focussed. For all but the largest firms, one market segment is still large enough for most analyst firms to survive and grow in. However, that means that organisations need to start from the problems and opportunities facing the clients. In much the same way, we’ve argued for many years that ‘recession AR’ requires starting from the analysts’ needs rather than the vendors’ news.

Smaller analysts firms need to accept that to survive they may need to be more dependent on a smaller number of clients. As the number of new clients declines, revenue has to come from turning the better understanding of your existing clients into better solutions, which generate more value for clients, and thus secure the survival of their analyst suppliers.

Winning in a recession is certainly an issue of the volume of sales effort and the integration of marketing to business development. However, most analyst firms will need to get external support to create and push the strategy needed to grow value for clients. If you want some recommendations, drop us an email.