[Duncan Chapple and colleagues at Brodeur Worldwide prepared this advisory note for clients of Omnicom in 2002.]
Despite the importance of technology market analysts in communicating vision, direction, and capability to the market, many companies don’t bother to pursue relationships with them. Of the ones that do, there are many whose outreach is half-hearted, shoddy and slapdash. A lot of vendors spend a million dollars, or more, every year buying reports, analyst time or commissioning analysts to produce white papers or market research, thinking they are doing analyst relations. However, that is different from convincing an analyst of your argument. Some analysts, particularly the likes of Forrester and Gartner, are increasingly concerned with the need to be seen as independent and will not write bespoke white papers for vendors. A commercial relationship with an analyst house will not make analysts more sympathetic to your company. At the very most, this might get you a single sit-down meeting.
What wins the respect of analysts is actively helping them with their research. This is especially important when analysts are estimating the size and market share of your company and its competitors. Many companies don’t help analysts with shipment and revenue figures, only to suffer when analysts’ figures underestimate, or even eliminate, a vendor’s role in a market. The most effective way to build a relationship is to work to the agenda of the analysts, not of your marketing plan. So, how should vendors go about building relations with analysts? Here are seven principles drawn from our experience over 40 vendors’ analyst relations programmes.
1 – Have ongoing communication with analysts
Analysts are most interested in real, long-term relationships. They can only recommend technology vendors who they know and trust, it is no use seeing them only once or twice, and then disappearing. Infrequent, news-driven and amateurish outreach does not produce good results, and sometimes can damage your company by suggesting that your company cannot deliver what it promises. At best, an amateurish approach tells the analysts that your company has good technology but is flaky as a business and cannot be relied upon to provide long term vision or understanding of the market. At worst, analysts will dismiss you as a technology vendor without a serious business plan and without credibility in the market.
Analysts know that relationships should be long-term and two-way: this is the only way they can continually renew the deep understanding of the technology landscape that their end-user clients are paying for. Briefings and updates must happen periodically throughout the year, though this should only be one part of a structured AR programme. Just as your briefings should give analysts the information they need (rather than just your sales pitch) you should back up briefings with ongoing communication.
This approach necessitates a sufficient investment in time and resource, so that tailored materials can be developed, which need to differ from those used with journalists and prospective customers if they are to be effective. Don’t keep the analysts updated with press releases, unless of course they ask for them. Instead, use tailored and waffle-free information and ensure that any requests analysts make are followed up. In short, stay at the front of their mind – and therefore on the tip of their tongue whenever they are discussing your market with anyone, including technology purchasers.
2 – Do analyst relations in every country where you want to sell
Many vendors say ‘we only meet analysts in the United States – we don’t need to in Europe.’ While yes, it’s true that analysts follow technology which is usually available on a global basis, the European market may well have different points of view and important nuances that an American analyst may not be au fait with. This is why the global analyst houses all have major European bases. The reality is that knowledge does not simply percolate between analysts’ US and European offices. Vendors need to foster relationships with individual analysts in every important market.
Furthermore, it is not enough to give European analysts US-centred information from US spokespeople on flying visits. Analysts’ clients often only want products or vendors that have succeeded in a similar business context – including geography.
Local spokespeople need local client case studies and references that prove how companies deliver real value. A German retailer will want to know which technologies have been successful in Dortmund, not Des Moines. Even in a more international sector, such as corporate finance, a Spanish bank will still most likely speak to a European-based analyst when looking for recommendations – even if that analyst ends up suggesting technology he has seen deployed in New York.
Indeed, this point goes a step further. Pan-European analysts tend to follow more specialised technologies, so many vendors of niche technologies only need to brief one or two people in each analyst house. However, one analyst will often follow large market segments in each country, so vendors need to brief analysts in every major country. The bottom line is the same: if you are selling into a country, you must be prepared to win over the analysts based out of that same country so that prospective clients are surrounded with analysts that know your company.
3 – Be honest and consistent
Analysts are intelligent people. Many vendors patronise them with over-simple hype designed to stamp two or three “messages” indelibly upon the analyst’s brain. Certainly, analysts are overloaded with information and inundated by technology vendors. However,
vendors that have been ‘spun’ and ‘messaged’ by amateurs all look identically “unique” and “leading”. Very often, vendors show no credible understanding of all the topics analysts are concerned with; their marketplace, real proof of how they deliver value to customers, etc. Analysts are not stupid, treat them with respect by placing your consistent strategy and effective implementation into their industry context.
4 – Fit into their box, but don’t make it a coffin
Technology marketers wax lyrically about how a new product will ‘revolutionise a market’ or ‘shift a paradigm’. Analysts raise an eyebrow at this. They make sense of markets and client challenges by drawing up market scenarios, technology architectures and capability models (such as Gartner’s Magic Quadrants) to categorise the landscape they see before them.
Clever vendors will relate themselves to the models and methods used by individual analysts and areas of coverage. This means using the same terminology as the analysts as well as addressing the issues that grip them – and of course these will differ between analyst houses. This also means using numbers for the number crunchers, techno-speak for the infrastructure guys, applications for the software ones and case studies for the analysts providing advisory services.
Even more care is needed when vendors take a step further. Executives and analysts must often choose which market segment a product should be positioned in. For example, the functionality of one vendor’s software could be grouped by analysts with products for sell-side ecommerce, CRM, e-CRM, content management, business applications or enterprise portals. This either boosts their percentage share of a market, for instance, or suggests the technology is ahead of its competition technically – but it can also misposition products into more glamorous, but less appropriate, markets.
5 – Focus on the analysts who influence customers, not the easy analysts
Different analyst houses have widely differing reputations and influence. Vendors often spend all their analyst outreach time with analysts who are easy compared to their competitors. Easy to meet, easy to get praise from, easy to get supportive writing from, and easy to get to speak to a journalist. Analyst outreach is a waste of time when vendors focus their time on relationships with easy analysts.
Two sorts of vendors fall into this mistake:
Vendors who trust their analyst relations work to media relations specialists. Media relations consultants often offer analysts relations as a free service on top of media relations. It’s free, and worthless. Overwhelmingly, media relations consultants will prioritise identifying analysts who can be easily led into supportive quotes for the media (the jargon for these analysts is ‘mouths on legs’). Vendors invest huge amounts of resource with these pliant analysts, who rarely criticise, love to be in the media and are easily led.
However, rent-a-quote commentators have little credibility with technology buyers – if the only people who praise your company are these people, then your company will look worse than if they had said nothing about you. US-headquartered vendors are often used to happier and less challenging interactions with US analysts, especially at the analyst houses they are major customers of. European analysts are generally more critical and less pleasant to be with. Unprepared US executives often find this unreasonably discomforting, and their European colleagues avoid responsibility for this discomfort by making sure that spokespeople meet mainly ‘easy’ analysts. Of course, this does no-one any favours. The vendor wastes time: the influential analysts never meet senior spokespeople and become increasingly critical.
6 – Send in your top people as well as your techies
Many analysts demand (and are flattered by) audiences with top executives and will look upon your company favourably when they get them. The best analyst relationships are ones in which company strategy can be influenced and tuned during briefings. To do this
effectively, a vendor needs to field its strategists and decision-makers. Furthermore, analysts with profit and loss responsibility have a burning interest in meeting senior executives because they tend to control budgets for spending with analyst houses. However, executives often don’t know their products and services in depth (to say the least!). Any company wanting to get the most out of analyst relations – including sales leads, strategy guidance and the benefits of a ‘relationship’ – should use a mixture of technologists, marketers and implementation experts, and its executive team.
7 – Draw a roadmap and stick to it
Aside from showing analysts that you exist and are here to stay, the most important thing to do is draw a roadmap and vision, then show how you are sticking to it and moving forward. This is fundamental to achieving the aim behind all this analyst relations work – increasing sales. If the analysts are to recommend your company and products, they must believe that there is a plan. The executives in a briefing should be able to point to strategies and explain what the company is intending to do, and where, when, how and why the company is intending to do them. This can be done under a non-disclosure agreement if necessary, and analysts will want proof in future briefings that this roadmap was not just a PowerPoint fiction. There should be no public strategy changes without pre-briefing and explanation to analysts, and no surprises, especially ones that an analyst might find out about by reading the press. In relationship terms this is like the celebrities who dump their unsuspecting partners whilst live on air: relationships are built on closeness and trust, and the more that is put in, that more one gets out.
Why these rules matter
Although high-technology market analyst consultancies have existed since the 1960s, the industry has mushroomed since the mid-1990s. By 2001 Darwin had concluded that “Corporations pay technology analysts $15 billion a year for unbiased technology research”. Gartner, the largest analyst house, reflected much of the industry as it grew its revenues from $225m in 1994 to $904m in 2002, equal to an annual growth rate of 19%. This revenue reflects valuable advice given to enterprises which use analysts to decide which technology to buy. It’s increasingly common to hear vendors say that several of their largest deals came from analyst recommendations.
Industry analyst houses – Gartner, Forrester, IDC, and many others – have a pivotal role in the technology sector. Acting as middlemen between all players involved, acting as an industry ‘lubricant’. An analyst’s duties can focus on writing research and attending vendor briefings, but most analysts also undertake client consulting, speaking in public and talking to the press. Some analyst houses separate analysts and consultants into separate teams but a company that consulted without doing basic research would not be an analyst house. Overwhelmingly, the analyst houses’ income comes from enterprises and service providers seeking guidance for their technology investments. These companies are the IT industry’s central point, the link between companies with IT budgets to spend and vendors whose technology is worth buying. Their analysts’ goal is to advise their clients, evaluate the technology and – ultimately – to offer value to the people who use them, whether IT vendors on the one hand, or IT buyers on the other.
This dual audience, often with seemingly contradictory interests, is important to understand. When paid by technology end-users, the main source of revenue and reputation for respected analyst houses, analysts need to offer frank recommendations on purchasing IT, what technologies to investigate, or even what to buy. Analysts don’t only do that through research papers, benchmark studies and on-site visits but also informal queries by phone and email.
When hired by a vendor, they need to offer constructive feedback, respect the vendor’s confidence, and make them feel that they are getting an even-handed and fair appraisal, as well as the prospect of sales leads if the vendor’s technology impresses. Their customers
know that analysts’ greatest assets are their deep professional knowledge of their technology. However, trust, credibility and reputation are almost as crucial: nothing damages an analyst more than recommending vendors which go out of business or – worse still – technology that doesn’t work.
High-tech buyers and the analyst community
The real power of analysts is their hold over technology buyers. Buying technology is a long, tortuous, and risky road. Everywhere along it, technology buyers will refer to research, attend analysts’ conferences and ask them how to simplify procurement and minimise the risk always present in a new technology purchase. Kensington Group, which analyses the analyst companies themselves, estimates that between 40-60% of technology purchases is directly influenced by analyst recommendations. In Europe, that’s more than €125 billion which analysts push in the direction of technologies and vendors they believe in.
This influence is concentrated in the market for technology bought by businesses. Nobody consults an analyst before buying a £49.95 PC game, but analysts influence most sales worth over $100,000. Analysts are more likely to be consulted where there is technological complexity, an accelerating speed of change, and where the purchase is highly material to the core processes of the buying organisation.
An analyst may be asked to sketch the technology options available at the earliest planning stages (‘Our company needs to connect better with customers – what can we buy?’). As the project gets underway (‘What exact questions do we need to ask these technology vendors?’) the analyst can be intimately involved with drafting of ‘requests for proposals’ and ‘requests for information’ as well as drawing up long and short lists of players they know and trust. After this, analysts will often be drafted to make sense of and judge the proposals the hopeful vendors send to the purchasers.
With all this influence, it is clear why vendors want and need industry analysts to be favourable or neutral. Analysts can recommend that their clients consider vendors, give one technology or approach a more favoured status, or even fast-track a
vendor to a final short-list for a purchase that analysts think a company may ‘fit’.
This isn’t all, though. Even the vendors themselves are tapping into the analyst pool, using analyst insight to plan. As well as offering buyer’s advice on what to buy, they also advise vendors what to sell, by pointing out possible strategies, improvements and industry directions. As the industry ‘lubricant’, they are the best-informed ‘connectors’, who can tell you who is doing what, whom to look out for, and which companies could be your top adversaries or partners.
They also wield a great influence in the public sphere by speaking at conferences and shows to countless top people – maybe even name-dropping a company or running through a case study – and by talking to the press. Journalists are increasingly reliant on analysts, turning to them for neutral comment when writing news stories and features. Many journalists form symbiotic links with analysts, who dole out wise words which lend credibility to an article, in exchange for publicity. By briefing analysts in advance of major announcements, vendors can ensure that analysts are able to give independent comment as soon as major announcements are made – and help analyst houses to increase their own media profile. It’s easy to see how an analyst can have a devastating impact on an individual vendor.
It’s not an overstatement to say that analyst houses are central to the technology industries. The seven principles laid out share the first lessons we learnt, but remember that analyst relations are not a science. Building relationships is an art; having someone who knows the analysts and understands the issues is crucial.