Why analyst firms back analyst relations

Clay Cocalis, the vp of worldwide sales for TowerGroup, focusses on three clusters of buyers:

“We typically don’t sell into the sales organization, we mostly go into analyst relations, marketing or to the C level Cocalis says.

Cocalis’ comments reflect one of the most startling effects of the growth of analyst relations: AR is now a major influence on vendors’ spending with analysts, and is even a major buyer in its own right.

As spending on outreach to analysts has grown, so has investment in associated areas, such as training, research and measurement. However, the biggest change is in spending with analyst houses. Vendors have started to realise that core research doesn’t been to be bought from the same firms from which it buys consulting and custom research. Furthermore, the resources which can be freely allocated between analyst houses has grown, as spending on research by vendors has become separated from spending on custom research and advisory days. That disposible budget is partly in the hands of analyst relations.

Attending events like Gartner’s Symposium, one can see that the rapport between vendors’ AR manager and analysts’ account managers has shifted. The buyer has more power.

Unusually, this is good news for analyst firms. Generally, they discourage increased buyer power. However, the rise of AR as a buyer suppliments buying by competitive intelligence and market information units within the same vendor organisations. A buyer in AR gives the analyst firm more entry points and more ways to show value.

Of course, AR is also buying with increased budgets. The whole customer opportunity is worth more for analyst firms. That’s why the fastest growing analyst firms tend to be the ones that are putting the most effort into encouraging vendors’ analysts relations functions to grow. The more analyst firms help AR managers to show their value, the greater AR budgets will be and the greater the opportunity the analyst firms has to create value.

The end point of all this is shown by looking at where TowerGroup is already: using analyst relations as one of its three main entry routes when selling into vendors.

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.