Effective AR accelerates revenue growth

Industry analyst firms, like Gartner, AMR, Forrester, and Ovum represent a multi-billion dollar market of specialist advisory firms that consult to large enterprises on the basis of an independent research agenda. That influence is strong across almost every market sector. Analysts influence between 40% and 60% of commercial technology deals in the United States, and between 25% and 35% of those outside the US.

Vendors that get the analysts on their side grow faster. For most CIOs, the analyst is the most trusted advisor outside their personal network. Analysts are involved in selection decisions increasingly often. Analysts’ propensity to recommend a vendor is largely determined by the effort those firms put into building analyst relationships. And their influence is such that the firms that are in the top half at analyst relations grow their revenues 260% to 290% faster each year than those firms that are in the bottom half when it comes to AR effectiveness. Our research shows that effective analyst relations can add 6% or more to the annual revenue growth of many vendors

Analyst influence is highest in the market segments where IT is most central. In areas like logistics, distribution and retail analyst use is well above average. Furthermore, larger firms (those with above 10,000 employees) are more than twice as likely to use analysts as those with between 5,000 and 10,000.

Use of analysts varies between vertical markets. For example, in logistics and distribution buyers face tight margins and understand that the devil is in the detail. The pattern in this industry is of less regular, but larger, purchases. They involve analysts in most stages of the buying process, including the earliest ones. In the logistics industry, managers are especially likely to use analysts to discuss technical information, maintenance and implementation issues.

In finance, where technology directions are rather more certain, fewer analyst firms are involved at few stages. However, the speed and volume of changes in that industry means that analysts will be involved constantly. In particular, analysts are especially likely to be involves in short-listing and selections – so much so that hardly any major purchase fails to be influenced by analysts.

Duncan Chapple

Duncan Chapple is the preeminent consultant on optimising international analyst relations and the value created by analyst firms. As SageCircle research director, Chapple directs programs that assess and increase the business value of relationships with industry analysts and sourcing advisors.