When analysts attack

Lighthouse often works with companies that have to deal with negative reports from industry analysts. Not every negative report need to be treated like a crisis, but negative reports generally indicate a weak relationship.

There are some very effective ways to improve relationships, but sometimes firms can’t wait to improve the relationship before they try to counter negative reports. Some negative comments or reports can have a real impact on businesses. In those very rare situations, where negative research impacts your business, we recommend four activities.

1. Classify the analyst’s comments. Because the analyst has to base their opinion on information that is public, they won’t have all the information you have. For that reason, you cannot expect analysts to come to the same conclusion as your firm unless you are very candid with them over a long period. You and your sales people should review the analysts’ comment to see which points have the greatest impact. There are two initial areas that you should focus on, and a final area to move onto.
• Which points can be shown to be mistaken on the basis of facts that are public?
• Which points can be shown to be mistaken on the basis of facts that you can make public to the analyst?
• What are the other points you disagree on?

2. Ask the analyst firm to discuss. After you have done your preparation, contact the firm formally. Do not be angry. Say that there is some important information that the analyst probably did not have to hand when writing the research. Say that this omission is having a big impact on your business. If you had the opportunity to see a draft, explain that this information is new. If you have not have the opportunity to see a draft, explain that you think it was very unusual to publish research without asking your firm for a comment. Either way, explain that you think this places a serious obligation on the analyst firm to review its research. Furthermore, if the research is being used by your competitors ask if the analyst has license that use to the competitor: there is a good chance the competitors are breaking copyright.

3. Give your sales people ‘silver bullets’. The analyst firm may take some time to respond to you. While that is happening, you need to give internal guidance to help your sales people defend themselves against the negative research. Give your sales people a memorandum that summarises the errors and cites authorities that take the correct view. Your sales people will be able to use the errors, and the other authorities, to suggest that the negative research is badly researched and cannot be trusted. Also look for comments that you can make about the authority of the authors of the research. For example, ask if they have weaknesses in the research methodology they probably followed.

4. Get new research published. If the analyst firm respects its reputation, they will supplement, correct or withdraw their research. If they cannot do that, then have a second, harder, discussion with the analyst firm where you present them with your silver bullets. Explain that even if only one or two of your points are accepted by journalists, other analysts or by their other clients, it will be a major blow to the credibility of all their other research if they are proven to be mistaken. If the analyst firm still cannot revise its statements, then other analyst firms will be happy to draft a report with an alternative viewpoint, especially if they are aided by your ‘silver bullets’. You may need to give some special encouragement to get alternative research drafted quickly, but your sales people will find it especially useful.

Of course, not every negative report should be treated as a crisis. Because a minority of analysts are really influential, some companies just ignore most of the negative coverage they get.

And, of course, not every negative report is unanticipated. Most analysts will give a draft of their research to vendors that are mentioned in the research. Sadly, sometimes analysts are not polite enough to give vendors advance notice. Furthermore, not every vendor reads draft research carefully — especially because the number of negative reports is reducing over time, as technology solutions get better.

P.S. A great additional comment just arrived from my colleague Michael Schneider: As an analyst with Gartner, one thing I wanted to avoid was basing my conclusions on incorrect information. Giving corrected information and semi-public information to analysts has two effects.

1. First, it provides the analyst a stronger basis for the conclusions drawn, most likely changing them.
2. Second, by providing additional information it goes to the analyst’s ego.

The corrections must be given first by telephone, and then followed up with an e-mail that provides the new and expanded information in a form that can be placed directly into the research.