Analyst Relations: Growing Relationships and Increasing Profits
Because of their relationships with the buyers of technology, IT industry analysts like Gartner, Forrester and IDC hold tremendous power over the vendors of IT products and services. While a vendor’s analyst relations program should be a strategic business tool, in most cases it is not, thus ceding power to the analysts. To smooth the power imbalance between analysts and vendors, the vendor community needs to develop world-class analyst relations programs.
Analyst Relations Management Issues
Welcome to the ARInsights Analyst Relations Best Practices. These Best Practices are written to helping clients begin and strengthen their IT industry analyst relationships through the development and maintenance of a world-class analyst relations program. We have created this practice area in response to a growing demand from the IT vendor community for a comprehensive and integrated viewpoint on analyst relations. The goals of the Best Practices are to assist our clients:
- Maximize the competitive advantage of their AR efforts
- Maximize the use of IT industry analysts as an important marketing channel
- Ensure that the IT industry analysts are not a negative impact on sales
- Maximize the money being spent with IT industry analyst firms
- Maximize the company’s understanding of the importance of analyst relations on the company’s success
- Raise the level of analyst relations (See SageNote “Styles of Analyst Relations: Don’t Be Stuck in Reactive Mode and Lose Sales”).
Analyst Relations: More Firms, More Analysts and More Impact on IT Vendors
Analyst relations became a front burner issue for many IT vendors in the mid-1990s as the IT industry analyst firms succeeded in convincing the buyers of corporate technology, typically IT managers, that the analysts hold the key to managing the risk associated with acquiring technology. This risk management function became even more critical in the late 1990s with the outrageous growth of venture investments in startups, the proliferation of Internet technology and the obsession with the New Economy. As a consequence, the IT industry analyst market itself has witnessed explosive growth in revenues (e.g., Gartner going from less than $90m to $1bn in a decade and Forrester experiencing near 50% CAGR in late 90’s) and number of analysts firms. A side effect of this growth in analyst firms (and new swarms of analyst firm sales executives) is that their influence with technology buyers and market watchers has reached new heights. Vendors of IT products and service have seen their sales and valuations fluctuate wildly depending on the published research and recommendations of the IT industry analysts.
Needed: A Sustained Focus on Analyst Relations
Because the typical buyer of technology relies — to a significant degree — on the advice, recommendations and market research of IT industry analysts, developing high level relationships and gaining mindshare with the analysts working at these firms are critical success factors for vendors. While a part of the influencer landscape (which also includes the press, financial analysts and consultants), the IT industry analysts require an approach that is unique in terms of information presentation, level of briefing and frequency of briefing. As a consequence, those vendors that succeed will be those that devote significant effort and resources to their analyst relations function. In any industry, senior executives would be remiss if they did not focus enough time and resources on financial analysts, but in IT industries, organizations need to devote just as much energy on the industry analysts. There is no quick fix for upgrading the analyst relations program. A sustained focus and multiyear budget commitment will be required to build the organizations, skills, tools and infrastructure needed. In addition, analyst relations needs to be an “all hands on deck” effort across the company, involving executives, product marketing managers, and marketing staff as well as analyst relations/Marcom associates. Furthermore, most vendors’ analyst relations programs require re-engineering, not tinkering around the edges. Only through radical changes in both processes and organization can analyst relations programs break the old mold of AR that was centered around the concepts and attitudes of public relations for the press. However, while radical re-engineering is needed, it must be implemented through practical, realistic and achievable action plans. AR managers’ challenge lies in achieving revolutionary goals through evolutionary steps.
Best Practices Agenda, Core Topics and Key Issues
These notes will recommend the best ways to implement next-generation analyst relations. They will deliver a mix of both tactical and strategic advice, as well as case studies and best practices reports. Because of a lack of solid information about the IT industry analysts, their practices and their impact, an immediate task for the Analyst Relations Best Practices will be to dispel the FUD (i.e., fear, uncertainty and doubt) that surrounds the IT industry analysts.
Hyper-competition and Internet time are constantly increasing the demand by end users for research from IT industry analysts, thus raising the bar for analyst relations programs. As a consequence, IT vendors ignore analyst relations at their own peril. Insufficient attention to analyst relations will have a negative impact on a vendor’s ability to grow revenue and increase profits.
Appendix A: ARInsights AR Best Practices
Core Topic: IT Industry Analyst Market Analysis
- What are the key trends in the IT industry analyst marketplace?
- What will be the impact of analysts at financial firms (e.g., investment banks and brokerage houses) on technology buyers? How does the emergence of financial analysts as advisors to technology buyers affect vendors’ analyst relations decisions?
- How will the evolving business models of IT industry analyst firms (e.g., more emphasis on premium consulting) change how vendors approach briefing the analysts?
Core Topic: Analyst Firms Selection and Contracting
- Why should vendors of technology subscribe to IT industry analyst firms?
- What will be the decision criteria and evaluation methodologies for choosing which analyst firms to subscribe to?
- How will analyst firm’s contracts be managed to ensure access to critical research, appropriate expenditures, and effectiveness as a relationship-building tool?
Core Topic: Analyst Relations Management Issues
- What will be the staffing requirements of a world-class analyst relations organization?
- What are the appropriate components that should go into an analyst relations budget?
- Where should the IT industry analyst relations function fit into a corporate structure?
Core Topic: Analyst Relations Best Practices
- What are the characteristics of a great analyst presentation?
- Which analysts deserve to be considered tier 1, 2 or 3? How does the tiering of analysts impact the resources and techniques used to influence them?
- What should go into a balanced scorecard for measuring the effectiveness of the analyst relations function?
Core Topic: IT Analysts and their Impact on Vendor Sales Cycles
- How do IT industry analysts impact the sales process?
- What are the best practices for a sales executive when confronted with a negative analyst report?
- How should background about the IT industry analysts be incorporated in the sales training process and content?
Core Topic: Analyst Relations Outsourcing Issues
- What is the role of third party providers (e.g., PR firms and marketing consultants) in the execution of analyst relations?
- What will be the decision criteria and evaluation methodologies for choosing analyst relations outsourcing resources?
- How will analyst relations outsourcers be managed to ensure quality, cost effectiveness and performance satisfaction?