Styles of Analyst Relations: Don’t Be Stuck in Reactive Mode and Lose Sales
Of the four styles of AR (i.e., firefighting, reactive, proactive and pre-emptive) most organizations dwell in reactive, or worse, firefighting. Both of these modes can have a negative impact on sales and revenues. IT vendors should focus on developing a proactive AR style at a minimum, with an eventual goal of moving into a pre-emptive style.
Vendors of high technology products and services have much (e.g., awareness, revenue and valuation) riding on their relationships with the IT industry analysts like Gartner and Forrester Research. So it is surprising that many vendors take an approach to IT analyst relations (AR) that seems haphazard or random. Part of the problem is lack of understanding of analysts and their impact on buyers of technology. Another problem is confusing the IT analysts with the press. Regardless of the reason, vendors need to take a much more systematic approach to dealing with the IT analysts.
It is useful for vendors to evaluate their current style of AR as this will indicate what needs to be done to improve the AR program. By using ARInsights’ model, vendors will also see the implications of not moving the AR program to a higher level. We have categorized the styles of AR into four types: firefighting, reactive, proactive and preemptive with the following definitions (see Table 1 for style characteristics).
The firefighting style of AR is one where a vendor deals with the impact of analysts as opposed to dealing directly with the analysts. Typically, the vendor’s sales force is trying to do damage control because analysts’ research either ignores the vendor or gives the vendor a very negative description or rating. A vendor with a firefighting approach, because they do not interact with the analysts themselves, is doomed to be defined by the uninformed analyst.
The reactive style of AR is one where a vendor answers questions initiated by the IT analysts, but does not actively reach out to IT analysts. Because the IT analysts do not necessarily contact every vendor for every piece of research they publish, vendors are constantly fighting ratings and recommendations based on old information.
The proactive style of AR is one where vendors reach out to IT industry analysts to ensure current information is available for the analysts. Vendors in this style are often quite content with the state of their IT analyst relationships because they appear favorably in ratings and rarely get excluded from short lists.
The preemptive style of AR is where vendors are constantly in contact with IT analysts on issues beyond merely updating information on the company and products. For this style, the goal is not merely having a good flow of information, but influencing how the IT analysts think about a market or issue.
Table 1: Characteristics of Analyst Relations Styles
General Analyst Perception of the Vendor
Impact on Sales
|Loses sales opportunities||Makes sales more difficult||Gets short list placement||Generates qualified leads|
|Degree of Interactions with Analysts||None to minimal||Only when an analyst calls or infrequent updates||Regular, usually quarterly and major announcements||Consistent, 1 to 2 times per month on various issues|
|Picking the Analysts to Brief||No idea||Haphazard or whoever calls||Researched||Segmented and prioritized|
|Corporate Commitment to AR||None||Extension of PR||Management commitment of time and resources||Laser focus across company|
Categorizing the styles of analyst relations is not merely an academic exercise as the state of analyst relations can have anywhere from a negative impact to actually generating qualified leads. In firefighting style, a vendor is confronted with skeptical analysts who only mention the vendor to the vendor’s prospects in order to say that this vendor should not be evaluated. This can have an impact that is never “seen” as this “avoid recommendation” results in lost opportunities never even perceived by the vendor. The opposite is true for vendors who invest in achieving preemptive style. Having a deep and positive relationship with the analysts actually because the vendor is not just put on shorts list, but is often mentioned as a leading example during conversations, teleconferences, speeches and published research, leading to greater awareness and consideration among buyers.
Vendors need to evaluate where along the AR style continuum they fall. It is important not to sugarcoat or come up with excuses as to why they rate negatively on a particular characteristic (e.g., how analysts are picked). This evaluation will determine how serious the AR problem is and the amount of incremental effort the vendor needs to put into its AR program.
Organizations then need to decide whether their analyst relations program should be focused on the proactive or preemptive style in order to maximize potential revenue opportunities. Because it is more expensive and difficult to achieve a preemptive style than a reactive style, vendors should carefully consider choosing the preemptive style. Preemptive style is appropriate for vendors in fast moving, volatile markets with competitors aggressively pushing technological and marketplace leadership issues. While there is an upfront expense and the challenge of cultural change to achieve a preemptive style, payback should take less than one year.
Commitments that need to be made to reach either proactive or preemptive styles include:
First and most important is the commitment by the executives themselves. Nothing signals to the organization the significance of analyst relations more than executives who make very visible their support for AR. This includes not just signing AR budgets but also running political interference for AR, conducting reviews of AR plans and making their time available to the analysts.
The second most important commitment is for appropriate staffing. AR is a very “people” activity, similar to direct sales. In fact, the vendors best at AR treat their AR personnel as account executives not as typical marketing staff.
It is important to also allocate monetary resources to handle expenses such as travel, development of an analyst portal, materials, outside resources like a PR firm, analyst roundtables and summits and other items.
An important commitment is that of planning. Too often vendors take a fire-aim approach to AR, in many cases wasting time and resources on activities or analysts with little return. AR programs need to invest in developing an AR strategic plan and researching which analysts deserve attention.
Finally, there has to be the commitment to having an “analyst relations is important” attitude across the organization. Nothing damages the building of a solid relationship with an IT analyst more than someone not returning the analyst’s call or e-mail because the vendor associate is “too busy.”
The bread-and-butter activity for IT analysts that focus on advising IT managers is creating short lists on what technology products and services they should buy. A short list consists of the vendors, usually three to five, that an IT manager should contact to have a sufficiently large enough pool of competitors to meet purchasing best practices but not so large as to waste time and effort. Competent analysts ask their clients a series of probing questions to determine what the client really needs and then matches up the vendors that meet those requirements. If an IT analyst does not have the most current or complete information about a vendor and its products, then it should not be surprising that the vendor is not added to a short list they are qualified to be on.