Analyst Relations Worst Practices
I’m a former industry analyst. In that role, I worked with hundreds of startups and dozens of large, established vendors, and I can honestly say that many of them don’t get analyst relations (AR) right. Hopefully, this document will serve as a guide to rethink the value of analysts and how the AR programs are developed.
AR can go wrong for two main reasons:
In most cases, vendors think about industry analysts as market influencers, strongly opinionated and equipped with a big megaphone, capable of reaching, without particular merit other than the established brand they work for, those organizations that could become customers.
Nothing could be further from the truth.
The aforementioned perception comes from a strong cognitive bias rather than a true understanding of what analysts do*. In fact, the majority of vendors I worked with completely ignore how industry analysts develop their strong opinions, and what’s the true value they have to offer.
The reality is that analysts develop their opinions after hearing tens/hundreds of organizations per year (it depends on how big the firm is) at an individual level, and hundreds/thousands of organizations per year collectively, discussing their interactions within the analyst community (if you think that your threads in the corporate mailing list are long, think again).
Here lies the true value of an industry analyst: being a collector of the overall market sentiment towards a technology, a product, or a vendor. His/her position is molded by what customers keep reporting in analyst enquiries**.
Listening to what an analyst has to say, and asking the right questions about his/her audience, a vendor can get an invaluable feedback about that portion of the market that cannot be reached yet (and sometimes also the one already acquired). That feedback is precious and second only to the feedback that the sales organization collects in the field.
Vendors that don’t get analyst relations right, usually fall in one of the following three camps, sometimes shifting from one camp to another as their exposure to the analyst community increases:
Ignoring the pundits
This is the category of vendors that perceive analysts in the worst possible way and tend to have zero or minimal AR. In my career, I heard analysts being referred to as pundits that spend all their time theorizing from their ivory tower, completely out of touch with what the market really wants.
Part of this belief comes from the fact that industry analysts are mostly known for their predictions. The data points they collect in their interactions with a multitude of organizations worldwide, and the patterns that they identify in the ocean of data they collect, is often turned into trend analysis and the subsequent generation of a series of predictions.
However, like any professional in any industry, analysts do mistakes and can go, sometimes, horribly wrong.
It’s a fair expectation that analysts don’t do mistakes in their prediction, given the impression that predicting trends is their main job. And every time a prediction is wrong, faith in the analyst community gets seriously tested.
Vendors in this category fail to realise that there’s a much more reliable part of the analyst job, the data gathering and interpretation, which is where most value can be extracted from.
This state of mind usually lasts until the first few prospects counter the sales or marketing statements with some research published by one or more analysis firm. At that point, this category of vendors has no choice but move to the next camp.
Dealing with the necessary evil
This is the category of vendors that believe analysts have nothing particularly valuable to offer but given their enormous influencing power, they must be dealt with.
Part of this belief comes from the assumption that the vendor itself talks to organizations as much as the analysts do, and so every feedback that must be captured will be captured. Of course, this is not the case.
First of all, organizations that talk to analysts are infinitely more candid about technologies, products and vendors than they would ever be with the vendor itself. Not only the nature of the relationship entices a straightforward conversation, but that relationship is also protected by a confidentiality agreement. There’s no confidentiality agreement between vendors and their customers or prospects.
Second, industry analysts almost always talk to many more organizations than the vendor possibly could. Individually or collectively, the analyst community gets pinged by or proactively reaches out to organizations worldwide, regardless of industry, geography, corporate size, function, persona, etc., building a far more comprehensive and structured view of the world than the one any vendor out there ever could. Even the biggest vendors, with sizable sales organizations, which in theory could collect many more data points, in practice cannot rival with a professional analysis firm, as the former is not trained and organized to collect and interpret data like the latter.
The vendors that fall into this category perceive AR as a waste of time that could be dedicated to something else, like marketing activities, without realising that analysts can be the most valuable feedback mechanism available to understand why the companies that are not their customers are not their customers.
Sometimes, champions of the analyst community within the vendors in this category can help them shift to the next camp.
Confirming a bias
This is the category of vendors that actually believe analysts have a value, just the wrong one: supporting with quotes or written research whichever position is the most convenient to the vendor at any given time. In cognitive psychology, this is called confirmation bias.
The vendors that fall into this category will actively seek (or even request to produce) any bit of information that can be opportunistically placed in a presentation, marketing brochure or press announcement. Anything else, especially adversarial evidence, will be systematically ignored.
Selectively, the analysts will be trusted or not trusted according to how aligned their position is to the vendor’s strategy. If one analysis firm is not confirming the bias, the vendor will seek an alternative opinion in competing firms until the bias is fully validated.
The implications of this approach can be devastating. First, it’s impossible to find the truth: no matter what’s the vendor position, given enough time, some evidence to support it will come up. Second, a continual reinforcement of a bias progressively pushes vendors out of touch from what the market is really asking for (i.e., Drinking the proverbial Kool-Aid).
Regardless of what camp a vendor belongs to, there’s a series of common mistakes that most vendors do and that should be avoided as bad AR practice:
- Pitch the analysts in same way customers are pitched
- Pitch the analysts with too many / the wrong representatives
- Not understanding how to get analyst momentum
- Brief and forget
- Not studying the analysts
- Not having a mechanism to process and incorporate feedback
- Not understanding what’s the goal of the analyst
Pitch the analysts in same way customers are pitched
The most typical mistake a vendor does with analysts is pitching them in the same identical way end user organizations are pitched. End users and analysts are completely different audiences that look for completely different sets of information in the interaction with the vendor.
End users’ top priority is understanding:
- if a vendor can solve their problem,
- how reliable a vendor is as a business partner,
- what products and features the vendor offers to solve that problem,
- what’s the effort required to implement them,
- how much they cost.
Analysts’ top priority is understanding:
- how the vendor differentiates itself from its competitors in solving a customer problem,
- how many (and what kind of) customers are already using its solutions in production,
- how healthy the business is,
- how much the ecosystem around the products is growing,
- what’s the vision behind all of that,
- what the strategy to execute that vision is.
As you can see, the two audiences have dramatically different priorities, and yet too many vendors start their briefing by explaining to the analysts what’s the problem that they are trying to solve.
Unfortunately, almost always, the analysts knows the problem much better than the vendor, for no other reason than the analysts talk to very many customers that have that exact problem. And customers that have a problem are acutely aware of the problem.
Moreover, and more amusingly, all vendors that compete to solve a certain problem describe that problem in the same identical way, because unless they got it completely wrong, there’s not much creativity you can (or should) put in describing the problem. So a vendor that dedicates half of the analyst deck describing the problem has unknowingly produced a presentation exactly identical to the one of all its competitors; to the point that nobody would notice a difference if the logos would be swapped between decks.
Of course, analysts want to know about the first five bullet points, but if they did their homework they already have that information, at least at a high level, and their interaction with the vendors should focus on that for the shortest amount of time possible.
Pitch the analysts with too many / the wrong representatives
Another common mistake, only affecting large vendors, is allowing too many company representatives to speak to analysts. The more a vendor grows, the harder it gets to keep every employee on the same page, and be sure that the company message is divulged clearly and consistently.
Nothing compromises the analyst’s trust in a vendor more than lack of coordination and cohesion across the many departments of the organization.
Sometimes there’s no fragmented vision of the world, but some employees can’t resist in putting a personal spin to that vision, impacting the analyst perception in a negative way. Other times, the fragmented vision of the world is an actual issue and it becomes more obvious as more employees talk to the analysts.
Not only it’s critical that a vendor keeps the message coherent in all interactions with the analyst community, but it’s also critical that those interactions are optimized to put the analysts in front of whoever has the broadest understanding of the vendor’s strategy and is the best at communicating it.
Not understanding how to get analyst momentum
Analyst momentum comes from customer adoption, not marketing effort.
After analysts have acquired the information detailed in the previous section, their second highest priority is talking to customers. That activity is vital to independently verify the marketing claims and assess first-hand how a technology actually performs in production, what are the challenges to make it work, if there’s any change of mind after the initial commitment, and any other precious data point that a vendor wouldn’t normally share.
Some vendors don’t put enough effort in providing customer references (which can be exceptionally hard to obtain, in all fairness), or enough details about each customer reference. Unfortunately, a customer logo on a slide is not particularly impressive to the eyes of an analyst because he/she sees a similar slide from pretty much every other competitor, sometimes the very same day. The so-called Nascar slide is more about feeding the ego of the vendor than helping the analysts do their job. Analysts have to go deeper and understand if a vendor’s technology has been implemented in production rather than being just a proof of concept, how extended the implementation is (i.e., corporate-wide vs. departmental), and so on.
Other vendors mistakenly assume that appearing in a research paper is an indicator of momentum within the analyst community. That’s not the case. An analysis firm featuring a vendor in a research may have very many reasons to do so, including being comprehensive for the sake of accuracy. Being mentioned in a paper doesn’t equal to being endorsed unless it’s explicitly so.
Hence, the marketing efforts a vendor dedicates to get noticed are not even remotely as valuable as the efforts to constantly provide new and detailed customer reference stories to the analyst community.
Not studying the analysts
Another typical vendor mistake in AR is coming to the meeting with the analyst completely unprepared. Like any seasoned sales professional will confirm, knowing your interlocutor is critical and helps you get the most out of the interaction.
Preparation is not just about having a full understanding of what is the area of coverage of an analyst, and what is his/her recent research all about. Preparation is also about reading those research papers, and watching the videos of his/her presentations on stage (if there are any), and reviewing his/her social media footprint (if there is any). All of this is beneficial to understanding where the analyst’s mind really is and how much his/her thinking aligns with the one of the vendor.
In fact, not every analyst is straightforward in communicating impressions about the vendor, especially during the briefing with them. In that context, multiple social dynamics are at play and it can be hard for an analyst to express exactly how he/she feels about a vendor or their products. The assumption that an analyst likes the vendor just because he/she has been very friendly and polite during the meeting is flawed.
Additionally, during a meeting, an analyst may not have a fully formed opinion about what’s hearing/viewing and may need more time to digest the information and come to a conclusion. That opinion further shapes up as the analyst talks to the vendor’s customers, competitors, competitors’ customers, other analysts, has hands-on sessions with the products, and so on.
The only way to fully understand what analysts thinks about a vendor and its offering is for the latter to ask straightforward questions, keep asking, and observing all the ways analysts express their opinions about the industry.
Given that the analyst community is quite big, this is a lot of work and possibly the hardest part of any AR program. The more a vendor invests in this, the more rewarding the AR program will be.
Brief and forget
Many vendors assume that after the analyst has been briefed once, he/she will remember forever, and everything about, the vendor. That’s not the case. A really good analyst that is in demand can easily be briefed by 200-300 vendors per year. Sometimes, multiple competitors on the same day.
As much as a good analyst tries to stay on top of his/her game, it’s just too much information to be retained. Sometimes vendor presentations, especially the non-memorable ones, get archived and forgotten forever. Also, vendors can change their strategy often if they are struggling to get market traction or must react to disruptors entering their space, and those frequent changes are not always captured by the analyst community without proper guidance.
All of this means that vendors need to work really hard to help the analyst community in staying up to date with what’s happening on their side of the house.
In my career, I heard more than once vendors complaining that AR is too much effort and that analysts don’t do enough on their own. The reality is that an analysis firm is usually very, very resource constrained and infinite fewer capabilities to keep up with the evolution of the entire IT industry than anyone could ever imagine.
Ultimately, it’s in the best interest of the vendor to be sure that the analyst community has all the information available to develop a well-informed opinion. Being front and center in an analyst mind should be an imperative for any AR program.
Not having a mechanism to process and incorporate feedback
Those vendors that fall in one of the three camps described at the beginning of this guide have no genuine interest in the feedback that analysts can provide during an interaction.
Even if an analyst has expressed a valuable and constructive criticism, most of the times, it doesn’t get registered, processed and incorporated in a structured way. It’s up to single individuals in the meeting room and their personal skills to capture the feedback and leverage it in the most appropriate way across the complex business dynamics that regulate the vendor’s activities. Which leads, in most cases, to no follow-up action or even discussion about the feedback.
The analyst feedback comes, once again, from his/her perception of the market as it’s shaped by the multitude of conversations with the end user organizations. Given this, that feedback should be considered worth of a debriefing and a serious reconsideration of the choices the vendor made up to that point.
I’m not suggesting that the analyst feedback should get the highest priority and be incorporated at all costs. A vendor hopefully has a clear vision of what’s trying to accomplish and not everything is shared with the analysts, so sometimes the latter may lack the context necessary to understand why certain recommendations won’t be implemented as suggested. Nonetheless, the analyst represents the customers and as such the feedback he/she provides should be formally reviewed.
Not understanding what’s the goal of the analyst
The ultimate goal of an analyst is not to be right or to call the vendor’s baby ugly. The ultimate goal of an analyst, or at least a good analyst, is to protect end-users’ interests, to stand for the customers.
Most analysts really want to make the world a better place, in their own way. If they perceive that vendors are not listening to what the market wants, they criticize whatever is necessary to criticize, until the optimal solution for the market needs is released.
In theory, vendors should want the same thing as, needless to say, offering the market what the market wants translates into more business. Hence, rather than perceiving the analysts as opponents, and work on them, vendors should consider analysts as powerful allies and work with them towards success.
Appreciating all of this and educating employees about it is critical to the success of the AR program.
Some of them have a page on their website dedicated to clarifying how their business model works, but that page is either insufficient, complicated to understand, buried deep down the website, or all of these things.
Analysis firms have vast sales organizations that, in theory, should spend time explaining in details how analysts work. In practice, the most of the sales force is too busy explaining the intricacies of the contracts to have the time for a crash course.
The assumption that vendors educate themselves about analysts is fundamentally flawed and the analysis firms should reconsider their approach in this aspect.
**An analyst, as any other individual on the planet, has a pre-existing bias that most likely will influence his/her interpretation of what customers are saying. However, three things must be considered:
- Analysts get hired based on a number of key requirements. One of them is the capability to listen. Another is the capability to be less subject to strong cognitive biases.
- Even the strongest bias eventually gets softened or even radically changed by the continual exposure to data (as in all the hundreds of interactions with customers).
- Very strong biases unsupported by data are easy to spot for customers, who always seek the most professional and unbiased perspective possible. Those few analysts that show too much bias in any direction can easily stop being in demand.