Whose job is it to make sure you get the coverage you deserve? Is the onus on the analyst, or on the firm seeking coverage? These are key questions – and if you want to know what the industry thinks, you’ll find some interesting survey responses in this posting. I raised this urgent topic in a couple of professional LinkedIn groups recently and my ad hoc research brought in a flood of frank and detailed responses – more than 40 of them – from all parts of the industry, including AR professionals, analysts, IT users, and advisory research sales staff.
The results make such compelling reading that I am writing this blog at roughly twice the usual length. And there is one master tip, towards the end of this posting, that could, in itself, guarantee almost any company hugely better analyst coverage. But let’s look first at the key topics raised in the LinkedIn responses.
Recent surveys (such as Hill & Knowlton’s November 2012 study) show that analyst assessments still influence more than 50 percent of all IT purchases and respondents to my LinkedIn survey confirmed this view. As independent analyst Bob Sakakeeny put it, “For commercial sales, analysts have a significant and measurable impact on the short list process.” In practice, vendors simply cannot afford to be ignored by the analysts who operate in their specialist areas.
But surely it’s the analyst’s responsibility to cover the market?
From a theoretical point of view, it seems reasonable to suppose that an analyst should cover the market properly. As BearingPoint’s Ludovic Leforestier commented, “It’s the analyst’s responsibility to assess the marketplace and contact suppliers. That’s a process called ‘research’”.
You can’t really argue with that – and, to be fair, the analysts engaged in the conversation fully agreed. Sepharim Group’s Bob Egan, for example, called analysts who were not knowledgeable about the market makers and were not proactively engaged “ignorant and lazy”.
Adrian Bowles of STORM insights Inc, voiced a similar view: “If analysts are too busy to do real research and find obscure vendors with unique offerings, they are doing a disservice to their end-user clients.”
However, as we all know, life is not quite that simple.
As a former research manager and executive at research firms large and small, I can say from experience that almost all analysts share the same gripe that they have too much work to do in too little time (never mind the usual related grumbles about compensation). This is a fact of life in the research business. Employers want deliverables and customer engagement from their analysts. Time to do real research is not usually ringfenced, and that makes it the easiest thing for the analysts to cut back on.
But when they do skimp on the research, how does that affect the suppliers they follow?
One of the analyst sales reps who commented thought that analysts were duty bound to pay attention to the vendors who were the subject of the most hype and noise within a market. That’s a controversial point of view – should the focus really be on those that shout loudest, rather than on those who may be the best fit for the customers’ needs? – but it does seem to be the kind of attitude that informs many analysts’ selections. The user perspective from my LinkedIn responses was that the analysts appear to cover the major players in a market “because clients are most typically interested in those vendors”. Is this chicken or egg?
If that is how the decisions are being made, it is bound to work in favor of the big vendors and those who have figured out how to play the media and social media games. Vendors with something truly innovative that the market has already recognized would also get a fair hearing. As I read it, though, the analyst sales rep’s view would imply that those companies focused on producing great products but bad at hyping them up would not deserve the analyst’s time to seek them out.
The fact is, time limits how much effort analysts will invest in researching the market. As Ludovic Leforestier notes, “In the long term, analysts live and die by their integrity and overall reputation.” Omissions may cost the analyst downstream, but in the short term it’s the vendors who have most to lose. This is really where the rubber meets the road. Kevin Lucas of Forrester summed it up: “AR can’t abandon its responsibility just because analysts don’t play ball.”
It’s not that analysts aren’t interested. It’s more a matter of time. As noted by Efrem Mallach, “Analysts are human, have conflicting priorities, and don’t have all the time they’d like to do all the research they’d like to do… Analysts need to identify
If you’re waiting for analysts to call and ask you what’s new, you’re in for a long wait
So it’s my responsibility as a supplier, then?
Rightly or wrongly, the answer seems to be yes. The simple reason is, as Harvard PR’s David Rossiter put it, “We have to be realistic. If analysts aren’t doing their job (for whatever reason – workload, laziness, incompetence), then the vendors we work for are the ones that lose out. It’s our job to make sure the companies we represent get on the analyst radar and make sure the analyst stays interested and up to date.”
This pragmatic position is echoed by the analysts themselves, like Bob Egan, who commented: “It is always the responsibility of the AR people in these companies to proactively reach out.”
When it comes to companies outside the front runners for any category, the consensus is that it’s really up to the vendor to make the running. Research sales people, for example, argued that “emerging vendors should [always] reach out to the analyst”.
So far, so good. The responsible analyst should be keeping in touch with you. But, in reality, that won’t necessarily happen, so you need to take responsibility yourself for moving matters forward. And that, of course, is not quite as simple as it sounds.
Companies we talk to tell us they reach out regularly to analysts. In many cases, they take the trouble to brief the analysts in person. But it can still feel like a waste of time, as there are often no visible business results.
That’s right at the core of the issue of reaching out and engaging. Most analysts are open to hearing from players in the space they track. But it is the nature of that interaction that makes all the difference.
Don’t believe me? Then listen to analyst Amy Wohl’s comment. “I’m always happy to talk to vendors who have something interesting to say. If they choose to try to ‘sell’ me, rather than offer information, it’s not likely to have a good outcome.”
For many companies, reaching out to analysts is simply a line item on the PR firm’s to-do list. They say they’re doing it, and they think that’s that. Well, not so, if you listen to how some analysts react to that type of outreach.
Try Bob Egan for example. “All too often they lead with some PR flak which serves neither the company nor the analyst’s interest,” says Bob. “I still cringe every time it’s a PR outreach, because it’s usually an overt sales job.”
The PR firm may have sent the email or made the call, but just doing that does not amount to taking responsibility for coverage. Effective analyst engagement is not a simple game of logistics. Effective engagement relies on communicating interesting and relevant content – and that means interesting and relevant to the analyst, not the vendor.
As a former analyst, I can tell you there is never any shortage of inbound information. And it is all largely the same old tunes – “We had a great year. We have the best product. We have some great new capabilities. We consistently beat the competition.”
It’s all noise. Your job – and no-one said it was going to be easy – has to be to get your message heard above that noise.
Can you help the analyst keep one step ahead?
So how do you go about getting your voice heard? Even a long blog posting like this is too short to go into much detail, but let me share with you one idea that should definitely help shape your thinking.
If you really took it to heart, this one thought could transform your company’s coverage.
The job of an analyst is to keep one step ahead of the clients.
Think about it.
I’m an analyst. When a client asks me a question, I want to be able to provide an up-to-date, well-informed answer, preferably showing an awareness of what is going to happen, as well as what is happening now. I don’t need to know everything – just enough to be able to answer those questions.
This has a lot of different implications, in terms of briefing content and regularly updated information. It’s all quite neatly summarized by Tom Henkel, who says “You need to think about ways to get analysts interested in your company. Demonstrate your company has something to say and some potential of making an impact on the marketplace. You need to develop an interesting story and leverage smart people in your company to deliver that story.”
This is not just a matter of re-using your standard press materials to brief the analysts. It’s not a matter of trotting out your latest sales deck. It’s not a matter of using your product management deck for the new release. None of that is good enough for a targeted analyst briefing.
What you need to produce for analysts is content that is fresh, relevant, valuable, and engaging for them.
The truth is that most firms simply don’t take the trouble to engage this way. It’s hard. It costs effort, and it usually costs money, too.
Maybe that explains why, when Tony Perri asked one analyst “When was the last time you had an interesting briefing?”, the analyst groaned “I don’t remember.”
It ain’t perfect, but it’s what we’ve got
This is an imperfect relationship we’re talking about. Life is not always fair.
Firms should be able to expect analysts to track them as part of their appropriate due diligence. But it frequently doesn’t happen. It’s not the analyst who loses out from that failure – certainly not in the short term. It’s the vendor.
That’s bad enough when the vendor has an AR team that can work to get over this problem. It’s a great deal worse when you’re a smaller player and simply can’t afford that luxury. But turning away and hoping your fortune will change for the better is not really an option.
Like any marketing activity, AR initiatives should always yield more than they cost. On that basis, even the smallest firm should be looking to invest in getting its voice heard. If the ROI is positive, the initial cost is not something that should cause sleepless nights. And one thing’s for certain; leaving your analyst coverage to chance is likely to cost you a great deal more.
Are we on target? Have you experienced issues of coverage? Have your say, and send us any practical tips you’ve discovered that we can share with our readers.
Great post, great summary, great topic. I dipped into the LinkedIn discussion, but got sidetracked before adding my two bob’s worth, so happy to do the same on your blog…
This issue is all about ‘R’ – but there are two ‘Rs’.
The initially important ‘R’ is ‘Relations’ – as in ‘Analyst Relations.’ If an AR professional doesn’t have a relationship with an analyst, then they’re not going to get traction. They need to nurture that relationship, provide the analyst with information that they need, understand what they’re covering etc. By engaging (without an overtly ulterior motive), they’re telling the analyst they’re interested in what the analyst is doing.
The next ‘R’ is ‘Responsibility’. To my mind, this is shared. The AR professional has a responsibility to identify, understand, engage with & inform the appropriate analysts. Lacking that, they’re lazy, sloppy, or just time-wasting hacks/flacks/self-promoters. Meanwhile, analysts have a responsibility to listen/ understand/engage/make some decisions about relevance, and keep in contact. Lacking that, they’re lazy, sloppy, or just time-wasting hacks/flacks/self-promoters.
So it’s a two-way street. There will always be exceptions, but AR professionals are paid to manage the exceptions, not just turn out formula programs. Analysts are paid to cover their markets & understand them completely – some won’t.
I would argue that an AR pro who focuses on the first ‘R’ – relationships – will have fewer problems with the surprises, but they’ll still have to deal with shared responsibility. I would argue also that analysts who don’t take responsibility for covering their markets adequately don’t actually have much influence, so therefore their value is diminished.
A complex issue, but a worthy discussion. And one worth continuing.
Many thanks for the feedback. Can’t argue.
One observation on ‘Relations’. We have seen a couple of companies recently trip up here. Relationship is key but it needs to be purposeful, focused and planned. Ad hoc chats, the exchange of friendly email may make you feel you have a good relationship but it lacks purpose and focus.
The net result we have seen is companies surprised by the fact that their ‘relationship’ didn’t lead to the analyst fully appreciating the company’s capabilities and market reach i.e. bad assessments and poor coverage.
Nice job Simon. “Firms should be able to expect analysts to track them as part of their appropriate due diligence. But it frequently doesn’t happen. It’s not the analyst who loses out from that failure – certainly not in the short term. It’s the vendor.”
Spot on. Of course, the normal curve applies everywhere, and when the irresponsible analyst crosses over with the less than diligent AR person, trouble is like to result. It will happen. The goal is to keep it to a minimum, re-mediate quickly when it does happen, and for “AR to try to stay one step ahead of the analysts.” Oh right, those were my words.