When talking to IT vendors eager to grow their business I usually come across a number of common challenges they face. One of the biggest issues which lies outside the companies (as opposed to e. g. finance requirements to fund the growth or adding enough skilled people to their workforce) is that once they are moving out of their comfort zone they are facing prospects that are much more skeptical than those in their home markets.
It seems to be a common pattern that vendors manage to grow to a certain size (depending on the size of their home market this is often somewhere between five and twenty million dollars) and then start thinking about ways to expand further. This often is when they are confronted with the ‘real outside world’ for the first time. Before this they managed to successfully leverage their network, or simply were the vendor with an office location closest to where the customer was. This kind of home advantage usually works up to a certain point. You might be able to successfully sell to new clients based on recommendations from your network to 2nd degree connections but that’s about where it stops. When you are dealing with prospects who have never heard of you and who don’t have any other obvious connection path (be it geographically or personal) to your company the selling gets much tougher. Obviously the first thing any vendor will do is to bring his USPs to the attention of the potential buyer. But be honest: How many competitors are out there who are making similar claims in regards to their or their solution’s capabilities? At this stage it doesn’t matter if their (or your) claims are true because at this stage the only thing that matters is the question of who is going to get the chance to proof their claims either by further demonstrations, POCs, trials or ideally by closing the deal.
A similar challenge vendors are facing is connected to the deal size. A lot of customers are willing to ‘risk’ a limited amount of money on a new vendor or a solution that is new to the market. With increasing deal size this inclination to take some risk quickly declines which is why smaller or new vendors often fail to win the larger deals in the market. This is also true in regards to the ‘business criticality’ of a solution. Buying something that is a nice to have from a new vendor is much easier than buying a solution that is business critical or security relevant from an unproven source.
Credibility wins business.
With markets where there are typically multiple vendors offering multiple solutions for a problem the buyer needs to significantly narrow down the field of potential suppliers. So being on the short list for further evaluation must be the primary goal in the early stage of the sales process. This is where the topic of credibility comes into play. When competing in their home markets a vendor is virtually guaranteed to get a place on the short list. Once competing outside: Not so much. Credibility means that a potential customer has enough trust in the claims you make about your company and your solution to give you the chance to prove yourself. Having credible sales people goes a long way towards that goal but obviously they are very hard to find. In addition some customers will never accept anything coming directly from a vendor at face value. Also references help to generate trust, even though the effectiveness of a reference quickly declines when they are not meeting the criteria a specific customer is looking for. This can include the requirement for a reference from the same country, the same vertical or of similar size – or ideally all of this at the same time. And of course if you were not lucky enough to acquire the right mix of reference customers in your home market this only brings you back to the initial problem of getting new customers in the first place. So the question remains how to best handle the credibility issue.
Influencers create credibility
This is where influencer relations has its place in the marketing mix. People like journalist and industry analysts make their living from evaluating technologies, vendors and solutions. Industry analysts in particular are heavily involved in advising technology buyers in regards to their vendor selection and short list creation. With industry analyst groups such as Gartner, Forrester, IDC and Ovum influencing between 40% and 60% of commercial technology sales their market reach is much bigger than anything a midsize vendor can hope to achieve on its own. This means that being mentioned by analysts – either in written research or in 1:1 inquiries – will open up indirect access to many potential customers. Coverage in official research publications is the most powerful tool for your sales people and your marketing materials to demonstrate that your technology, company, products and service offerings and methods are highly recognized and credible.
Analysts are writing about your market, whether you like it or not. Being pro-active in reaching out to analysts gives you the strategic advantage of being able to influence their research by providing them with the insight they need, when they need it. Analyst Relations is not a billion dollar club. It is critical that analysts are well informed of your company strategy, products, and services. This needs to be an ongoing process to maintain a top-of-mind status, especially for a vendor that aims for higher name recognition and company growth. Early engagement with analysts is a great way to get analyst buy-in and top-of-mind presence to increase credibility and in turn to secure your place on the short list and to boost sales.
In any business environment the phrase ‘best practice’ sooner or later comes up when people are talking about planning, execution and measurement of business activities. According to Wikipedia “a best practice is a method or technique that has consistently shown results superior to those achieved with other means, and that is used as a benchmark. In addition, a “best” practice can evolve to become better as improvements are discovered.”
So the concept is fairly straight forward but to establish what actually constitutes best practice in a specific context is anything but easy. In addition even knowing what the ‘best practices’ are doesn’t necessarily meant that you know how to actually implement them in your specific environment. In today’s blog post I want to look at ‘best practices’ in the context of analyst relations.
Getting started with analyst relations can prove to be quite a challenge if a company does not have any previous experience in dealing with analyst companies. The number of analysts who are covering a specific technology niche is usually limited so it is very hard to just get started and learn to do the job while you are doing it. Chances are that you will end up making some serious mistakes which – given the limited audience size – will prove to be very hard to correct. I have listened in, and helped prepare dozens of vendor presentations and analyst meetings. It is fair to say that the range of professionalism I have seen varies greatly. So working out the ‘best practices’ on your own will mean that you are taking quite a risk with the reputation of your company.
Now, what do we do when we don’t know what to do? Right, you hire an expert who knows how things need to be done. Well, based on my experience this is not what will actually ensure that you are executing ‘best practices’. Knowing what works and what doesn’t and understanding the agenda of the various analyst firms and the individual analysts only helps to a certain degree. In my opinion ‘best practice’ in analyst relations is not based on finding that one magic bullet. Doing analyst relations this way is a static approach that amounts to pushing (un-customized) information in the direction of your target analysts without really building a relationship. It is my opinion that the ‘best practices’ for a vendor are a very individual thing that depends on the available resources (time, money and expertise) a company can „spare“ for analyst relations, the technology niche the vendor is active in and the agility of the vendor (both in terms of innovation and in terms of growing the business). Only when balancing these factors will you be able to come up which an analyst relations program that will not only reach the analysts but will actually convince them. Having worked with many vendors throughout my time at an analyst firm and now as an analyst relations consultant I have seen some good and quite a few bad examples which have brought me to the conclusion that there is no way you can completely outsource your analyst relations program. Any truly successful analyst relations program will always be a highly customized joined effort which combines the know-how of the analyst landscape with the specific inside knowledge about your company. More than anything this means that ‘best practices’ in analyst relations are based on building the right team with both internal and external parties and staying flexible enough to adapt to changes in the market and analyst perception.
So if you are willing to compete in the field of analyst relations, make sure that you are well prepared and have all the resources in place to win the game. Trying to find the right way without staying engaged will not be enough when you are competing on a global level and when messing things up might mean that you won’t get a second chance to fix things.
If you think back on the many occasions when you’ve heard this phrase, or for that matter used it yourself – how many times has it been a good idea to give it a try yourself first? Trying something implies that there is the potential to try again if the first attempt fails, or where it is possible to get professional help to get something done after trying once it becomes clear that it isn’t something that can be done “on your own”.
There are some occasions where trying is certainly a valid option. You can try to cook your dinner and if it fails you can still order a pizza. But trying to fix the brakes on your car might not be such a good idea if you don’t exactly know what you are doing.
When it comes to running your business it is in most cases not such a good idea to rely on trying. This is probably one of the reasons why you have job interviews and do your due diligence when you hire someone to work for your company. You want to be sure that the person you are hiring is qualified and experienced enough to get the job done properly.
So how come there are so many people willing to take on the risks involved in engaging external “influencers” on their own without any previous idea of how to get things done?
I am not saying that getting analyst relations wrong is going to threaten your life or the very existence of your company, but it is certainly an important part of building your brand and shaping the perception of your company in the market. So you should better be sure how to get things right.
As in most cases involving interpersonal relationships it is the first impression that counts the most. You probably would not consider sending a junior inexperienced sales rep to an important client. So how come you are willing to approach the handful of relevant analysts for your technology niche without making 100% sure that you understand how the game is played?
I have listened in, and helped prepare dozens of vendor presentations and analyst meetings. It is fair to say that the range of professionalism I have seen varies greatly. Chances are that the analyst you are talking to is covering a large number of vendors and has listened to a huge number of companies trying to “sell” the superiority of their solution. Part of that sales process is also the level of professionalism you are showing in the way you engage with the analyst community.
So if you are willing to compete with your competition in the field of analyst relations, make sure that you are well prepared and have all the tools at hand to win the game. Trying to get it right will not be enough when you are competing on a global level and when messing things up might mean that you won’t get a second chance to fix things.
When asked about analysts and analyst relations the reaction of technology vendors seems to be divided into two main groups. Those that believe that analyst relations is something a vendor is supposed to work on and those that believe that analysts are an external force – some kind of godlike alien species – that works in a complete vacuum and that will sometime in the future knock on their door to take them to a better planet (or alternatively blast them to hell by putting them in the bottom left corner of a market study).
My favorite quote from the second group – one which is actually a more common example of mindset than you would believe – is the following:
“Dear XXX, we currently do not have any budget for this kind of things. At the moment we do not care too much about analysts, once they can’t ignore us they will write about us anyway. And influencing analysts is fooling yourself. Better to have clear results they can’t deny, right?”
Now obviously this vendor is a strong believer in what in economics is called a “perfect market”. This perfect market implies a 100% availability of all information for all market participants at all times. It also implies that there is no effort associated with gathering information and making sense of it. In reality however it is quite unlikely that an analyst will be able to find, interpret and analyze all the vendors and information that is available at any given time. So providing information for (or withholding it from) an analyst is a kind of influence that is quite real.
Relying on the analyst community to do all the work for you is a dangerous thing because in many cases there will be more than one vendor in any technology space that can solve a customer problem. Now if one thinks about it this isn’t so different from what is happening all over the market. Every buyer tries to spot the perfect solution in the market by gathering information about what is available. Now I wonder if all the vendors that are subscribing to the earlier quote also agree that doing any marketing targeted at all those buyers out there is a waste of time because by some miraculous means they will be able to spot the perfect solution anyway. Of course an analyst is supposed to have a more comprehensive understanding of a market and will probably spend more time analyzing what is available than an ordinary customer but then again he has to deal with a global market and he cannot narrow down the field by simply deciding that a number of features is not relevant for his specific use case. In addition most analysts are simply really busy people and it might not be a good idea to base your analyst relations strategy on the assumption that they will make the time available to notice you right at that moment when you happen to reach the pinnacle of your efforts.
Analyst Relations isn’t about having one interaction at that one magic moment when the alien space ship comes to pick you up. It is more apt to think of it as a kind of SETI project where you listen for messages and where you help guide your alien visitors to a landing space right in your backyard. This process requires skill, dedication and patience and this is also why it is a profession and why there are professional service providers out there to help you. Now wouldn’t it be cool to have “fist contact”? Maybe once you start talking to them you will find out that they aren’t so different after all.
When starting with analyst relations companies often realize that the task lying ahead of them is pretty daunting. There are several hundred analyst firms with thousands of analysts publishing research for every imaginable market niche. On the other side there are tens of thousands technology providers worldwide vying for the attention of these analysts. This means that simply having a great product will not be enough to get noticed.
But how does one cope with the task of sorting though this vast number and actually getting down to doing some work? This is where the proverbial elephant comes into play: How does one eat an elephant? – One bite at a time. If the whole of the analyst community is too much to digest at once, it must be broken down into smaller pieces. So one of the main tasks of any analyst relations program will be to come up with a way to structure and prioritize both the analyst firms and the analyst community in a way that makes sense for your company and your analyst relations goals. Targeting analyst from the top three or four analyst companies that are experts in the technology your company is offering is the obvious thing to do. Doing this will give you a starting point but it also means that you will be omitting lots analysts that are just as important for the overall success of your analyst relations efforts. And since it is the obvious thing to do it will also mean that most of your competitors will be competing for the analysts’ attention.
Having a clear cut idea what you want to achieve will also help you to build your list of analyst firms and analysts you will want to target. For example there are some analyst firms that have a great presence in the media but are lacking the client base to make them attractive as potential channels to directly impact the buying decisions of your buyers. So if you are looking to support your PR efforts and increase your presence in the media you might have to target a different set of analysts than if your main goal is to influence the analysts who are supporting your prospects in sorting through their vendor short list when making a buying decision. Pretty much the same applies for selecting analysts based on the verticals or geographical areas they are covering. All these criteria will help narrow down the number and allow you to come up with an initial list of analysts that are relevant for your analyst relations program.
However the problem with all these selection criterias is that you will not only need to come up with the right criteria to match your analyst relation goals, but they also require a deep understanding of the capabilities, methodologies and focus of the various analyst firms and analysts. Without this understanding chances are that you will waste a lot of effort dealing with the ‘wrong’ analysts wasting both time and money. So make sure that your cook knows how to properly prepare the elephant before it is served and eaten.