Using Analyst Relations
Southampton Business School
White Paper
Using Analyst Relations to Strengthen Your
Market Position in I.T. Services
Mike Wilman
Senior Lecturer in Marketing
Southampton Business School
Mike.wilman@solent.ac.uk
________________________________________________________________
Abstract
Analysts and consultants have tremendous influence on your customers and
prospects, affecting approximately one-third of all purchasing decisions.
Developing a successful long-term strategy for analyst relations requires
attention to the following factors:



Development of objectives which fit the overall marketing objectives and
strategy.
Understanding of how to relate to analysts and how to build long-term
relationships, learning how to work with them rather than talk at them.
Being prepared to commit the resources needed to sustain a long-term
relationship.
Knowing which analyst firms and analysts to target to achieve maximum
effectiveness across targeted European countries.
Introduction
The recent downturn in global economic activity has resulted in information
technology (I.T.) vendors not only downsizing operations and staff, but also
scrutinising more closely the returns from budget spend and investments.
Ironically marketing, particularly strategic marketing, is often hit hard during
corporate downturns even though it is this very activity which will help position
the organisation for future survival. Many technology-driven vendors still regard
marketing as an overhead rather than an investment.
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Using Analyst Relations
An important element in the strategic marketing armoury of any I.T. services
vendor is the investment it makes in building and maintaining relationships with
industry and market analysts. The larger vendors who recognise the influence
that analysts have on the buying cycle often have their own in-house analyst
relations team. Some, especially start-ups and SMEs, rely on individual
executives building personal relationships, whilst others employ PR firms to build
analyst relations as an adjunct to media activity.
The recent economic events have meant that understanding the real reasons for,
and benefits of, building and maintaining relationships with analysts, and the
ability to manage those relationships as part of a strategic marketing plan, is
becoming increasingly crucial to corporate survival. In Europe, building those
relationships, at a local level, is particularly critical as economies and markets
respond at different speeds to the aftershocks of the recession, which began in
the U.S. before the events of September 11.
Conducting an effective European Analyst relations program requires special
care, development and planning. Europe is not a homogenous, undifferentiated
market. The analysts in the various countries have different preferences and
agendas, and must respond to the needs of users and suppliers in the individual
countries, each of which has its own economic infrastructure, culture and I.T.
requirements.
Analyst relations is part of marketing strategy
Analysts are key influencers in the chain of decision-making between vendor,
channel partner and ultimate customer. Other influencers include journalists;
consultants; financial analysts; industry gurus or visionaries; and academics.
Industry and market analysts often have the greatest impact of all these
'influencers', and the impact is not necessarily directly related to the amount of
money a vendor spends on an AR program. Spending money merely to gain
analysts' attention is unlikely to work. It is more important to target available
resources effectively, reaching the right analyst firms and the right analysts, in
order to develop long term relationships.
It is important to remember that analysts are influential because of their
independent and objective interpretation and evaluation of information rather
than the factual knowledge they dispense.
An understanding of the regional and country differences within Europe is an
important part of any European or EMEA marketing strategy. A crucial element
of this is an understanding of the cultural, political and economic differences that
remain significant despite the growing harmonisation of European-wide trade and
fiscal policies. Developing an appropriate AR strategy to reflect a vendor's
current position and future ambitions across Europe is very important and often
requires expert and independent guidance.
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Using Analyst Relations
Companies that have been successful in increasing sales, customer satisfaction
and shareholder value are those that have adopted an appropriate marketing
strategy. Independent research has shown that analysts can influence between
40-60% of sales with a properly developed and executed program.
An AR plan should not stand alone as a discrete part of an overall marketing mix.
Instead, it should be an integral part of it. Analyst Relations objectives that are
specific, time-constrained and measurable should be developed from the context
of the overall marketing and corporate strategy. This strategy should be revealed
in a short-to-medium term plan (1-3 years) which will describe the program for
developing and managing relations with the key analysts firms.
Objectives for AR must be a function of what the vendor wants to achieve and of
how its products and services are being positioned and differentiated in the
market place or, for e-businesses, the market space. There are almost 300
analyst firms offering a wide range of services from consulting to market sizing,
each seeking to differentiate themselves in a market where research is being
increasingly homogenous and commoditised, and where consulting is used to
offer added value to clients.
A vendor's marketing management may simply want to create awareness of their
company's services. Or they may be seeking influence, especially with firms
such as Gartner whose client base is primarily the end-user. Another objective
may be to use analysts as consultants, advisors and expert counsel in the
development of new services programs.
Some of the functions that vendors use analysts for include:
Understanding marketing strategy

Gathering data on market size

Conducting quantitative or qualitative primary research

Carrying out a specific consultancy task

Asking for advice and validation (analysts are usually happy to provide this)

Participating in thought leadership

Adding value to a program during the development phase

Gaining insight into market segments

Testing out opinions and hypotheses

Benchmarking vendors with competitors
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Using Analyst Relations
To be effective, AR must work to a carefully-thought out plan and not just be a
series of intermittent tactics which are really designed for short-term media
communications. McGuire (1978)1 developed an information processing model
which implies that strategic AR involves much more than just placing as many
press releases or emails as possible. This model indicates that analysts go
through the following stages when responding to vendor messages:
Exposure
Attention
Comprehension
Acceptance
Retention
And it is the long-term retention of analysts' influence that vendors should be
seeking to develop. This can be achieved in four stages:



Targeting the most appropriate analyst firms and individual analysts. Expert
guidance is crucial in this process and can save wasted hours of searching or
of mis-directed resources
Planning the long-term strategy and ensuring that the appropriate resources
(money, time, manpower) are budgeted for
Executing and day-to-day management of the AR program; expert guidance
is again crucial in this process
Measuring the results against the objectives set, whether this is in terms of
perceived influence and thought leadership, column inches of print, or
increased sales.
The tactical development and execution of the AR plan comes later, as part of
the overall marketing communications mix which might involve advertising, PR,
sales promotion, sponsorship and other tools. In reality communication with
analysts often falls within the PR sphere.
Building relationships, influence and involvement
Typically, vendors are unable to make full and effective use of their relationships
with analysts, because there is a fear of letting analysts know anything other than
what is in the corporate go-to-market packaged presentations. These
presentations, which often sound like a dozen other vendor presentations, are
usually full of company jargon and diagrams that reflect internal procedures
rather than the needs of customers or analysts. Consequently, they are of little
real value. As previously mentioned, the key is to have a clear plan, know which
analyst firms to approach and, within those, which specific analysts to approach
and how.
Typically, vendors and PR firms who use media-style techniques to communicate
with analysts find that their communications are mis-directed and do not achieve
the required results. It is all too easy to 'spam' analysts with emails, press
releases and phone calls. Analyst needs – especially the type, frequency and
1
McGuire, W. (1978) 'An information processing model of advertising effectiveness', Behavioural
& Management Science in Marketing (ed. Davis & Silk), Ronald Press
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Using Analyst Relations
nature of the communications including context, selection and availability
(Gerbner 1956)2 - are quite different to those of journalists.
Developing a relationship with analysts in a way that enables them to become
advocates and advisers is important, and the more strategically-oriented vendors
are the ones able to do this. Implicit in this is the importance of using permission
marketing techniques (Godin, 2001)3, gaining the trust of the analyst and
providing opportunities for them to want to work with the vendor. This means
that communications with analysts are welcomed rather than being interruption or
'spam' driven, and the quality of interaction is at a higher level.
A critical part of the communications process is to seek feedback, rather than
sending a tactical stream of one-way messages. Without feedback, there is no
meaningful communication.
As mentioned earlier, it is important to develop long-term relationships with
analysts. This requires both dedicated AR resources and the willingness and
ability of senior executives to spend time with the analysts. Some executives
have more skill in working with analysts than others, but often perceived
problems can be resolved with training, coaching and other on-going support.
Fear of analysts is almost always the result of a mis-understanding of their role
and objectives.
A key factor in building long-term relationships with analysts is to develop the
level of involvement. Involvement is the degree of personal importance and
relevance attached to a ‘brand’ (Antil, 1984)4 and for analysts this means the
amount of time and attention they will give to a vendor and the weighting or
ranking given to a vendor's people, products and services.
To use a modified version of Laurent and Kapferer's model (1985)5, analysts will
take a cognitive or cerebral approach to vendor evaluation, involving the
conscious selection and interpretation of information as well as a behavioural
approach involving a response to product or service information or messages.
Three key aspects of this are the level of interest, the risk importance and the risk
probability which analysts will ascribe to a vendor's product or service offerings.
In other words, analysts will be concerned about the reputation or credibility of
the vendor and an important element of this will be the type of relationships built
up between vendor and analyst.
2
Gerbner, G. (1956) 'Toward a general model of communication', Audio Visual Communication
Review, IV:3, pp 171-99
3 Godin, S. (2001) 'Permission Marketing', Simon & Schuster
4 Antil, J. (1984) 'Conceptualisation and operationalisation of involvement', Advances in
Consumer Research (ed. Kinnear), Association for Consumer Research
5 Laurent, G. & Kapferer, J. (1985) 'Measuring consumer involvement profiles', Journal of
Marketing Research, 12 (February), pp 41-53
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Using Analyst Relations
Nevertheless, analysts have to remain independent and objective, and vendors
should respect this. Analysts will not promote or recommend a particular service
or solution - they would soon lose their independence and credibility if they did but they can omit a vendor from a paper or report if that vendor has not
communicated effectively and appropriately.
Also, analysts are looking at a broad range of companies, issues and markets in
a way that vendors are often unable to do, suffering as they do (quite
understandably) from the 'marketing myopia' of working within a single corporate
structure. Vendors should welcome this broad 'world' vision and make effective
use of the information they receive from the research and analyst firms.
In developing relationships with analysts, vendors should remember that perhaps
the most significant activity that analysts do is talk over the phone, face-to-face or
via a webinar - discussing issues of importance to both vendors and I.T. users.
Very often this activity will have far more impact than reports they write or
conferences they speak at. A survey carried out by CIO magazine in 2001
revealed that the average company spends over half a million dollars on analyst
relations with the prime objective of building close relationships which will help
with decision making and the avoidance of marketing mistakes.
Selecting the right analyst firm
It is important to recognise that analysts do not always get things right.
Sometimes they can be part of a hype factor that builds up around a new
technology or marketplace, and become the victim of hype as well as a
proponent. A case in point is the dot.com bubble that burst in March of 2000.
Forrester was one of those analyst firms which had to make large downward
revisions in its forecasts of on-line buying, but note that its forecasts were more
conservative than other firms. Forrester did accurately predict that spiralling
costs would prove the downfall of many of the dot.com companies.
One of the key aspects of the analysts’ role is to help executives and CIOs in
user organisations understand the impact and business case for new technology.
Of these firms that specialise in the user environment, Gartner is the largest with
revenues approaching $1bn in 2001 and over 10,000 clients. Forrester, with just
over 1,500 clients, was second largest with revenues of just under $160m.
Some firms like Yankee Group and Ovum specialise in vertical markets, while
Datamonitor, Dataquest and IDC are examples of firms that specialise in market
research and have extensive vendor client bases.
Selecting which firms to target is important, depending on whom vendors want to
influence - other vendors, the user base, or both? For many vendors, it is the
latter option.
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Using Analyst Relations
There is, however, one very important additional point - Europe. Not all analyst
firms cover European countries in sufficient depth or breadth to provide vendors
with expert and accurate knowledge of those markets. So knowledge of where
analyst firms are located, and how many analysts they have in the various
countries, plus an understanding of their specialisms, is an area where expert
and independent advice is very important.
Tiger Lily acts as a bridge between IT services suppliers and relevant analyst individuals and
organisations, providing guidance, advice and support to enable IT services organisations to
influence the analyst community. The results are increased mindshare, accelerated sales cycle
and improved market perception.
Contact email: info@tigerlily.uk.com
Mike Wilman
Telephone: +44 1628 671216
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