I had a B2B startup founder ask me if it was possible to buy placement in a Gartner Magic Quadrant. The question shows a fundamental misunderstanding that the big industry analyst firms like Gartner Group and Forrester are “Pay for Play”. That simply doesn’t make any sense.
You care about analyst coverage because customers care. Customers care because vendors can’t purchase it.
The only reason marketers care what some industry analysts have to say is because some customers respect their opinion. The moment customers suspect that this opinion can be bought, they would stop paying for their advice. These markets where an analyst opinion really matters are often those where the decision is made by a purchase team that doesn’t have the time/skill/money/risk tolerance to perform a complete evaluation of every vendor in the market. They trust analysts to educate/advise them enough to quickly get the vendor list down to a more manageable size. It varies by market/geography/company size of course but if you are selling to a Fortune 500 IT buyer in North America, you may not get on a short list if Gartner doesn’t cover you (if you are selling to consumers, you probably should stop reading this right now).
You can’t buy love. But you can purchase a date.
So the entire business model of an analyst firm depends on customers trusting that the analysts are not biased for or against certain vendors. Vendors cannot purchase coverage in a report, nor inclusion on a Quadrant or Wave. Analysts do cover companies that don’t pay for their services. So does paying an analyst firm increase your chances of getting favourable coverage in their research. Heck yes it does! But it doesn’t guarantee they will write nice things about you. Purchasing a contract gives you their attention. It gives you the ability to interact with them regularly (the biggest mistake you can make is pay for the contract and not establish regular meetings with the analysts, more on this later). This leads to several things:
- A better understanding of how the analyst firm views the market
- An opportunity to educate the analysts about the value of your offering and your point of view on the market
- The opportunity to influence their thinking about how the market is evolving
- Advanced warning about upcoming research and the ability to respond to questions and surveys before the research is published
- The opportunity to introduce them to your customers, further illustrating your offering’s value and increasing your chances of coverage.
- The ability to establish the credibility of your company and your depth of knowledge of the space, increasing the credibility of your offering in the eyes of the analysts.
- The ability to establish relationships with the analysts (hey, they are people too and it never hurts if you all know and like each other).
So buying the contract is a bit like buying your love interest dinner at Le Bernardin instead offering to split the bill at McDonald’s. It won’t guarantee that you’ll fall in love but it will increase the odds that they’ll show up so you can make your case.
The often-ignored but equally important reason you want to work with analysts – to learn from them
But here’s the thing. Coverage isn’t the only reason you want to work with an analyst firm. It may not even be the main reason you want to work with them. You want to work with them because you can learn from them. They spend all day thinking about the markets you are in. They spend a significant amount of time talking to customers. They know what your competitors are up to. Who else in your market can give you this kind of perspective? How valuable this perspective is to your company depends on a lot of things but here are some things I’ve used analysts for:
- Feedback on messaging and positioning – they know the terms the rest of the market is using and they know how customers express themselves. That puts them in a unique position to give you feedback on how you are expressing your value proposition and your terminology. They also have a firm grasp of what your competitors have and can help you understand what really differentiates you.
- Competitive insight – we are all under non-disclosure when we talk to analysts so they can’t tell you anything that isn’t already in the public domain (well technically anyway). but it isn’t always easy to keep up with what the competitors are doing especially if you are in a crowded market. Part of the analyst’s job is to stay on top of who’s doing what in a market.
- Customer insight – Analysts do a lot of customer briefings. I find myself asking questions like “Have you ever seen a company with this problem?” or “We think that customers using competitor X’s product tend to look like ABC. Would you agree?” You should never trust any one person’s opinion as the final word on a market but the insight you get from an analyst can help you understand where to look next.
Now don’t get me wrong – I have worked with analysts that I though had a spotty level of knowledge of their market, had obvious biases toward certain vendors and seemed to be incapable of constructive feedback. Every profession has a few that maybe should be doing something else with their lives. Fortunately for me that has been the exception rather than the rule.
Another thing to keep in mind is that you will have a much deeper understanding of the particular slice of the market that you play in than any analyst you will meet. They on the other hand will probably understand the broader market better than you do. You need to keep this in mind when you are filtering their feedback.
Two big cautions for startups!
- All of the good stuff that you get from analysts only happens if you do the work. You have to establish a regular calendar of meetings with multiple analysts. You have to prepare for those meetings. You have to find customers that are willing to talk to them. You have to have interesting new news to talk about. You have to complain like heck if your analyst is a dud. If you simply sign the cheque and wait for the good stuff to come rolling in you are wasting your money. Without an analyst relations plan, it’s pointless.
- Don’t forget your other marketing priorities. If you are a B2B startup working with analysts is going to be on a long list of things you have to do including lead generation, sales support, enabling your salesforce, building content for your site and campaigns, securing customer references, etc. etc. You have to weigh working with an analyst firm against the other things on your list and take your budget into account. If you only have $60K to spend on marketing, I wouldn’t recommend that anyone spend half of that on a Gartner contract. Even though I think analyst relations is very important for certain companies in certain markets, you need to be smart about it and make sure it makes sense for the value you will get.