Analyst Relations

In episode seven, we’re talking with Duncan Chapple of Kea Company about analyst relations.

Duncan is a Managing Partner at Kea, a global advisory firm that delivers influencer relations and strategic guidance for vendors of high tech products and services. Duncan has been a consultant and analyst with Ovum, Europe’s largest technology analyst house and successfully founded and directed an international analyst relations business. He also played a central role in founding the Institute for Industry Analyst Relations in 2007, and was a member of its founding board.

I wanted to get an inside view on analyst relations – so I couldn’t think of a better place to start than with Duncan. I was able to sit down with him on November 16 just after ARInsights in Cambridge, Mass.

Mark: Duncan Chapple, welcome to Confessions of a Marketer.

Duncan: It’s wonderful to be here. Thank you so much.

Mark: So let’s cut to the chase. What do you think most marketers get wrong about analysts?

Duncan: I think that marketers misunderstand a number of things about analysts. But the biggest one is the idea of pay-to-play. I think when marketers first meet analyst firms they typically don’t meet analysts. They meet salespeople and salespeople come along and say, “If you don’t buy what I’m selling then life will be worse for you.” And I think salespeople have to say that whether they’re selling you TVs or shoes or absolutely anything. And I think that means that people get the impression that unless they are buying from an analyst firm that the analyst firm won’t take them seriously. And that leads to the logically consequential belief that if you want analyst firms to say good things about you you have to pay them more than your competitor. And those things generally aren’t true. Of course there are, I’m sure somewhere there was somebody who you could pay to say nice things about you.

Mark: And there have been.

Duncan: Absolutely. And, in fact, there still are. But those people are not taken terribly seriously. And I think, even if you are not very familiar with the analyst world, you start picking up analyst literature, you start reading it–smart people can smell when stuff isn’t really on the level. I think people can sense that, and bad research is kind of driven out by good research. This is made even more profound by the rise of social media and the way that people are starting to share analyst research. The good research is getting passed around and that helps high quality insight to become more widely consumed by people.

Mark: And that’s kind of changed the business model for analysts, too.

Duncan: Yeah.

Mark: It used to be everything was behind a pay wall. And maybe the first paragraph or even the first sentence of a report was visible to the general public. Now a lot of that material is freely available.

Duncan: Absolutely. When I came into the analyst industry in the 90s a lot of vendors perceived analysts as primarily influencing wider world through quotations in the media. So analyst reports were extremely valuable, very hard to get hold of. Only people in the IT Department had them and, honestly, 20 years later it’s often still the case that even in quite large organizations very small numbers of people–a handful, two, three handfuls of people–might be the only ones who have direct access to the full research of these analyst firms. But the difference is that now the number of analysts firms being consumed by managers is vastly greater and you have organizations, like HfS Research for example, where you’ve got millions of eyeballs consuming research from these organizations and they’re not paying any for it. And that kind of influence doesn’t just change the business model for the analyst firms but it also means that analysts are much more influential than they ever were.

Mark: And that was considered the primary revenue stream for a lot of firms–the subscription revenue.

Duncan: Absolutely. I used to be an analyst at Ovum and we had a massive direct marketing campaign through the dotcom boom where we would be mailing it to people and asking them to buy our reports for $1,000, $2,000, $3,000, $4,000. And the sad fact was that often that would be at a loss because of the price of this direct marketing machine. I mean, it’s very inefficient. you have mail tens of thousands of people to get 100 people to buy a report for $3,000 or $4,000.

And now the business model is so much more complex. You can make money as an analyst in almost any way. There are analyst firms out there who are primarily producing their research as video and there’s a business model to support that. And this means that previously, analysts who might be hyper-specialized–you know, you’re in some tiny German university town and you know an awful lot about business intelligence software and once only the biggest firms in the world would find you. And now, tens of thousands of people can be consuming your insight. So the way that you monetize that is much more plural. And I think analysts are almost unaware of all of the ways that they have to monetize their research. And they almost lose track of all the ways in which there such is being consumed and being used.

Mark: It’s hard to keep track of.

Duncan: Lots of people don’t try to keep track of it.

Mark: As long as it’s out there, as long as it’s going viral, as long as people are reading it–great. So what do you think most analysts get wrong about marketers?

Duncan: Well I can I can start off by telling you the things that I got wrong. I used to be an analyst and I would interact with analyst relations people and marketing people. And there were a lot of things that I quickly realized that I misunderstood. One was that marketing people in technology companies are technology people and so sometimes you would get information, sometimes marketers tell you things and they’re just not true.

Mark: I don’t believe that.

Duncan: But I mean, technology marketing people say things to analysts that are not true. And there are two classes. There are things that they know to be untrue. So there’s a lot of puffery and a lot of wishful thinking but also I would meet people who would genuinely explain things to me that were contrary to elementary laws of physics. But they would be explained to me that their solutions really did that and they would honestly believe that their solutions really did that. So one of the big surprises is that technology marketing people often don’t know their solutions very well. They don’t know competitive solutions very well. They don’t know the market very well. So you come into conversations with vendors and you assume, “If you’ve been sent to me by a big high tech company, you must be able to participate in the conversation with me.” And then, very quickly you realize that the ability of these marketers to hold up their end of the conversation is really extremely uneven. The other big surprise is that marketers have got an extremely complex and messy internal environment and they seem to be the bad guys but actually they’re the good guys.

Mark: That may cause their apparent lack of knowledge.

Duncan: Yes, absolutely. I have a lovely example. So, I’m here in Boston because I’ve been attending what is one of the biggest gatherings of analyst relations professionals organized by ARInsights. And one of the people there is from one of the world’s largest high technology companies. I’m not going to embarrass them, but really one of the very, very largest high technology companies in the world.

Mark: It rhymes with?

Duncan: No, no, no. But, for example, they’ve been comparing their own organization against tiny firms like Hewlett-Packard. So, I mean, that tells you something for this organization.

Mark: They’re big.

Duncan: They’re a big organization and yet they are in the situation where their ability to reliably access business leaders and to put those people in front of analysts is extremely limited. So they got a lot of resource, they’ve got a lot of information, they’ve got a beautiful portal and you can log into and analysts can access all of this information. But if you want to meet them face to face, you’ve got to be at a very big industry event and you might get a short period of time for deep dive with them.

Now, I know this is a big, wealthy, stupendously profitable organization and yet it is not able to eke out from its own organization more than the bare minimum of time needed for executives to speak with these hugely influential market makers. That’s his daily reality. But for me as an analyst, it’s almost unimaginable that organizations don’t understand how influential I am. And so I assume you don’t want to meet me, it’s not because they’re busy doing other things, it’s because the truth is worse than I can possibly imagine. If they won’t come and meet me–if I know not only won’t they meet me they won’t meet the biggest and most influential firms in my industry–it’s because the truth must be so terrible that I would be able to smell it if I walked into their headquarters, let alone started to speak to their people. And I think that organizations can’t understand how complex the internal marketing world is and so they assume that if analysts are not being taken seriously by a firm, of course you assume it’s because of the analysts and their incredible predictive power and their incredible powers of deduction, rather than these people just having other things that or not be convinced of the importance of analysts.

Mark: You may have answered this question in what you just said, but what angle should a marketer take when they approach an analyst? How should that work? What’s the tack they should take? Obviously, from what you just said, maybe they should be a little bit more informed and maybe a little smarter about their own product. But how do they get to that point?

Duncan: Well, the good news is–in fact, it’s doubly good news because, firstly, there’s very little that they have to do that is special. They simply have to understand what the analyst is interested in and try to come into the conversation with an understanding of what is on the analyst’s mind. So it’s really super straightforward. The other good news is that hardly anybody is doing that. So, last night I organized the dinner for some of the attendees at this conference so we had some really interesting people including Josh Bernoff. So, Josh had 20 years at Forrester, was one of the most cited analysts in the media, year after year after year after year. He gives a lovely example. In his career as an analyst, he probably received something like 20,000 press releases and, of those 20,000, maybe 300 were even tangentially relevant to his work. That absolutely spoke to my experience as an analyst as well–that you get just press releases from organizations that either don’t understand me or don’t understand what that technology does.

Or probably both. So the signal to noise ratio is absolutely immense. If somebody was to get in touch with me and say, “I’ve read something that you have written and I disagreed with it or I agreed with it,” I would be astonished. And, perhaps the experience of the most senior, the most desirable analysts at the most influential firms is that they’re able to find a few people who approach them in that intelligent way. But, imagine for someone like Josh Bernoff,  probably one of the most influential analysts in the world for decades, he’s getting a tiny handful of interactions. Most weeks will go by where he will get dozens of approaches every day. But he might go for weeks without any of them being even slightly relevant to him. I think you can imagine what means for marketers and I think it also says something about how immense the rewards would be for analysts if they were to just take that time to not email 400 people, but to just pick one person and spend a little bit of time understanding them and then making a phone call or writing an approach that was in any way personalized to what they were doing.

Mark: What is the best way for a firm–say, you know, a high tech firm, a software firm IoT firm–whatever it is, to get on an analyst’s radar?

Duncan: I think the starting point has to be that getting on the analysts radar is a firm-wide activity, it’s a team activity. It’s definitely something that individuals can do but it has to be an activity for the firm. Analysts want information, they want relevant information that they can digest and that they can use. That means that organizations need to think: What kind of information is being consumed by analysts? What kind of data are they asking for? Very few analyst relations managers do that. Very few analyst relations managers start from that point. Instead, it’s the other way around: The company is selling something and you generate information about what your company is selling. And you come along and you say, “Mark, I am selling something and I would like to tell you the various attributes of this thing that I’m selling.” But, as an analyst, you are interested in the object itself but you’re interested in the context of that object you’re interested in what that object tells you about the market that it fits into.

Mark: It could be a great object but if it’s in the wrong place it doesn’t work.

Duncan: Also, it could be an outlier. It could be an extreme example or it could be a counter indicator. There are lots of firms that are really successful because they’re providing something that almost nobody in their right mind would want. But there are some people for whom it is absolutely the perfect thing and marketers don’t have that perspective to understand what the wider significance is of their solution.

You know, everybody is like this. You design something, you sell it to 10 people to 100 people. You think the only reason why a million people haven’t bought it is because of the physical limitation that you have in terms of the number of arms and legs and mouths that you have available. Analysts are starting from a different viewpoint. They’re starting from the needs of their clients, they’re starting about the future needs. They’re often talking about the problems that clients have which are perennial. And marketers don’t come along with that. Marketers don’t come along saying, “We’ve got a solution for a business problem that has enduring longevity.” Nobody comes along and says, “We’ve got ways you can get your invoices paid a little bit faster.” People come along and say, “We’ve got something new–we’ve got an artificial intelligence solutions for your invoices, we have something that’s is absolutely, massively at the leading edge.” But that might not relate to the pain points of the problems that that analysts has. If a marketer was to come along with an understanding of the information that the analyst wanted to consume–case studies, references and data that had been pre-chewed and pre-formed in some way, so that the analyst could quickly assimilate it, then they would be street ahead. But nobody does that.

Mark: So what’s the advice you would give a marketer to get the ear of an analyst?.

Duncan: The first thing has to be the understanding of the analyst relations this is a firm-wide activity. I think maybe the best description I’ve heard of the task of analyst relations is from Kevin Lucas. He’s an analyst at Forrester who advises analyst relations managers. And one of the things that he says is that one of the key tasks for analyst relations is to transfer, onto the rest of the business, responsibility that analyst relations. And in one sense that sounds like super slippery. I mean is it the job of anybody to transfer responsibility for their job away from themselves and on to somebody else? OK, that sounds super, super slippery and super wise. But, actually, it’s kind of true. You know, analyst relations needs resources from the rest of the organization and you need to convince the rest of the organization that not only can’t you be successful without their participation but they can’t be successful without their participation. Things like reference customers are a great example of that. If you’re a sales person, you are not going to let an analyst relations manager anywhere near your client. You’re not going to let anybody touch your client without a very good reason because any uncontrolled variable might set in a whole series of processes for your client you can’t imagine.

You don’t want any variable to change once you’ve made the sale. That’s why the one piece of advice that sales managers get now that they’ve got 100 years ago and that’s still true, is once you made the sale leave the room as quickly as possible. You could only you can only make it worse. And so it’s very hard to tell them it’s people to provide reference customers, to provide case studies. All of these things seem very, very dangerous and, of course, that’s the reason why analyst relations managers only have slides and promises and slideware and shelfware. And they often don’t have realities. So the most important thing is for marketers to understand that they have to convince the business to participate. And they need to be developing techniques that allow the business to understand the value of analysts, that increase the career value of your colleagues who are working with analysts. And there’s a whole series of devious techniques like this to help mobilize people inside your business. The only other thing they need to know is this super-straightforward fact: that you need to read the analysts research, you need to work out the kind of information that they are using and you have to give it to them.

And, honestly, even if you’re giving them information which isn’t really relevant to your company but is relevant to theirs, then they will appreciate that. Maybe there’s an analyst who is writing about your technology and is writing about some other technology that is not of great interest to you. But maybe you know somebody who knows something about this. You know, maybe they’re writing about something completely irrelevant to you, like coffee. You know you don’t sell coffee, but maybe your organization contains people who consume coffee or enjoy it or even have coffee machines. You could introduce those people to the analyst and then you’re building a multidimensional relationship with that person. You’re making them value you because they understand that you have some sympathy for them, that you’re following them, that you’re alert to their work, that you genuinely want to help them to be successful in their careers. It’s basic empathy. So actually successful analyst relations just boils down to those two elements. It’s having a little bit of empathy for the analysts. Easy to do that–you just need to read what they’re writing and think intelligently about what kind of information must they be using in order to write these sorts of things. And then it’s convincing your colleagues about how much easier their lives would be if they were being more helpful to industry analysts.

Mark: So getting cooperation to do case studies, getting engineering specifications or whatever it is–getting the right information in the hands of the analysts relations professionals then to the analysts.

Duncan: Absolutely. And and also feeding the good news about success back to the rest of the organization. In a way, what analyst relations managers need to do is find their internal stakeholders who are helping provide information to analysts and make those people the heroes. The people in market intelligence who took the extra five minutes to produce that statistic, the product manager who skipped her lunch break in order to be able to speak with an analyst, the executive who responded to an email. You have to make these people heroes and to make analyst relations an accelerator and a catalyst in their internal status and their careers in the short term for them to see that it’s worthwhile for them to be helpful to analysts and to be helpful to analyst relations people. Because it’s only afterwards that they’ll see the big benefit of analysts recommending you to short lists or analysts speaking to you favorably to potential investors or analysts mentioning you in the media.

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