Hiring an Analyst Firm Is Like Buying an SUV
There are many common threads that tie together shopping for an analyst firm and kicking the tires of a sports utility vehicle. The power promised by the marketing behind both is impressive.
The trick is finding one that fits what you want to accomplish. Both have high expectations associated with them. And, as any test drive can quickly show, sometimes what appears to be the perfect match is uncomfortable at best and dangerous at worst.
Like the many myths that surround SUVs, there are half-truths that swirl around analyst firms as well. One big myth of SUVs, for example, is that mild-mannered families that make weekly treks to Costco will become hardened off-roaders with the flick of the four-wheel drive switch. Of all the SUV owners I know, only one has done this, and it was to check out a weekend cabin in the mountains of Southern California.
Let's get to the truth of how to manage expectations when it comes to hiring an analyst firm.
Truth 1: Expectations
Analyst firms have an expectation management problem.
So many software, hardware and services vendors hire analyst firms but do not have a clear idea of what they want to accomplish with them. Executives expect that hiring an analyst will help them get positive mentions in the media and in written research. But just writing a check doesn't earn you positive mentions -- you first have to do the hard work of proving that you deserve those mentions.
Analyst firms therefore are subject to higher expectations than they can deliver, and it's all because of vendors not realizing that any relationship of value, especially with analyst firms, is all dictated by the simple truth that you get what you give. There are no shortcuts to that fact.
Truth 2: Fear and Quotes
If you sign with an analyst firm out of fear or for quotes, cancel them now.
Let me be clear on this point. There are many companies out there signing up with the world's largest analyst firms because they are afraid that if they don't they will be seen as less important in the market.
Inside these fear-driven companies is typically either one or a group of senior executives whose pride has been hurt because the analyst firm told them of their shortcomings. The vendors' products may be way behind schedule, their applications may stink, and their marketing may be irrelevant for the market.
These are all tough messages to deliver, and give credit to the analyst who has the courage to tell clients that. But if you just keep signing up out of fear, you are wasting your money. The same holds true if all you do is use analysts as quote ATMs.
Truth 3: Acronyms
Analysts will never be acronym mercenaries.
Every once in a while a marketing executive has an epiphany about his business and comes up with a new acronym that they feel just crystallizes their market. As an analyst, I would find it painful when these people would come to me and ask for an endorsement of their latest creation.
The funniest one I remember was pronounced "wino," and I couldn't help but think it was created by the marketing vice president, mimosa in hand, nursing a hangover after having been out with the sales vice president all night.
No self-respecting analyst is going to fight for a new acronym when we're hearing from user clients there are too many acronyms already.
Truth 4: Benchmarks
Start benchmarking your analyst firms now.
There's tremendous pressure inside many vendors to show some value from their $30,000 or higher investments in analyst firms. And, as in purchasing an SUV, there are the many other costs associated with maintaining and operating this vital piece of machinery in your business arsenal, so the total cost of a year's subscription could easily rise above $70,000.
If your CEO has not asked, "Where's the value?" the question is coming, and it would be good to have a benchmark or scorecard ready when the question comes. If your CEO is sales-centered, gets the elevator pitch going now to defend the best analyst firms you have on contract.
For those of you who signed on with an analyst firm out of fear, your benchmarks will be barren. Why? Because analyst firms know if you signed out of fear and may not respect you much. You may be getting taken for granted by the analyst firms you fear, and you won't even know it. Benchmarking will tell you that uncomfortable truth.
And just as an SUV may not fit in the parking spots of places you frequent, your analyst may be a poor fit. It may be time to return it for another model and cut your losses.
Truth 5: Mileage
Depending on your driving habits your mileage will definitely vary.
The car manufacturers selling SUVs are polite and politically correct and tell you that your mileage "may vary." Of course it will. If you're like my friends who floor their SUV up the mountains of Southern California, you get holiday cards from Chevron thanking you for bumping the stock price up.
The same holds true with analyst firms. Don't be like the timid, fearful companies that manage their analyst firms like the timid SUV drivers who stop before they go over speed bumps. Be bold. Hold your analyst firm accountable to results -- immediately. If you don't, you will never get real value from your analysts.
And if you are afraid of your SUV's power, it's more dangerous to try and drive it. Instead, get rid of it. That same message holds true for analyst firms you fear. You will never get the mileage you are paying for out of those relationships.
Louis Columbus, a CRM Buyer columnist, is a former senior analyst with AMR Research and is founder of LWC Research, a firm specializing in CRM, sell-side e-commerce, sales and product configuration and guided selling.