Don’t discount the business value of analysts’ 350,000+ phone-based inquiries with end-user clients

icon-social-media-blue.jpgIn all the buzz about 21st century social media like Twitter and blogs there is this 19th century warhorse that is the analyst firms’ secret weapon – the telephone.

 Yes, the lowly telephone.

A common conversation SageCircle has with vendor executives is their opinion that analyst research is commoditized because so much information is available for free on the Web and in blogs, thus analyst influence must be dropping. It quickly turns out that the executive is almost always referring to the analysts’ published research. Our point in this post is that written research has always been commoditized and thus the written word is not what sells analyst services. What clients really buy is spoken advice – personalized and delivered real time – that cannot be commoditized, digitized, and distributed around the Internet.

Many members of the vendor community do not have a visceral feel for the client value delivered by these ad hoc phone-based inquiries between analysts and end users because they have never participated in one. Often vendor executives approve spending for analyst contracts because they think it is all part of a pay-to-play payola scheme. Because of this attitude they never bother to actually use the inquiry services they buy. 

However, the typical end user client of an advisory firm does not have this negative bias about analyst firms. For the enterprise IT manager, the advisory analyst is a trusted, objective advisor. In many cases, the analyst can actually save the client many times the analyst contract cost by providing timely insights – via a short phone inquiry – about a vendor contract the IT manager is negotiating. So rather than perceiving the analyst as someone to pay off, enterprise technology buyers see the analysts as a way to save major amounts of money.

This sort of phone-based advice is something that cannot be currently duplicated via social media – though maybe someday new technologies might offer alternatives.. IT managers absolutely can and do use information from the Web and blogs, but they can’t talk to the writer about their specific situation and ask what other IT managers in their situation are doing.

Plus, inquiry is easy and time efficient. An email or phone call to the firms’ client service department to set up the inquiry takes less than five minutes. The inquiry itself lasts 30 minutes. This is typically much less effort than researching the answer on the internet and maybe not finding any useful or trusted content.

To get a feel for the volume of interactions with clients, SageCircle contacted AMR Research, Forrester, and Gartner about the number of inquiries they do. In aggregate, the three firms conduct over 350,000 inquiries with clients per year. While some of these inquiries are with vendor clients, the vast majority are with end uses. Our research shows that vendors typically underutilize this deliverable. That means that the firms had over 350,000 chances to deliver value that will cement client loyalty and contract renewals. Of course, some of the value delivered to the end user comes at the expense of the vendor in the form of demands for bigger discounts or in sales deals that are lost.

The growth of the blogosphere and the Twitter phenomenon have not dampened demand for access to analysts via telephone. Gartner reported in its 2Q09 earnings call that client inquiries have increased 28% over the prior year and that inquiries with CIOs have increased 40%. So even with the explosion of information and opinion available on the Web and social media over the last year, IT managers are calling the advisory analysts at an increasing rate.

But wait, there’s more!  Conference One-on-Ones

Those 350,000+ inquiry calls do not take into account the other major way that analysts have personal conversations with end users.  Both clients and non-clients have meetings at analyst conferences. A big selling point to the end users for attending analyst conferences is meeting with key analysts. Firms invest significant resources to staff these 1-on-1 meetings. For instance, at Symposium Gartner will equip a huge ballroom with temporary cubicles, set up a scheduling center staffed by more than ten people, and use specialized software to handle the 1-on-1 reservations. If there are 4,000 end users at U.S. Fall Symposium and each one uses their three 1-on-1s, then in a single week alone there will 12,000 face-to-face advisory sessions. In addition there will be many thousands of informal conversations going on as well. So it is not unrealistic to say that Gartner analysts will have 20,000+ opportunities to provide personalized advice to clients in Orlando in October.

Add up all the analyst conferences throughout the year and multiple by the number of end user attendees to realize that there are at least another 150,000+ analyst-end user conversations to add to the 350,000+ phone-based inquiries. These half-million personalized and interactive conversations deliver a business value that cannot be matched, which is the basis for advisory analysts’ ongoing success.

SageCircle Technique:

  • AR should develop an executive “strategic briefing” program to educate stakeholders on how written research is only a small fraction of the value of analyst firms
  • AR should work with trusted senior analysts to schedule inquiries with skeptical executives to discuss how end users gain value through short phone calls

Bottom Line: Social media and analyst firms each have their role in providing information and advice to the buyers of technology products and services. Not understanding the various delivery models of all participants can lead to vendors missing valuable opportunities to identify and educate influencers. Conversations between analysts and end user clients are powerful influencing points because they are personalized, interactive, with trusted advisors, and high in volume.

Question: AR – How many of your executives express the opinion that analyst research has been commoditized? Are they referring only to written research?

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13 Responses

  1. Funny thing is that the telephone works wonders for AR professionals looking to work with analysts too ;-)

  2. Maybe it’s these firms’ approach, but 350,000 seems low based on my calendar and my colleagues. Doesn’t Gartner alone have over 600 analysts? That should get you to 350-400K right there. Why wouldn’t an analyst want to talk to 2-3 end users a day if we’re supposed to constantly measure the pulse and needs of our topics?

    • Here at Gartner, at least, some analysts are quantitatively oriented, so they don’t take a lot of inquiry on a daily basis. Semiconductors is a good example of a whole research area in which there’s not a lot of end-user inquiry.

      My calendar, at least, is booked to overflowing, normally. It’s not unusual for me to have as many as 10 inquiries in a day. Carter cites a 30-minute slot but you really have to schedule them 45 minutes apart to account for people running late, etc. ,so that’s the max you can pack into a work day.

  3. sagecircle, you have once again written a very interesting piece. As a former client research analyst at one of the leading firms, could I provide a slightly different perspective?

    In the 12+ years that I worked directly with end-user clients, I do not recall ever having a 5-minute prep call, followed by a 30 minute teleconference.

    More usually, I would have at least a 15-20 minute (sometimes as much as a 60-minute prep call), followed up by documentary context or discussion documents from the client, sharing and vetting these with the analyst, doing some research to assist the analyst to prepare for the call, followed by call that was often 50-60 minutes, sometimes as long as 2 hours, sometimes arranged on the fly for as short as 5-10 minutes.

    But with the diminution of the client-facing role that I have seen in recent years, it would not be surprising to me if more calls were of the 5-minutes-of-prep-30-minute call variety.

    When I started out years ago, the client-facing (analyst-supporting) role called for an MBA with several years of experience who would be an expert in one or more areas, do and write research, travel and make presentations to clients, actively participate in research and research strategy meetings. Now more often, I believe (and have been told) the analyst firms look for an entry-level person with no more than a few years of experience, and I have seen great decreases in expectations for the role.

    Thus, it is interesting to note that in the same week that sagecircle cites that the three leading analyst firms have taken 350,000 inquiry calls, we have also seen a report of an analyst firm losing a major analyst, in part because of “120 hour weeks”? I have seen this happen before, and I think there is a connection.

    At the same time that the analyst firms would like, I think, to do more and more inquiry calls, which obviously demands more and more of the analyst resources, the diminution of the client-facing (analyst-supporting) role means more of a load on analyst resources. Sagecircle’s citing of 350,000 inquiry calls is right on target – this is precisely what analyst firms try to do today: log more calls with clients every year. Clients have to hope and trust that the analyst firm then sizes its work force with the right set of skills and capabilities to be able to provide X number of calls to X number of clients, and be able to provide rich analysis and insight in each call. In fact, this seems to be more art than science, and rather than invest in a well-trained, adaptable client-facing role to pick up the slack and alleviate some of the burden, I see analyst firms using the client-facing role more as “facilitators” and bookkeepers, and letting the analyst chips fall where they may.

    I am watching with great interest to see how successful the analyst firms are, and how tolerant clients are, with this strategy.

    • I’m frankly not sure that an MBA (or any other degree) is particularly valuable for the analyst role. What I do think is valuable is broad as well as deep expertise in technology, and experience with tech hands-on, in a tech management role, and in a business role.

      For instance, my newest colleague at Gartner, hired last month, has 35+ years of experience, a master’s degree in a technical field, experience hands-on in end-user companies as well as management experience up to the CIO level, experience working for vendors, consulting, being in business roles (managing a P&L, etc.), and more.

      That said, I certainly do see plenty of new analysts with other firms, who are primarily fresh faces right out of college or an MBA program, and I agree with you that it diminishes credibility.

  4. Hi Carter

    The reality is that it is a blend of generic written material, bespoke reporting and interactive guidance at the large enterprise high end, tending towards generic written material as you get into mainstream businesses who tend not to use analyst services explicitly and consume analyst insight via vendors (commissioned/licensed pieces) and the media, events, SIGs, etc.

    As per previous conversations, we need to remember that the big three are only focused on a relatively discrete part of the decision maker community – most notably those involved in big decisions within big companies. Of course that’s a pretty important subset, and there is bleed-over into other areas, but activity here is only a part of the decision making landscape.

    In the broader market, the scale and mechanics of decision making activity, along with the nature of the audience, makes any interactive advisory model (e.g. telephone centric) much more challenging, both in practical and economic terms.

    Hope you don’t mind me reframing the discussion in the context of the bigger picture. I do think it is all to easy to run away with the idea that the world revolves around a handful of large analyst firms – indeed around analyst firms in general :-)

    • As a further thought, even though I have referred to generic *written* material, perhaps we should refer to generic *published* material in the broader sense, which would include things like webcasts and podcasts. These are becoming more popular delivery mechanisms (particularly the former).

      The good thing about media such as this is that you can have ‘canned interaction’ – e.g. you can often get a much more rounded view from watching multiple people with different perspectives interact than you would from a report or article written by a single analyst in a darkened room. When it’s an analyst and a vendor interacting, provided the discussion is conducted in the spirit of objectivity, the analyst can act as a proxy for those involved in the IT decision making process. Throw an experienced customer into the mix, and the insights could arguably be better than a dedicated call between two individuals on the telephone – especially for people who don’t know what they don’t know, and are sensible enough not to assume that analysts themselves are ‘all-knowing’ :-)

      I am sure others out there have experience of other mechanisms for imparting advice or exchanging insights. We use interactive online workshops, for example, Redmonk immerses itself into the communities it is advising, and so on.

      The point is that while the telephone is not going away, its continuance in the advisory context is not in itself a particularly useful foundation for arguing that analysts are still important. I would prefer to turn this thinking on its head and argue that the richer and more diverse interaction mechanisms that exist today mean that many more analysts are reaching many more people than ever before.

      The question of distinguishing good from bad, objective from divisive, etc is quite a separate discussion. And if we get into that one, I would want the output of the larger firms, even the paid for stuff, put under as much scrutiny as everything else.

  5. I’d be interested to get a breakdown of what proportion of that 350K inquiry calls are conducted with VENDOR clients, with IT/END USER clients, and (where appropriate) with WALL STREET and OTHER type clients.

    Would it generally mirror the makeup of the firms’ client bases overall?

    Cheers,
    Gerry

  6. [...] Comments Gerry Van Zandt on Don’t discount the business va…Dale Vile on Don’t discount the business va…Dale Vile on Don’t discount the business [...]

  7. On the balance, very important points are made in this post. However, I disagree on a few.

    First, perhaps I’ve been fortunate to deal with realistic execs, but I’ve never been told that we needed to “pay off” a given firm or analyst; nor has it been insinuated. I have more than once felt the need to remind research firm account managers that vendor clients pay in the same hard currency as end-user clients and are entitled to the same level of client service. This includes regular, unfettered access to analysts.

    Second, the amount of information to be gleaned from analysts regarding end-user inquiries varies greatly from firm to firm and among analysts. Some offer very little, even when you’re the one who facilitated an end-user discussion for them. Others willingly prepare slides and gather notes. Very few proactively approach vendor clients with this info. My point is, the blame for underutilizing inquiry time can’t fall on vendors alone.

    Lastly, I’ve been told by an account manager that Gartner permits only two 1:1s per vendor at the Symposia. Of course, there are more informal opportunities, but there isn’t an untapped watershed of missed chances.

    Thanks for raising this topic, Carter.

  8. So I’d like to chime in as both a former client of these services and as a (current) analyst. To the main body of the initial post, I whole-heartedly agree – inquiry is under-utilized and under-valued. I’ll take the value argument a step further – why would a client renew if they can’t get a question answered in a timely manner? This form of access is called inquiry, and it is crucially important to the analyst-client relationship.

    But briefings are not inquiry, and consulting is not inquiry, and the boundaries between the activities are often trampled knowingly or unknowingly.
    All types of analyst access are “fettered” by guidelines in some way and the guidelines may vary by firm. Understanding the guidelines is key to using them successfully.

    Inquiry – The essence of inquiry is the answer to a question – who should be on my shortlist? How are other folks doing this? Who are our competitors? What’s happening in the market? In most cases, inquiry comes with membership.

    Briefings – are related to the analyst’s current coverage area and current writing load / research agenda – they are not related to membership. They occur based on their fit to the current research agenda and interest level of the analyst. Quality time is the key – don’t ask to brief an analyst every month, save the few you may get in a year for meaningful dialog when both will realize value.

    Consulting – vendor and non-vendor clients can pay for blocks of hours or days to cover work the other 2 categories do not. A common dividing line is when the analyst begins to do work on the client’s behalf. Work may include vendor product strategy discussions and messaging reviews, helping clients develop an RFP, or simply a guaranteeed block of time for wide-ranging discussions and feedback.

    1:1s – face-to-face meetings at conferences are usually limited to help clients get SOME access. Limits avoid analyst dance-cards from filling up before all attendees have a shot at a 1:1. If you can’t get all you need at the event, you may catch the analyst off hours or use inquiry after the event to get what you need.

    Understand the access guidelines to get full value / avoid conflict.

  9. [...] market research, and white paper for hire. It is the end-user advisory firms that have the hundreds of thousands of personal interactions with IT buyers every year. Thus, dollars spent with those analyst firms will have the biggest [...]

  10. [...] published research becomes more and more commoditized, enterprise clients turn to analyst firms for personalized advice and targeted consulting. Gartner has kept its analyst team relatively constant at 650 even as it [...]

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