In 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.
- 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?