It is early December. And all across the globe technology vendor strategists are busy devising their product roadmaps, marketing programs and strategic priorities for 2011. One of the sources that almost every vendor will consult is secondary research from the analyst community (e.g. Gartner, Forrester, IDC). There are numerous companies whose product management organizations heavily depend upon analyst market research to guide their roadmaps. By contrast, most CEOs I have met have a fundamental skepticism about the wisdom of industry analysts. Executives question whether the analysts really have a better grasp of market size, customer needs and future trends than in-house personnel. So where is the biggest value to be gained from analyst relations? For starters, the most significant value does not come from focusing on analyst opinions about your immediate market.
Too many technology vendors fall into the trap of becoming obsessively focused on what the analysts about saying about their market. If your team doesn’t know more about your own market than an industry analyst does then you have a bigger problem! Consider that most analysts are spread thinly across multiple technology categories, which means that they (as one person), spend only a fraction of their day focused on your sector. How many people are staffed in your marketing organization? Each product manager should be spending a percentage of their time gathering customer requirements. Do you have a competitive intelligence analyst? If not, then you should. And if you do then they should be spending 100% of their time on external analysis of competing vendors. Finally, your marketing leadership team ought to be spending a significant percentage of their time analyzing market trends and devising long-term strategy.
Don’t Ignore the Analysts, but Form Your Own Opinions
Analysts will undoubtedly have access to information that you do not. For example, many prospective customers will consult the analysts prior to or during an RFP cycle. Analysts are often advisors to venture capitalist firms, investment bankers and strategic buyers involved with merger and acquisition activities. Furthermore, analysts are retained by your competitors to provide strategic guidance and insights. Therefore I am not proposing that you should ignore analyst commentary or insights. The analysts should be just one of many inputs you consider when formulating your strategy. But I am stating that you should formulate your own primary research and informed opinions about the competitive landscape, market sizing and customer requirements. Furthermore, I would state that if you continually find yourself surprised by analyst research on your immediate market then you are not doing a very good job of primary research.
Also, I should clarify that I am not stating you should not worry about what the analysts are saying about you as a vendor. Poor placement in a Gartner Magic Quadrant or Forrester Wave can be devastating to sales. Consequently, a professional, experienced analyst relations team is a must in today’s technology market. But outbound analyst relations are not the focus of this post.
The Real Value is in Adjacent Markets
The real value to be gained, in my opinion, from market research firms has little to do with your current market. Instead the biggest value comes from learning about adjacent markets. Adjacent markets fall into two primary categories: 1) markets you are considering entry into and 2) markets which are indirectly influencing your primary sector. Both are important considerations, but neither are easy to monitor and understand without third party support. More in my next post…