Several bloggers have been talking about industry analysts and high tech startups. Brings back the dotcom days, when startups rolled down 101 in their stretch limos, on their VC and analyst tours. Everybody needed a nod from Gartner or Forrester to clinch that next round of funding. Much has changed. Some suggest the changes include a more mature view of where analysts fit in startup strategies:
Carter Lusher suggests the analysts as more important than PR for startups. He sees analysts as almost a sales lead generation/conversion resource. He’s got a case study where the entire marketing budget went to Gartner to Gartner and a customer reference program.
Raj Kanaya and John Oh advise startups to look to at least two customer-focused advisory analysts — smaller firms in particular — to help offset the typical bootstrap shortage of product marketing expertise as well as market data. (Hat tip to Duncan Chapple for pointing to their blog.)
It’s good advice, but analyst sales reps should size up the obstacles. The biggest: getting startups to look past the nearest Gartner Magic Quadrant or Cool Vendors list. The other biggest: convincing startups and their boards/VCs that they should part with cold cash for analyst services.
Free is a very attractive idea. Selling analyst services to startups is not a walk in the park. There are lots of indicators out there that the “zero marketing budget” mindset of the old open source software crowd is about to come back even stronger on the wings of social media and community based conversation.
Of course, analysts could turn this momentum to their advantage. Chris Kelley suggests that analysts interested in the early adopter markets could use microblogging tools like Twitter to slash overhead and boost loyalty.
Interesting ideas.
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April 29th, 2008 at 6:30 am
Hi Barbara, Thanks for the link.
One slight correction, that software company focused its marketing efforts on its customer reference program as well as Gartner. The two went hand-in-hand.
Part of the “cold cash” for AR and analyst services could - and should - be taken out PR agency spending. Multiple studies by different research firms (including SageCircle) consistently shows that the industry analysts have way more influence on short lists and other aspects of the sales cycle than the press for tech sold to enterprises. Bottom line is that spending money on AR has a much greater real ROI than PR.
Forrester has two very powerful case studies (see link below) about the business value of analyst relations. Here are two extracts:
“…With two-thirds of its sales cycles affected by industry analysts, it’s vital for Lawson to know which analysts are influencing each prospect and for it to have repeatable sales support mechanisms in place to influence deal outcomes. Lawson’s AR generates new sales opportunities, as well…”
“… AR generates approximately 10% of the company’s leads, while 40% to 50% of sales cycles use analysts or their research at some point. Ultimately, Callidus attributes 10% to 15% of its revenue to AR…”
http://sagecircle.wordpress.com/2008/04/28/use-the-analysts-words-to-build-executive-understanding-about-the-impact-of-the-analysts-on-sales/