Being covered by industry analysts is a great proof point that your product is making an impact, your business model is sound and that your business is a real player in the market. Analyst coverage adds tremendous value from that perspective, but it’s not always possible to quantify the exact dollar value of good analyst relationships. This can make it difficult for a business to decide how much to invest in an analyst outreach strategy and how much effort you should put into developing those relationships. In my experience, building good relationships with analysts has benefited Yellowfin significantly and it’s something that we continue to invest heavily in.
Based on my experience at Yellowfin there are four things that you need to do if you want to work with analyst firms:
1. Be prepared
Look at your business and decide whether you are actually willing to do what it takes to build a successful relationship with industry analyst firms. If you’re not prepared to do the work, then just ignore them. It is definitely possible to carry on your business and be successful without analyst coverage.
If you are willing to play then you need to be prepared to play by their rules. This involves doing your research and determining which analysts are a good fit for your business. Each analyst firm has different criteria when they research particular products. That’s because they each have a different customer base and different reasons for existing. It’s important to understand which analysts really make a difference in your industry and may actually influence a potential buyer of your product or service.
For example, a business has to be reasonably large before Gartner will be willing to put it in front of their customers. They have enterprise customers who want to partner with strong, viable businesses. If you can’t afford to play in the enterprise space then you’re not an appropriate fit for Gartner, so don’t waste your time chasing them.
Once you have identified those firms you want to work with, then you will need to identify the actual analysts within those firms that cover your area. From there, you can create a communication plan that outlines how you will reach out and engage with them.
This communication plan must take into account the criteria that they use to assess your product. If you want to play the game you will need to commit to building your product and your business to fit their exacting criteria. You also need to ensure that your business can meet their revenue-based milestones - funding doesn’t matter here - it's about how much customer revenue you are generating. Analysts won’t take notice if you don’t meet their criteria and that means you won’t be featured by them. If you aren’t willing or able to meet their criteria in the medium term then there’s no point wasting your time trying to build the relationship.
If you don’t have the resources to play with the big boys, then find the analysts who are willing to look just at your tech and work with them. They can be your stepping stone to building a relationship with other larger analyst firms in the future.
2. Fit your story to their narrative
The reality is that analysts specialize in particular segments and specific markets. They understand their own space and customer requirements extraordinarily well. If their customers are your target customers, then you need to be prepared to match your story to their narrative. It’s really important to recognise that analysts won’t change their industry-based narrative for you, so you need to make sure you fit into their storyline.
Spend time understanding their narrative before you start communicating with the firms. Take the time to tailor your communications so you can demonstrate how your product fits into the evolution of the industry and will help them be successful with their customer base. For example, if you’re dealing with a firm that works with large enterprises, then the long-term viability of your business is critical for them to take you seriously and needs to be built into your story.
When creating your narrative, it’s good to have a goal in mind. If you want to feature in the Magic Quadrant, then understand what their precise criteria is and work towards meeting that. It’s also important to have a great tech story. That means you must be building technology that is fantastic and constantly update analysts with the story of where you are taking your technology.
3. Take a long-term view
Most analysts are in it for the long haul - they’ve been in their space for 10-20+ years and have a lot of history. They’ve spoken to a lot of vendors and know their industry inside out. Analysts want to know that you’re not just another flash in the pan so you need to cultivate your relationship with them over a long period of time.
It’s going to take a lot more than one briefing to be successful with any analyst firm. Think beyond your first encounter and set up the foundations for briefings in the years to come.
It always pays to be honest and transparent to build trust. It will take dozens of briefings over years to build up the analysts’ confidence in your business and their belief in you, and authenticity goes a long way in nurturing these relationships. One tactic we used to great effect in the early days at Yellowfin was to be brutally honest. In key analyst briefings we would say “here is where we are today, and this is why we don’t think we deserve to be included until next year.”
This approach really differentiated Yellowfin when we started speaking to analysts. We told it like it was and didn’t over-market to them. We made sure that our product did what we said it did - we didn’t take vapourware to them. We didn’t waste their time - we only took a product or feature to the analyst firms once we knew we could demonstrate its worth. This showed that we were serious about our product and valued their expertise and feedback.
As part of this relationship, it’s also important to listen to their feedback and take it onboard. The most positive feedback we’ve received from analysts is when we’ve delivered what they suggested six months earlier. It showed them that we were serious and helped move their relationships with our product forward. Delivering on your promise is a much more effective way to get an analyst’s attention, rather than just crossing your fingers and saying “please talk about us."
If you’re in it for the long haul then you have to be prepared to give these relationships a lot of love and that takes time and effort. If you’ve got the money, it’s a good idea to hire someone to manage these relationships full-time.
This person can constantly communicate with analysts about your progress and vision. They can communicate where you’re heading in the market, what you are doing well and where your product is going. Having someone manage your analyst relationships rigorously is the most effective way to be successful.
It’s important to be clear that it costs a substantial amount of money to achieve coverage by heavyweight analyst firms like Gartner or Forrester. The vast majority of this money is invested in managing the relationship on your side. But it is also important to invest money with analyst firms on a commercial basis. By engaging with them on a commercial level you will have more time to talk to the analysts and you can learn more about how they see the market. Learning about the market is the most valuable component of the relationship. Once you understand how the analysts perceive the market and where it’s going you can then tailor your products or service to meet that expectation.
Ultimately, the most important aspect of an analyst’s job is to look at the viability of your business. If you can’t afford to commit resources to managing analyst relationships effectively, then you don’t belong in their quadrant - it’s as simple as that.
Building long-term relationships with analysts isn’t easy. Like any good relationship if you put in the time and energy, are genuine and deliver what you say you will, you will be well-positioned to reap the rewards. Investing in analyst relationships is a strategy we’ve seen great benefits from, and is an area I’m always happy to talk to emerging founders about.