Sales, Reputation & Community: Carter Lusher On The Future Of The Analyst
October 14, 2009
Next I asked an important question for me, given my interest in the use of the web for business, I asked Carter what his thoughts were on the changing nature of competition from the web for large analyst firms? And do larger analyst firms have any thing to fear from smaller firms providing free research? Where those same boutique firms rely on selling consulting for their business model? For example, a firm like Redmonk creates free research content, Carter suggested that creating free research is something the larger analyst firms have always done.
Free, was not invented by small firms, the larger firms selectively provide free access to their reports to entice in new customers, and if you search the web for Gartner or Forrester reports you can usually find a free copy listed on a vendor's website. In fact Gartner makes about $7 million a year on licensing reports to vendors. If you consider the practice carefully, really the vendors are paying for the privilege of marketing the analyst firms for them.
Creating research and then providing it for free is a big investment. You have to be able to generate enough business to support that effort. For a boutique firm, it takes a lot of effort to create research, create a reputation and find clients.
Cutting reputation costs using the web has been one way for boutique firms to gain exposure. And the web in turn has always been an issue for large analyst firms.
When Carter was at Gartner in the late 90's the company was struggling with what to do about the web. The web lowers the barriers to entry for an analyst firm. Even if a firm cannot get press quotes, an analyst can generate their own visibility from their website. However, there's a problem with the web, you have to compete to gain attention, especially when there are more analysts around.
When Carter first started in the business he sometimes had to explain what an analyst firm was, but by 1995, when he called and told people he was from Gartner, the vendor understood who Gartner was, and the analysts’ role.
Today with the proliferation of analyst firms it’s tougher for the clients to choose which firm to pick. Reputations are everything, for a small boutique firm, success relies on the reputation of the analyst. The proliferation of firms actually gives an advantage to the larger firms who can rely on their reputation to get through to clients. Boutiques can leverage those same reputations.
A new start up firm like The Altimeter Group is an example of a group of analysts. Charlene Li, Jeremiah Owyang, Ray Wang & Deborah Schultz who have turned their reputations as analysts into a successful consulting company, Carter considered that Jeremiah Owyang enhanced his existing reputation as a thought leader in the industry when he was at Forrester, but more importantly Jeremiah developed many more direct connections with large clients through his public presentations and meetings when working at the firm. Those connections will be important as Jeremiah and his colleagues build The Altimeter Group.
The larger firms have a big weapon at their disposal, well maybe two according to Carter, the first is brand and reputation, the second is surprisingly, sales. Yes, the large firms have very large sales forces, people dedicated to calling on the largest companies in the World to ask for their business. Gartner alone has 938 sales reps, and is committed to growing its sales force by 20% a year. The real secret of the large analyst firms are these successful b2b sales teams.
According to Carter, for a small firm, becoming a successful firm is not just about writing well and getting coverage, but if you want to grow your firm, knowing how to build a successful sales team is very important.
There are other models for analysts, Wikibon, a wiki community of experts provides free advice on IT related content. What examples like this point too is the ability of analysts to manage their own reputations online. Today it is a lot easier to do that with the web, but you really have to work at the effort. And the larger firms are getting just as savvy with the web. Carter believes Gartner has about 90 analysts’ blogging and Forrester has a number as well. Those analysts who can develop their own personal following even will do even better.
Phil Fersht Former Research Director at AMR has been very smart in developing his own brand. He is quoted in the press about his area of expertise. Carter believes that Phil Fersht’s development of his own Linkedin.com Group, "The BPO and Offshoring Best Practices Forum" with over 7000 members has been a great way to engage people and if Phil wanted to translate that engaged community into a business beyond AMR he can quite easily do so in his next career move.
IDC's Insights community is a good example of a private community that really engages the audience, and provides an analyst firm with a way to connect with new potential customers. But analyst firms have to understand how to build those communities. Gartner and Forrester have their own communities, but those are currently more in the realm of conference calls and in person conferences.
Carter summed up the future of the analyst firm as sales, reputation and community.
Analyst firms need to understand how to build a good sales team and process, even the big two analyst CEO’s believe their firms have only just broken the ice on the potential revenue that comes from giving research advice. And ramping up their sales team is one way to increase further penetration within their potential audience. Analysts have to be good at developing and maintaining a reputation, this means using some of the new tools of open social media, blogs and Twitter. But Carter sees even more potential from developing communities, especially private communities, where the analyst firm can engage their audience.