Question: How can product managers work effectively with industry analysts?
How should a product manager balance listening to an industry analyst opinion versus that of customers? After all, analysts don’t buy the products, customers do. How much influence do analysts really have on purchase decisions? Do they actually spot trends that are for real? Or are they merely pundits who are never held accountable for what they say?
Answer from Paul Young of Product Beautiful: As with all questions, the answer is “it depends.” Analysts play an important role in many industries, but their influence on buyers and users varies widely. IT buyers may look to a Gartner, Forrester, or IDC to help them sort through a variety of confusing and overlapping solutions to their problems. In other industries, such as consumer electronics, analysts have little to no bearing on the purchase decisions of customers. So, assuming you are in a market that can make use of analysts, they can be helpful — if you know how to use them.
Dealing with analysts is like a dance. There is some give and some take, and if you’re a client of their firm (which you probably are if you’re talking to them for advice or reading their materials), you want to not only learn from them but also to influence them so that they show your company as a leader in their various publications (e.g. Gartner’s Magic Quadrant). This results in a lame back and forth where you have to be both deferential to — and challenging of — the analyst under the umbrella of “seeking their advise.”
In reality, many (not all) analysts spend the majority of their time talking to paying clients. Clients who pay for analyst services are companies like yours who are solving some problem out in the Market. Therefore, the prototypical analyst receives information that is an amalgamation of the data that you and your peers at other companies are collecting. There is some value in learning that, and you can glean some good competitive data from analysts.
The downside of the analysts’ world view is that they are more than likely NOT spending time talking to customers and figuring out what their unfulfilled needs are — they’re listening to you tell them! Then they’re regurgitating what you and everyone else told them about the needs of the Market into a report that they charge you for. Yet you can’t not have a relationship with the analyst because then they tell your story to the world by listing you in their materials as a “laggard” or some other derogatory term, and you can’t control the message. Yes, for the most part my view of analysts is dim.
All that said, there are analysts out there who are very, very good at what they do. My belief is that the Product Manager should know how to recognize this breed of analyst and how to use them. Interview an analyst just like you’d interview a customer, and ask lots of open ended questions. I like to lead off with questions about what trends they are seeing, just to grease the skids — they all have a pat answer to this. Then follow it up with something like “those sound like some really interesting trends — what examples of companies have you seen those things taking place at?” That will give you a good idea if they are reading from the script or have boots on the ground experience. If it’s the latter, think of the analyst as something between one of your salespeople and a customer, and interview them. Just don’t use talking to the analyst as a proxy for talking to customers yourself.
Do analysts spot trends? My general feeling is that they may not spot them but they are really good at giving them names and making people realize that there is a trend. As far as accountability, analysts are just like all of us, and are judged on results. Take any prediction of the future with a grain of salt, but someone making wild, baseless predictions will more than likely not last. If nothing else analysts will at least ground their predictions in probabilities, research, and data. Best of luck!