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How should a product manager use feedback from industry analysts?

Posted on June 29, 2008 · 3 Comments

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!

3 other answers so far ↓

  • Derek Britton // Jun 30, 2008 at 5:11 am

    First can I say that Analysts are a fact of life especially in hi-tech, so don’t kid yourself that this is an option. If there is no-one in your organization who “takes care” of AR, then there should be. Preferably as a full time strategic role.

    Having had direct experience with a couple of the market leading analyst firms over nearly a decade now, here are some observations based on a lessons-learnt:

    – Be honest; don’t dress it up, say it how it is. You WILL get found out, so don’t try to spin something to be what it patently isn’t. You have the NDA in place… so tell the whole sordid story.

    – A good story is no good unless there are specific reference points. From what I have observed, analysts are more often than not particularly interested in:
    1) customers
    2) customers
    3) customers

    … so unless there is a customer situation (not necessarily a reference account, but it helps) the whole credibility is on thin ice. The more they can talk DIRECTLY with your clients, the better your credibility.

    – Be consistent. Your message might be obvious to you, but it probably isn’t to them, who after all listen to vendors and clients droning on and on all day about THEIR world. So say your story, make it clear, make it compelling, and keep your message from one meetnig to the next. It will become a habit for them to know what you are saying after a while, but keep persevering even if your analyst appears to have forgotten what you told him last time. [And on that note, I know at least one one analyst who hates people who use the phrase “obviously”, because if its obvious you shouldn’t say it, and in most cases it is only obvious to the speaker, not the listener].

    – Be concise. Pity the analyst for a second, who has to endure death-by-powerpoint every other day, who has to listen to vendor “unique value propositions” that are anything but unique, who has to pretend to be considerate and thoughtful when frankly it is the same old story. These guys are human and should be treated as such. So don’t bombard them with detail, let them ask and explore; don’t overpitch, keep it simple and let them scrutinise; don’t make it more technical than you need to, because it is about a customer’s desire to purchase, not how technically impressive your product is: “and here’s Dave from the lab to REALLY show you how this thing is wired together…” (the analyst is already zoned out…).

    – Finally, know your market. The forces that drive it, the movers and shakers. Demonstrate you’ve done the hard work finding out what’s really going on. How? By talking about customers, customers and more customers (see above). But issues affecting the global vertical to which you are selling are things you should just know. Don’t go in blind.

    There are several other pitfalls to avoid but these certainly come flooding back from memory. All common-sense, of course, but sometimes easy to overlook in your desire to get your money’s worth from the appointment…. often the biggest smile you will get is when you say “I don’t have any slides to show you today”… Put yourself in the same position…

    The value you get out will simply be directly proportional to the professionalism and effort you are prepared to put in.

    Its a very important job, your opinion of them is not the important bit, the outcome of the discussion is. Enjoy!

  • The Cranky Product Manager // Sep 30, 2008 at 2:27 am

    The Cranky Product Manager has an even dimmer view of analysts than Paul. They’re coin-operated ho-bags. Pure and simple.

    Alas, they are a fact of life – kind of like your deadbeat brother-in-law that borrows money and never pays it back and demands you help move heavy furniture at least one weekend a month. Ignore analysts at your peril – you will be punished if you do.

    Anyway, here’s a post detailing how the Cranky Product Manager deals with analysts.

  • The Cranky Product Manager // Sep 30, 2008 at 2:29 am

    Oops. Gave the wrong link. Here it is…