Analyst Relations: Dating the 800-pound Gorilla

800 pound gorillaIndustry analysts play a unique role in media relations, especially in high-tech PR. You always want to brief analysts before you make a major product launch to get their take on your new technology, and ideally their buy-in so you can ask them to serve as an independent, unbiased reference for editors and sometimes prospects. Of course, not all industry research is created equal, and some has more value than others. My clients tend to watch their rankings in Gartner Magic Quadrant and Forrester Wave reports quite closely, because those rankings do translate into sales.

However, analysts are fallible. Even with the best market data and research their reports are still subjective, which is why I found the recent news that ZL Technologies is suing Gartner Group for $132 million in lost sales astounding:

“ZL alleges at great length in its Complaint (and recapitulates in its Opposition) that it has a strong product and satisfied customers. The Magic Quadrant reports do not say otherwise; the real point of contention here is not the quality of ZL’s product, but instead the subjective analytical model Gartner used to assess ZL’s market position and prospects. ZL does not contest Gartner’s basic assessments of ZL—that it has a good product but needs to expand its sales and marketing—but ZL challenges its placement on the Magic Quadrant Report because Gartner uses a “misguided analytical model” that gives “undue weight to sales and marketing.””

Does Gartner really have that much market power? Over the last decade, I have watched Gartner gobble up Meta Group, Dataquest, and a host of other analyst firms like Pacman, so at the end of the day they are the biggest market force in the room, but does that really mean their analyses are more accurate? According to the filing by ZL Technologies, the Gartner Magic Quadrant holds the power of life and death for their sales. Although I see analysts having an influence on the market, I can’t see their reports having a stranglehold. Surely, having a better solution, better support, and a strong sales team make up the difference for an inaccurate research ranking.

David Ferris of Ferris Research has a good take on the issue. As he states,

  • Any analyst firm is simply expressing an educated opinion.
  • No one firm knows the future, but can only predict based on past data.
  • The connection between analyst dollars spent and report results should be minimal, or non-existent. Paying for research should not give you special privileges.
  • Customers should consider the value of the product, not analyst rankings, hen making a buying decision.
  • Bigger is not necessarily better in the analyst world. Any research report is only as good as the analysts who are gathering and reporting the data.

With great power comes great responsibility. Gartner has achieved great power, largely through acquisition, but that doesn’t mean they hold all the wisdom. In many ways, this lawsuit gives Gartner too much credit, too much power by claiming the Gartner Magic Quadrant has the ability to make or break a sale or a market. Analyst research can be valuable, but when you make it your sole raison d’être for closing or losing new business, you’ve missed the point.

Who knows how the ZL Technologies lawsuit will turn out. But in my experience, when tech companies call out the lawyers to solve their marketing problems, there are bigger internal problems that are affecting their chances for success.

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