Market research is not about you
I have relationships with a lot of industry analysts and, like journalists, their existence is hanging by a thread because very few people understand what they are for.
Take the redoubtable Gary Smith, a long time analyst for the EDA industry. Gary worked most of his career for Gartner until that organization decided to stop covering the industry because... well... no one in the industry was supporting the effort, just like they weren't advertising. Gary struck off on his own after the layoff and founded Gary Smith EDA and continued the good work. He's making a decent living but people still don't understand what he is doing.
Long before the layoff, Gary started putting out a wall chart on the industry; what companies were in it and where they fit. Over the years, as the industry grew, Gary started making more wall charts for different segments. I think there are three now. You need an magnifying glass and a comfortable seat to read them, but they are pretty comprehensive.
And most people in the industry complain about them. "That company doesn't belong in that category!" "That's not what we do!" "I thought he was an industry expert!" All those complainers have no clue what the purpose of those charts are and what Gary does.
See, analysts don't report what the companies in a given industry tell them. They listen to the customers of the industry. They listen to current customers, past customer and potential customers, then they report what those people say. Of course, Gary takes lots of meetings with vendors, listens politely, takes a few notes and nods sagely. Then he goes back to his data from the customers and sees if it lines up with what they say. Then he puts out his reports (available for a fee) and his free wall charts. Personally, I think he way undercharges for the charts.
In today's world, getting a reality check about your messages and image in the market for free is INCREDIBLY valuable. It doesn't matter if Gary or any other analyst can parrot back your corporate dreck, it matters what the market is hearing you say, hearing what others are saying, and that information getting back to you. If what the analyst says what the market sees agrees with you, then you need to give your marketing team a pat on the back. If it doesn't agree, you need to ask the team why.
I've had several clients get upset about analyst positioning and end up abandoning working with the analyst (like Gary), but on the rare occasion that I get them to cool down and reconsider their positioning statements, wonderful things happen. New customers start calling them, sales people have their calls returned, and business looks good.
So I take my hat off the Gary and all his compatriots in the analyst field. And it's time the rest of you went to him hat in hand and find out what your customers are really saying.
Good explanation, Lou - and I do respect Gary Smith as well. Anyone who has been around the business and understands it as he does, well, how can you not?
ReplyDeleteWhen I blogged about the chart with respect to DFT, I kinda passed it off as the usual - DFT is a small slice of the EDA pie, and it just doesn't get the energy - you know me, I'm always complaining about that. But then I saw a couple more comments that indicated the same for other categories (granted, one of those comments WAS from a vendor). So it got me wondering, who ARE those wallcharts for? The vendors, the customers, or Gary?
And as far as the price goes, where are you going to put your energy? The free wallchart or the paid for reports?
JMF
Just got this note from Gartner's Steve Ohr:
ReplyDeleteHi Lou:
I saw your tribute to Gary Smith, and would certainly endorse your “hug an analyst today” sentiment. Consider posting these comments:
Analysts may or may not help with PR. As a rule, we can’t lend our names to press releases (especially product announcements), but an analyst’s knowledge about your company, its products and positioning can help amplify a promotional message — especially when asked to comment by members of the press or the financial community. This may be helpful in getting noticed by The New York Times, Reuters and The Wall Street Journal, as well as the electronics trade press.
As an analyst, I track revenues as well as products and technology. I call it the “seedy underside of the industry.” You can’t forecast five minutes into the future without a pretty strong understanding of how much money is out there now. And you’d be distressed to hear how little margin there is on some of the most advanced parts. Everybody wants technology to be cheap, pennies per function. Even as a journalist, I noticed a painful disconnect between the products big companies were willing to promote, and what they actually made money on (which, very often, were second-sources for someone else’s high runners).
But where you can make a connection between somebody’s advanced technology (the new product announcement) and what the market actually wants (including cheap), you can take credit for a job well done. One of Matt Quint’s clients, for example, Analogic Tech came out of the startup the chute years ago, promoting a series of low-voltage power management devices for cell phones and portable media players. I interviewed Rich Williams, the company founder and chief scientist, for EE Times. Rich is a fabrication process genius, had figured out a way of manufacturing his power management devices in a nearly-abandoned memory fab, and bragged that he could sell them for (let’s say) a “very competitive price” and still make money on them. I will claim credit for helping to launch the company with an article in EE Times. But it was the “very competitive price” — what an analyst might tell an investor client — that helped grow that startup into a $100-million public company.
Regards Lou,
Steve Ohr