This article originally appeared in Silicon Bayou News.
Startups, both B2B and B2C, fight every single day to educate their prospective buyers on competitive differentiation and return on investment (ROI). That’s because ultimately, the success or failure of almost every startup is dependent on just how well the company can persuade its key audiences into taking action(s). Some of the most successful startups in the world are the ones that can balance their persuasive arguments by combining objective facts with subjective and aspirational messaging and positioning. But doing so is easier said than done, as made evident by the 90 percent of startups that fail.
Currently, startups most frequently rely on media relations, social media, content marketing and marketing automation to spread awareness, communicate key messages and drive and nurture leads. The newest, and current “jewel” of these tactics, marketing automation, is emerging as a major advantage for startups that can invest the time and resources to manage it appropriately. In fact, according to Autopilot, “marketers using automation software generate 2X the number of leads than those using blast email software and are perceived by their peers to be 2X as effective at communicating.”
However, one marketing tactic that is common, even essential, to the enterprise, but that is often overlooked by startups is analyst relations. While the cost of partnering with an analyst firm, especially one or more of the “big” ones such as IDC, Forrester, and Gartner among others, can be daunting for a young company cognizant of burn-rate, the positives of building analysts relationships can outweigh the concerns; no matter the age of the company.
The Benefits of Analyst Relations for Startups
Message Testing – There is perhaps nothing more important for a startup than its brand messaging, for inconsistent, unclear and undifferentiated messages can detract from early product or service adoption. Analysts are experts at understanding value and in helping companies to communicate that value in ways that stick among core audiences. An analyst can tell a startup if its messaging is already being used, the likelihood of its success and whether or not it aligns with what its customers are looking for. Having access to this depth and breadth of information at an early stage can have a profoundly positive impact on a company’s go-to-market strategy and the likelihood of initial success.
Competitive Information – Analysts are long-term thinkers. They are paid to stay on top of trends and to make educated assumptions about the future of industries, products and services etc. Through research, partnerships and events, among other activities, analysts have incredible knowledge at their disposal; knowledge that they are willing and able to share with startups as long as it doesn’t breech any client confidentiality rules or their organizational ethics. Therefore, a relationship with an analyst can result in unprecedented competitive intelligence that can be used to gain and sustain market share early in the company’s lifecycle.
Perception Enhancing – Perception is reality, and the reality for many startups is that their target customers will not engage with them because of their perception as being too early, or immature. To their credit, analysts have gained the trust of numerous enterprise and mid-market companies; many of which make purchases exclusively based on recommendations of the firms that they contract with. Therefore, a startup that is introduced to an enterprise buyer through an analyst is likely to face less skepticism as it relates to the perception of the brand and the product; potentially expediting important early-stage sales and revenue goals.
Third-Party Validation – According to an article in Entrepreneur, “The value of third-party validation is substantial. While it’s common for brand managers or internal employees to speak positively about features and benefits; third-party validation is what really provides confidence and accountability to companies and consumers to fully commit to spending their money.” This is especially true for startups, which are in the “prove it” business on a regular basis. Analyst recommendations, reports and awards all hold significant weight, and could be the determining factor in winning a piece of business over the competition which is perceived similarly.
Globalization – We live in a global economy, yet startups have limited resources and certainly cannot be everywhere in the world at once. Analysts, on the other hand, often have a global footprint, meaning they can serve as your de facto global sales force. Its in the best interest of analysts to inform their clients of right-fit opportunities that derive from anywhere in the world. Without analyst relations, startups may not have another way to scale sales worldwide so quickly.
Tips for Startups to Begin an Analyst Program
Now that you know the benefits of engaging with analysts, it’s time to get started. Here are a few tips to get the process underway.
Start Talking Early – Contrary to reports, do not wait until a product launch or funding round to start talking to analysts. While you may not have the equity to become a member until a certain milestone is hit, begin planting the seeds early. If an analyst likes what you have to say, they may very well recommend you to clients before you’re an actual paying customer.
Budget for it Right Away– Just as you will budget for media relations, marketing and other operations essentials, budget for analyst relations, but do so early. Accounting for it will proactively showcase to potential investors that you are cognizant of burn-rate, but that you also realize the value that an analyst relationship can bring to the company. If it’s in the budget, it becomes part of the team’s responsibility to fund it.
Make the Firm Earn Your Business – Analysts want your business just like you want their help and expertise. Thus, don’t be afraid to negotiate on pricing or seek opportunities to participate in reports and studies without committing to a monthly membership. Remember, as a startup, your company might be tremendously valuable to the firms’ customers, giving them an incentive to build a strong relationship with your company for a long time to come.
Go with Your Gut – Odds are there will be multiple firms that study your industry. That certainly doesn’t mean that you have to subscribe to all of them. Conduct due diligence and pre-brief three to five firms, solicit feedback and ask questions about how they can help. Then when it comes time to decide, chose the one (maybe two) that you believe could offer the most ROI. Don’t let the hype and propaganda fool you: one great relationship is better than five mediocre ones.
Analyst relations are an essential part of the startup lifecycle. If done correctly, the right partnership can have positive impacts on revenue, growth and profitability for years to come.