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Category Design

Category Design and Analysts: Everything You Need to Know

Analyst firms like Gartner and Forrester have tremendous influence today.

Enterprise buyers use them to sort through the noise and make informed decisions.

Journalists use their market research in their stories and to discover new companies.

Investors use them to understand the market landscape and learn what customers care about.

Yet we speak with many B2B startup founders who shun analysts because of their pay-to-play business model. Is it wrong that these firms charge vendors for their advice then, at the same time, make software recommendations to their paying customers looking for the best vendors? The answer is, who cares? You can choose to take a moral stance against this well-established market that has major influence over the enterprise-buying process, but you do this at the detriment to yourself, your employees, and your shareholders.

While you can take a stand, your competitors will accept the world for what it is today, fork over the money, and play their game. Now, that doesn’t mean you can’t be creative and your approach to analyst relations should be the exact path that all the other companies take. It just means opting out of playing their game entirely is foolish.

Let’s explore how these firms work, how you can work with them, and how you can leverage analysts — and their new competitors — to support your category design efforts. 

Working With Traditional Analysts

Analyst firms like Gartner are a services business at their core. Their analysts are paid a salary and the firms need to arbitrage their time to generate a profit.

On the buy side, enterprise companies are paying for access to Gartner analyst reports and/or for the hourly time of their analysts to help them make better decisions on the software they purchase.

On the sell side, software vendors are paying Gartner analysts for their time. This can be incredibly valuable because these can be the analysts who spend all their time with your target customers. They can offer incredible insights into the features these customers care about and how they are thinking about the problems they need software to solve.

When you engage Gartner, you are paying for time. Typically you should budget anywhere from $50,000 to $100,000 per year for this access. If you only have $500,000 in the bank, this is not something you should even consider. But if you’ve raised several million dollars and need to break into the enterprise, this can give you invaluable insight into your market and help set your company up for success.

These firms are often the ones who define new market categories. These new categories come from their conversations with both customers and vendors. This means that by engaging with them, you’re able to help shape their view of the market and can increase your chances of influencing their decision to create a new market category.

Working With Gartner Challengers 

You may remember the days of print Consumer Reports. Professional reviewers would test products and write up their reviews, then Consumer Reports would sell their detailed buyer guides filled with those reviews and recommendations. Then platforms like Yelp and Tripadvisor appeared and gave customers a very different way to understand what products to buy, based on the reviews of everyday individuals. This same trend that happened to consumers happened with B2B buyers.

These new platforms in the B2B era like G2, Capterra, and TrustRadius, are helping customers solve the challenge of buying software with free platforms full of reviews from their peers (instead of analysts at Gartner, aka professional reviewers).

These platforms are all different, but at the end of the day, the way they solve the problem is the same: It’s a platform full of reviews from your peers, organized by market categories. These platforms allow you to create profiles for free, but they really want your money to optimize your profile and use their platform to generate leads. So, unlike Gartner, you aren’t paying for advice and guidance, you are paying for awareness and leads. While this can sound appealing, the downside is you don’t get the advice of analysts who have deep domain expertise of your space and spend their time with your customers.

What We Recommend to Clients

When it comes to working with traditional analysts, here’s what we tell our clients: the moment you can afford it, do it. And don’t just do it because you hope they will create your category. Do it because you want their advice.

When it comes to B2B review platforms, we recommend that clients evaluate each platform, and choose the one they think their customers are most likely to use. Then they should aggressively work to get customers on their platform and test all the different paid options the platform offers to further optimize and leverage the platform.

Why Customers Are the Key Driver in Category Design

Whether traditional firms or peer review platforms, there’s one thing they all have in common: their job is to reflect what the customer wants. That’s why whether you work with Gartner or G2, the most important thing you can focus on is engaging your customers, leveraging them to validate your product, and showcasing there is a market of customers that NEED a category.

Analysts don’t just create a new market category every time a startup tells them they have an innovative idea that they feel doesn’t fit into existing categories. These firms are getting paid to help buyers make decisions and market categories are how they organize information.

For them to justify a new market category being covered by their analysts, they have to truly believe that there are a significant number of buyers looking for their help to make informed decisions within this new category.

You can sell the dream to these analysts about how incredible your company is and why a new category must be created, but ultimately the number one thing you can do to support your category creation efforts is to engage your customers. If analysts are constantly getting calls from customers asking for advice on a category they aren’t covering, you dramatically increase your chances of them creating the category which you can play a key role in shaping.

Outside of weaponizing your customers to advocate and validate the need for your market category, you need competition. Analysts won’t cover a category of one. Most of the firms look for at least 10 companies before they will even consider creating a new category.

While getting Gartner or Forrester to validate your new category is the dream, that’s a long-term goal that can take many years of convincing to pull off. In the short term, you should view your relationship with analysts as a way to better understand the enterprise customers you are hoping to attract.

How to activate your customers to support your category efforts:

#1: Get your customers to pick up their phones to call Gartner, Forrester, and the other traditional firms.

#2: Get your customers to leave detailed reviews about their experience with your tools and explain in detail how it solved their problems.

#3: Create case studies that demonstrate the problem your category has solved for real world customers.

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