James Gardner is Head of Innovation & Research at a major bank in the UK. A recent post on A Call to the Analyst Community on his blog Banker Vision, laments the poor quality of advice that his organisation receives from external analysts. He is also not very happy about their aggressive sales practices either. Reading through James’ post, I found myself nodding in agreement. I have used the big name CRM analysts on and off for over 20 years. But looking back with the benefit of hindsight, I think they offered more of a ‘comfort blanket’ to hide behind, an insurance policy when talking to clients, rather than anything of tangible value. Value that I would be willing to pay for out of my own money.
Let me explain.
When I was a junior CRM consultant at several big six consultancies, I would avidly collect and occasionally read CRM analysts’ reports. They were usually well written documents based on a bit of research and a modicum of insight. There was not usually anything original about the reports, but clients liked to see them referenced. I suspect they hadn’t read them either. I would marvel at how the analysts could charge so much for the common sense, limited market research and vendor PR occasionally contained within them. And some of the reports were just plain wrong, particularly where the analysts stepped outside their area of expertise and failed to understand the bigger business picture. That gave me a bad dose of cognitive dissonance.
As I gained experience as a CRM consultant I continued to collect the reports. But I started to read only the reports from analysts who really knew their stuff. They comprised maybe 10% of all the analysts whose reports I had read previously.These analysts generally had real experience gained actually working in their field of expertise and thus a context within which to write about. But I compared and contrasted their writing with other sources of materials including academic papers for theory, CRM consultant colleagues for their experience and industry articles for practical case studies. Even the best analysts were sometimes found wanting. The biggest issue was, and I think still is, the hyping of CRM technology and the down-playing of all the other complementary factors that enable the technology to deliver value.
Today, as a partner in a start-up innovation consultancy, I no longer have access to analysts’ reports. I find the odd one on the Internet and out of habit still collect them. But I rarely read them unless they are about something new that I know nothing about. Charlene Li & Josh Bernoff’s excellent reports on e.g. Social Computing, that led up to them publishing their ‘Groundswell’ book are a perfect example of this. They really know their subject. And I benefitted greatly from it. But even here, there is so much good stuff available for free on the Internet, or through my network of consultancy contacts that analysts have almost become obsolete. I have become knowledge self-sufficient. And that isn’t because I don’t need much knowledge; I read dozens of books, hundreds of academic papers and thousands of blog posts every year. I can get what I need from the Groundswell itself.
I understand why many businesses use analysts. It is not just to gain access to basic knowledge. Or the fear of maybe missing out on something insightful. Or even one-on-one access to the best analysts themselves. There is also the influencing analysts and their recommendations side too. What CRM consultancy doesn’t want to be in the magic top-right quadrant or ahead of the CRM wave. But many normal businesses have stopped using analysts. I was talking to some CRM strategy folks from Vodafone a while back who said that they no longer used the big-name CRM analysts. They simply didn’t know enough about their fast-moving industry to be worth the money. They still used niche analysts though. The ones who really know their subject. But not the big-name analysts.
My advice to any business thinking about using CRM analysts is to ask yourself these simple questions:
- Do they have individuals who really know your industry better than you do? If they don’t, you shouldn’t be using them
- Do they provide practical insights that extend beyond just CRM systems? If they don’t, you shouldn’t be using them
- Can they provide you with assistance in actually implementing their insights? If they can’t, you shouldn’t be using them
- Can you get the same information from other, cheaper, less restrictive sources? If you can, you shouldn’t be using them
- Can you get access to their unwritten knowledge in the heads of their best analysts, as well as their written reports when you need it, on a per-use basis? If you can’t at a reasonable price, then you shouldn’t be using them either.
I stopped using big-name CRM analysts some time ago. I havent missed anything. And my bank account is so much healthier. That doesn’t mean that you shouldn’t use them. But you should ask yourself those five questions first.
What do you think? Do you use CRM analysts? Do you get your money’s worth from them? Let us know your experiences.
Graham Hill
Customer-driven Innovator
Follow me on Twitter
Graham,
Your points are well made, but I think you could substitute “consultant,” “guru,” or “advisor” and your post would read exactly the same.
New insights or deep industry knowledge is not always required to add value. Nor does a analyst/consultant/guru have to know your industry better than you do (seriously, is this possible?). On my past consulting projects, most of the time the problems the organization faced were known by all. But somehow they couldn’t face the facts and put a plan into motion. An outsider was required to start the change process.
Yes, insight and experience are important. Methodologies and solid research techniques help reduce the risk of bad decisions. Fresh insights are good, too. But there are plenty of stories floating around about the know-it-all guru who descends on a company, make a quick diagnosis, recommends “quick fixes” (the same ones given to all of his/her other clients) and then jets off to the next opportunity.
My advice is to hire outsiders that have a proven track record of actually helping an organization come to grips with its problems, and implement real change.
Bob
Lighthouse Analyst Relationships posted a rebuttal of sorts to James Gardner’s post that’s worth reading.
Do analysts need more industry expertise than their clients?
Read the complete post here: A defence of analysts: the proof of the pudding is in the eating
In my view, the only thing that really matters is the clients perception of value. That perception will likely be colored by the current economic crisis, which not doubt will weed out the individuals and firms that clients won’t, or can’t, pay for.
Rather than defending our business models or casting stones at others, we all should be reaching out to our clients and finding out what value is needed now.