Forrester Research, Inc. (FORR): 5 FORCES Analysis [Nov-2025 Updated]

You're digging into the competitive moat around Forrester Research, Inc. ($\text{FORR}$) as of late 2025, and honestly, the landscape is tough, reflecting that $\text{395.0 million}$ to $\text{405.0 million}$ revenue guidance. My analysis using Porter's Five Forces shows the core challenge isn't just the extremely high rivalry with Gartner, but the rising tide of AI substitutes that let customers bypass expensive reports. Plus, with customer power being moderate to high-evidenced by that $\text{288.1 million}$ Contract Value in Q3 2025-you need to see exactly how $\text{FORR}$ is defending its turf against these pressures, especially as analyst headcount fell to $\text{1,465}$. Keep reading to see the breakdown on suppliers and new entrants.

Forrester Research, Inc. (FORR) - Porter's Five Forces: Bargaining power of suppliers

When you look at the supply side for Forrester Research, Inc., the power dynamic is heavily skewed toward the talent that actually creates the intellectual property. The suppliers here are primarily the specialized, top-tier industry analysts-the very people whose expertise forms the core product. If you lose a star analyst covering, say, cloud infrastructure strategy, you don't just lose an employee; you lose a critical, scarce resource that clients pay premium prices for. This concentration of expertise means that these key individuals hold significantly high bargaining power.

The internal pressure on this talent pool seems to have intensified. The analyst headcount reportedly fell to 1,465 from 1,656, which, if accurate, represents a substantial reduction in the total supply of internal experts. This reduction naturally increases the reliance on the remaining talent, effectively boosting the leverage of those still under contract with Forrester Research, Inc. To put this in context, the Q1 2025 total headcount was reported at 1,510, and the Q3 2025 headcount was down 8% compared to the same period in 2024, showing a clear trend of workforce contraction in the face of market headwinds, which compounds the importance of the remaining analysts. You have to manage this talent retention very carefully.

The power of these specialized suppliers is further cemented by the nature of Forrester Research, Inc.'s proprietary assets. Their key data sources, particularly the survey platforms and the methodologies behind the Forrester Wave™ evaluations, carry high switching costs for the firm itself. If Forrester were to lose access or the ability to leverage a core proprietary survey, integrating a replacement would be costly and time-consuming, potentially impacting the credibility of research that saw 73% of total revenue in 2024. Furthermore, Forrester's own research highlights that for their clients, the difficulty in tying third-party data to proprietary data often makes insights hard to act on, suggesting a similar internal challenge exists when replacing core data suppliers.

On the flip side, not all suppliers have this leverage. General IT and administrative services-think standard cloud hosting, office supplies, or basic HR software-are highly commoditized. For these inputs, Forrester Research, Inc. has ample choice, and these suppliers have very low power. The firm can easily swap providers for these non-core functions, keeping costs in check. This contrast is stark: the analyst is a unique, high-value supplier, while the office printer toner vendor is not.

We also must consider the threat of forward integration by the analysts themselves. A highly regarded analyst, possessing deep client relationships and proprietary knowledge, has a clear path to becoming a direct competitor. They can forward-integrate by leaving to become independent consultants or by starting a competing research firm. This threat is real, especially when clients are looking for tailored advice, as demonstrated by Forrester Research, Inc.'s own findings that companies leading in customer experience outperform laggards by 80% in revenue growth-a metric that depends on expert guidance. The potential for an analyst to capture that value directly is a constant risk factor.

Here is a quick look at the supplier power dynamics:

The key risks associated with supplier power manifest in several ways:

• Risk of key analyst attrition and competitive entry.
• Difficulty in replacing specialized knowledge bases.
• Potential for increased compensation demands from remaining talent.
• Client focus on high-ROI insights, such as the 20% higher marketing ROI seen by users of predictive CLV models (Forrester Research, 2025).

Finance: draft a retention bonus structure for top 10% of analysts by end of Q4.

Forrester Research, Inc. (FORR) - Porter's Five Forces: Bargaining power of customers

You're looking at Forrester Research, Inc.'s customer power, and honestly, the data suggests it's a real headwind right now. When large buyers have options, they hold the cards, and Forrester's client base leans heavily toward the big players.

The power is moderate to high due to customer concentration in large enterprises. Forrester serves 61% of Fortune 100 companies, giving large buyers leverage. When you have that many of the biggest checkbooks in the world as clients, their collective negotiation strength is significant.

We see this pushback reflected in the Contract Value (CV) trend. The CV declined to $288.1 million in Q3 2025, which is a 7% decrease compared with the prior year. That drop signals that even as they try to manage costs, major buyers are either signing smaller deals or letting some contracts lapse, which is a clear indicator of buyer pushback in the current environment.

Wallet retention is lower, implying customers are reducing spending on the platform. For Q3 2025, wallet retention was reported at 86%, up one point from the prior quarter, but this metric is still being affected by what management calls enrichment challenges. Still, client retention held steady at 74% compared to Q2, which shows they are keeping the lights on, but not necessarily expanding the relationship.

Here's a quick look at the key financial indicators showing this buyer pressure:

Also, customers have low switching costs to the primary competitor, Gartner. This is a structural issue in the research and advisory space; while deep integration takes time, the core research product is often seen as substitutable, especially when budgets tighten. If a large enterprise decides to consolidate its advisory spend, moving from Forrester to Gartner, or vice versa, is a known, manageable process, which keeps the pressure on Forrester to constantly prove its unique value proposition.

To be fair, the average Contract Value per client actually increased by 5% to $162,000 for the year, which suggests that while the number of clients or the total contract value is shrinking, the remaining, deeply embedded clients are perhaps spending more on their core relationship. But that single positive metric doesn't negate the overall trend of declining total contract value.

You should watch these metrics closely:

• Client count declined 11% year-over-year.
• Research revenue has seen a year-over-year decline for 11 straight quarters.
• The full-year 2025 revenue guidance projects a decline of 6% to 9% versus 2024.

Finance: draft 13-week cash view by Friday.

Forrester Research, Inc. (FORR) - Porter's Five Forces: Competitive rivalry

You're looking at Forrester Research, Inc. (FORR) right now, and the competitive rivalry force is definitely flashing red. Honestly, when your own revenue is contracting while the broader market is expected to grow, the pressure from rivals intensifies significantly. It's a classic case of a mature market where every client dollar is fought for tooth and nail.

The core issue here is the sheer scale difference. Forrester Research, Inc. faces extremely high rivalry, particularly with Gartner (IT), which is a much larger, dominant competitor in the broader research and advisory space. This dynamic forces Forrester Research, Inc. to fight for mindshare and budget allocation against a competitor with deeper pockets and broader reach. Also, you see competition creeping in from major consulting firms like Accenture and IBM, which are increasingly bundling research and advisory services into their larger, more comprehensive consulting engagements. This bundling strategy makes it harder for Forrester Research, Inc. to isolate the value of its pure-play research offering.

The financial data from the second quarter of 2025 really underscores this competitive strain. Forrester Research, Inc.'s Q2 2025 revenue of $111.7 million was down 8% year-over-year. That decline is happening while the US Professional Services industry, which is the environment Forrester Research, Inc. operates in, has a growth forecast of 5.7% over the next few years. This divergence suggests Forrester Research, Inc. is losing share or facing significant headwinds that its competitors are either weathering better or capitalizing on.

The market maturity feeds directly into price pressure and a relentless focus on cost reduction across the board. You see this pressure reflected in the client behavior metrics from Q2 2025:

• Wallet retention slipped to 85%.
• Client retention was 74%.
• The events business saw the sharpest drop, with revenue falling 23% year-over-year.

Here's the quick math on the revenue breakdown during that tough quarter, showing where the pressure was most acute:

For the full year 2025, management is forecasting revenue to stay essentially flat, guiding for a range of $400 million to $410 million, which represents a decline of 5% to 8% versus 2024. Still, the expectation of flat revenue in a market segment expected to grow at 5.7% confirms the intensity of this rivalry force. You're definitely seeing a battle for existing customer spend, evidenced by the drop in wallet retention, which shows existing clients are spending less on incremental services.

The firm is trying to counter this by emphasizing its Forrester Decisions platform and its AI tool, Izola, which saw client usage rise 22% quarter-over-quarter. That's a necessary action, but the immediate financial results show that competitive pressures are currently winning the short-term budget battles.

Finance: draft 13-week cash view by Friday.

Forrester Research, Inc. (FORR) - Porter's Five Forces: Threat of substitutes

The threat of substitutes for Forrester Research, Inc. (FORR) remains elevated as clients increasingly find alternative, often cheaper or more immediate, ways to source the insights they once relied upon from traditional research subscriptions and advisory services. This pressure is not theoretical; it is reflected in the firm's recent financial performance.

High threat from the rapid rise of Generative AI tools for internal report creation.

The proliferation of Generative AI (GenAI) tools presents a structural challenge to the core value proposition of research reports. Forrester itself has noted the transformative nature of this technology, predicting that GenAI will displace 100,000 frontline agents in 2025. This suggests a significant portion of the information synthesis and report generation that clients pay Forrester for can now be partially automated internally. You see this pressure reflected in the firm's own strategic response: the launch of Forrester AI Access in Q3 2025, a self-service offering leveraging their GenAI capabilities. Still, Forrester predicts that enterprises focused only on immediate Return on Investment (ROI) from AI will scale back initiatives prematurely by 2025.

Customers can substitute expensive research subscriptions with independent consultants.

Clients facing budget constraints are clearly trading down from multi-year, high-cost subscriptions to more targeted, project-based engagements, or turning to independent experts. This substitution pressure is evident in the consulting segment's performance. Consulting revenue dropped 5% in Q2 2025, showing substitution pressure on high-value services. Looking at the most recent data, the trend worsened slightly in Q3 2025, with consulting revenue falling 8% year-over-year to $21.5 million on an adjusted basis. This pullback on advisory services suggests clients are either bringing expertise in-house or seeking lower-cost, specialized external help rather than relying on Forrester's broader advisory bench.

The financial impact across segments in Q3 2025 illustrates the broader client hesitancy to commit to full-service relationships:

Free or low-cost content from tech vendors and open-source communities is a viable alternative.

The sheer volume of free, vendor-sponsored content and rapidly maturing open-source data sets means that basic market intelligence is often available at zero marginal cost. This dilutes the perceived value of Forrester Research's entry-level subscription tiers. The decline in wallet retention-the spending depth from existing clients-is a direct indicator of this substitution or down-selling behavior. Wallet retention slipped to 85% in Q2 2025 before recovering slightly to 86% in Q3 2025, but this still means 14% of prior contract value was not renewed or enriched, pointing to clients finding cheaper alternatives for some of their needs.

Internal corporate strategy teams can leverage cheaper data analytics platforms.

Sophisticated, cloud-based data analytics platforms now allow internal teams to process their own proprietary data and map it against publicly available benchmarks, reducing the need to purchase external validation. This internal capability directly substitutes the need for high-cost, bespoke analysis projects. The overall client count decline of 12% year-over-year to 1,806 clients in Q2 2025 further suggests that some organizations are consolidating their external research spend or relying more heavily on internal capabilities.

The pressure manifests in several ways you need to watch:

• Wallet retention was 85% in Q2 2025.
• Client count fell 12% year-over-year as of Q2 2025.
• Consulting revenue fell 5% in Q2 2025.
• Research revenue fell 7% in Q2 2025.
• Full-year 2025 revenue guidance was lowered to between $395 million and $405 million.

Finance: draft 13-week cash view by Friday.

Forrester Research, Inc. (FORR) - Porter's Five Forces: Threat of new entrants

The threat of new entrants for Forrester Research, Inc. is best characterized as moderate, leaning toward low for broad-based competition but higher for specific, narrow niches. You have to appreciate the sheer inertia and established moat Forrester has built over decades. It isn't like starting a simple website; this is about institutional trust and data scale.

Building a reputable brand like Forrester's requires decades and significant capital investment. The brand equity acts as a serious deterrent. To be fair, a new firm can launch a website tomorrow, but getting a CIO to trust their strategic roadmap to an unknown entity is a different beast entirely. Forrester's scale of proprietary research is a key component of this barrier.

High capital is needed to fund proprietary research and annual surveys of over 700,000 people. This massive data collection effort, which as of late 2024 included annual surveys of more than 700,000 consumers, business leaders, and technology leaders worldwide, represents a sunk cost and data advantage that is hard for a startup to match quickly. Think about the logistics and the cost of running those surveys year after year; it's substantial.

Here's the quick math on the scale you're up against, based on recent figures:

Still, the landscape is shifting, and this is where the threat rises. There is a low barrier for niche, specialized, AI-driven research startups focused on a single vertical. These smaller players can move faster and focus intensely on emerging areas, like a specific application of generative AI in supply chain finance, for example. They don't need to cover the breadth Forrester does; they just need to be the best in one small, high-value area.

What this estimate hides is the speed of response from incumbents. Established competitors like Gartner can quickly acquire successful new entrants. Gartner, for instance, has a history of over 36 acquisitions since 1993, including deals like AMR Research for $64 million in 2009, demonstrating a clear strategy to absorb promising competition rather than letting them mature. If a startup gains traction in a key area, the established firms have the capital-Forrester itself had a stock repurchase authorization of approximately $89 million at one point in 2024-and the strategic imperative to buy them out, effectively eliminating the threat before it becomes systemic.

The current environment suggests new entrants face a dual challenge:

• Overcome Forrester Research, Inc.'s deep data sets.
• Avoid being acquired by larger rivals like Gartner.
• Compete against Forrester's own AI tools like Izola.
• Survive in a market where Forrester's full-year 2025 revenue is guided to decline by 4% to 8% versus 2024.

Finance: draft 13-week cash view by Friday.