Why KCG’s analyst relations awards beat the IIAR’s


We used 18,777 data points from the Analyst Attitude Survey to compare the two leading awards for analyst relations teams. Although we found that KCG‘s awards are more useful than the IIAR‘s, both primarily reflect corporate performance rather than that of the AR teams. As a result, there’s very little that AR teams can do better or worse in these awards. We need something better.

The problem with the IIAR awards is already well established (Phil Fersht‘s comment was provocative). Although the IIAR will not respond meaningfully to questions about its methods, we ran statistical analyses to compare both the IIAR’s awards and KCG’s with the data from Kea Company’s Analyst Attitude Survey, which we believe is the largest multi-client study of analysts. Regression analysis showed that just a few variables influence either award.

  • The IIAR’s awards reflect scale; the number of analysts communicating with in-house AR professionals in a firm was the only predictor of winning its awards, and an exceptionally powerful one.
  • KCG’s awards reflect scale much more than any other variable. Statistically, the other factor that drives success in the KCG awards is analysts’ perception that the firm is gaining ground commercially. Of course, the other factor is KCG’s choices about market segmentation: some are much smaller than others, making it easier for firms in small segments to win and harder for those.

Because both results reflect the quantity rather than the quality of relationships with analysts, there’s little than analyst relations teams can do to change their relationships with analysts.

Analyst relations teams struggle to prove their value, and few public, third-party endorsements of their work exist. It is certainly risky to create awards but, I’ve seen from the Analyst Firm Awards, these are uniquely useful tools to help professionals to find best practice. The existing analyst relations awards, however, are clearly not driven by differences between how different firm build their relationships with analysts.

Needless to say, it makes sense: praising the largest providers is not only without controversy but means rewarding the most major companies whose budgets can flow to the IIAR and KCG. There’s little benefit in antagonizing them. Even so, AR professionals need something better that the existing options if awards are to help people get better or recognize improvements in analyst relations.

The first step is easy: we conducted a dendrogram analysis to find a more neutral segmentation based on the analysts’ responses. As illustrated above, dendrograms are a method of clustering. We used it to organize firms based on the distance between the analysts who selected them: analysts who comment on Dell tend to comment on HPE, for example, but those who comment on SAP are slightly more likely to mention Salesforce than Oracle. That’s an excellent way to identify similarly-sized analyst communities.

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