How can we stop the decline of analyst relations?

There is a huge opportunity for vendors to benefit from the generalised decline in the responsiveness of analyst relations. Most vendors fail to act in the knowledge of the last year’s changes, creating huge benefits for those AR teams that fill the gap. That is the overwhelming tone of conversations with around two dozen analysts around the world I’ve had this month to follow up the astonishing results (summarised here) of a recent Analyst Attitude Survey.

This post outlines the opportunities for vendors with the courage to change, the obstacles preventing AR teams from acting along these lines, and the specific actions needed.

Five key success factors that seem to be opportunities

  1. Building rapport. What vendors describe as a shift from reactive to proactive AR is often a euphemism for shifting from interaction to one-way broadcast. Most AR teams are less able to answer analysts’ request for information. Firms that are able to maintain human contact, develop rapport and put effort into answering questions are rising fast in analysts’ estimation.
  2. Giving the overview. A general decline in the availability of spokespeople, and in the number of market participants through M&A, means that some analysts struggle to get high level intelligence about the markets they follow. Firms that are able to maintain the commitment of spokespeople, and who develop AR people who are spokespeople, tend to win increasing share of mind.
  3. Focusing on the analyst. A general shift over to online, anonymous, self-service delivery of information is failing to show corporate priorities and give analysts highly relevant information as the signal-to-noise ratio worsens. Firms that are able to personalise their communication with analysts get more attention because they provide higher value.
  4. Remembering the second tier. The wise impulse to tier analysts has led to the situation where second and third tier analysts are relatively neglected, especially in smaller firms and emerging markets. Companies that allocate effort in line with the value of the return on their effort are making fast inroads into the opinions of neglected analysts.
  5. Not making yourself redundant. AR teams that reduce the volume of work by excessively narrowing their focus and shifting to automated delivery are laying the basis for their budgets to be reduced. AR teams that continue to involve spokespeople and budget holders in AR delivery are more able to insulate themselves against harsh budget cuts.

While some of these points, if not all, will echo as generally true, many stakeholders will consider themselves immune from the general position. Certainly, there are always outliers against any general trend. However, many of the reasons that people use to negate the proposition that AR effectiveness is declining reflect partial, and thus incomplete, understandings.

What are the reasons for complaisance?

  • Our AR team is more responsive, not less. Some AR teams really are more responsive. In particular, we’ve seen some firms allocating more AR effort into the North American market, particularly Asian companies. However, if most teams are less responsive then that creates a gap: analysts are looking for input which they cannot get elsewhere. That gap is especially clear for grass-roots market data. If you are not stepping up to meet that unmet demand, then the Asian firms will continue to do so.
  • Our analyst survey says we’re great at AR.  Unless your firm is taking part in a blind multi-client survey of analysts, in which you don’t determine or discover the individual participants, then I’m really not surprised to hear that – and not only for reasons to do with bias and method. But even if your firm is doing great at AR then there is a lot to learn. For example, Cisco deserve a lot of praise for virtual done right, but even top AR teams have the opportunity to improve the way they do online events or some other element of the mix.
  • Analysts are getting harder to contact. Some analysts are harder to contact. It reflects the pace of work and perhaps that’s why is now analysts in Europe, rather than those in the US, who are now hardest to contact. Even so, when I pick up the phone and call an analyst’s direct line during working hours then most of the time I’ll either get through or I’ll get a call back. I don’t think that’s anything special about me. What some analysts tell me is that firms are either offering less interesting information, or there’s no quid pro quo: the AR team doesn’t respond to the analysts’ requests, so why should the analysts agree to webinars or mercy briefings which are not real conversations? The shortage isn’t of available analysts as much as there is a shortage of thoughtful spokespeople who can answer analysts questions.
  • AR doesn’t have the resource. This is the most solid objection, and Ludovic outlines it here. The answer is a complex one based on sensitivity analysis (Here comes the science bit). Let’s make some reasonable assumptions and then try to make a point. Imagine if a third tier analyst has 1 unit of influence, a second tier has 10 units and the top tier has 100 units. Then imagine that the ability of AR to influence the analyst is directly in-line with the effort expanded. It’s superficially worth putting 100 times more hours into a top-tier analyst than a third tier analyst. But if everyone is communicating with the top tier and then no-one communicates with the third tier then the most effective strategy is to not nag the analysts you cannot impact much and to focus on the people you can have the greatest influence on. 100 hours into understanding and influencing a top analyst might not shift them more than one unit of influence, but one hour with 100 third tier analysts will almost certainly shift them in total by more than one unit of influence.

What are the solutions for AR teams?

  • Don’t get high on your own supply. The tone of what analysts say anonymously to third parties really does differ from what they say to you. Give it a go, and compare transcripts of the conversations. Everyone has to be brave enough to continuously identify possibilities for improvement.
  • Pick up the phone or come for coffee. Analysts may say they don’t have the time, but sometimes they do. Make more effort to reach out with questions about what analysts want, and listen hard. You are smart enough to listen actively without over-committing.
  • Don’t point a hosepipe at analysts. You know George Bernard Shaw’s line about not having the time to write a shorter letter? Too many analysts are getting everything from you, by email, as a press release, as a tweet etc etc, with no sign of context or priority. And it doesn’t reflect any understanding of their needs.
  • Keep an eye on those Asian firms. Analysts may complain about the cultural difficulties between Asian and Western businesses, but those Asian firms are bringing home the bacon. They are rising fast in analysts’ opinion, both in services and in equipment.
  • Build active support among spokespeople. Executives are under more pressure and need more convincing to support AR programmes. Since many executives are more familiar with PR, Ralf and I wrote a book (Industry Analyst Relations) to explain AR using that paradigm. Buy copies for your spokespeople (email for massive bulk discounts).

To find about more about what analysts really want, and what really works to influence analysts, buy our Analyst Attitude Survey. Email us to get the FAQ document or to arrange a webinar.

Duncan Chapple

Duncan Chapple is the preeminent consultant on optimising international analyst relations and the value created by analyst firms. As SageCircle research director, Chapple directs programs that assess and increase the business value of relationships with industry analysts and sourcing advisors.

There is 1 comment on this post
  1. February 26, 2010, 11:06 pm

    I like being respected by AR as much as any analyst, but it’s also the analyst’s job to be relevant and helpful to AR. Honestly, the challenge of the research analyst job isn’t to regurgitate press releases first or to fluff egos or attend private meetings. It’s to turn that information, grassroots end-user information, business trends, and vendor conversations into forward-facing value. In other words, it’s about actual analysis of data and information.

    At the end of the day, AR needs to find the analysts who help them and analysts need to provide the information and services that are most relevant to their marketplace. If you’re not getting value from your analyst subscriptions and products, re-think them. (On the other hand, if you’re planning on getting something for nothing, maybe you need to re-think your approach. The analyst-AR relationship always needs to be something-for-something.)