Maximizing the Value of Analyst Relations

One of Lighthouse’s traditions is the Boardroom: an annual working lunch for AR professionals, hosted in San Jose, CA, the week before Gartner’s Symposium. In April 2007, we met to discuss ways to maximize the value of AR in a recessionary environment. Geoff Roach is an wonderful host, and arranged a private boardroom for us in the Silicon Valley Capital Club.

From Europe, it’s hard to understand how deep the recession anxiety is here. Much of the anxiety has a personal expression for home-owners because of the long general decline in Bay area house prices, and in the number of houses being sold, since May 2006. Bankruptcies have doubled from 2006 to 2007. However, a number of local business indicators also show a downward trend over the last year: passenger travel is down, while air freight is at its lowest level for nine years. Also down are hotel occupancy rates and revenue. Since August 2006, consumer prices have risen much faster here than in the rest of the US. Over the last month, both the Nasqaq and the SV150 stock index are down, the amount of business space to let has risen to 17.4% of the total, and even the population of Silicon Valley has dipped. On the bright side, the Administration has succeeded in bring the dollar to a 26-year low (discouraging Americans from importing) and the weather’s lovely.

However, our feeling is that this recessionary anxiety will be maintained for some time. Wall Street shares that feeling, and the future values of US tech stocks are falling. Our discussion was very wide-ranging, but there was general agreement that AR managers need respond more to analysts’ needs. A lot of ‘communication’ is actually one-way broadcast. Rather than simply ship out their own corporate information, AR managers need to better understand what analysts really want.

I think that Geoff’s book, coauthored with Lisa Perri, is an excellent guide to that. Their book outlines a survey of hundreds of analysts, across over 100 firms. They use their experience as analysts to show what analysts do, and then use their research to show the analyst firms’ business models. They show some useful approaches to quantify the value of AR, and Return on Investment, including a worked example that show one small firm showing a $8,597,179 return from analyst relations.

The two chapters I found most valuable were ‘What drives analysts crazy’ and ‘Secrets of the inner sanctum’. Those use comments and statistical data from analysts who show what analysts hate, and love, in their interactions with analysts.

Obviously, a book based on extensive bottom-up research will cost more than one based on anecdotes. However, their book gives great insight into the needs of the US analyst. It’s an excellent companion to Efrem Mallach’s book and seminar, Win them Over, which is the original and best book on analyst- and consultant-relations programs.

The eBook version of Geoff and Lisa’s book is available online. For the same price, Analyst Equity readers can get a hard copy of the book, and a copy of Efrem Mallach’s book. Just email us your order.

P.S. You can also read up on the 2006 and 2005 boardroom discussions.

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.

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  1. October 30, 2014, 6:57 pm

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