Following on from my post yesterday, in which I said that larger firms and PR agencies ca usefully combine senior and junior AR staff, I’ve had the question: what about smaller firms with limited budgets?

A corporate AR team (for example, with four or more people) can have a division of responsibilities. But my correspondent believes that if a firm is doing AR with one or two people those professionals must be the best that can be found. “If I were going in for heart surgery in small country hospital I would want the most skilled doctors available even thought medical interns may fit into their budget better. There is the distinct possibility that a vendor firm will be worse off by having poor analyst relations than no analyst relations at all. Sometimes it is better not to do a job than to do it poorly. Too often I have found that the right resources have not been recruited at the mid and smaller firms.”

Cervantes suggested that ‘the proof of the pudding is in the eating’. Let’s think about what firms like that do in practice. Firms with full-time analyst relations staff already have some scale: They will tend to have revenues of $500 million dollars or more.

However, firms whose analyst relations are in their early stages tend to prejudice one benefit of the relationship with analysts over the other: Insight, Opinion or Influence. An exclusive focus on one benefit will distort the practice of analyst relations by that firm. That will also tend to determine whether or not it brings junior staff into the AR team. That’s because each mode either suits intensive resources (complex communication to fewer analysts, requiring fewer, but more senior, staff) or extensive resources (more direct and robust communication to more analysts, requiring more staff that may be more junior).

• Insight. Firms that focus on gaining Insight from the analysts to develop their internal understanding tend towards extensive resources, and tend not to allocate senior people into the AR function. The point of interaction is between executives and product managers, who ‘consume’ analyst insight, and the analysts. The AR function is made technical (in the sense of being about technique) and focuses on optimizing the organization of discussion with analysts and the distribution of information to them. Junior staff can do that work well and, indeed, it’s an excellent training ground because many analysts need to be approached. Very often, we see analyst relations in those firms being part of the market research or competitive intelligence functions of the firm. Market intelligence specialists have experienced that insight is very widely distributed. Because they are in the habit of consulting regional or functional boutiques, they will tend to communicate with specialists in each of the firm’s key product or service segments. They will also tend to favor firms that serve vendors, such as IDC, rather than firms that focus on buyers.
• Opinion. Firms that want to change the opinion of analysts that are heard by the firm’s stakeholders tend to manage AR through the firm’s public relations and marketing communications functions. They will focus on the firm’s domestic market very heavily, since that is where key stakeholders (such as executives, employees, investment bankers and principal investors) are based. These stakeholders will primarily experience analysts through the media in the domestic market. That means that AR specialists in those firms tend to focus on analysts with a high domestic media profile. Those often tend to be analysts who are, in fact, less influential on buyers than the average analyst. However, they are most frequently encountered by vendors’ employees and investors. Analyst profile in the media is very widely distributed, so it makes sense to use extensive resourcing, to cover more analysts.
• Influence. Firms that primarily focus on the analysts who influence the buying decisions of vendors’ potential customers tend to resource intensively, and to increase that intensity over time. Analyst influence on sales is very concentrated: fewer than 20% of the analysts influence over 80% of the sales. The middle-managers of the leading AR teams at large firms (like Cisco, Deloitte, HP and IBM) are generally more senior, specialized and qualified than are most directors of AR outreach in mid-market firms.

Of course, many things are easier for the larger firms because they can combine these three without imbalance. Even if they have fewer cents per dollar than the mid-market firms they are able to enjoy from economies of scales, knowledge management and team training. One of the major responsibilities of a team leader is to devote as much time as possible to training “junior” people. In a larger firm this is the only way to make sure that outreach is done correctly and effectively while still staying in, what is often, a limited budget.

More importantly, larger firms and PR agencies are also able to use these benefits to offer a real career path and genuine professional development. Mid-market firms, and larger firms making appointments outside the domestic market, cannot offer those benefits so easily and therefore face extra challenges in motivating isolated AR specialists.