Lighthouse reveals top methods for AR evaluation

The four most frequently used methods of evaluating analyst relations have very different uses: some primarily measure the firm’s overall performance rather than that of the AR team; other give specific guidance on how to reallocate effort for maximum effect. In a Lighthouse research project summarised in January’s webinar (on Thursday the 29th), we have found that most AR teams are having to re-think their evaluation methods dramatically in the current economic slowdown.

Lighthouse project on ‘Changes in the evaluation of analyst relations’ is being managed by Alban Thurston and myself. It surveys large organisations about how they evaluate their investment in industry analyst relations. According to interim results being shared with clients this week, four methods are most widely used:

  1. Movement in ‘signature’ research, evidenced by reports like Quadrants and Waves
  2. Frequency of mentions in analyst research, evidenced by services like the Lighthouse Analyst Index
  3. Numbers of briefings and other interactions, recorded by the AR team itself
  4. Surveys of analysts’ attitudes and perceptions, like the Analyst Attitude Survey.

Several other evaluation methods were also reported; they were either less frequently used, or abandoned. Two methods were especially seldom used:

  1. Movement in market share/shipment estimates and forecasts
  2. Investment/equity analysts’ citations of sympathetic industry analysts .

In discussions about these findings this week with organisations that took part in the first cycle of the research project, we’ve had some interesting feedback. Many managers feel that measurement of changes in signature research is ineffective as an AR measure because it fundamentally assesses the firm’s objective position rather than the relationship built by the AR team.

Generally, managers expressed frustration that many of the measurements do not give AR professionals a good idea about how to allocate their resources differently. For example, with fixed resources it’s very hard to increase the volume of interactions. Positioning in signature research could be improved by allocating all effort to only firms that produce signature research, but this produces an unknown risk represented by under-communicating with the majority of analysts.

Analyst attitude surveys were very highly rated because they both gave strong indicators that were accepted by senior managers, and also gave clear indications of how to allocate resources differently in order to better meet analysts’ information needs

At this stage in the research, it also seems to us that there are some strong differences between vertical markets, in particular with those firms where analysts are not felt to have a direct and rapid impact on buying. Those firms seemed to be the most aware of industry analysts’ impact on investors and equity analysts.

Because the project is developing some fascinating insights, we’re very likely to run a public webinar on this topic in January.

Lighthouse reveals top methods for AR evaluation
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5 Comments

  • Reply December 4, 2008

    Ludovic

    Duncan,

    You’re focussing on “clippings” and “output” and forgetting the other dimensions:
    - impact on sales (one avenue to explore is win/loss analysis there)
    - leverage for marketing (you know, the “L” in IDEAL, like speaking engagements and reprints, note that I dare not to say the W***e P***r words)
    - and the impact on strategy, but that’s very tough to quantify

  • Reply December 5, 2008

    Duncan

    Hi Ludovic,

    This survey shows the methods that are *frequently used* to evaluate analyst relations. I am a strong supporter of win/loss analysis, but it’s not widely used as an evaluation method. Neither are the value of leverage and the impact on strategy.

    We’re not forgetting the other elements in the AR process, but we are showing the firm the reality of measurement in their peer group.

    Duncan.

  • Reply December 11, 2008

    Efrem

    The put-down of movement in “signature research” as a measurement method is not fully justified. Such research cannot measure a firm’s objective position. It measures the analyst’s perception of that position. (That’s why different research firms can give the same vendor different positions in similar measures.) Analyst perceptions are based on, among other things, (a) the facts, (b) how the facts are presented to the analyst, and (c) how the analyst filters them through his/her prior information and feelings. Analysts claim that (a) predominates, and with some perhaps it does – but unless they are emotionless robots, it can never stand alone. The impact of subjective factors is higher for measures such as strategic vision, lower for measures such as breadth of product coverage, but analysts can never escape it. Influencing the subjective factors is AR’s role in shaping a firm’s position in these charts. It’s not the only thing that determines that position, with really good analysts it may be a minor influence, but it’s always there.

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