A new benchmarking study of business-to-business vendors in North America shows very different responses to the recession. 44% of firms will cut marketing while 31% will increase by more. Former Gartner country manager Ally Motz writes that “the average spend changes for the entire group was actually slightly positive, increasing by 0.4% – especially on pipeline acceleration and client retention.” $1bn-plus firms were most likely to cut their spending. Lighthouse´s free IDEAL Audit can help AR teams to realign their resources to new priorities. Continue reading
Many AR professionals are planning for recession right now. Lighthouse’s assessment remains that we’ll see a very uneven dip, with recession in some of the western economies being balanced by growth in developing markets. The growing value of the US dollar is engineered by overseas national banks to constrict US exports, thus opening the field for European and Asian vendors to accelerate. How can AR professionals plan for this uneven economy, at a time when a number of vendors are starting to cut analyst relations functions in order to maintain spending with industry analyst firms?
In planning workshops we’ve helped run over the last few months, we’ve found that Lighthouse’s IDEAL methodology is a powerful and comprehensive for understanding the five elements of effective AR:
- Identifying the analysts;
- using measurements to Drive goals;
- Engaging with analysts on the basis of their information needs;
- Aligning AR to the rest of the business and, finally;
- maximising the Leverage of the benefits of AR.
Using this methodology can help AR teams get the fundamentals right and ensure now that they have the resources, plans, benchmarks, proofpoints and focus on results needed to withstand the pressures of the next year. For example:
- Identifying the analysts is crucial to doing more with less. Ideally, effort will be allocated to analysts in line with their potential impact on the firm’s profitability. Most AR teams are so focussed on a vast range of competing tactical priorities which outnumber their ability to respond. The result is often that they don’t take the time to tier strategically and, in that way, reduce the scope of their tasks. We’ve argued that most AR effort is wasted (here, here, here and here). Many attempts to tier analysts are well intentioned but mistakenly focus on vendors funded analysts with high media profiles, as we discussed in Tiers before bedtime. The solution is to use effective identification techniques like Analyst Impact Modelling and QuickTier to focus on analysts with sales impact. These approaches involve understanding which analyst and consulting firms are most used by your potential clients.
- Driving progress often requires goals. Goal setting is highly effective in almost any endeavour. AR teams needs to be able to answer questions like: Where are we not, compared with other firms? What is our profile in research like? How likely are analysts to recommend us, versus our competitors? What should our resourcing be like? What position to be want to maintain or rise towards?
- Engaging with analysts requires understanding of how to build rapport in recession; the right resources; and a plan to ensure the right frequency of communication with the most important analysts. Our series on recession AR stresses starting with analysts’ needs rather than those of the vendor, in order to generate a relationship based on reciprocity and exclusive information. Resources like tools, guides, a calendar of regular activities, and technology for virtual teams needs to be support with agreement on priorities. Engagement cannot be optimised without prioritised goals to drive the team forward.
- Alignment to the business means better understanding of business goals. Efrem’s AR Value Calculator, building on his work at Kensington Group, helps businesses to understand which part of their business are most sensitive to analyst influence. Often AR can make the most contribution to profitability by focussing not the core business but the growth areas. That means connecting up AR to sales, strategy and competitive intelligence, both as functions and as people. Stronger human support, amongst executives, key account managers and communications teams, also needs to be won.
- Finally, leveraging the AR programme also rests on a clear and common understanding of goals. If the organisation only values one AR output (only insight, or only media coverage) then AR really needs to align to that while, at the same time, educating the organisation. If your stakeholder don’t see the impact of analysts fully, or can’t see the benefits of AR, then you need to focus on how greater leverage can improve internal perceptions and, in turn, increase the resources available for AR.
To find out more about IDEAL, contact us.
Managers can learn how to accelerate the momentum of their analyst relations programme at Lighthouse’s seminar on Building AR Momentum. Lighthouse’s second-level AR course runs in the second quarter of each year: in Munich in April, in Singapore in May and prior to the Forrester IT Forum in June (Thanks to Marius for the photo from Thursday’s class).
The seminar explains how AR professionals can accelerate their results by using IDEAL, the best practice methodology for analyst relations. This isn’t a introductory course, but one that aims to build the capacity if managers to answer the most challenging questions about the execution of AR strategies. To allow participants to attend both the Lighthouse session and Forrester AR Council, the class will run from 8 am to 1.15 pm, concluding with a lunch break.
- What makes analysts recommend firms to buyers?
- Which communication methods should you use more, or less?
- How to leverage analysts to develop strategy, reputation and profitability
- Developing AR momentum and operational excellence
- Selecting and using Databases & CRM tools
- Perfecting analyst newsletters and extranets
- Controlling and managing enquiries
- Getting the most out of analyst summits and conferences
- How to anticipate and test the impact of your messages in each briefing
- Measuring your AR program
This year the course has some extra content:
- How to account for the different impact of national and global firms in national markets.
- Contrasting media-centric and user-centric analysts.
- How the division of labour in analyst firms is changing.
- Why the ‘squeaky wheel’ should not get the oil.
- Key aspects to consider in cross-cultural communications.
For a copy of the fact sheet and booking form, send an email to us at contact at lighthousear dot net.
Lighthouse is offering analyst relations teams a free conference call on the IDEAL methodology – to get an invitation, please email analysts at lighthousear dot com.
Over the last couple months we have been engaged in our IDEAL powered AR audit. This sees us interviewing leading AR practitioners about the makeup of their analyst relations programs to understand where they focus most and where they need to focus more.
Generally speaking, mature AR programs have a broader focus than their younger competitors; whilst the vast majority of vendors’ analyst relations activities achieve competency in at least one of Identify, Drive, Engage, Align or Leverage, it is rare to see a high level of focus across the board.
The most common area of high-level focus is Leverage, with most vendors scoring on average, 7 out of 10. This makes sense because leveraging analyst relations requires little budget yet produces noticeable differences relatively quickly.
For instance, increasing internal, active support for the analyst relations program often starts by gathering key AR stakeholders into some form of committee or council. Another area we look at is the level of best practice and networking AR teams engage in. These activities are simple and low in cost to execute – this is why many score highly when it comes to leveraging within the AR paradigm.
This leads us to an interesting and recurring theme: how to make AR budgets go further. When it comes to Leveraging, success is easier to come by because it doesn’t require that scarce resource, capital. However, does this mean that there is a funding problem with achieving success in the Drive and Engage functions?
We welcome your thoughts on the most efficient ways to deploy your AR resources.
Lighthouse’s free IDEAL analyst relations audits are leading us into some fascinating conversations. The audits help you to review the principal features of effective analyst relations programs. At the end of the audit, we benchmark your scores against the best practice in the industry, to help you see where the biggest gaps are between what you are going and what you could we doing.
We’ve made a conscious choice to benchmark firms against best practice, rather than against the average scores. One reader has pushed back at us about that. He suggests that smaller firms can’t hope to even approach best practice, and instead they should aim to be better than average. The question is also posed of whether or not our approach will be demoralising: most firms will equal or exceed the average, but no-one will exceed best practice.
We remain convinced by our original approach, for five reasons.
- Quality not quantity. Best practice is about conscious control, not resources. We benchmark using our IDEAL methodology. We show how far you are optimising your AR through identifying analysts, driving performance using effective goals, engaging analysts, aligning effort and leveraging the benefits of AR. These show you the ‘inputs’ you are feeding into your analyst relations systems. Benchmarking against best practice does not mean holding 1,000 briefings a year just because a competitor does.
- Anyone can win. It is not only large firms that can be recommended by analysts. Analysts want to find solutions to clients’ problems. Vendor scale is only one variable. Small firms can be leaders. One client of ours was top-ranked by Gartner in its niche market despite having revenues under 50 million. If you can win, then aim to.
- The ‘close second’ still loses. Normally, only one supplier wins the deal. Even if a consortium wins a large deal, one firm really wins and the others make less profit. Most analysts follow seven firms closely. To be on the tip of the tounge every time, you need to stand out. Being slightly above average it not enough to win your way onto shortlists, especially if you are a mid-sized or smaller firm.
- Average stinks. Most firms don’t do their AR well. In particular, most are misallocating resources. Aspiring to average patterns also means emulating their mistakes. For example, should your firm be sending out average numbers of faxes and mailing out average numbers of press releases? No. You should be part of the minority that rejects ineffective tactics like these. Should your firm be sending our average volumes of pricing information and market analysis? No. Most firms fail to meet most analysts’ needs for this sort of information. You will build better relationships by aiming to meet analysts needs rather than emulating your competition.
- If you want love, buy a dog. The real objection to our approach is this: many people don’t like to be told the gap between where they are and where they need to be. Culturally, this is more specific to some countries than others. However, showing the gap honestly is key to giving AR directors the information they need to reallocate resources and to put the case for more resources. We have also read Love is the Killer App. On this particular terrain, however, we need to look our customers in the face, state things as they are, and not take the line of least resistance.
Clearly, it would be far easier for us all if we benchmarked against averages. Most people would walk away feeling they did well on some things and had a few areas for improvement. However, the reality is that the level of AR effectiveness is rising fast — and so are analysts’ expectations. AR directors certainly need to know where they have the biggest opportunity for improvement. However, they also need to understand the gap between them and the current winners. Benchmarking against also-rans turns you into an also-ran. Benchmarking against the best allows you to be the best you can be.