Several weeks ago, I had the opportunity to sit down and chat with ESG Senior Analyst Nik Rouda about big data and analytics trends. Nik is one of the most innovative people I know working to solve problems involving data and business intelligence, so I enjoyed hearing his insights about how to make more effective business decisions.

After our discussion, Nik and I started chatting about the many misconceptions that people have about how analysts work. It was a fascinating conversation, because although I work at a technology company that places a high premium on information analysis, I also bought into some of these myths.

The truth about analysts will surprise you. Here are some of the most surprising insights that I gained from our conversation:

Myth #1: Analysts think they are the experts on everything

Nik told me, "You definitely know your company better than I do, but I probably know the other 30 companies in your space better than you do." Any successful analyst knows the limitations of their expertise. They are continually striving to learn more about their sector and to better understand how different companies are solving industry challenges.

As a result, if you are genuinely innovating in your industry, any analyst would love to speak with you so they can learn more about your approach and bolster their knowledge base. It’s important to recognize this when trying to build relationships with analysts. If you approach the conversation as a useful (and humble) thought leader who is genuinely trying to share their approach with the analyst, this can be very useful for both your company and the analyst.

When talking to analysts about areas that they may not be proficient in, start at a high level and then go deeper. Nik suggests, "Talk to me like I'm your grandmother that doesn't know anything about your company." Some topics will be new, some will be well known, you just have to find the right level of depth on the point at hand.

Throughout the conversation, also assess whether the analyst is interested in the topic. If you sense that you are losing them, ask them directly, "Is this useful to you?" This gives the analyst a chance to communicate to you whether the topic is relevant, and if it isn’t you can then refocus the conversation.

Myth #2: Analysts are only for big companies

Many people think analysts focus only on the big players in a particular industry, but this simply isn’t true. It’s probably the most pervasive myths in the industry.

An analyst’s job is to cover developments in a specific sector or industry. They often help mid-sized companies in ways that are immensely valuable--for instance, through market research, helping define market opportunities, or by making introductions to strategic partners.

Some companies will work with analysts simply to bolster their brand credibility.

Even startups benefit from working with analysts. Nik said he spends 20% of his time working with Series A or earlier stage companies. Analysts help startups craft their messaging. Analysts are knowledgeable about all of the other companies that operate in a sector, they are well-positioned to help startup companies communicate their unique value in a way that doesn’t simply echo the industry incumbents.

Myth #3: Analysts just want to rank your company’s performance

Some executives are reluctant to reach out to analysts because they are fearful of the power that analysts wield through industry reports and company rankings. In my experience, it is never a winning strategy to keep a low profile because you are afraid of how you will be assessed. It’s far better to tackle the cause of your fear head on by engaging in proactive communication. This is true whether you’re dealing with analysts, regulators, journalists, or any other power broker.

In terms of communicating with analysts, it’s especially important to know that they are eager to share their industry insights. They are markedly different from regulators and journalists in that they are motivated to share suggestions and insights. Analysts can help you discover new markets that are more profitable or they can make suggestions about where to spend marketing and investment capital.

Think about a conversation with an analyst as an opportunity to speak with a well-connected thought-leader who knows all of the players in your industry. Would you pass up this opportunity? It is not to your advantage to avoid conversations with analysts because you are reluctant to being ranked.

Myth #4: An analyst is just another kind of journalist

First, it’s worth clarifying at the outset that you cannot pitch an analyst in the same way that you would pitch a journalist. How to pitch a journalist is an entirely different topic. Many public relations and marketing professionals miss this important point.

To understand how the two professions differ, it’s important to understand how they each operate. Journalists report on recent news and noteworthy developments. This term, "noteworthy" is highly ambiguous, but it basically means that it isn’t enough to convey information. As the of an aphorism says, "If a dog bites a man that's nothing; but if a man bites a dog, that's news."

In other words, reporters care more about delivering a good story than they do about detailed data and analysis. To see how this plays out to its logical conclusion, you only need to see the latest Gawker scandal.

An analyst’s job, on the other hand, is vastly different. Analysts are not looking for what is new and interesting--a highly subjective task to say the least--but rather they are trying to piece together data and bigger picture industry trends in a meaningful way. If you reach out to an analyst with the sole purpose of getting written up, then you will probably be disappointed. Only about 10% of company briefings that analysts receive will be discussed in analyst reports.

A better goal when reaching out to analysts is to share your expertise and industry perspectives so that when the analyst writes their next report, they will have a more thorough understanding of the unique contributions that your company brings to the industry.

In order to do this successfully, you need to learn to listen. When an executive or investor relations professional gets on the phone and only shares their perspectives but doesn’t listen to the analyst, they have no idea what the analyst thinks about the topic being discussed, and it will not lead to a successful outcome.

Myth #5: Analysts are pay-for-play

Many people think analysts will only speak with executives so they can sell their firm’s services to that company, but do not think it is valuable if you are not interested in hiring an analyst.

Not at all. While analysts do provide individual services to companies in their industries, good analyst firms offer valuable feedback for all companies, not just paying clients. Analysts frequently offer free consultations and advice for smaller companies.

Still, if you encounter an analyst firm that provides research or work that is far below standard rates, this should be a red flag. This is a case of you get what you pay for. Analyst firms that charge sub-standard rates are more prone to be swayed by client interests or cut corners on methodology.

The analyst firms that charge a premium rate are able to do this because they have developed a stellar reputation for delivering exceptional research. Any firm with a decent reputation is going to be very careful to not let their reports be unduly influenced by client interests.

Final thoughts

If you focus on building long-term, honest relationships with analysts, it will be very valuable to you as you grow your business--regardless of your company’s size. Analysts have the connections and insights to help your company achieve and surpass your goals. Just like in any other situation, the best way approach a relationship with an analyst is to treat the relationship as a two-way street.