A successful and proactive investor relations (IR) function or department understands its business down to the last detail. It also has an overview of the various interests of the investors. You may know that over the years, investor relations have become more complex and strategic, leaving IR professionals increasingly under pressure and overwhelmed. Note that the demands from various stakeholders are high, with a consistent stream of information coming from different directions.
It is no secret that communications professionals, leadership teams, and investor relations personnel will have to be able to respond to and mitigate mounting concerns from the financial community. They also have to instill more clarity and certainty in an uncertain situation triggered by the coronavirus.
Did you know that new legal, regulatory, and compliance issues tend to pop up regularly? And that is not all; IR professionals are also faced with many communication challenges and issues—from conveying strategic changes and addressing value gaps to disclosing bad news.
Make a Strong and Lasting First Impression with Your Website
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There is no doubt that a company’s IR webpages and website are often the first places that financial analysts and potential investors will go when they make an initial judgment call on the company or consider it a potential investment.
Note that with the immense power to influence their perceptions of the company, your website can serve as a crucial marketing tool as well as means of information delivery. Similar to your investor deck, keep in mind that the IR pages of your website should provide clear and objective data about your company’s products, services, and objectives.
Your website should also display your history, financial data, executive and board profiles, stock details if you are publicly traded, and contact information. For your website to be effective, any financial information that investors and financial analysts need for decision-making must be readily available.
Moreover, you may know that the investment community prioritizes and values a high level of transparency. This is why the more information and data you can provide, the better. This will also help save your IR team valuable time. This is because investors will be considerably less likely to call you looking for information when it’s easily accessible online.
Also, as a best practice, it is best to outline your investment thesis on the opening page. This is important as it will highlight your organization’s strategic vision, current initiatives as well as any key performance indicators (KPIs) that demonstrate its solid and profitable track record.
Did you know that interactive graphs and charts are an excellent way to communicate your financial performance? You can also use other important elements, such as current and archived annual reports, regulatory filings, press releases, webcasts, and corporate governance information.
Identify Your Goals
You have to determine what you are looking to accomplish via investor activity in the next couple of years. For example, it could be broadened visibility or hosting the first analyst day. Keep in mind that each of these intentions will likely result in a different and unique approach towards investors. For instance, if your priority is broadened visibility, it might require a focus on increased conference presence as well as specific shareholder targeting activities. On the other hand, if the goal is increased analyst coverage, you will benefit from ramping up activities with sell-side analysts.
Remember that identifying these objectives and goals before planning investor activities will help ensure that you’re enlisting in activities that will lead to successful outcomes.
A Clear and Compelling Story
You should keep in mind that central to your investor relations initiatives and efforts is your company’s story. And a clear, engaging, and compelling message will bolster and improve your credibility with investors, helping them better understand and appreciate your business and opportunities.
Note that as you formulate your story, it is best to highlight your services or products without over-hyping your company. You should also show your company’s unique position within the broader industry landscape, showcasing its strengths without losing your investors in a flurry of technical detail.
Use Apples-to-apples Comparisons
Did you know that sometimes, the financial metrics and ratios shared by a company vary from one period to the next? This makes it difficult and time-consuming for investors to accurately evaluate and gauge performance. However, by ensuring that the same metrics and ratios are used consistently, you can enable credit analysts to better understand trends and patterns and engender trust.
Reinforce Your Business’ Long-term Fundamentals
Investor relation activities are also a critical opportunity for your top leadership to highlight and reinforce the long-term fundamentals of your business. And it is essential to refresh the messaging on the key strengths of your company, such as the value of its key offerings.
Do not Wing it
It is essential to prepare thoroughly for all your earnings calls. This is because what you say as well as how you say it is pretty important during investor meetings and on quarterly calls.
Announcing the Bad News
It is no secret that transparency and honesty are important in investor relations — particularly when it comes to challenges. Remember that even a steady and responsibly managed company may encounter a serious crisis or disappointing financial results. Keep in mind that how you handle these situations will help shape and influence investor attitudes towards your company.
It is simple and easy to highlight the positive trends and news impacting your company while glossing over the negatives. However, the best and most responsible companies do an excellent job at providing balanced information.
For instance, if you realize that you will miss Wall Street’s consensus profits or earnings estimates, it is vital to have a comprehensive plan to touch base with financial analysts right away in order to discuss why the numbers or figures diverged from expectations.
And if you encounter a real crisis, your company’s success and future will likely depend on how you disclose that information to your investors, employees, regulators, and other stakeholders. It is essential to develop plans for both crisis management and communications before troubles arise, including organizing a crisis communications team, solidifying companywide procedures, and deciding on spokespeople.
Final Thoughts
Note that the primary goal of investor relationship management is to strike the right balance between providing an assessment of the impact and measured guidance and conveying long-term resilience and confidence.
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