The importance of investor feedback.
When it comes to managing stakeholder engagement, the benefits of data and direct stakeholder feedback are generally well understood. Perhaps your organisation already conducts regular employee feedback surveys, and it is very likely that you present customer feedback data to your investors in the form of KPIs such as CSAT (Customer Satisfaction Score), NPS (Net Promoter Score) or CES (Customer Effort Score).
IR Magazine’s Global IR Survey, conducted in Q1 to Q3 2021, found that 62% of the 441 responding IROs had discussed customer relations with investors. The benefits of customer feedback are widely accepted, it has become a business school topic and there is a whole industry offering products and services focused on collecting customer data.
Systematic investor feedback gathering is less common.
Many IROs are more sceptical when it comes to collecting investor feedback. You may have experienced investors seeming hesitant to provide feedback, and the feedback collected by brokers who have organised meetings tends to remain vague and non-conclusive. As a result, your expectations regarding investor feedback may be low.
This does not mean that investor feedback is not of interest. Understanding how this important stakeholder group sees your company will ultimately have an impact on valuation, financing costs and thus the company’s bottom line or ability to grow. Rather than asking for feedback directly, listed companies are more likely to rely on investor surveys conducted by independent advisors to get a better understanding of investor sentiment towards their company.
How to improve investor participation.
Most investors will understand your desire to gain better insights and the ability to improve through investor feedback. If the process is bilateral, and preferably simple and quick to execute, you have an excellent chance of benefiting from investor engagement. Today’s technology is your ally. The right tools will allow you to ask the questions that matter to you and prompt for feedback while you are still fresh in the investor’s mind.
5 suggestions to maximise your impact:
- Keep it to a minimum:
The number of questions you ask should ideally be no more than five. Focus on the must-have insights you would like to get from your investors.
- Make sure the answers to your questions lead to actionable results:
Surveys work best when you define in advance what you would like to achieve.
- Pre-define potential answers:
Think of your recent investor discussions and go through your previous investor feedback, if available, to come up with potential answers to your questions. Offering investors two alternatives, multiple choice answers or ratings to choose from greatly increases your chances of getting an answer.
- Make it quantifiable:
If you are going to track feedback over time, ratings are the best option. ‘Would you recommend an investment in our shares/bonds to a friend or colleague?’ with answers on a scale of 0 to 10 is the NPS-equivalent question in investor relations.
- Reduce free-text:
Investors are likely to glance at your questions and quickly estimate how long they will take to answer. If they seem too elaborate, you risk lower participation. However, if you limit yourself to just one question that requires a free-text answer, this should be the follow-up to the NPS question. And do not be shy of asking for critical feedback. ‘How can we improve your assessment of our investment case?’ is likely to yield more actionable results than ‘Is there anything else you would like to tell us?’
Do not forget to emphasise the importance of feedback at the end of your discussion, and make your contact aware you will be sending an email asking for feedback.
The role of tech tools.
You will automatically be able to improve the quality of the feedback you receive from your investors if the process is strictly bilateral. Asking for an email to the CFO and IR team will already be an improvement over most broker collected feedback.
By deploying a tech tool you will be able to collect the feedback in a more structured way. Associating the feedback with the event as well as with your contact improves your ability to work with the feedback you are receiving from investors will make it actionable.
Your tool should make it simple for investors to participate. If there are little barriers to your investor contact and you are able to ask the right questions while optimizing the time to provide the feedback you will be amazed at the results.
- Collecting systematic investor feedback will provide you with actionable insights.
- Investors are more likely to provide meaningful feedback if the process is bilateral.
- Identify your areas of interest in advance.
- Make it simple for investors by focusing on the big points and limiting free text answers.
- Today’s tech tools will help you gather feedback, connect the answers straight to your CRM and ensure you can work with your data points.