David Whittaker, Senior Investor Relations Adviser
Why you need to understand perceptions of your company
The substantial resources, including staffing, technology, printing, advisers and senior management time that most companies devote to investor relations are unfortunately not unlimited. It’s therefore crucial that these scarce resources are utilised as efficiently as possible with the best IR outcomes for the company. Goal setting, strategy formulation and results measurement are fundamental to ensuring the effectiveness of the IR program.
One of the best ways to understand whether your story is being heard, understood and valued by investors is through perception research – a powerful tool for supercharging your investor relations effort.
What is perception research?
The best form of perception research is a comprehensive assessment of how your company is perceived by institutional investors and broking analysts, offshore and domestically, involving interviews conducted over a 1-3 week period in a structured format.
However, it can also be a lot simpler and less formal. For example, straw poll feedback following a major investor relations event can provide rapid and useful insights on how the event was received and if the message got through.
Five reasons every company should undertake perception research
- Get honest feedback, as outsiders see the company and appreciate how it stacks up against peers and the wider market.
- Identify issues in market perceptions and address them before they become a major problem for the way your company is valued.
- Refine messages and disclosure to ensure the story is being heard, understood and the assets appropriately valued.
- Direct your market engagement activities to ensure maximum return on effort from roadshows and meetings.
- Measure the effectiveness of your IR program, refine your goals and strategy to maximise the impact on shareholder value.
Five questions a perception report can answer
- Is your corporate strategy understood and considered appropriate?
- What does the market see as your operational strengths and weaknesses?
- How effective are your presentations and reports?
- What are the hot button issues and performance expectations?
- How are you perceived relative to peers?
Five essential ingredients for top quality perception research
Not all perception research was created equal. The right interviewer needs to ask the right questions to the right people. And you need to be prepared to listen.
- Perception research should be undertaken by an unbiased, independent third party. Effective perception research should cut through the ‘sugar coated’ interactions many CEOs and CFOs have with investors and brokers, which are good for building relationships but don’t always provide the feedback leaders really need or want to hear.
- Perception research should gather both quantitative and qualitative feedback. Quantitative ratings scales can be really useful for measuring certain aspects and illustrating data graphically but it will miss the granular detail and nuance that qualitative information provides.
- Perception research should seek as broad a view of the company as possible, with feedback gathered through interviews of current and past investors (domestic and international), broking analysts and other key opinion influencers, which, may include equities sales traders, media and market commentators.
- The interviewer needs to know the story, understand the company and be able to speak the language of the market to ensure respondents are fully engaged in the process and their feedback is heard, understood and appropriately reflected in the perception report.
- The tough questions need to be asked and you need to be prepared to hear the answers you may not want to hear. To receive full benefit from the process you need to be open to honest feedback that may challenge the way you see your company.