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Measuring the success of your shareholder communications
In the ever-dynamic landscape of today’s corporate communications, effectively engaging with shareholders is ever-more paramount for fostering investor confidence and securing a company’s financial future. The advent of new technologies, changing investor behavior and shifting communication platforms have combined to transform the ways in which companies interact with their investor base.
This playbook will delve into these pivotal changes and offer insights into how investor relations professionals can optimize their strategies to enhance communication efficacy and stakeholder engagement.
First, through a poll of leading IROs around the world, we will examine the evolving nature of corporate communications influenced by technological advancements. This includes the diverse media through which investors now access company news and changing preferences in how information is digested.
Our research will address the importance to IR of feedback, which should not only serve as a metric of past performance but also as a vital tool for continuous improvement. This section will provide practical advice on how IROs can effectively gather and use feedback to refine their strategic work, ensuring their efforts yield a tangible return on investment in terms of both time and resources.
By the end of this report, IROs and communication professionals will be equipped with a clearer understanding of the current shareholder communication landscape and actionable strategies to enhance their effectiveness in this crucial area.
The ways in which listed companies communicate with their shareholders have changed to beome almost unrecognizable over the past few decades. Different channels are emerging as more effective, or as having more reach, than others, while investors have their own preferences for where and how they want to absorb information.
When asked to list the communication channels they find most effective today on a scale from one to 13, where one is most effective and 13 least effective, our poll finds that in-person events are considered the most impactful of any method listed.
When asked to rank several different forms of communication, IROs rank in-person events highest, with an average ranking of 2.2 and 33 percent of respondents naming them the single-most effective method. Direct calls also feature highly, with an average rank of 2.7, chosen as most effective by 16 percent of respondents.
Elsewhere in the rankings, virtual events (average ranking 3.9), press releases (4.3) and emails (4.3) also feature high on most respondents’ lists. But despite 14 percent of respondents naming live video as the most effective method of communicating with shareholders – more than named virtual events, press releases or emails as the best channel – this method receives an average ranking of just five.
At the other end of the scale, IR blogs receive both the lowest average ranking (9.4) and are picked as the most effective communication channel by none of those polled. Social media (average ranking 7.5) and IR newsletters (7.2) fare little better among those polled, with fewer than 5 percent naming either as the most effective channel.
IROs were then asked to rank the three communications channels they found most effective three years ago, to compare and contrast with what they find effective today.
In-person events – perhaps unsurprisingly – still rank as one of the most popular first choices, with 15 percent of respondents ranking them top as a communications channel three years ago. The same proportion pick out IR blogs as their most effective channel three years ago, while live video is ranked in top spot by 13 percent of respondents. In general, in-person events (average ranking 1.5), live video (1.5), IR blogs (1.7) and webinars (1.8) receive the highest average rankings among those polled.
This paints quite a different picture from the one portrayed by today’s results: while IR blogs and webinars were considered among the most effective communication channels three years ago, they both rank near the bottom in today’s estimations.
At the other end of the spectrum, neither news articles nor emails were considered a top option by any respondents three years ago, receiving an average ranking of 2.5 and 2.7, respectively. Phone calls are named the most effective route for reaching investors three years ago by only 6 percent of respondents, compared with 16 percent who cite them as a top choice today.
Virtual events, named as the most effective method of communication by 6 percent of respondents when considering both today and three years prior, now have the third-highest average ranking, compared with the fourth-lowest spot three years ago.
The findings illustrate that while certain channels may once have been perceived as the most effective or important way to reach investors three years ago, the reality has turned out to be rather different today.
Whether that is a consequence of over-reliance on virtual technologies in the aftermath of the Covid-19 pandemic or a careful reassessment of where investors like to absorb information, investor relations teams are continually refining their strategies to always hit the best channels.
In order to achieve this best, it’s crucial that IR teams maintain a meticulous feedback process to allow for any necessary changes to be easily made.
Establishing a feedback loop is a fundamental strategy for enhancing the effectiveness of investor communications. This iterative process allows IR teams to continuously capture and analyze feedback from their communications with shareholders and the broader investment community, hopefully gaining invaluable insights into investor perceptions, concerns and expectations in the process.
This information not only provides a measure of the impact of current communication strategies but also serves as a critical input for refining and optimizing future messages and engagement approaches.
There are different kinds of data that can feed into this process. Most IR practitioners will be familiar with integrating quantitative data – which captures things that can be measured or counted – into their feedback loops, but there is an increasing need to develop a process around qualitative data, which represents information and concepts that are not represented by numbers.
When asked which of the two they consider more important, 63 percent of IR professionals say they consider qualitative and quantitative data to be equally important, with 27 percent considering qualitative data to be the more important than its counterpart.
IROs were also asked to rank in terms of importance the various metrics available to them for evaluating communication success, on a scale of one to 17, where one is most important and 17 least important.
Immediately, several metrics emerged as the most popular choices, with direct feedback via calls or email gaining the highest average ranking of four, while the quality of follow-up engagements or meetings is ranked at an average position of 4.1, followed by analyst notes with an average ranking of 4.4. These three feedback elements also receive the highest proportion of top-three rankings – that is, were named as first, second or third-most important – among those polled. Other top-ranking factors include the number of engagements or meetings held with a particular investor (average ranking 4.7) and analyst coverage or ratings (4.9).
At the other end of the scale, three feedback factors are consistently held in low regard by those polled: looking at pure website dwell times (average rank of 12.1), social media posts (12.3) and click-through rates on email marketing and other items (12.9) are bottom of the pile by some way. Only website dwell times receive any top-three rankings, with just 2 percent of IROs considering that factor an important one.
Respondents are more split on some factors than others: sentiment analysis, feedback from questionnaires or polls and awards or other recognition are all given an average ranking of between six and eight, but are named almost as often in IROs’ top three most-important options as in their bottom three least-important choices.
Those polled also have varying opinions regarding how often they should review these metrics.
The largest cohort of respondents – 45 percent – say they do so on a quarterly basis. Around a quarter (23 percent) of those polled review their evaluation metrics less frequently: at least biannually or, in 5 percent of cases, never. A further 19 percent say they conduct these reviews on a monthly basis and a hard-working group of IROs – 8 percent – do so on a weekly basis.
Though there are clear trends in what IROs agree on to be the most important factors and the best way to review these metrics, there is also clearly variation from company to company on these issues.
'Our primary mode of communication with shareholders is still through email and direct conversations. This is mainly due to our current position; we’re not actively seeking a large number of shareholders, so we usually communicate with a set list of known shareholders with which we regularly interact and engage.
‘Lately, however, we have partnered with our digital social media team, which has been conducting targeted LinkedIn messaging via our broader Boston Scientific channel, specifically aimed at investors. This initiative began about three business quarters ago with a pilot where the team created several key posts designed to reach specific investor-type users and discovered that engagement with these targeted posts was significantly higher than what we typically see with other channels and posts.
‘As a result, we have formalized this process, establishing a schedule of posts aligned with key investor events planned throughout the year. These are then amplified to the targeted audience and we measure the click-through rates to see whether certain elements – like videos – enhance engagement. It’s still early days, but this strategy is something our social media team introduced and we have been actively supporting it.
‘We categorize our content into three areas. The first is earnings and the key messages we aim to highlight. The second is ESG topics, particularly emphasizing our recent performance report, which has generated a significant amount of content. The third focuses on our products. We’ve observed that our targeted audience engages most actively when we showcase our innovative products. Typically, we provide an overview or background, sometimes including a patient story related to one of our products, and this approach seems to resonate well with our audience.
A broad approach‘For general communications, we focus on broad engagement as we already have frequent interactions with our major shareholders. Our main goal is to engage the wider base of investors with which we might not consistently interface. To maintain their interest, our team monitors how long people interact with our content and whether they click through to our investor website.
‘Once there, there is a wealth of valuable information available to them. We also track metrics on our investor website to gauge the effectiveness of our engagement strategies. Overall, our approach is broad, but it’s crucial to see how this engagement translates into broader business impact.
‘We hold a quarterly meeting to review this and, about a year ago, we made a significant addition to our IR team by hiring a communication specialist. This has been extremely beneficial, as most of our team’s background is in finance: we’ve all essentially progressed within the finance organization and are passionate about it but having someone who brings a different perspective on communication has been invaluable. She previously worked at an IR agency and now takes the lead in our interactions with the communications team. While I review the metrics quarterly, the team remains actively engaged throughout the process.
‘I think it’s crucial to prioritize the messaging you want to communicate and ensure it’s delivered consistently. It’s challenging to quantify its impact precisely, but one way I gauge whether our message is resonating is by hearing it echoed back during my conversations with investors and analysts. If we maintain a consistent message and then, during introductory calls or meetings, people acknowledge that they recognize our story, it confirms that our efforts are effective.
'It’s difficult to measure in numbers, but I believe it truly makes a difference.’
Our main goal is to engage the wider base of investors with which we might not consistently interface
With this backdrop in mind, here are some steps IROs might take in order to better assess their communication channels and ensure they are prioritizing the ones that deliver the best return on their time investment.
Establish clear KPIs based on the objectives of shareholder communications, such as increasing shareholder engagement, improving transparency or enhancing shareholder value.
Typical KPIs might include metrics like the open rate of email communications, attendance at shareholder meetings, feedback from investor surveys or the number of queries received.
Use advanced analytics tools to track engagement on digital platforms such as corporate websites, social media and email newsletters.
Monitor metrics such as website page views, click-through rates and time spent on financial statements or investor presentations and social media interactions.
Regularly conduct surveys among shareholders and potential investors to gather qualitative feedback on the effectiveness of communications.
Include questions related to clarity, relevance and overall satisfaction with the information provided.
Use direct feedback from face-to-face meetings, investor conferences and one-on-one calls to refine strategies even further.
Integrate insights from shareholder queries and concerns into future communications to address gaps and enhance clarity.
Compare your shareholder communication practices and outcomes with peer companies in order to identify areas of strength and opportunities for improvement.
Use industry benchmarks to set realistic goals and expectations for shareholder engagement levels.
Study changes in shareholder base composition and trading patterns following major communications or during regular periods.
Analyze how different types of news or financial reports influence investor behavior and stock performance.
Develop regular reporting mechanisms to keep senior management informed about the effectiveness of shareholder communications.
Highlight the correlation between effective communication strategies and shareholder value creation.
Continue to hit all the hallmarks of great shareholder communications by ensuring they are clear, timely and informative.
Regularly educate shareholders about the company’s strategy, performance and market conditions to maintain or increase their interest and investment.
