Investor relations officers play a vital role in the success of an issuer. An IRO’s scope of work is extensive, from building and maintaining relationships with investors and communicating the issuer’s financial performance and strategy to ensuring the issuer is complying with securities regulations. And one of the most challenging tasks an IRO faces is measuring the success of his or her investor targeting efforts.
Traditionally, IROs have relied on metrics such as the number of meetings held with investors, the number of analysts covering the issuer and the number of institutional and retail investors owning the issuer’s shares. While these metrics can provide some insight into the effectiveness of an IRO’s investor targeting efforts, they are not truly reliable indicators of success.
To confidently measure the success of any investor targeting, IROs must have access to deep analysis and data measuring market engagement and market sentiment, together with the efficacy of their communications efforts. By accessing this type of granular analysis, IROs can better understand their investors’ behavior and preferences. For example, data analytics can be used to identify patterns in the types of communication that are most effective in engaging these investors. Measuring these and having the knowledge and information to action them when needed is powerful.
The success of investor targeting is also measured by the issuer’s share price performance over time. One factor in achieving a successful share price is dependent on continuously balancing the demand of long-term shareholders that might be looking to sell with those willing to increase or create a position in their portfolio. The challenge for IROs is to ensure they have a finger on the pulse of the investor base.
Surveying the investor audience can also provide valuable insights into the investor’s perception of the issuer, its level of engagement with the issuer and its level of interest in the issuer’s shares. These deeper discussions with investors can further be used to identify areas where the issuer can improve its investor targeting efforts. Although this is another great tool, the IRO must always discern the difference between interest and the actual catalyst of an investor putting money at risk.
Measuring the success of an IRO’s investor targeting efforts can be challenging. By using data analysis to measure activity in the market, communications, share price performance and surveys, however, IROs can confidently gain a better understanding of their investors and the effectiveness of their efforts. This, in turn, can help them to make data-driven, fact-backed decisions, fine-tune their investor targeting strategy and ultimately drive better results for the issuer.
Diana Forzley leads business development for issuer services at Generation IACP