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Dec 14, 2017

Investor perception studies: DIY for IROs

Investigating the pros and cons of tech alternatives to the traditional investor perception study – and how these tools compare with the in-depth insights gathered by third-party providers

At a glance

The traditional option
A traditional investor perception survey can set you back $100,000 but with a process that spans 10 weeks of in-depth phone interviews, intensive analysis and comparisons with your provider’s normative database,and the expert knowledge that comes from years of experience, the insights gathered can prove invaluable.

Taking it online
Online tech tools do offer alternatives, however, allowing IROs to gather feedback at little or no cost. Of course, where traditional methods have a monetary cost, these options have others costs – such as a lack of anonymity or a lack of depth. So do IRO-led surveys work? ‘Absolutely,’ says Rebecca Corbin of Corbin Advisors.

Working your findings
Whether you choose to do a survey yourself, employ a third-party provider or use a mix of both, what you do with the information is key. Impartial responses can prove more useful when presented to the C-suite,notes Deutsche EuroShop’s Patrick Kiss, one of four IROs sharing their views on in-house versus third-party surveys.


Traditional perception studies provide an independent, third-party evaluation of what your company is doing well and where it can improve. They help you drive the direction of your IR program and help management shape company strategy.

But while you might not run a perception study often (firms that regularly do so will probably run one every 12-24 months), with prices ranging from around $10,000 to as much as $100,000 depending on the approach, scope and deliverables, such surveys might be out of reach if you’re on a tight budget. Increasingly, therefore, IROs are looking at new, cheap or free ways to gather investor feedback to either substitute or simply supplement the bigger in-depth perception studies.

Taking the pulse

Julie Tracy, who runs the one-person IR shop at Wright Medical Group, does use third-party providers. ‘I have done traditional perception studies in the past and they are valuable to understand the current state of the shareholder base – particularly when there has been a significant change in corporate strategy or structure, or during times of significant business transition or M&A activities,’ she says. ‘They are also valuable in preparing for an investor day or to understand why the firm might be undervalued when compared with its peers.’

That doesn’t mean she isn’t open to alternatives, however, using mini ‘pulse surveys’ and even putting SurveyMonkey to work ahead of the earnings call. ‘A pulse survey is a scaled-down version of a full-blown perception study that is typically used to gather feedback following an event like a quarterly earnings call or an investor day,’ explains Tracy. Offering a speedy opportunity to gain immediate feedback from investors following the event, pulse surveys ‘usually focus on a few key topics to gauge investor understanding and sentiment and are more limited as to the number of investors interviewed,’ she adds.

Wright Medical typically conducts two pulse surveys per year: one following the earnings call in February, when the Memphis-headquartered firm announces new financial guidance for the year; the other in November, to gauge progress. But Tracy also uses SurveyMonkey – which starts at free to use – to reach out to investors and analysts each quarter, collecting information ahead of the earnings call. ‘This type of DIY vehicle for collecting investor feedback is always well received by investors and has the additional benefit of being very cost-effective,’ she says.

At online real estate firm Zillow, a company that is good at using existing resources, Raymond Jones, vice president of investor & corporate relations, and Dennis Walsh, director of IR, decided to gather investor perception on the company using a customer service tool already in use at Zillow.

While most perception studies are carried out by calling survey participants on the phone and asking them to answer questions on the spot, Zillow went online for its DIY version. ‘We wanted to do a perception study so we shopped around for a little bit, but realized it was going to cost more than we wanted to spend on an outside provider,’ explains Jones. ‘We have a consumer research team at Zillow that conducts research studies with home shoppers, publishing a lot of research about the housing market. We were able to use the same third-party research platform [Qualtrics], which allowed us to conduct our perception study completely online.’

Walsh concedes that when you are doing it by phone, you can definitely get more information out of people. ‘You are able to prompt them and get them to provide additional color when they give a brief answer,’ he explains. But the pair thought there would be other benefits to doing it online. ‘Firstly, investors are short on time,’ says Walsh. ‘Our thinking was that they might appreciate having the flexibility to fill out the survey in their own time.’

In what Jones describes as ‘truly an experiment’, he and Walsh talked internally and came up with what they considered ‘a fair balance of rankings, ratings and multiple choice as well as several open-ended questions’, making up around 15 questions in total. And they were ‘pleasantly surprised’ by the results. ‘All of our respondents completed the survey,’ says Walsh, ‘and their answers were thoughtful.’ They even got non-shareholders to respond, ‘which in my experience can be hard to do by phone because they don’t want to spend time on a firm they aren’t invested in,’ adds Walsh. Some respondents even went so far as to recommend the approach to other companies.

The informal approach 

Over in Hamburg, another tech-savvy IRO – Patrick Kiss of Deutsche EuroShop –actually takes a more old fashioned approach to his DIY perception gathering, describing it as ‘a combination of meeting feedback collection and a perception study’.

‘We send out an email to every investor we meet on a roadshow or at a conference within the first few days following the meeting,’ Kiss explains. ‘In this email we ask whether any question was left unanswered, whether the meeting confirmed, improved or maybe worsened the investor’s view of Deutsche EuroShop, and finally we emphasize that we are keen to maintain an intensive and constructive dialogue in person, on the phone, via email or – our latest favorite – via social media.’

If it’s the first time the company has met with that investor, Kiss also asks whether it’s okay to add its email address to the distribution list. ‘It’s not rocket science but we get good feedback ratios,’ he says. ‘It’s especially helpful around conferences, where brokers usually don’t collect company-specific feedback.’

This sort of feedback gathering is obviously different from a perception study in that it isn’t anonymous, and Kiss acknowledges this, adding that the company does opt for the more traditional method as well. ‘We do tiny versions of ‘traditional’ perception studies once a year as part of our shareholder identification,’ he explains, where ‘a handful of institutional investors are asked a handful of questions.’

Keeping up traditions 

Despite the many benefits of these tools, there are aspects of the traditional third-party perception study that, for most IROs, simply can’t be replaced by the tech alternatives. For Kiss, whose alternative approach provides feedback but not anonymous feedback, ‘traditional’ perception studies offer a higher-quality resource ‘as they are not biased by the personal factor.’ The impartial responses are also more useful when presented to the C-suite. ‘You can say, This is the perception study the service provider conducted as a neutral institution,’ Kiss notes, something Tracy also highlights. ‘Though as you would expect, a full-blown perception study requires a larger investment for the additional work and analysis involved,’ she says.

Walsh also points to this external analysis as a real draw for many IROs. ‘When you engage a third party to conduct your perception study, it is really great to have someone else analyze the findings,’ he says. ‘That is a huge benefit and I believe most IROs will probably want that. Also, if you’ve been at your company for 10 or 15 years, for example, it would be really hard to look at the results without a bias.’

In Walsh’s case, however, he had been at Zillow for less than a year when the team ran the survey. ‘I was able to put together a report for management and our board that I felt was pretty unbiased,’ he says. His background also helped: ‘I had experience in conducting perception studies, analyzing the findings and making recommendations from my prior experience working as an IR consultant.’

As you would expect, the providers themselves agree that their services offer great benefits – but they make some compelling points. Rebecca Corbin, founder and CEO of Corbin Advisors, and Brian Rivel, president of Rivel Research, both point to the experience they can offer as well as the depth of responses gathered through phone conversations and the analysis involved. Corbin explains that her researchers spend around 50 percent of the project time in the analysis stage, going on to offer not only findings on the company itself but also relative feedback based on Corbin’s normative database of hundreds of other firms – something Rivel offers, too.

‘Anyone can gather feedback,’ says Rivel. ‘But it’s the quantification, analysis and interpretation of that feedback that leads to insight and action steps – and that is 90 percent of the value.’ In fact, Rivel argues that other than the cost element, there are few, if any, benefits to an in-house alternative such as a study conducted using SurveyMonkey.

He highlights a number of issues, including the lack of control over who actually completes the survey (‘did the admin fill it out?’). And he suggests thinking about ‘how you fill out an online survey… is that person rushing to get through it?’ And in this vein, he says online surveys often elicit one-word answers.

‘For instance, if you ask, What are the strengths of the company?, you might get the answer ‘management’ and that is where the online survey ends. A quality interviewer will probe that answer, asking, What is it about management? Is it management as it relates to how the firm communicates? Is it how the managers run the company as operators? Is it management depth? Is it visibility? Is it pedigree? Probing is something that is lacking in online research.’

Tread carefully

Corbin agrees there are a number of drawbacks to a company-led survey – especially one conducted online – but doesn’t feel these types of tools should be discounted. ‘I think conducting your own surveys should be part of the IRO function,’ she says.

There are, however, things every IRO needs to think about when choosing to do this. ‘You need to be careful about how many times you’re surveying investors and the questions you’re asking them because they are very busy,’ Corbin notes. What’s more, as both she and Rivel point out, the questions you ask need to offer you the chance to gain insight. A simple customer satisfaction-style 1-10 rating on management, for example, isn’t going to cut it.

‘If you get an average of five or even seven, what do you do with that?’ asks Corbin. ‘You now know your investors are satisfied or that they’re not satisfied but you don’t really have any actionable insight to correct what could be a thousand different things as to why they’re rating you as such.’

So think about the way you frame your questions, avoiding the ‘are we good/are we not good’ style, advises Corbin, because ‘investors care more about issues around strategy, execution and expectation management, and you really want to drill down into the factors that are driving their scores.’

Timing is also key. ‘We have advised clients in the past that it was the wrong time to conduct a perception study – even though we’d already been engaged to do it,’ says Corbin. And there are many reasons why it might not be the right time, from disappointing earnings to simply being at the wrong stage of the company life cycle.

Putting your findings to good use

Even before you start on your survey, you should know how you want to use the findings because this will shape everything, from the questions you ask to the level of analysis you carry out.

‘I use the information from perception studies to identify factors that are influencing investment decisions and opportunities to unlock value and positively influence long-term valuation,’ says Jones. ‘They are also great for evaluating the effectiveness of your IR efforts and investor communication channels. One of the most important uses for the information is to develop strategies and tactics to differentiate your company as an investment and drive long-term shareholder value.’ But when Jones and Walsh
conducted their online survey, they were also looking for something to present to management and the board.

Often, says Corbin, the survey conclusions relate to issues IROs are already talking to management – especially through a third-party provider – lends them more weight. ‘The IROs we work with are very sophisticated,’ says Corbin. ‘They’re typically vice president or senior vice president level, and they’re very aware of what the issues are and have absolutely been communicating those issues to management.

‘We will often be saying a lot of the same things IROs have been telling management but because we are an expert in our field, because we are an independent third party that is not only bringing absolute but also relative research, that definitely gets management a lot more focused on implementing the research and recommendations versus an in-house study.’

If you are going it alone, ‘you have to ask yourself whether you want to take it to management level,’ says Walsh. ‘Do you want to produce a formal report of the findings or are you just going to read the responses and say, That was interesting? To actually package it into a report, to analyze the responses, identify key findings and look for trends in the responses, to make recommendations to enhance your IR program – that is a large undertaking, which is really what you end up paying for when you are using a third-party provider. But it is incredibly valuable.’


Tips for going it alone

If you do want to gather feedback yourself, Rebecca Corbin, founder and CEO of Corbin Advisors, offers some tips on getting the most out of your research.

Timing: Think about what’s going on with the company because timing is a critical factor in conducting your survey. ‘We would never want to do a study and go out there elevating the brand and getting investor feedback when we know the company is going to disappoint on earnings, for instance.’

Framing: Your investors and analysts are busy so ‘the questions you ask need to be questions they feel are worth their while to answer.’ They also need to offer the opportunity to provide worthwhile answers: a 1-10 scale of satisfaction is going to offer little in the way of insight.

How many?: A shorter, ‘pulse’ type survey with three or five questions ‘after earnings or on issues where you can leverage that insight to management’ will work best for most IROs.

The tools you use: There are different options out there but ‘if you do a survey in SurveyMonkey, for example, and you’re asking the right questions, it will analyze the data for you – outside of the open-ended.’

Going forward: If you plan to do more than just take a look at the findings, ‘there needs to be a call to action.’

Fatigue: Think about how often you canvass your analysts and investors because you don’t want to wear them out with too many surveys. ‘It should be about quality, not quantity,’ concludes Corbin.


This article originally appeared in the winter 2017 issue of IR Magazine

Garnet Roach

Garnet Roach joined IR Magazine in October 2012, working on both the editorial and research sides of the publication. Prior to entering the world of investor relations, her freelance career covered a broad range of subjects, from technology to...

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