The rise of retail investors has been well publicized recently but this rise has only exacerbated the reasons why most firms concentrate on institutional investors. While institutional investors are similar in nature, fewer in number and invest higher amounts, the reverse is often true for the retail investor.
Communicating effectively with retail investors means communicating with a large and fragmented audience that could range from loyal customers investing their spare household income at the end of the month to financially savvy Gen Xers looking to boost their pension pot.
It is technology that is helping to solve the problem of how to connect companies with their retail investors. Recently launched apps from Stockperks and TiiCKER both offer ways to reward retail investors for their investments in companies in a variety of ways, including discount codes, free merchandise and gift cards.
And it is technology itself that has enabled this engagement, as Jeff Lambert, founder and CEO of TiiCKER, explains: ‘The challenge of engaging with retail investors used to be actually being able to verify them as investors without having to authenticate them through brokerage paper trails. These days, it’s easy for retail investors to use apps and other technology platforms to verify their identity and prove details of their investment.’
As Lambert says, perks programs are a long-term vision as opposed to a quick win. ‘The key thing to understand is that this isn’t a simple giveaway program,’ he points out. ‘We’re rewarding loyalty and building value over the lifetime of the shareholders’ investment. Many retail investors buy and shop the brands they own shares in and, by nurturing this relationship, we can encourage the likelihood of them holding and buying more stock, and reinvesting their dividends.’
'Perks programs give companies the opportunity to own the narrative: here’s how we’re working with retail investors, here’s how we're listening to them, here’s how we’re rewarding them. It’s basically a great way of embracing them, communicating with them all year round and making customers into shareholders and shareholders into customers.’
In addition to straightforward rewards, perks programs offer the opportunity to align strategies with societal trends and appetite for change.
‘We’re seeing companies embedding perks within their ESG strategy and engaging with retail investors by making them part of their ESG journey,’ says Watson.
‘The next generation of investors want to manage their own portfolios – they have money and love investing but they also want to put their money where their mouth is and make a difference. We’ve seen success with ESG perks such as companies planting trees on behalf of their shareholders, and funding clean water initiatives.’
So what does the future hold for perks? For Lambert, it’s a global opportunity. ‘We’re confident that, ultimately, TiiCKER will be a global brand,’ he says. ‘Many companies operate throughout the world and there’s no reason why there shouldn’t be retail investor perks wherever there’s a major exchange, whether that be London or Hong Kong.
'It’s also about educating companies about the demographic of their shareholders. There are chief marketing officers at public companies who are often unaware that there are hundreds of thousands, if not millions, of retail investors in their stock.’
For Stockperks, it’s all about exploring exciting new opportunities for engaging with retail investors through perks programs.
‘We’re investigating how we can offer perks that are unique and special – experiences that money can’t buy, such as raffles for red-carpet events, or limited-edition products that are only available to shareholders,’ says Watson. ‘Companies already hold tours for institutional investors, so why not offer retail investor days? The potential for building excitement and rewarding retail investors with perks from firms they resonate with is fascinating.’
This is an article from the Winter 2021 issue of IR Magazine. Click here to access the digital magazine.