In a publicly traded company, shareholders occupy a pivotal position as primary customers. While all stakeholders contribute to a company’s success, of course, prioritizing the needs of shareholders remains paramount. In this article, we explore the importance of recognizing those shareholders as primary customers and the significance of implementing a comprehensive Investor Relations (IR) strategy to effectively communicate with that evolving shareholder base.
The Complex Shareholder Landscape
In a post-COVID investment world, the popularity of do-it-yourself brokerages including Robinhood, TD Ameritrade, and Charles Schwab has reshaped the composition and complexity of the shareholder base. Now, in addition to large institutional brokers, traders, and fund managers, ordinary individuals have emerged as significant participants who also actively research and purchase shares.
As they are typically smaller investors, it may be easy to mentally discount these individuals. That’s flawed thinking in today’s environment. A strong retail base provides a significant advantage to a company’s capital market strategy. These investors can infuse much-needed liquidity and unlike the institutional side, they don’t tend to follow severe market fluctuations at the quarter’s end.
As each group has unique needs, characteristics, and preferences, companies must tailor IR communication efforts to effectively engage with this diverse range of investors.
Understanding Stakeholder Mapping
Stakeholder mapping draws upon practices from the corporate social responsibility sphere to identify and categorize stakeholders based on their level of influence and interest in a company’s activities. This approach allows organizations to gain a comprehensive understanding of their stakeholders’ expectations, concerns, and impact on the business and should always be included in your IR strategy.
Employing stakeholder mapping has proven to be highly effective in enhancing engagement. When we identify and categorize stakeholders, companies gain insights that inform and influence tailored communication strategies. It allows companies to address specific needs and concerns. The approach fosters trust, transparency, and meaningful dialogue, all of which help build stronger relationships between the company and its audience.
Crafting a Comprehensive IR Strategy
Designing and implementing a comprehensive IR strategy to address the communication challenges posed by such a diverse shareholder base is critical. The strategy should encompass a thorough understanding of and engagement with all potential stakeholder groups associated with the company.
It is imperative the strategy encompasses a review of your brand story, a thorough understanding of your messaging content goals, and the timing and cadence of your news flow. The strategy must also support the multitude of communication tools needed to engage shareholders. Keeping in mind that the laws of your exchange jurisdiction regarding tipping and material disclosure vary, your communications to institutional and retail shareholders are most likely distinct, too.
Effective Communication Approaches
So now you understand the landscape and mapping. You’ve figured out the specific information each of the audiences wants and needs, and you’ve developed the IR strategy. It’s time to pull the trigger.
Maximize communication with institutional shareholders and large brokerages by prioritizing clear and concise information that aligns with the customer’s investment objectives. Regular reports, conference calls, and meetings can foster transparency and encourage enduring relationships.
On the other hand, retail shareholders require accessible, simplified information to understand the company’s performance and prospects. Engage them through user-friendly platforms including digital newsletters, social media channels, and virtual shareholder meetings. Meet these retail investors where they are and use these avenues to enhance the connection.
Shareholder satisfaction remains a top priority for publicly traded companies and a comprehensive, effective IR strategy ultimately fosters transparency and cultivates relationships. It ensures all shareholders are well-informed about the company’s progress.
With the changing landscape of shareholder composition, and recognizing the significance of each stakeholder group, companies can tailor their IR communication efforts to effectively engage with the diverse range of investors.