How to make better use of your own data
Investor targeting (the identification and selection of appropriate investors) and investor engagement (interacting with these relevant investors) can be considered the high art of investor relations. Opinions on the best strategies are divided and certainly large companies will opt for a different approach than mid-caps. One thing is for sure: it is necessary to use quality data – and that data is in many cases at least partially delivered from external sources. The most vital, pertinent and valuable data, however, is already yours or can be generated by yourself. We help you make better use of your data!
Before we dive into the ways you can get more out of your own data and link it with external information, we will have a look into a few – admittedly exaggerated – traditional IR strategies where owned data is not used optimally.
IR strategies that barely use their own data
Consciously passive IR:
Some companies consciously decide to allocate few resources to investor relations. They do only few roadshows (or none at all) but usually do react to incoming investor requests. The IR manager often has a number of other responsibilities which leaves little time to focus on the 'right' investors. Often this is done by companies where the founding family is still heavily involved and currently has no desire to sell which means they are not much interested in improving liquidity or achieving a high valuation. The latter - at least in Switzerland - only leads to higher wealth taxes for the families. Obviously this is not very interesting for the owners.
Outsourcing to brokers (broker-sponsored):
Especially larger companies are offered free (broker-sponsored) events by brokers. It makes sense to take up their offer, but less so if targeting is exclusively done by the broker and if the company fully relies on this single channel to reach investors. It is important to remember that a good client for the broker is not necessarily an appropriate investor for the issuer.
Outsourcing to brokers (issuer paid):
Over the last years, brokers have reduced their offering of ‘broker-sponsored’ (free for the issuer) research and even larger companies are now partially paying for research coverage (‘issuer paid’). The willingness to pay for research is surprisingly high and looking at the prices paid it is understandable that issuers have the attitude ‘they shouldn’t have to do anything more’. The broker is the one organizing events from A to Z, allowed free rein when it comes to investor targeting. Now, from a regulatory point of view, brokers are allowed to approach all investors, but in practice they often prefer to invite those they have an existing business relationship with.
Purchasing external data:
Many companies pay external providers to carry out a shareholder ID or even a targeting – some even several times a year. Ideally these documents then can be used during event planning. This however often does not go as smoothly as planned due to a number of potential issues:
- In many cases the data of the targeting/share ID is incomplete and cannot be used for a direct engagement, because (for instance) the contact person is missing, incorrect or missing contact details.
- When the right contacts have been identified, it can be tedious to coordinate reaching out when setting up a broker-sponsored event. Especially if it is unclear if an investor did not want to accept the meeting or has never even been contacted properly.
- The issuer reaching out directly is also very time-consuming and the success is situational. While an invite to a physical roadshow is often accepted, an issuer’s call to push the story or 'sell' a call with the CFO can come off as rather desperate or smarmy.
In practice, shareholder IDs (and probably also targeting exercises) are thus mostly used for investor profiles and IR reporting.
Where and how you generate valuable data
From an issuer’s perspective, even in the above explained ‘traditional’ approaches to IR valuable data points are being generated. But you need to consciously decide to capture and use them.
Incoming investor requests:
Every incoming investor request, be it via email, phone or webpage is a data point that should be logged. If this can be done automatically, even better.
Externally organized events:
While there may be conflicts of interest (as explained above) when brokers are organizing events, brokers do have good contact to many investors and are able to 'push' the equity story accordingly. This can and does lead to interactions with new investors.
The same is true – and even moreso because there are no conflicts of interest – when events are organized by third parties (IR advisors, specialized providers).
Which data the IR needs to collect in any interaction:
It is up to you to not only answer the investor’s questions during an interaction, but also do an assessment of the investor, answering the following questions:
- Do your 'story' and your parameters (market cap, sector, liquidity) fit the investor’s investment strategy?
- What is the investor’s buying power?
- Who is the decision maker in the investment team?
- How serious is the interest, what is the trigger to actually invest?
You should find out this information ideally beforehand, potentially making use of external data, and then verify them either at the very beginning or at the end of the interaction. As a result, you will have an opinion as to the priority of the investor. Informally, or even better, formally.
How to optimally use (your own & external) data
Link external with internal data:
External data is helpful but (unfortunately) rarely good enough to be converted directly into action. But when you combine your self-generated data with the external data, it is a different story.
An example: your shareholder ID tells you that a German investment company holds 10’000 shares in your company. The data, however, does not tell you exactly who took the buying (and/or selling) decisions. During an event, you had a chance to speak to someone at this very investment company, whose team was behind the investment decision. You found out because you asked about it during your interaction.
Both data points combined are now highly relevant to you.
Example: Prioritizing incoming requests:
You received a request through your homepage. Comparing it with your notes, you realize you last met the investor three years ago, but they apparently switched to another firm in the meantime and have more 'buying power' than before.
In this case, the investor probably immediately qualifies for a CFO or CEO meeting, if requested.
Example: Influencing the prioritization of broker events
‘Micro-managing’ broker-sponsored events is tedious, but when a broker organizes an event in a specific location for you, you need to make sure that your 1st priority investors based at that location are invited, and not only when all the ‘good’ slots are already taken. You might also want to reserve a few slots for yourself and then approach relevant investors yourself.
Example: Organizing virtual events for 1st priority investors by yourself
If you know your 1st priority investors and have important events to discuss, it makes sense to self-organize a virtual roadshow ASAP after publication, allowing short time slots (30 minutes should suffice). Firstly, your existing investors/contacts appreciate the direct approach, especially in such context. Secondly, organizing a roadshow like this together with a broker would require a lot of time merely for coordinating the event. Thirdly, you gain insight on the reactions of ‘invested’ and informed market participants to your news and what type of questions come up. These insights then help you developing the event-specific communication.
Application in the IR day-to-day
All of the above examples can be implemented by yourself, probably even using the standard software that you already have on your computer. But it requires a lot of work, as for the initial set-up as for maintaining it. Your biggest issue will probably be the interfaces.
schedulR, our investor engagement platform, has been developed over the last years exactly for this reason: Allowing you to self-organize events. We make sure that data is collected automatically as much as possible, you can easily add anything you want, and your data is available to you at the right moment. Furthermore, we support your data maintenance and give you access to our data, too.
Some concrete examples of how we can support you with smart, digital processes:
- Up-to-date investor data: We keep your investor data up-to-date, for instance we adjust the contact information when an investor changes firm.
- Pre-screened investor requests: Incoming investor requests are pre-screened by us, are delivered to you including an investor profile and are automatically logged.
- Virtual events for 1st priority investors: You can organize a virtual event for your 1st priority investors with a few clicks, fully integrated with Zoom (other providers are possible, too).
- Get feedback from investors: You can use our feedback tool to easily collect feedback from your investor after an event.
- IR CRM integrated with your financial calendar: Set up an event once in your IR CRM and decide if you want it mirrored on your homepage, too and even the SIX calendar if you wish.
- Interactive financial calendar: Decide yourself if you want to activate 'Request an invite' buttons on events in your financial calendar, or even use them on your social media (e.g. when organizing an investor day)
- Integration with news distribution: You can use our platform to send news to your distribution lists (incl. ad-hoc in Switzerland). You can check your CRM to see if an investor is on your mailing list.
Additionally, we offer our software clients to organize physical events for them (with a focus on Switzerland, Italy – other locations such as the US with partners). We use our platform to set up the events so interactions are all automatically logged in your IR CRM. This service includes the following components: targeting (your existing investors + suggestions for new ones), invites, follow-ups, schedule & profiles, logistics, accompanying you the day-of, collecting feedback and preparing the feedback report. This can be especially interesting when brokers have no interest to offer physical events in certain locations, or to specifically target ‘neglected investors’.
Our goal is always to free up your day and leave you with more time to meet and interact with relevant investors. This is how we got our name 'Interaction Partners'.
The actual meetings are one thing we cannot and do not want to take on from you, but we are quite sure you would not want that either – it is certainly one of the most interesting parts of your job.