sector rotations. Instead, identify the things that your IR program can control, that can be measured, and best demonstrate the impact of the IR department.
Best Practice #1: Identify and commit to quantitative and qualitative KPIs
Establishing realistic and manageable KPIs that can be tied to IR program results is a critical component in managing internal expectations, while at the same time showcasing the effectiveness of the IR program. It also enables you to more readily identify areas where adjustments might be required to bolster success.
All companies, regardless of size, need to focus on message resonance, accuracy of models, and quality of engagement in analyst notes.
For example, decisions around capital and re-
source allocation or prioritizing one component of the program over another can be more easily made if there is data to support it. Studies have shown that using both quantitative and qualitative metrics can be impactful.
Quantitative KPIs For any size market cap, it is imperative to build a com- prehensive and focused investor outreach strategy to reach new investors, while maintaining quality share- holders. It is also important that IR professionals review not just the quantity of meetings sponsored by covering sell-side firms, but also the quality of meetings to hone your future program planning and objectives, as well as ways to host company events to reach key investors. “Go beyond a list of targeted investors and evaluate
your ‘conversion’ from meeting to holder,” suggests James Marsh, SVP - Head of Investor Relations at
2 6 S UMMER 2 0 24 ■ IR UPDAT E
Peloton Interactive. “How many meetings does it take? How do you sequence interactions with various executives? Add metrics that address these types of questions and are trackable, as well as aligned with your overall IR program goals.” Metrics that measure success can vary depend- ing on the breadth of a company’s market cap, re- sources, fundamentals and overall IR objectives. For example, for larger companies, the quality of investor outreach, such as improving shareholder communications, messaging resonance, and strategic filtering of incoming interest, should be prioritized, while for smaller companies, shareholder composi- tion/diversity, liquidity, and improved buy-side and sell-side exposure are priorities. When measuring the quality of investor outreach and your shareholder composition, some things to consider include: • Number of investor meetings (both targets and shareholders)
• Shareholder buy/sell/hold patterns following interactions
• Trends in engagement levels to gauge effectiveness of messaging
• Investor base and sentiment by size, composition, and turnover
• Level of participation and interest in your IR events and communications
• Frequency and tone of your interactions with investors
• Results of investor surveys and perception studies In addition, databases have methods of tracking
information, but most IR departments augment this with customized slides to show efficacy. Another measurement to agree on: analyst coverage
and sell-side efficacy. Te ways to evaluate your impact can depend greatly on your market cap. For example, for a company that has limited sell side coverage, in- creasing the number of analysts covering a story can be an important KPI, while for large-cap companies, maintaining quality of coverage often has a higher importance when there are many analysts to support. All companies, regardless of size, need to focus on
message resonance, accuracy of models, and quality of engagement in analyst notes.
niri.org/ irupdate
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