The need to attract new investors while retaining the old ones is a balancing act IR professionals have to master in an increasingly competitive sector.
Attracting new investors is obviously a critical task for companies and IR teams that are looking to grow. However, focusing on new investors should not outweigh the need to satisfy the existing shareholder base — in fact, Bloomberg argues that IROs need to take great pains to keep current investors pleased, or risk losing shareholders to an ever-competitive investor market.
Sometimes, it’s simply a matter of returning to the basics to ensure that established investors stick around.
Know Your Investors, Know Your Job
This really is a return to the most basic principles of investor relations, but it nonetheless bears repeating. As the Head of IR at Henderson Global Investors Miriam McKay puts it, “The clue’s in our job title — investor relations — not analyst relations or investor origination.”
This means your investors need to be at the center of everything you do — you are, after all, the first and primary point of contact between your shareholders and the company. It therefore falls on your shoulders to educate the investors and facilitate clear communication between your shareholder base and the management teams.
To most effectively meet these demands, IROs must have a definitive understanding of their investors, as well as in what manner they want to be engaged and how frequently. For example, institutional investors will likely have different needs than more short-term hedge fund investors. Knowing who prefers more constant contact and who is happy with less frequent, regularly scheduled events helps you to create a strategy that keeps everyone happy.
Catering to the needs necessarily requires strong time management skills, and while every investor has a right to engage with the company, it’s up to the IR team to effectively allocate that most valuable resource of all. According to Phil Corbett, head of IR at Genel Energy, this means that major shareholders in particular “need to have enough interaction to ensure the right level of understanding and trust has been forged.”
To build that level of understanding and trust, it is critical that IROs go out of their way to be reliable, and effective communication is crucial to laying the foundation. Information needs to be shared consistently, inquiries addressed promptly, and channels always open and accessible. Any changes in strategy should not come as a surprise to shareholders, but rather, should follow a natural trajectory that has been laid out well beforehand.
Implementing mobile technologies can prove an incredibly effective way to communicate with shareholders of all shapes and sizes, particularly as the devices become increasingly ubiquitous both in the industry and around the world.
Don’t Burn Bridges
Shareholders come and go, but it’s important not to cut ties with those who leave. After all, there is always a chance that they will return. As McKay notes, “In many cases, these investors have built a substantial knowledge base, so it’s well worth helping them to keep this up to date, so that they are ready to come back when the opportunity presents.”