We recently hosted a global webinar on how to measure IR performance, and what to do to benchmark and enhance your IR program – the really key questions for every investor relations professional.
Measuring IR effectiveness isn’t easy, but it’s a vital task. It clarifies and strengthens the role of IR within a company and it’s a good business practice, along the lines of “what get’s measured, get’s managed.”
To define best practices, we used data from our global Extel Studies which incorporates feedback from hundreds of companies in Europe and North America.
As you can see from our Extel chart below, investor & analyst feedback is by far the most critical metric, used by over 90% of European and North American IR teams to measure their effectiveness.
What the Buy-Side and Sell-Side Want from IR
When we surveyed the buy-side and the sell-side globally and asked them what they value most from investor relations, there were 10 attributes mentioned most often. Not surprisingly, providing access to senior management is at the top of the list with knowledge of the business and sector also highly valued IR attributes.
Best Practices from Top-Rated IR teams
Analyzing our extensive Extel European data, we found that year-in and year-out, there were several companies whose IR teams ranked highest. These IR teams – about a dozen in total – are the consistent top performers in terms of all their IR activities, including their outreach and the partnerships they have built with investors – factors which set them apart from other IR teams.
And since 2007, these top IR Extel winners outperformed the Eurostoxx 600 by nearly 24%. This outperformance underlines the importance of IR in challenging markets, when investor demand for transparency and visibility is at a premium.
What are the best practices of these top IR teams? They have their key senior managers spend time with prospective investors more than other IR teams. They also conduct more one-on-one meetings and host more site visits and field trips.
Overall, these IR teams have demonstrated the ability to get closer to investors (and to the sell-side too) which means understanding and then responding better to the needs of investors.
What this says above all is that good IR is all about the long term. That’s because IR is all about trust. And trust is something that takes time – by its very definition.
Building that sort of affinity with the markets is evermore important because in a world of few resources for IR, and an equities market which has lost some direction & confidence, and where individual stock stories get swallowed up by wider factors, it can be the difference that enables your story to be heard.
To learn more about Best Practices for Measuring IR Performance, listen to a replay of our webinar, available on demand: http://bit.ly/RD5mxv