Who Says You Can’t Teach an Old Dog New Tricks? 4 Ways IR Teams Can Refresh Investor Targeting for Better ROI

Written By Steve Adams, Managing Director, Chief of Staff

June 16, 2022

As we enter the summer months, many IR teams are hitting the road for conferences and non-deal roadshows. While the aim is to attract new investors into the stock, IROs often rely on the same old techniques they’ve always used. While they may be telling their story as effectively as ever, the results can fall short of expectations simply because the tactics are tired, and the story is not being told to the right groups of potential new investors.

In other words, the problem is not the narrative itself. Indeed, for many IROs, articulating the high points of the investment thesis is second nature. Finding and targeting the right audience, on the other hand, represents much less familiar territory and a much more challenging task. IR outreach is only as successful as the recipients of that outreach allow it to be. As such, high-quality investor targeting needs to be a primary concern for IROs and their teams.

Improving targeting—and the ROI it delivers—starts with understanding where efforts fall short.

We find that when targeting misses the mark, the reason usually boils down to a combination of four key factors: data, segmenting, conference selection, and historic perspective. Below is a closer look at each of the culprits along with tips for reenergizing your investor targeting initiatives for fresh impact and better results.

1. Avoid firm-level targeting and do your research at the fund-level instead. Outside of small investment shops, firm-level targeting won’t get IR teams very far. Instead, in most cases, it leads to outreach to the wrong contacts and an overall low hit rate. Unfortunately, many teams rely only on firm-level data to make outreach decisions. To avoid generic or—even worse—misplaced results, make the investment in better quality data that will lead to your best targets.

With fund level research and information, it becomes much easier to identify the portfolio manager or managers who will be most receptive to your investment narrative. Fund level data also provides teams with the opportunity to deep dive into portfolio holdings and better understand the investment objectives of individual funds. With this more granular information, targeting becomes much more fine-tuned and valuable, driving significantly higher hit rates and outcomes.

2. Cast a narrower but more intentional net. The notion that more outreach to more investors inherently leads to more shareholders is outdated and flawed. Despite popular perception, a longer target list does not necessarily mean a higher rate of return. Instead, it results in exactly the opposite: high-effort, low-yield endeavors. Today most IR teams can benefit from a more focused list of targets. At a minimum, IR teams need to know which targets warrant a greater degree of their time and energy, and which can be deprioritized.

To that end, it can be helpful to segment target investors into tiers such as gold, silver, and bronze. While the specific rules of engagement will vary from team to team, tiers can help you better decide how many touchpoints each target receives in a calendar year, which targets merit facetime with the management team, and which need to be further vetted by the IR team.

3. Change up your conference schedule to diversify your outreach. IR leaders often find themselves speaking to the same investors at the same conferences, year after year. The widespread misperception that teams are limited to a handful of investor conferences only results in closing off a significant portion of the investment community. There is no obligation for IR teams to continue attending any given conference, especially if it is not delivering high-quality contacts. In fact, doing so is often one of the biggest time wasters for the team.

Empower your team to simply stop going—at least for a few years—and try something new instead. Get creative in your efforts to meet new faces. Consider attending non-traditional conferences for companies in tangential industries, if permitted. Other tactics worth trying include relying more heavily on non-deal roadshows, hosting investor webcasts, or even planning reverse roadshows to bring investors to your management team.

4. Look forward instead of back. Focusing on the past can cause IR teams to seek out the wrong investors for the future. It’s very common to target investors who resemble the historic or current makeup of the company’s shareholder base. But this strategy can be shortsighted because it fails to reflect where the company is heading. Business models, financial profiles, and performance all change over time. The investor targeting approach also needs to shift and, preferably, shift ahead of actual company results.

Remember that the process of converting a prospective investor into a shareholder can take months, if not years, and that any new shareholders you attract will ideally maintain holdings in the company for many years to come. Futureproof your targeting efforts by proactively looking for investors who connect with your company’s outlook and prospects as opposed to where it stands today.  

Trade in Your Old Targeting Plan for a Fresh Set of Tactics

If your targeting efforts are not generating the outcomes you want, don’t be discouraged. It’s likely not because your company is an unattractive investment opportunity. Rather, it’s because the wrong investors are hearing your story. The good news is, we can help you innovate your targeting strategy and boost your ROI.

Clermont Partners can support your IR team with accessing and interpreting higher-value investor data, prioritizing prospects, diversifying outreach, and future-focusing your targeting strategy to reach the right investors. And we can help you master these new techniques in time to ensure a high-impact summer meeting agenda. Give us a call to learn more about these ‘tricks’ of the trade and how you can reimagine your investor targeting initiatives to achieve a whole new level of ROI.

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