Wondering what your investors are really thinking? Ask them!
Perception audits are a great way—probably the best way—of gauging what the investment community really thinks about your company and its prospects. The right questions can yield an invaluable cross section of analyst and investor opinions, expectations, and concerns. To make the most of your next perception audit, keep the following suggestions in mind.
- Engage a third party to conduct the audit: You might get along wonderfully with your analysts and top investors, but would they feel comfortable sharing their unvarnished opinions with you about the most sensitive aspects of your business? Has the company underperformed in recent quarters? Did a recent product launch fail to deliver? Is your strategy clearly articulated? Most investors would have strong opinions on such matters but might pull their punches in a one-on-one meeting with management. Enlisting a third party to conduct the audit interviews will encourage participants to answer more candidly, particularly if the responses are anonymized and aggregated before being shared with the company.
- Schedule the audit for maximum IR utility: What does your IR calendar look like? Planning on hosting an investor day in the next 12 months? What about your product pipeline? Any impending changes to your enterprise strategy? Timing your perception audit with an eye on where it best fits within your IR program will ensure that you can put what you learn from the audit to meaningful use. Are there common misconceptions about the business that you can dispel on the next earnings call? What sorts of presentations would investors most like to see at an investor day? If you recently announced a new strategy, is that message getting through to investors? A successful perception audit will inform all aspects of your IR program.
- Stay focused on your key questions: You might have a laundry list of things you’d like to ask your investors about, but your perception audit need not and should not be more than a dozen questions, nor take more than 15 minutes to complete. Some participants may be happy to give lengthy responses regarding certain topics, but the success of the audit does not hinge on them doing so and most will appreciate keeping the interview brief and to the point.
- Prime the pump by alerting your invitees ahead of time: The service provider you engage should be able to handle all the logistical details, but to ensure maximum participation, you should reach out to the intended participants ahead of time. This is best done via an email from the IRO or CFO to explain the basics of the audit process, to inform them who will be contacting them and when, and to emphasize how highly the management team values their feedback. Start with your covering analysts and top investors, but also invite former and prospective investors, such as those you may have met at a recent conference. Former holders may be willing to discuss why they sold out and prospective investors will have a fresh, if limited, perspective on the company.
