Investor perception audits just as much about misperceptions

Illustration courtesy of Johannes Ahlmann on Flickr.

Illustration courtesy of Johannes Ahlmann on Flickr.

Rob Swystun, Pristine Advisers

Have you ever thought that you knew someone relatively well only to find out later on that you didn’t know that person as well as you thought? Or, even more importantly, have you ever thought that a person saw you in a certain light only to find out later that they had some really off-the-wall perception of you?

Turns out companies can be the same way.

Sometimes companies think they’re putting out a certain image that they want to be known for only to find out that investors, potential investors and analysts see them in a completely different light or have missed their main market positioning strategy.

David Calusdian, Executive Vice President & Partner of Sharon Merrill Associates, says all companies can combat these misperceptions about themselves by first finding out how people perceive the company and then using that info to determine how to focus communication and messaging to dispel any misconceptions about the company.

The best way to do this is with an Investor Perception Audit, which is exactly what it sounds like. Basically, it is a survey of a corporation’s past, current and potential institutional investors, plus sell-side analysts. These surveys should be conducted by a third party via telephone to ensure complete anonymity. And anonymity is important. Even the most outspoken analyst or investor will be more reluctant to let their true feelings be known in a face-to-face conversation or if they know they can be identified. In fact, many companies are quite surprised at what the survey respondents have to say in these anonymous exchanges.

Among other things, the audit should include questions about what investors and analysts think about the company’s:

  • strategy;
  • prospects for growth;
  • communications;
  • management strengths, and;
  • catalysts for investors to purchase stock.

The information provided by these audits is a valuable tool for boards of directors to take the pulse of investors and potential investors to try and gauge whether there is any burgeoning shareholder discontentment.

An audit can help to catch this discontentment before it escalates into a full-blown proxy battle. And, even better, it allows management to identify the root cause of investor dissatisfaction and address the problem before it gets out of hand.

What with investor activism becoming a growing trend among corporations, IROs are being called on to keep management abreast of investor inclinations. And an annual investor perception audit coupled with quarterly summaries of feedback garnered from one-on-one meetings tend to go a long way toward this.

But not only are they useful as a means to head off any potential proxy battles, they also show investors that you value their opinions and are interested in what they have to say. They are also useful to get a handle on the different types of investors a company has and the differences those investors represent.

These audits have long been used by public companies to evaluate investor perceptions for the purposes of refining messages and making communications clearer. So, when planning your company’s IR strategy, make sure you incorporate this most useful of tools to interact with and gauge your most valued audiences.

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3 responses to “Investor perception audits just as much about misperceptions

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