Can we really measure IR success?
Many companies doubt whether they can measure IR performance. Evaluation of an investor relations strategy is crucial, especially for smaller companies. The IR strategies designed for organizations usually have a timeline of about 5 years. We certainly could not rely on the tactics that would rule our brand for this long journey unless it is proved safe and effective.
IR teams are facing a tough time measuring the success and ROI (return on investment) of their IR campaigns. This digital age has made most companies take the multifaceted approach where achieving holistic multiple IR outcomes is the goal. So, have you set your IR goals and IR performance objectives for this year?
Investor relation services are the one way to prove that the IR teams are an important contributor to the company’s performance. A quote by Jane describes its importance- “Research and market surveillance is a crucial component to an IRO’s ability to measure, monitor and modify a company’s financial communication efforts. It helps you analyse trends and develop programs to respond effectively”
Let’s learn more about IR measurement-
Some key facts related to IR success –
- Most companies use quantitative IR success management tools
- Most brands don’t go beyond institutional investments and trading volumes
- Company size dictates qualitative or quantitative metrics (Type of tools), several tools used and the category of metric used.
- About 80% of companies use at least an IR metric to keep a check on their performance.
- Making goals for your IR program can enhance the success rate
METRICS FOR IROs THAT MEASURE IR SUCCESS –
Quantitative ones –
#1 Valuation or Stock Price:
The IR’s success can be best measured by the company’s stock price. Institute for public relations claims the measurement for IR can be done easily by getting a fair market value for its stock. Though it is difficult to establish a direct link between the two an investor relations firm can easily get it done for you. Do not consider this as the only key metric to be used as this can be misleading. Try going for some collective practices to be sure of your results.
#2 Ratings and coverage of Sell-side analysts:
Your IR team’s success is looked upon by the number of buy recommendations and the number of covering analysts. It may signal that you are helping analysts get high-quality earnings estimates and this boosts your performance amongst the investors.
Note that coverage and ratings are linked to the company’s basic fundamental performance and don’t add in case of poor financials.
#3 Website analytics:
The IR website can provide important analytics and insights to check the effectiveness of the communication to the investment community. The easy, real-time and consistent manner can only provide results.
#4 Shareholder base:
Marking functioning has strong connections with marketing relations. Retention of shareholders can be a great measurement criterion for IR success. The shareholder base can also contribute significantly to this by detailing the types of investors, variety of investment styles, impact, concentration, depth and duration. The best way to measure this is by keeping on recording this with your company’s previous performance and later on comparing them for growth determination. These results can also help you make a more effective strategy.
Qualitative ones –
#1 Awards:
Recognitions are testimonials that signify a good quality IRO. They prove that networking and communication skills opted for by your brand are top-notch and do not need any further modification. This award-winning IRO program can aid a company’s trade at an average 15% valuation compared to others.
#2 Investor studies
This metric keeps an eye on the investor and analyst base about investor communication. The audits must be done repetitively several times perpetually to compare your previous audits. compare yourself to yourself and let yourself succeed. This way you can measure the loopholes, success, failures and effectiveness of your programs.
We hope you now can get real-time insights into your IR strategies. Go beyond your competitor’s limits and rule the entrepreneur world!
