The Blog

Measuring Shareholder Engagement: Trends & Best Practices

Jul 11, 2022 | Insights

Measuring shareholder engagement has become a crucial aspect of evaluating and enhancing corporate strategies. There’s an old adage that says, “What gets measured gets done,” emphasising the importance of setting quantifiable goals.

It’s true that some activities within investor relations teams can pose measurement challenges; however, shareholder engagement is an area that’s been overlooked when it comes to essential analysis.

In this article, we’ll explore the trends and best practices in measuring shareholder engagement, how companies leverage these insights, and the role of technology in the process.

What Makes Predicting Investor Engagement So Challenging?

The challenge is that the data required for predicting investor engagement currently “lives” in 3-4 different systems with different providers. There’s little integration between them. The limitation this presents keeps businesses from having a complete view of their shareholders, one that captures, reports on, and draws conclusive insight from all investor activity. In addition, there’s no branding across these platforms or human engagement with the companies and their C-suite.

For instance, the IR team may rely on several different providers for its website, online earnings events, CRM, and capital market data needs. In this scenario, the challenge of identifying investor engagement is impossible.

The only solution is to evaluate the information from each source. This is also done independently, preventing a complete view of the data, as well as developing insights that can only be obtained from a broad-scale analysis. The result is that a team can only take generic actions, such as sending mass emails, holding ineffective meetings, and providing general financial information. This is hardly productive.

The Solution—A Single Platform

The solution is to partner with one provider to integrate all shareholder data on a single platform. This allows a company to analyse specific IR sales and marketing efforts, determine the effect of its digital assets and events, and interpret sentiment toward its stock. All the data is within one system.

This allows the business to predict, influence, and impact next steps as they relate to investors. Future interactions can be tailored to the specific interests, desires, needs, and goals of each shareholder. A company can efficiently and effectively meet its IR goals.

The Value of Measuring Shareholder Engagement with a CRM

Measuring shareholder engagement offers valuable insights into the effectiveness of investor relations programs. By implementing rigorous activity tracking and leveraging cutting-edge customer relationship management (CRM) platforms, businesses can monitor and optimise their engagement efforts.

The process ensures the efficient appropriation of management’s and investor relations personnel’s time while enabling quantitative verification of progress toward objectives.

Expanding Reporting Standards

Shareholder engagement metrics are no longer limited to internal reporting within organisations. A notable trend is the inclusion of these metrics in company proxy statements, with emphasis on a commitment to transparency and corporate governance. Companies now highlight their shareholder engagement approaches, philosophies, and key statistics.

By taking these actions, businesses show dedication to providing their investors with opportunities to express their views on crucial corporate matters. This inclusion serves as a testament to the company’s responsiveness and willingness to listen to its shareholders.

What Metrics are Essential in Shareholder Engagement?

Companies employ various metrics to report on their shareholder engagement efforts effectively. These metrics provide a comprehensive view of the company’s engagement activities and commitment to building strong relationships with shareholders. Here are some commonly used metrics:

Number of meetings: companies disclose the total number of meetings held with shareholders. The metric focuses on top shareholders exclusively or meetings with all shareholders, including prospective investors.

Percentage shares: firms report the percentage of outstanding shares represented in meetings that have been held. This metric can be calculated based on the total number of shares outstanding or shares held by specific shareholder groups, such as the company’s top holders. It offers insights into the level of engagement with significant shareholders.

Percentage of holders: reporting may also include the percentage of shareholders engaged relative to the total number of holders. Companies can focus on a subset of top holders or provide a broader representation. This metric shows the reach and inclusiveness of the company’s engagement efforts.

Harnessing CRM for Shareholder Engagement

Utilising CRM platforms and robust activity tracking is crucial for generating accurate shareholder engagement metrics. Establishing standardised activity types and determining which interactions to include in the metrics is critical.

Companies need to consider whether to include meetings solely with management participants or extend the scope to engagements facilitated by investor relations personnel. Furthermore, companies can broaden the definition of engagements to include various investor interactions, such as participation in webcasts, attendance at analyst days or shareholder meetings, and engagement through email communications.

CRM & Shareholder Engagement

CRM activity tracking can be used to generate these metrics, but this requires a consistent, reliable process for tracking activity. The metrics highlight the importance of having standard activity types which should be included in the published metrics.

For instance, it’s essential to decide whether to include only investor meetings with management or those conducted by investor relations personnel. The concept of “engagements” must also be evaluated. Businesses may only want to focus on meetings with investors, whether these are in-person or virtual.

However, they may also want to incorporate other investor interactions such as investors or targeted investors who listen to earnings results webcasts live or via replay and attendees at analyst days or shareholder meetings. They may also want to consider those who receive email communications sent by the IR team.

Embracing the Evolution of Shareholder Engagement

Measuring shareholder engagement is no longer only a formality. It has evolved into a crucial aspect of effective investor relations. As trends continue to emerge and change, companies must adapt and refine their strategies accordingly.

By embracing emerging practices, leveraging technology (such as CRM activity tracking), and aiming for transparency, businesses can create stronger connections with their shareholders, enhance corporate governance, and drive long-term value for all stakeholders.

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