Almost every company has a problem communicating with investors. Over the past 20 years, I’ve been involved with roughly 700 investor campaigns. In many cases, our client had trouble comprehending that investors did not understand their messages.
No matter what we said, the executives didn’t recognize that they had a problem.
One day, after getting off a very frustrating phone call, it hit me: if I could figure out how to show a CEO a video of investors struggling to perceive his or her company as an attractive investment, the conversation would change.
So we started making videos.
We asked investors to sit in front of a computer and navigate a company’s investor relations site, or pitch deck, or other corporate materials. While they did this, we asked them to talk aloud.
Those first videos changed everything.
CEOs were stunned. Once they understood the problems, their teams were able to make changes and meet their business goals.
For example, one investor said of a firm’s carefully-honed investor website:
Right now, I’m still confused. I’m not clear what exactly this product does, how it benefits the end users, who is going to buy it, and how many of the units can be sold.”
Another had a more basic concern:
“I don’t know what industry we’re talking about.”
Still another, looking at a gorgeous page of facts and images, observed:
“As an investor, I need to know exactly what this company does. These graphics don’t tell me. Nowhere in here does it tell me exactly what this company does.”
No matter how intelligent or experienced you are, you face a challenge when it comes to investors: you are far too close to be objective. Working 16 hours a day, how can you possibly imagine that an investor would not even know the industry in which you compete, nevermind appreciate the finer points of your strategy?
As we expanded our efforts, we discovered a few simple truths about investor relations:
- Simple and compelling stories spread like wildfire… but it’s hard to know if your story is simple and compelling until you show it to potential investors
- Investor perceptions drive your firm’s ability to raise capital, compete effectively and grow consistently
- Poor liquidity and a lack of capital and symptoms caused by investors not seeing a compelling reason to buy your stock the way it is currently being presented
- To stay in touch with investor perceptions, test often
- Focus on the investor and all else will follow
Warren Buffett, legendary for his ability to spot superb long-term investments, put it this way, “For more than forty years I’ve studied the documents public companies file. Too often, I’ve been unable to decipher just what is being said, or worse yet, had to conclude that nothing was being said.”
You don’t need Warren Buffett to reveal when your words ring empty. Just watch a few handfuls of investors try to repeat what they think you are trying to tell them.
Mark McKelvie is the Founder of Investor Testing, which offers a powerful new way to quickly and efficiently test, research, enhance and improve the effectiveness of your investor marketing.