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Give your shareholders a voice.

Give your shareholders a voice.

A doctor, farmer and fisherman walk into a bar 🎣.

Have you ever opened your registry, seen some random name with a random address, that's not only entered your registry but bought decently? All of a sudden, someone's gone from nowhere to your top 200, top 100, top 50 or even higher.

You have to wonder how they came across you. How they learned your story and built conviction. And if there's one like this - how can we get more?

A lot of these investors don't like and work in the major investment cities. They can be farmers, remote workers, overseas expats and more. And you have to wonder, how do they see you?

  • "Do they follow our company announcements?"
  • "Do we have their email?"
  • "Do they have a broker?"

With the rise in real estate values, wages and wealth combined with unprecedented digital access, there are more self-directed investors now than at any other point in the history of the ASX. 

Through our experience, I've seen (1) groups of deep-sea Marlin fishermen investing between catches, (2) retirees on Lord Howe Island writing big cheques and (3) farmers getting up early to go through the market before their day starts. 

There are shareholders and potential investors everywhere. 

And all of them have a phone, internet, trading apps, and like all of us - they want to be a part of something.

So it's worth noting that while 99% of your investors are far removed from the boardroom, they still want to be heard. 

Let's understand why. 

Information doesn't equal engagement.

Think about the internet. So much information, with so little connection, all bundled into the same experience.

Just Wikipedia alone is home to almost all the information you could ever need in your lifetime, but without connection, it's unlikely you'll absorb much of it. 

Traditional shareholder engagement is the same.

Most companies are good at pushing information to their shareholders and keeping them informed. Take any annual report and they're packed with information - more information than most investors know what to do with.

But information alone isn't enough to cut it. Why do we expect shareholders to feel informed and valued if the channels we offer them are predominantly one-way and text-based?

It's why HotCopper is so popular.

It (regrettably) services an unaddressed challenge for millions of shareholders - the ability to connect and be heard. Companies need to get better at providing channels for shareholders to reach the company directly on their own terms.

A generic email address at the footer of an announcement isn’t enough (and we know that 50% of investor emails go unanswered, anyway). Our friends at the ASA have strong guidance on this: consider roadshows, interactive webinars, investor dinners, and even open-invitation investor site tours - think beyond a “once per year” engagement opportunity mindset.

Because when you offer the opportunity to connect, investors invariably do - they are pining for connection. We see it time and again with InvestorHub - the companies that use the features most frequently are the ones that get more hub traffic, more hub engagement, more hub signups - and more on-market buyers!

And that's the key to building a long-lasting shareholder connection. In a world of endless information, connection trumps all.

Let's understand how. 

Focus on these two categories. 

I want to focus on two categories to address when marketing to your investors: push and pull.

(1) How do you push content and information to your shareholders?

As I said earlier, most companies are good at the push side of their investor marketing, but there's always room for improvement.

Shareholders want to be engaged directly, not via mass communications. This is where segmentation and targeting can be useful.

In the 12 months since I first wrote this article, we’ve found that segmenting your shareholder base into four categories for separate targeting is helpful. For each segment, you can tailor not only the message but the amount of time you invest in communicating with them:

  • Top shareholders 
    Whether you classify your top shareholders as the top 20, 50, or 100, these shareholders represent anywhere from 40-70% of your registry. You’re probably already calling them, having lunch with them, and monitoring their movements in registry reports. Keep it up.

  • The middle
    These shareholders sit outside your top, but still hold a significant amount of shares and likely have a significant amount of capital that they can deploy. We sometimes refer to them as the “#100 to #1,000”, as that’s where they usually sit in your registry, but depending on your size, it could be shareholders "#50 to #500" or even "#30-#50".

    These shareholders are often the most underserved shareholders, and if you could increase their belief in your business, then they could have a lot of capital to deploy to back that conviction (they're also handy when it’s time to raise). They have a basic understanding of your business but need to understand your team, your technology, or your results in more detail before they can invest. It’s worth creating a communications strategy to address that.

  • The long tail
    These are the remaining shareholders, often referred to as “retail”. Importantly for them, they read a fraction of the material you put out, and likely don’t understand the vast majority of your reports, announcements, or presentations. Creating material that is simple, jargon-free, and paints a clear investment thesis for them is vital.

    Iggy Tan from ASX:ATC recently did a great presentation that follows these principles.

  • Investor leads 
    These are the emails you collect at conferences, via your investor centre, and other various sources. Some companies are proactive at collecting emails, but many are not.

    Here’s the thing: if a prospective willing to give you their email, they’re probably interested in buying your stock. Sending your announcements, presentations, annual reports, and retail-friendly collateral is a fantastic way to build conviction and increase your shareholder base.

    You’re already doing these things: just make sure you include these people on your email list! If you’re not collecting investor emails, then this is your annual reminder to do so as well! Frequent communication with investor leads is a proven way to increase their likelihood to buy.

(2) How do you pull, or incentivise, your shareholders to interact with you directly?

Conceptually, it's pretty simple; open the doors and lower the friction so the interested can come forward. 

In practice, it's a little more involved.

Creating two-way communication channels takes time and effort, but the benefits for your shareholders will be significant and long-lasting.

And given that all of your shareholders reside online in some digital capacity, leveraging channels is the best way to start.

  • Webinars.
  • Q&A.
  • Interactive communities.
  • Social media.

These are just a couple of ideas to broaden your thinking, but the goal remains consistent no matter what channel you pursue: provide your shareholders with two-way channels to reach you directly and to feel like they’re heard.

When investors feel heard, they trust the company and believe in the team more.

A weird flex, but if you want proof of this, head to HotCopper and find the threads about hub announcements from any of our clients (1, 2, 3) - they’re (mostly) optimistic about the simple act of opening up lines of two-way communication with the market.

Remember to be adaptable, open, and creative when connecting with your shareholder base. It can feel intimidating, but I've got faith that if you’ve made it this far, you can do this.

And to end this article, a challenge.

See how they see you. 

I challenge you to re-think how you present to the market, by pretending you are an arms-length investor thinking about investing for the first time.

So - have a look at how you look to the market. Open up your trading app and have a look. The #1 way people research stocks is through their trading app (CommSec etc), and the #2 way is through other information websites like MarketIndex, Simply WallSt, the ASX site and even HotCopper.

So forget you work there for a minute. Go look up your stock. 

  • Have a look at the chart - what story does it tell?
  • Have a look at your recent announcements - what can you learn?
  • Can you tell what your company does yet?
  • Can you tell why someone should invest yet?
  • Do you have traction on social media/HotCopper? What does it look like?
  • Imagine you have a question - what would you do?

In short - imagine you have money to invest and based on what you can see rather than what you know - would you invest?

If not - what needs to change?

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