By David Calusdian, President
The ability to tell a compelling story is key to generating investment community interest. And understanding the foundational elements of a compelling investment narrative is fundamental to effective IR storytelling. To help you drive investor interest through effective storytelling, we’ve compiled five pieces of advice.
1. Be substantive.
A great investment story has to have substance, including an explanation of how your company makes (or plans to make) a profit and management’s vision for the future. Make sure to add details that support the investment thesis. Just be careful not to add too many details that do not directly relate to the thesis. One major tendency of management teams, especially those in more technical industries, is to inundate investors with the specifications of a product or technology.
2. Be Honest.
A good story is not the same as a perfect story. Most investors understand that – in fact, your message will be more believable when you expose a few of the risks to your success. Many executive teams shy away from discussing potential challenges to achieving their strategic goals, but investors can spot this reticence easily, and will see it as a red flag. Perceived negative topics you should address include your competition, external strategic risks and internal challenges. Importantly, address any adversity with your proposed solution, which should show how you will improve the business and profitability in the process.
Good communication is never a one-way street and telling your investment story shouldn’t be either. That means listening to how investors respond to what you’re saying. Which aspects appear to resonate with investors? What do they dislike or criticize? The more you welcome honest feedback, the more you will receive. In addition to listening and asking thoughtful questions during one-on-one investor meetings, a more formal way to acquire significant investor feedback is through a perception audit . By using the financial community’s responses to refine your message, your company will both demonstrate its interest in a dialogue and present a story investors want to hear.
4. Make it relevant.
By taking the messages you hear from listening to investors and applying them to your investment story, you can create a compelling message for the financial community. To communicate in a way your investors will understand, try using language, illustrations and examples that would make sense to someone who doesn’t work in your industry. Make analogies to everyday experience that bring home the key points. And be sure to simplify the thesis so that every investor can easily understand it.
5. Be consistent.
To strengthen the impact of your investment thesis, it’s important to communicate the key points in all of your investor materials. From press releases and presentations to conference call remarks and annual shareholder letters, use the same ideas and themes. For example, while the language in an earnings script need not be exactly the same as it is in a PowerPoint presentation, the reasons to invest in your company need to be consistently repeated across the spectrum of communications materials. Doing so will ensure your target audience has heard your message, and it will also reduce the potential for the message to be obscured with unnecessary clutter.
Remember, to communicate effectively with investors, use clear, compelling messages that show how you will build shareholder value. Ultimately, that will be why they choose to invest in your company.
Need help telling an effective narrative to the investment community? Let the storytellers at Sharon Merrill help you drive investor interest and shareholder value. Contact us at firstname.lastname@example.org or through the form below.
David Calusdian, president at Sharon Merrill, oversees the implementation of investor relations programs, coaches senior executives in presentation skills and provides strategic counsel to clients on numerous communications issues such as message development, ESG communications, crisis management, and shareholder activism.