Measuring and Evaluating IR Effectiveness: A Personal Perspective

Hello fellow IROs,

Have you ever wondered if your IR efforts are really making a difference? As an IR expert, I've learned first-hand that it's not just about the numbers. It's about understanding how our work contributes to the success of the company. All too often, IR is seen as a cost center, but if we can prove its value, we can ensure its continued support and investment.

Data Collection: A Balancing Act

Collecting accurate and up-to-date data can be a challenge, especially for smaller companies or those with limited resources. I've found that a combination of manual tracking and using existing systems can be effective. For example, I've used simple spreadsheets to track investor meetings, media coverage and social media engagement. While this is time consuming, it provides valuable insights.

To track the effectiveness of investor relations efforts, you can monitor several metrics. Tracking investor meetings, including the number of meetings held, attendees, topics discussed, follow-ups, etc., can help you analyze this data to calculate the average number of meetings per month and the percentage of meetings attended by institutional investors. If you're already using social media for your financial communications, then engagement metrics on these media, such as likes, shares, comments and click-through rates, will help you determine investor interest and interaction. Analyzing website traffic, including unique visitors, page views and time spent on the site, provides valuable insights into investor engagement with company content. And finally, one of my favorites and I believe to be one of the most difficult to do yourself: Investor surveys. These can be conducted by gathering feedback on IR communications, clarity of company story, accessibility and responsiveness, which in turn enables the calculation of average satisfaction ratings and the identification of key areas for improvement.

Data Analysis: Turning Numbers into Stories

Once the data has been collected, the real work begins: the analysis. I've learned that it's not just about the numbers, but also about the stories they tell. By identifying trends, comparing our performance to industry benchmarks and showing the impact of our IR efforts, I can make a compelling case to management and the board, but also to analysts and investors.

Analyzing key metrics and their impact can help you shape your story. I know this is not done manually, but media sentiment and social media comments can be analyzed using sentiment analysis tools to determine investor perceptions. The scores assigned to media mentions and social media posts can be averaged to determine overall sentiment. Comparing engagement rates for different content types helps to identify what resonates best with investors, whether retail or institutional. Engagement rates can be calculated as a percentage of total impressions or reach. Analyzing website traffic data provides insight into investor interest and engagement with company content. Metrics such as bounce rate, time spent on the website and pages per session can be analyzed. Financial performance metrics such as earnings per share (EPS) and return on equity (ROE), while not a direct measure of IR effectiveness, can provide valuable insight into the overall health of the company and the contribution of IR efforts to its success. While the share price can be influenced by a number of factors, tracking its performance over time can provide a general indication of investor sentiment and the effectiveness of IR efforts. However, it is important to also consider other factors that may affect the share price, such as market trends and macroeconomic conditions.

Demonstrating Value

In the course of my career in Investor relations, I've learned what a profound impact effective IR can have on a company. It's about more than just communicating with investors; it's about showcasing the value that our company offers.

By carefully measuring and evaluating our IR programs, I've been able to demonstrate how our efforts contribute to several key areas. One of the most important benefits is increased investor confidence. When investors perceive a company as transparent, accessible and well-managed, they're more willing to invest and remain loyal shareholders.

Another tangible result of effective IR is the increase in share price, although it should be noted that this can also be influenced by other factors. By effectively communicating our company's value proposition, financial performance and growth prospects, we have attracted and retained investors, which has led to a better share price. In turbulent times, this may mean that our share price is less volatile compared to companies without strong IR programs, or that it has a flatter curve rather than fluctuating wildly in response to any external factor.

In addition, having a strong IR program has made it easier to access capital. Cultivating positive relationships with investors can help secure favorable terms for debt or equity financing, helping the company grow and expand.

To streamline my IR efforts and maximize efficiency, I've transitioned from manual methods, such as using Excel spreadsheets, to leveraging powerful technology tools. IRM (investor Relationship Management) software is invaluable as it automates tasks, provides valuable insights and increases overall efficiency. By having a centralized platform to store and retrieve meeting notes, I can quickly find the information I need for specific investor meetings. Also, with quick access to personal information, I can tailor my approach to each individual investor, build lasting relationships and show a genuine interest in their needs and concerns.

Continuous improvement is key in IR. By regularly monitoring and analyzing our performance, we can identify areas for improvement and adjust our strategies accordingly. This commitment to excellence ensures that our IR efforts are in line with the evolving needs of our company, our investors and the market in general.

Where are you on your IR measurement journey? What KPIs are you tracking and have you found them useful? Let's get in touch and discuss how we can further improve our IR programs together. Share your experiences and insights in the comments below!

Muge,

Your Fellow IR Enthusiast

Yücel, currently Director of Investor Relations and Sustainability at Galata Wind Enerji (GWIND.IS), initially began her investor relations career in 2008 at Dogus Otomotiv (DOAS.IS). She promotes proactive strategies utilizing digital technology and AI, and she specializes in shareholder targeting. Galata Wind Enerji, traded on the Istanbul Stock Exchange, operates wind and solar farms in Turkey, and plans further expansion into Europe, reaching a capacity of over 1000 MW by 2030.