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Measuring IR

Measuring IR

By Diana Estupinan and Mark Fisher

Art or science? Investor Relations (IR) is a bit of both. Much of it is ‘soft’ and cannot be measured, such as  developing the right messaging or building close relationships with key investors. But many aspects of IR can be measured with considerable accuracy, and this should be done as rigorously as possible to improve performance. This applies both to the performance of the company in its relationship with investors, and more narrowly to the effectiveness of the IR department itself.

Measurement tools

Investor perception surveys often provide insights that come as a surprise to a company and can prompt it to rethink its communications strategy, and even influence its business focus. Surveys typically seek the views of major investors and buy-side analysts as well as sell-side analysts. An IR department may already be in touch with them, but if a survey is conducted by a third party, with replies kept anonymous, respondents often open up and reveal unsuspected opinions.  They might be concerned about the quality of the company’s management, or think it is underperforming against its peers.

Surveys can include both open-ended questions, and ‘rank from 1 to 10’ type questions that produce qualitative and quantitative results. They can be done online or through sending written questions, but often the most effective method is phone interviews that enable a skilled interviewer to pursue topics and tease out vital information. Instinctif’s IR Optic tool for example, had been designed to empower IROs with a powerful diagnostic tool to measure investor sentiment over 12 metrics.

Mining the share registry for information is another hard measurement tool. Are shareholders mainly buy and hold, or short-term, and how is this mix changing over time? Are they based in the region or outside? Are retail investors losing interest, and which funds are not holding your company when you might expect them to? The share registry can reveal all of this and much more.  You can see who is suddenly increasing their holding, for example, which could lead to an attempt to influence company policy or even a takeover bid, and you can use the registry to help compare your shareholders with those of your peers.

You can also spot whether your company is on the right or wrong side of investment trends. If investors who are leading the charge to divest from non-sustainable companies are deserting you, that should be a wake-up call.

In the hands of an inexperienced IR department a shareholder registry is just a mass of data, but used intelligently it provides critical information.


Some measurement metrics can be usefully included in IROs’ KPIs. Such as how often they conduct investor perception surveys and extract valuable information from the share registry. Also how quickly do they respond substantively to questions from investors, how many one-on-one meetings with senior executives do they arrange, how many roadshows, etc. They can also set targets for how many research analysts they want to be covering the stock, and which ones specifically. While they cannot force them to, they can at least keep records of their attempts to persuade. Website engagement is another KPI, to stay on top of which parts investors are looking at and how often, and maybe change the content and presentation as a result.

The ’soft’ nature of much of IR means that no measurement tool is perfect. But there are many available and together they can make a difference. These include a mix of quantitative and qualitative measures including regular reviews of market perceptions, benchmarking against your peer group, building the right register for the company’s current position into its lifecycle.

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