The global COVID-19 pandemic brought challenges on many fronts, leaving organizations to manage volatile markets, stunted revenues, and vital cost reductions. But as we emerge from the eye of this storm, there may be a silver lining to be had when it comes to investor engagement. With in-person meetings all but impossible, necessity has helped facilitate the adoption of video or audio investor conferences with screen sharing.
With travel restrictions remaining for many of us around the globe, virtual NDRs will most definitely be a big part of our future IR strategy. We recently sat down with Michael Snell, manager of investor relations at Q4, to discuss how to capitalize on the advantages of virtual meetings while circumventing potential pitfalls.
An opportunistic approach
“Most IROs will have started their year with planning an investor targeting and engagement strategy in line with key dates from their financial calendar. Topics for consideration would have included which cities they would visit, management availability, the cadence of engagement with key shareholders and target investors, which conferences they would attend, and even which local banks or brokers would help schedule meetings and logistics,” says Michael. “By the end of March, even the best-laid plans had changed.”
Despite the decimation of these well-laid and strategic plans, many IROs seem to be looking at this time opportunistically – as for the vast majority, the “show must go on.” The pivot to a virtual approach brings a number of benefits and may actually allow IR departments to scale investor targeting efforts.
Here are a few ways that embracing virtual investor meetings can increase the efficiency of your IR plan.
· Immediate cost savings and carbon reduction – The savings associated with air travel, hotel bookings, executive cars, hosting dinners and even printing and other administrative costs has an immediate impact on budgets. IROs have taken advantage of this opportunity to reallocate funds to other parts of the IR program. In redirecting funds to leverage technology for instance, IROs can increase their direct engagement with investors, expanding engagement with key institutions. A pause in travel has also reduced industry linked CO2 emissions with many embracing the opportunity to contribute to a low-carbon future.
These technology investments can help IROs parse through the mind-blowing amount of information available today to uncover portfolios that are a great fundamental match and arm management with critical insights into their investment drivers. Funneling this new found budget toward these tools can deliver data-driven insights and enable IROs to proactively frame the conversation.
· Time management and efficiencies – C-suite availability may be an IROs most valuable commodity, so most take great care in planning efficient NDRs, scheduling back-to-back meetings to achieve more in the same time. Now, IROs can capitalise on C-Suite time that would otherwise have been lost on airplanes and in the back of cars and use it for additional high-quality meetings.
· Expanding geographic reach for improved ROI – Maybe the most impactful benefit, transitioning to virtual NDRs alleviates the geographical limitations inherent in the traditional in-person approach. Historically, IROs might allocate 2-3 weeks after announcing results for investor roadshows – perhaps that meant a few days in their home market and then a significant time abroad. “Now, early adopters of a virtual approach are organizing their day based on a cross-continental timeline to manage each day efficiently. In this format, virtual meetings with European investors are scheduled early each morning and the afternoons are spent with North American targets. Executive time is used more efficiently to cover a lot more ground, which can significantly improve return on investment of their time,” says Michael.
He also explains that the other benefit is that IROs are no longer bound by the constraints of traditional NDR hubs. Now cities and investors that may not have been justified, but present significant opportunities, can be added to the list.
Mitigating possible drawbacks
“While the majority of IROs conclude that the benefits outweigh the negatives, there are absolutely some perceived disadvantages to be aware of when pivoting to a virtual approach,” adds Michael.
Many IROs believe there’s no substitute for face-to-face engagement. And while this is hard to argue, the pandemic has helped the world embrace new ways to work. Meaning your investors will now likely view virtual meetings as being a key method for staying in touch. Many may even welcome it as the primary mode of communication moving forward.
Managing your day and events in different time zones is also a consideration for IROs and their management teams. To prevent meeting fatigue consider taking time off in lieu or flipping business hours to accommodate early or late finishes – particularly important if shifting your working schedule has a material impact on life at home.
The structure of video calls can be a challenge, as well, in that they are essentially set up to allow a single person to present, which disrupts the natural flow of conversation and may deter questions. This can take some practice, but executives and IROs can work to encourage a connection during these virtual meetings.
“I’ve noticed that the current situation can, at present, actually be an opportunity for connection and camaraderie. When we start calls by addressing the moment and acknowledging that we’re all navigating through its complexities together, we can improve the quality of the meeting and engagement of its participants. Even if we’re sitting halfway around the world, beginning these new interactions with empathy pays dividends.”
In some cases, virtual meetings see a higher cancellation rate than in-person because investors no longer need to consider logistics when booking and cancelling meetings – this has a knock on effect with corporates experiencing higher cancellation rates and more “diary churn” vs traditional marketing events. Reconfirming and verifying meeting details, as well as confirming tech requirements in advance, can help cut down on these last minute drop outs. Pre-preparation and testing of systems can help mitigate potential tech issues that waste precious time during the call.
A permanent pivot?
Michael contends that current travel restrictions and unknowns stretching into next year will make virtual investor meetings an industry staple for the foreseeable future. “I think, in general, our industry has already seen that the benefits of virtual NDRs far outweigh any potential concerns.”
We’re in a period of unknown, but those who take advantage of this opportunity to reach out to and engage with more investors, extending or even initiating new conversations, may be laying the groundwork for a geographically diverse shareholder base. Investors won over specifically during this time of market volatility may go on to become the foundation of support during any future similar state. And that is important.
While virtual may not be a complete replacement for face-to-face meetings, the benefits of this approach mean that it will now forever live on as a core part of our investor engagement strategy moving forward. For several helpful tips for planning an effective virtual NDR, visit here.
