Actionaria - what do retail shareholders want from communications?

I’ll be heading to Actionaria tomorrow, the annual show for retail investors in France. It’s mainly out of nosiness – having produced a brochure for one of my clients, I’m quite keen to see what the competition has come up with.

Retail investors are a small but important group – typically they are “sticky” shareholders. In it for the long term, goes the conventional wisdom, they are loyal to existing management and can help counteract price volatility resulting from trading by high turnover institutional investors, or market stress.

But what retail investors want – and therefore how companies should communicate with them – tends to be a relatively neglected area of research. Three facts stand out:

The first is that retail investors invest overwhelmingly in household names. In recent research by Investec Wealth & Investment, over half the 2,000 interviewees declared they were more likely to buy shares in well-known companies. Moreover, the same proportion would continue to hold such shares even if they performed poorly.

The second is that they want a simple story. They want to know what the company does, how it makes money and its vision for the future.

The third is that retail investors overwhelmingly use the internet to make decisons: research by the SEC shows that 4 out of 10 private investors will visit a company’s website to gain information.

What does this mean for communications?

First of all, if you’re not a household name, time to demonstrate how you fit into people’s lives. IMI proudly announces on its homepage, for example, that it “converts industry knowledge and market insight into design-engineered solutions”. This doesn’t mean much to most people. Dig deeper in the website and you discover they play a crucial role in areas of concern to the general public, such as clean energy, energy efficiency and healthcare. There’s material for a compelling retail shareholder story here – but it isn’t being told.

Second, make the most of the "third party" channels these investors rely on: press, and retail brokers (particularly in the UK and US). Not only do they reach a wider audience, but their independent view makes them valued by small shareholders. Tell your story simply to journalists and brokers. Then keep telling it.

Finally, invest in your website. Navigation is key – your audience is internet-friendly but not necessarily internet savvy. Ensure your IR site and annual report are no more than one click away from the homepage. Both the homepage and the IR landing page should provide an overview of what the company does, with information logically arranged so investors can quickly and easily locate what they need. Shareholders should have the option to subscribe to regular email alerts, or dedicated shareholder newsletters to keep them up-to-date with the company and generate further loyalty.