Think Like a Politician: Use Investor Perception Audits as a Strategic Advantage

In politics, there is an age-old debate as to whether elected leaders should vote according to the wishes of their constituents, or vote their conscience as the people’s representative.   We have seen politicians criticized for using polling too extensively to guide policy (see Bill Clinton) — and not enough (see Barack Obama).  When I worked as a political consultant prior to entering the IR profession, we used polling to gauge the electorate’s opinions on a certain issue – not to change policy, but to determine what audiences need focused communication and how messaging should be used to address misperceptions.  And this is exactly how IR practitioners should use our own version of polling – the investor perception audit. 

I recently had the pleasure of being interviewed about investor perception audits by Broc Romanek of   The podcast is available here:  An investor perception audit is a survey of a company’s capital markets audiences – past, current and potential institutional investors as well as sell-side analysts.  Typically conducted by a third-party via telephone to protect anonymity, the perception audit usually includes questions about the company’s strategy, prospects for growth, communications, management strengths, and catalysts for investors to purchase stock, among others.  Think you already know what they perceive about your company?  Certainly, investors and analysts are usually not shy about voicing their opinions.  However, many companies are often surprised at the feedback they receive when investors are not speaking face-to-face with management.

Today, many boards of directors have come to view the perception audit as a valuable tool to take the pulse of their investor base and determine whether there is any under-the-surface shareholder discontentment.  It’s better to find out what the reasons are for any disapproval now, rather than during a contested proxy battle.   Because of the growing trend toward shareholder activism, boards have become much more interested in the IR function, and good IROs are keeping their directors in tune with investor sentiment.   An annual perception audit and a quarterly summation of feedback from one-on-one meetings usually go a long way toward achieving this goal. 

Much like a political poll that dissects each demographic and geographic group and locates which constituents need extra communication, a perception audit can ensure that the company understands the concerns of its many investor types.  Again, it is better to resolve (or at least understand) any differences that management may have with diverse types of shareholders with various investment styles before they make a choice between the company’s board nominees and those of an activist shareholder.  Additionally, the act of reaching out to shareholders through a perception audit demonstrates management’s appreciation for their opinions.

Public companies have long used perception audits to evaluate investor perceptions and then refine messages.  In 2010, a tidal wave of shareholder activism has raised the stakes, making the perception audit a highly strategic tool for boards and management alike.   So as you plan your IR program, think like a politician and use “polling” to curry favor with your most valued audiences.

David Calusdian
Executive Vice President & Partner



Filed under Perception Audits

3 responses to “Think Like a Politician: Use Investor Perception Audits as a Strategic Advantage

  1. David Perry

    A most interesting article. There is however a reluctance by many IROs to undertake perception audits because:
    a. They feel they are meant to be the eyes and ears of the company to the market and to know the market’s views – or should know the views
    b. management may question why the IRO would need to undertake such a study. Isn’t that their job?
    c. there is the view that you shouldn’t commision a report unless you know the outcome. It takes a confident IRO to commision a report as there may be a negative surprise in it for him/her.
    David Perry
    IR consultant, Melbourne Australia

  2. Pingback: What Makes for a Successful Investor Relations Program? | The Podium

  3. One can never have enough information about their customes, clients or constituents. Thanks for the post.

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