Retail IR – An Underestimated Component of IR

In their IR work, most companies tend to focus on institutional investors, portfolio managers, asset managers and equity analysts. But the environment is changing and there is a noticeable, continuous change in the market. Retail investors have a significant impact on the market and are becoming more influential players in the investor world.

The phrase “Esprit de corps” is perfect for small investors. A single investor cannot let the share price of your company fluctuate upwards or downwards. But due to their multitude, private investors have a considerable influence on the liquidity of the share and the share price development, especially in micro and smallcap companies.

How do private investors inform themselves about a company?

The information behaviour of small investors differs considerably from that of professional players such as portfolio managers and equity analysts. Small investors use the company’s website, social media, online forums and online news sources. They collect information about “your” company from all kinds of sources, sources based on sometimes distorted news, rumours or speculation. The basis of good retail investor relations is therefore to provide private investors with sufficient first-hand information.

Why should the information needs of small shareholders be taken seriously?

Why should a company be interested in the information needs of small shareholders at all? In any case, they only have the right to information once a year – at the Annual General Meeting. So what are the consequences of “too little information” for private shareholders? Small companies with many private shareholders and few institutional investors in the share register quickly feel the effects of the share price development: little company information leads to speculation. The speculations lead to rumours, trust dwindles, shares are sold, the share price comes under considerable pressure.

What can a good retail IR program look like?

Regularity is important when communicating with private shareholders. Control the discussions of private shareholders by determining the topics as a company. It doesn’t always have to be price-sensitive news. A brief update on a project. A summary of the last participation of an industrial fair. The presentation of individual departments in the company. The outline of the work and tasks of a foreign branch. An interview with the head of research and development. Private shareholders are interested in all information about “their” company, not just the information relevant to the share price.

Which channels should be used?

Digital media are particularly well suited as channels of communication with private shareholders. Particularly popular with private shareholders: Quarterly web conferences at which the CEO discusses the past quarter. Of course in live video, questions can be asked with the help of a chat. A monthly video podcast in which the IRO answers the most important questions from private shareholders. Social media, which reports on trade fairs and internal company events. And of course the company website with interactive graphics and information.

As IR officer, you control the discussions of private investors. If you don’t, someone else will.