After nearly 20 years on the international sell side in positions as head of sales, research sales and corporate access, Sarah Bowman transitioned to investor relations in 2010. Now New York-based vice president for IR at Germany’s Deutsche Post DHL (DPDHL), she offers her unique perspective on understanding investor needs and the ‘internal and external’ role of investor relations.
1. Answer the question that is asked
Coming at IR from a sell-side perspective, one thing I’ve brought with me is a know-your-customer emphasis. Knowing your customer is critical, and when I was on the sell side I often saw IR and C-suite teams deflecting questions or answering a different question from the one asked. Investors were left wondering whether the IRO didn’t understand the question or didn’t want to answer it. Either way, it lowers credibility and creates frustration.
That’s a serious communications problem, and solving it can really differentiate you as an IRO. I worked on the sell side for 20 years, and as a result I know how analysts and investors express themselves. And I know what investors’ concerns are because I read all the research out there about my company and our peers. That helps me to better understand questions and answer them simply and directly.
You could say this has a lot to do with active listening. If you don’t have a sales background, you can seek out resources to improve your active listening skills. For example, don’t walk into a meeting with a set agenda: really listen to what the investors are asking you because what they want to know may be completely different from what you were going to talk about.
Another aspect to keep in mind is that you always know more about the company than investors, but they have a really limited amount of time and interest, so don’t waffle or elaborate – just answer directly.
2. Trust is critical, inside and outside the company
IR is about developing relationships of trust, both internally and externally. If you gain the trust of investors, then if something goes wrong hopefully they’ll listen to you and stick with you over the long term. You need trust with the C-suite, too, so it knows you are a credible and reliable source of information from stakeholders. The C-suite has to know you have the protection of its reputation and the reputation of the company as your top priority.
3. Constantly seek to improve
DPDHL launched ‘first choice’, a group-wide process optimization initiative, in 2006 and, like the rest of the company, the IR team is mandated to improve our practice every single year. One of the reasons I go to the NIRI annual conference is to find out what the best practices are so that I can seek to implement them. A lot of new IROs coming from the sell side think they know everything – but I know I don’t!
For the past few years, DPDHL’s focus has been on digitalization, so the IR team has been focusing on digitalization in our IR effort. For example, after seeing Slido used for audience interaction at last year’s NIRI conference, we’re looking at using it for an upcoming capital markets day.
4. Grow your feedback loop
One of the really good things DPDHL’s IR team does – for so many reasons – is analyst consensus collection. We send out a spreadsheet, gather the responses and compile them, then send a ‘blinded’ spreadsheet back to everybody. It gives us one more touchpoint to reach out and talk to our sell-side analysts, it helps them to think about our reporting structure the same way as the company, and the analysts like the closer relationship.
We also use Survalyzer, an online survey platform, to gather feedback after every investor meeting. We track investors’ responses over time to show trends in the level of confidence they have in management and our strategy. It makes them feel like they’re being heard and we’re present for them – which is the essence of building relationships.
5. Maintain the human touch
The more big data there is, and the more quantitative and passive the world becomes, the more the key differentiator is the human touch. That means your ability to form strong relationships both inside and outside the company is what is most important. Jobs like IR, which require a high emotional intelligence and have a high level of personal interaction, will never be digitized.
