Be (very) short, simple and memorable
7.00 am: A meeting room at a large investment bank; in the audience, several dozen well-dressed institutional equity salespeople.
At the microphone, a succession of securities analysts, each putting forth one stock that’s a prime candidate for purchase or sale that day. These analysts know their stuff, but that doesn’t prevent audience reaction.
A couple of minutes into one pitch comes a loud voice from the floor: ‘Hey, Joe, is it a buy or a sell?’ It’s a buy. A minute later, from another part of the room: ‘Hey, Joe, what are the bullets?’ Joe says something inconclusive. The man next to me draws a thick line through the name of the stock. ‘Won’t be talking that one today,’ he murmurs.
When the meeting ends, I ask my neighbor what happened then. He explains: ‘I’ll call maybe a dozen people today. For each one, I’ll mention 10 or 15 names. I give my guy two or three bullet points for each one; he says ‘no interest’ or ‘tell me more’ and we go to the next one. If the analyst doesn’t give me bullets for his pick, I’ve got limited time and I’ve got other things to talk about.’
That is, in fact, why I’m in this meeting room. Our firm has been hired to train a few analysts in how to better translate their insights into the ammunition their equity sale force needs to seize the clients’ attention. What I’ve just seen brings the realities of investor messaging forcefully to life.
Reality one: The analysts’ reports can be very persuasive. The company’s presentations and disclosures can be very effective. Neither matters until the prospective investor decides to take a look. That decision, yes or no, happens very quickly, and usually in response to three (no more) strong messages.
Why no more than three? That’s the maximum number most people can remember unaided; some retail brokers prefer to work with just two. If it’s strong enough, one message can do a lot of attention-grabbing, as in the case of a blockbuster headline.
But what’s a great bullet? Anything that makes a company stand out from the crowd, for better or worse – and stand out in a way that will make investment profitable. These bullets are company-specific: new or failing products, strategies, management. They’re macro: industry trends, interest rates, drought, energy prices. They’re technical, quant-driven. They’re special situation-driven: activist shareholders, M&A, litigation.
Great bullets are about ‘why this?’ but also about ‘why now?’ If prospects don’t act quickly on newly kindled interest, there are countless other competitors for their attention. Action, though, needn’t always mean transaction – for some longer-term-oriented investors, action might simply mean heightened scrutiny and engagement.
Reality two: Someone has to create the messages and companies may fare best doing it themselves. Sell-side analysts are paid to put forth reasons to buy or sell shares right now but those reasons, though legitimate, may not be the best ones to direct at the investors a company most wants to attract or retain.
Some managements and boards regularly look at their own company as if they were investors. This is an important exercise, especially when it leads to the question: why should the investors we prefer want to own our shares today? Answering that question may influence corporate strategy, though that isn’t the issue here. More often, it can – and should – influence corporate communication.
For IR purposes, answering that question also leads to the three bullets. They can be organizing principles for presentations; they can be topics for interviews with media or analysts; they can inform communications to customers or employees. They can shape investor dialogue.
Why this? Why now? Short, clear and pointed.
James MacGregor is vice chairman and a co-founder of Abernathy MacGregor, one of the world’s leading corporate, strategic and financial communications consultancies.
