7 Considerations for a Successful Perception Study

Get investors talking

Shrewd investors aren’t shy when it comes to asking management teams for specifics about a company’s approach to anything and everything that factors into the investment thesis. While it’s normal for executives and management teams to feel like they are always in the hot seat, a perception study reverses the roles and asks investors to be forthcoming with their thoughts, ideas, and opinions.

Well-crafted, professionally conducted perception studies encourage investors to give detailed responses to key questions and share the specifics about what they want to see from a company. This makes a perception study an invaluable tool for strengthening productive and mutually beneficial relationships with investors. Done well, perception studies uncover investor views on the company, strategy, and management team and can flag any misperceptions or disconnects with the investor narrative, which is used to guide messaging tweaks and future strategic communications.

Set the stage for a great conversation

With all the chatter on the Street and in the greater marketplace, now more than ever it is critical for companies to connect with investors and fully understand their thoughts on what it takes to increase valuation. Here are seven ways to ensure a valuable discussion.

1. Include a diverse group of respondents. Ideally, perception studies should be fielded to a mix of top shareholders, recent entrants as well as recent exits, prospective investors who remain on the sidelines, and sell side analysts. The more diverse the respondents, the more likely a company is to reveal various viewpoints on critical topics, leading to more holistic and insightful perspectives.
2. Approach a perception study as a strategic exercise. A perception study is an educated, active listening exercise, not a survey. Questions should be strategic and open-ended, intentionally designed to elicit investors’ thoughts about what matters are most relevant to a management team. While surveys can be valuable, especially when a company wants to understand something specific from a large number of investors, they do not allow the questioner to probe further into key points. Follow-up questions posed during the perception study often turn up the most interesting nuggets of information. So, it’s critical to craft the questions in a way that opens the door to further discussion.
3. Be open to candid responses. Investors are not short on opinions, especially when it comes to the companies they follow and how to improve valuation. While some responses may sting, candid and sometimes brutally honest viewpoints can paint a very clear picture of the expectations held by the Street, making these the best types of responses to gather. Regardless of the accuracy of comments and perceptions, management teams need to understand how the Street really thinks about the company. Only then can teams determine the right next steps to either validate and strengthen current investor viewpoints or work to address misperceptions.
4. Use a third party to make the call conversational. A perception study conducted by a neutral third party encourages investors to speak freely and share perspectives they might not share with management otherwise. An independent third party is not there to defend the company. Their role is to listen and ask educated follow-up questions to dig a little deeper on important points. Often, the conversation takes its own direction and the person conducting the study is along for the ride, capturing the details and insights revealed and probing for more insightful detail.
5. Offer the option of anonymity. The option for respondents to remain completely anonymous, or even for some comments to be anonymous, can encourage investors to be their most forthcoming and openly share strong opinions and additional details. They may be willing to provide more information when their name is not associated with their responses.
6. Gain insights before and after an Investor Day. With everything that goes into an Investor Day, making every effort to ensure the event’s success is important. A perception study can inform a well-tailored Investor Day agenda by turning up themes that are top of mind for investors before the event. The insights gleaned can help the management team better prepare for potential questions they may receive and prevent speakers from being caught flat-footed or put on the spot by hot topics, issues, or sentiments they may not be expecting. Post-event, a perception study can be invaluable in ensuring the Street understood the intended messages as well as garnering feedback on speakers, presentations, and strategy.
7. Make perception studies a regular part of the IR program. Major events aren’t the only time to field a study. While most public companies speak with their top holders regularly, taking a periodic pulse check amongst a strategically curated group of investors should be done at regular intervals, even when things are going well, and especially during times of change and uncertainty. With a shift in management or strategy, the announcement of a major acquisition or strategic review, or even during an uncertain macroeconomic environment, a perception study can help gauge how any transition or situation might impact investor sentiment and whether the narrative around the change resonates with the Street.

Turn insights into action

Whatever the reason or timing of a perception study, acting on the takeaways is always a critical follow-up step. The results of the perception study give insight into what the Street values. Translate these findings into messaging adjustments that address concerns and clarify points in the investment story. While some findings will take longer to address than others, transparency and clear communication at each step go a long way toward demonstrating alignment with investor viewpoints and changing trends. The goal of the perception study should always be actionable steps that help sharpen the investment narrative, improve disclosure, and ultimately maximize opportunities to enhance valuation.

If you are considering a perception study or need assistance planning the implementation, crafting questions, or acting on the insights, contact us to help you navigate through the process.