Investor Relations and Public Relations are the two most important tools in your marketing arsenal.
The question is not whether your company needs both these tools, but rather why they are so crucial to you.
After all, if you already have everything set up to run your business smoothly, it would be unwise to spend time and resources on anything that isn’t directly related to running things. However, “Nothing is more powerful than an idea whose time has come.” — Victor Hugo
That quote is very relevant here, because it relates to the fact that every business needs to think of ways to market itself effectively. The problem with most businesses though, is that they don’t understand how this actually works (which explains why some companies find themselves struggling.
These days, the average person gets a big part of their news from social media. In fact, studies have shown that nearly two thirds of all online users rely on Facebook and Twitter as their primary sources for finding information.
This is where Investor Relations and Public Relations come into play — they are primarily designed to counterbalance the “noise” found in social media by providing your stakeholders with accurate, well-rounded information about your business.
Importantly, the two concepts are not interchangeable. Investor Relations is mainly designed to do one thing — convince potential investors that they should put their money in your company. Public Relations, on the other hand, aims to build public awareness and understanding of your business.
To help you better understand what each of these concepts actually entails, let’s take a look at the following example.
Imagine that your company is launching a new product, and you want to make sure that people know about it. If you only rely on Investor Relations for this purpose, your message will probably be very conservative and risk-averse. After all, your target audience are mostly wealthy people with a lot of money to invest, and you want them to feel safe and secure about putting their cash in your company.
On the other hand, if you rely on Public Relations for this purpose, things will probably turn out very differently. Your message will be full of enthusiasm and optimism, because your target audience are generally members of the general public. If you win their hearts, chances are good that they will help spread the word about your product to other people around them.
That’s why you should always use a combination of both Investor Relations and Public Relations when communicating with potential investors or the general public.
Of all the tools in your marketing arsenal, nothing is as important as Investor Relations and Public Relations. It’s not always apparent why these two departments are so pivotal for any firm to succeed, but once you understand the nature of those responsibilities, it will be obvious.
To put things into perspective and shed some light on the situation: We should think of Investor Relations and Public Relations as the first, second, third and fourth steps of your sales funnel.
The first step is lead generation; this is where you acquire potential leads (ie. investors or customers), at least one percent of them should turn into actual deals. The next step is nurturing those leads (the other 99 percent) you want to convert into actual deals. At some point, the leads have matured and are ready to be sold on your products or services. That’s where Investor Relations comes in; this department is responsible for growing investor awareness about the company through all their communication channels. The fourth step of the sales funnel is closing those investors/customers, who not only buy your products and services, but also recommend them to other potential customers.
The Public Relations department is responsible for making sure new customers know how they can access your products and services. It’s not just the company that benefits from the work accomplished by both departments; so do your investors and customers. Investor Relations provides your business with more capital, through investments, while Public Relations helps you acquire more customers and spread the word about what you do and how people should need or want this.
What do Investor Relations and Public Relations have to do with marketing? The simple answer is everything. Marketing encompasses every aspect of your business, from attracting investors during the early stages, all the way to convincing new customers about how much they need your products or services. So it’s only natural to use marketing techniques for Investor Relations and Public Relations. Both departments should be treated as separate components of your business, but at the same time they should function as an integral part of your overall marketing strategy. The nature of their responsibilities dictate how you should communicate with them. For instance, a successful public relations campaign is useless if it doesn’t account for investor awareness.
Similarly, growth in your net revenue is meaningless if it’s not considered in the context of transparency and communication with each department. The same can be said about Investor Relations; growth should be reported alongside the numbers pertaining to public relations.
Many entrepreneurs and businesspeople think of Investor Relations and Public Relations as two items among many on a list of things to do. They don’t realize the crucial importance these two components play in any business. Top companies, both large and small, rely on them for their success. Here’s why they’re such a big deal:
1) Investor Relations
Your investors form their first impressions about your company from the information they receive from you. These impressions will lead them to participate in your business, or not. Just as importantly, if they do participate, what kind of relationship they have with you and other stakeholders is crucial for maximizing their efficiency as a resource.
2) Public Relations
Your public form their first impressions about your business from the information they receive from you. These impressions will lead them to purchase your products and services, or not. Just as importantly, if they do choose to do so, what kind of relationship they have with you and other stakeholders is crucial for maximizing their efficiency as a resource.
In my career as a marketer, I’ve been asked plenty of times why my agency is so focused on Investor Relations and Public Relations. To the layman, the difference between these two might seem difficult to fathom at first glance. Both of them serve as a bridge that connects you with your investors and prospective clients respectively. They both inform and convince your stakeholders about the value of what you do, and they both serve as a force for garnering new interest in your organization’s products and services.
To paraphrase what I’ve been told, investor relations is simply an umbrella term for all the activities that pertain to shareholders, whereas public relations refers to the way you interact with your prospective customers, both of which form the foundation for any business.
The one big difference between the two is that while they serve opposite purposes, they also need to complement each other perfectly in order to do their jobs effectively. I’ve never been a fan of calling them antagonists though, since their relationship is purely transactional.
To quote what a veteran venture capitalist had told me, there’s no way you can analyze a business’ financial position without first getting a good grasp on how it responds to all the inquiries from its investors and analysts. If there are flaws in the realm of investor relations, your company is likely swimming with risk on more than one front. It’s only fair to assume that the same rules apply to public relations as well, since there are quite a few companies today who’ve seen big investments rise or fall based on how they present themselves to their potential customers.
Developing Investor Relations and Public Relations processes has become an integral part of any marketing strategy for modern businesses. It’s not enough for your company to simply push out press releases and let the media pick up the story. If you want your ideas, opinions and accomplishments to be recognized by both existing stakeholders as well as potential clients, you have to take charge of how they are represented in public via investor relations activities.
Every stakeholder group has their own unique needs, which your organization’s IR activities should ideally cater to. That includes analysts whose job is to determine the financial health of different companies, potential investors who are currently evaluating their options, as well as employees and other groups inside your company whose interests are tied up with its long-term success.
Every single one of them has a certain expectation from your organization, and without meeting those expectations adequately, you’re likely to see investors pull their funding, or customers move on to your competitors. You can probably already see how these two groups are connected with one another; if there’s even the tiniest issue with the way you communicate to one of them, it’s very likely that you’ll stumble with the other as well.
The bottom line is that your organization’s ability to navigate both investor relations and public relations activities, will be what determines how it fares in the long run. If you’re able to meet these expectations successfully, you’ll see more people becoming interested in your brand, which will lead to better business opportunities down the line.
You can always contact us for guidance in anything related to Marketing, Investor Relations (IR), and Public Relations (PR). We are an award-winning firm and have been featured in the media as well, so surely we are experts in all these fields. Don’t worry, we will have solutions to all of your marketing problems.
Patricia Baronowski-Schneider
President
Pristine Advisers
Tel: 631–756–2486 | Fax: 646–933–0177
E-mail: pbaronowski@pristineadvisers.com
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