Investor Journey

• According to online investor communications specialist company IRM, an investor journey is similar to a consumer journey in the sense that listed companies are marketing their products, i.e., their stocks, to a large audience who could potentially buy their stocks. IRM provides the following map of the investor journey.

 

Source

 

• Each investing decision is influenced by both facts and emotions, as well as individual circumstances. Thus, there is no one-size-fits-all journey. According to a financial advice expert Chris White, there are three types of investors: fixers, survivors and protectors. The fixers are result-oriented and responsive to facts. The survivors are idealistic, sometimes naive or unrealistic. They can be mission-driven, which means they sometimes pick stocks that do not work for them. Finally, the protectors are those focusing on others, such as family or friends. They tend to have guardian or caretaker roles. These investors tend to be the most risk-averse.
• However, the high-level investor journey shown in Figure 1 provides a simplified roadmap of an investing decision. With this roadmap, a listed company can see each stage of the decision and develop a strategy to attract investors. IRM suggests improving the number of investors found in the Needs stage and accelerating what it calls the progression rates between stages.
• A typical challenge for smaller companies is the lack of coverage by the media and analysts. As the recent Seeking Alpha article on Identiv also suggests, it was covered by only two analyst firms over the past half a year. For this reason, IRM recommends that smaller companies "identify their potential investors themselves, engage with them and communicate directly wherever possible." And technology plays an important role in this process.

Messaging and Touchpoints

• IRM suggests that each decision to progress during the journey is based on information in messages, collected through what is known as "touchpoint." A touchpoint is where the company reaches potential investors, such as its website, social media, online articles or a document by an exchange platform.
• An effective strategy delivers the messages 1) in the medium investors want, 2) using the touchpoint they choose, and 3) at the time they want it.
• Effective messages are a mixture of facts and impressions. This is the case because investors are not always rational--IRM suggests that this is particularly true for those who are still in an early stage of the journey, where investors look to build "confidence in the company and its industry, have a good impression of its management and prospects, and then they might decide to invest more time in their decision process." At later stages closer to the Buy stage, investors look for "financial numbers, projections and forecasts, share prices and charts and so on" and possibly "extensive historical financial reports for detailed analysis."
• Nonetheless, companies do not know which stage an investor is at when a message is delivered to a touchpoint or what information they need to see to progress to the next stage. "So impressions matter at every touchpoint, and quick navigation to successively more detailed facts is needed to deliver for later stage investors."

Countering Messages

• As the recent Seeking Alpha article hits Identiv on its profitability, a potential strategy to change the narrative is conveying messages that give positive impressions on its profitability and quickly link investors to all of its positive performance metrics (applying the concept discussed above). Delivering effective messages at other touchpoints may overcome a negative message by Seeking Alpha.

• Behavioral biases of analysts and investors have been found to be the sources of stock mispricing, according to a study by the National Bureau of Economic Research (NBER). Both decision fatigue and first impression biases are found in the study to have impact on the accuracy of analyst forecast. On the other hand, limited attention is found to cause investors to "sometimes neglect relevant public information signals." This may lead to underraction to publicly available information and thus result in mispricing.