Frequently Asked Questions Why Do Investors Speak To You? Are Your Results Statistically Significant? What Is The Difference Between A Perception Study And Marketing Research? Can I Compare My Results To Other Companies? Can I Measure Progress In Our Investor Relations Program? What Does "Norm" Mean?

Why Do Investors Speak To You?

There are three primary reasons why we are successful interviewing members of the investment community:

1. This has been our core business since 1991 and we recognize that interviewing people is an art, not something that should be secondary or left to an account executive. It is a specialty that involves an ability to gain the cooperation of busy executives and engage them in a constructive dialog by probing but never biasing responses.


2. We employ seasoned executives who are both knowledgeable about the investment community and highly experienced in interviewing investment professionals.


3. When possible, clients contact potential respondents and let them know that we are conducting the research for them. They remind each potential respondent that they value their feedback.

^top

Are Your Results Statistically Significant?

When looking at survey results, we are often looking for the differences between two or more groups or are looking for changes over time. Sometimes, these differences are the result of mere chance. Studies of large universes are often designed so that results are statistically significant within a precise margin of error (say ±3% or 5%), that is, they are not the result of chance. Statistical significance is achieved by ensuring that the sample is large enough to accurately represent the universe. In the case of small universe studies, statistical significance usually does not apply. In these cases, we are looking for meaningful results. Studies of small universes are an accurate representation because the sample is often 50% or more of the universe. Therefore, the study is more like a census than a survey (results are meaningful because they are the actual responses of virtually the entire universe). Searching for meaningful results also involves identifying trends and consistent patterns or themes emerging from the data and analyzing their strategic implications.

^top

What Is The Difference Between A Perception Study And Marketing Research?

Perception studies and marketing research are similar in nature, but accomplish very different things. A perception study gives you just that; perceptions of some of your shareholders and analysts. The value of a perception study is to give you a quick read on what some of your shareholders are saying. Typically, perception studies are highly qualitative (that is, a lot of verbatim comments from your investors) and undertaken when management needs to understand if some of their messages are being heard.

Marketing research allows you to build on a traditional perception study or “audit.” Marketing research takes some important things into account. Firstly, according to research by McKinsey (taken from an article written by Kevin Coyne and Jonathan Witter—McKinsey Quarterly 2002, Volume 3), no more than 100 people (including analysts, portfolio managers, financial media, et al) affect the value of your company as an investment. Given that, marketing research aims to uncover a true representative sample. At least half of those people—whether you have 40, 60 or 80 that are important to you—should be interviewed in order to be able to accurately project results to the entire audience of people that follow your stock. Secondly, marketing research uses quantified rating scales in order to give context to the qualitative piece. Without the numbers, there is no way to see your results against other companies and measure progress year-over-year. Thirdly, marketing research allows you to compare results by audience (i.e. sell-side vs. buy-side, owners vs. non-owners, influential investors vs. non-influential, etc.). Marketing research creates a living, breathing, ongoing measurement tool that allows you to make better decisions with more conviction as it relates to your company as an investment.

^top

Can I Compare My Results To Other Companies?

Finding out how you rate among your top investors is one thing. But, what does it mean? Marketing research gives you a quantitative score on how well or poorly you are doing in a particular area. For instance, on a six-point scale, management might receive a mean rating of 4.5 for credibility. That could seem like a very positive score on the surface, but if the average (norm) for other companies is 5.0, your management team is below average for that measure. On the flip side, let’s say your score for responsiveness is also 4.5 but the average for other companies is 4.2, you are actually doing well in that area. Without this kind of context, research is much less effective.

Can I Measure Progress In Our Investor Relations Program?

Assume again that your company scored a 4.5 on management credibility rating scale, where 1.0=poor and 6.0=excellent. Next year, when the same measure is calculated, the score is a 5.0. You have shown vast improvement in this area. The following year, the score is a 5.2. When you start to see a trend like this, it becomes clear that the initiatives you have taken as a result of utilizing marketing research are paying off in the minds of the customers (shareholders). It gives you and the rest of management comfort in knowing that you are gaining a competitive advantage.

^top

What Does "Norm" Mean?

Norm is short for "normative data." Norms refer to the proprietary set of scores that allow you to compare your results to other companies and see "where you stand." These scores are the result of thousands of responses to each of a handful of key questions. Having a large database of norms allows you to analyze data on a more granular level (i.e. by companies in your market cap range, industry, sector, index, or even where you belong to a common list such as Fortune Most Admired). Without normative data, a research study provides very little context.

^top