How to Impress Financial Analysts: 5 Tactics for Chief Marketing Officers

By Jennifer Nastu, Contributing Editor

Relationships with financial analysts typically fall into the lap of a company's Investor Relations department, and IR, in turn, typically is handled by the finance department and the CFO.

"Finance does the outreach to the financial analysts, fields financial analyst calls, goes out and speaks at investor conferences," says David Hurwitz, Chief Marketing Officer (CMO) of Niku Corporation, a public company that has recently gone from one financial investor following the company to its current number of six (including Deutsch Bank; Needham and Company; C.E. Unterberg, Towbin; SG Cowen; America's Growth Capital; and Farmhouse Equity Research, LLC).

So, if IR handles financial analysts, how can a CMO put marketing know-how to use in order to help get financial analyst coverage for the company?

First, understand the difference between industry analysts (generally more familiar to marketers) and their financial counterparts: Industry analysts already have a pretty firm conception of the market. Their focus is about 80% on the product and your customers, with perhaps a 20% focus on the financial performance of your company, Hurwitz says. "And ostensibly, they don't care at all that the company is a hot stock."

Financial analysts, on the other hand, focus 80% of their interest on the financial performance of a company and 20% on the product and what customers do with it. "It's a dramatic difference in emphasis," says Hurwitz. "The main difference is that financial analysts are writing for investors. Industry analysts are writing for customers."

In addition to delivering a strong financial performance -- within the analysts' expectations -- Hurwitz suggests five tactics for CMOs to work better with the IR department.

Tactic #1: Work closely with finance and Investor Relations

While it's your CFO who will probably do most of the analyst briefings, you'll need to provide the positioning and marketing materials that describe and size the market and that describe your products/services and competitive advantages.

If meetings with financial analysts are held at your company, encourage your CFO to include you in the presentation. For example, Hurwitz says, "Just this morning, we had several large investors come in to meet the company and they were escorted by a financial analyst." In addition to the CFO, CEO, and Hurwitz himself, also present were:

--VP Sales to give a sense of distribution capability and the company's plans to grow it.
--VP Engineering to give a sense of "the brass tacks about the product."

Tactic #2: Keep analysts on press release distribution lists

Financial analysts want to know that your company is "doing great things," says Hurwitz. With that in mind, ask them if they'd like to be on your newsletter distribution list so they can deepen their understanding of what you're up to.

"The primary people who receive press releases are customers and industry analysts, but it's a window for [financial analysts] to look at what's going on at the company," he says.

Work with the CFO and CEO to be sure you're sending the right releases to the right analysts. Just as with reporters, they don't want to be barraged with inconsequential releases, but they also don't want to miss something critical.

Tactic #3: Get fair disclosures education for your staff

Although marketers at public companies routinely get Investor Relations department sign-off on press releases, we're aware of several cirmcumstances where they completely forgot to get sign-up for email newsletter articles or company blog items. If your article or blog reveals information that impacts company finances which hasn't already been presented to investors, you can be in big trouble.

You may want to have your CFO do a fair disclosures presentation on an annual basis to everyone the marketing and PR team who write blogs, newsletter articles and/or talks to the press.

Tactic #4: Keep investor relations up to date

When you rewrite company materials to reflect new information (changes in competition, market size, market growth, or your products), you're likely to make certain the sales team has updated materials.

Be equally dedicated in making sure IR has the same materials. And remember that IR will tend to focus on the presentation of financial metrics. They won't be as savvy about the market space and the competitive dynamics as you are -- and they don't need to be, as long as you're providing them with that information.

How does Hurwitz provide the materials his IR team needs? "It's a PowerPoint world," he says.

Tactic #5: Make yourself readily available

While your quarterly earnings conference call might be the prime channel from which analysts receive information, they like the opportunity to do some primary research on their own.

Holding a conference? Attending a conference? Let analysts know that you're available for briefings. However, have an Investor Relations executive pre-vet your speech and be at your side during these briefings to help with analyst questions.

This also holds true for Webinars, which many marketers are participating in these days.

Niku Corporation http://www.niku.com