Retail investors are the new force in the stock market. According to data from Charles Schwab, retail investors now account for almost one-quarter of total U.S. trading volume, up from 10% in 2019. Retail investors are also more diverse, younger, and tech-savvy than ever before, with 15% of all U.S. stock market investors being new in 2020.
For public companies, this presents a huge opportunity to tap into a large and growing segment of the market that can provide many benefits, such as:
- Long-term loyalty and stability: Retail investors tend to buy and hold stocks for longer periods, reducing volatility and increasing the demand for shares.
- Alignment with management: Retail investors are more likely to vote with management recommendations on corporate issues, supporting the company's strategy and vision.
- Low-cost engagement: Retail investors are less demanding and less costly to communicate with than institutional investors, who often require frequent and expensive meetings, roadshows, and analysts coverage.
- Brand awareness and loyalty: Retail investors are often customers or fans of the company's products or services, and they can become advocates and influencers for the brand, driving more sales and referrals.
However, reaching your retail investors can be challenging, especially in the digital age where retail investors have more access to information, tools, and platforms than ever before. How can you effectively engage with your retail investors and build a strong relationship with them?
In this guide, we will share some best practices and tips for reaching your retail investors, covering the following topics:
- How to identify and segment your retail investors
- How to communicate and educate your retail investors
- How to reward and incentivize your retail investors
- How to leverage ShareClub to create your own shareholder club
How to Identify and Segment Your Retail Investors
The first step to reaching your retail investors is to know who they are and what they want. Unlike institutional investors, who are required to disclose their holdings and activities, retail investors are often anonymous and hard to track. However, there are some ways you can identify and segment your retail investors, such as:
- Asking your transfer agent or broker-dealer for data on your registered and beneficial shareholders, including their names, addresses, email addresses, phone numbers, number of shares, and holding periods.
- Conducting surveys or polls on your website, social media, or email newsletters, asking your retail investors to share their demographic information, investment goals, preferences, and feedback.
- Using online tools or platforms, such as ShareClub, that can help you verify and validate your retail investors' stock ownership and collect their contact details and interests.
- Analyzing your website traffic, social media engagement, and email open rates, to see which channels and content are most popular and effective for reaching your retail investors.
Once you have gathered some data on your retail investors, you can segment them into different groups based on their common characteristics, such as:
- Age, gender, location, income, education, occupation, etc.
- Investment style, risk tolerance, time horizon, objectives, etc.
- Brand affinity, product usage, loyalty, satisfaction, etc.
- Communication preferences, channels, frequency, topics, etc.
Segmenting your retail investors can help you tailor your messages and offers to suit their needs and expectations, and increase your relevance and appeal to them.
How to Communicate and Educate Your Retail Investors
The next step to reaching your retail investors is to communicate and educate them effectively. Retail investors are hungry for information and insights, but they also have limited time and attention spans. Therefore, you need to deliver clear, concise, and compelling messages that can capture their interest and trust. Here are some tips for communicating and educating your retail investors:
- Use plain and simple language, avoid jargon and acronyms, and explain any technical terms or concepts in an easy-to-understand way.
- Highlight your company's vision, mission, values, goals, and competitive advantages, and show how you are creating value for your shareholders and stakeholders.
- Provide regular and consistent updates on your company's performance, progress, challenges, opportunities, and outlook, using a variety of formats, such as press releases, earnings calls, webinars, podcasts, blogs, infographics, videos, etc.
- Be transparent and honest, admit your mistakes, address any issues or concerns, and disclose any risks or uncertainties that may affect your business or stock price.
- Encourage feedback and questions from your retail investors, and respond to them promptly and politely, either directly or through a FAQ section on your website or newsletter.
- Educate your retail investors on the basics of investing, such as how to read financial statements, how to analyze stock charts, how to diversify portfolios, how to manage risks, etc., using simple and engaging content, such as tutorials, quizzes, games, etc.
- Invite your retail investors to join your events or webinars, where you can showcase your products or services, introduce your team or partners, share your stories or testimonials, or answer any queries or doubts.
- Monitor and measure the effectiveness of your communication and education efforts, using metrics such as reach, engagement, sentiment, retention, conversion, etc., and adjust your strategy accordingly.
How to Reward and Incentivize Your Retail Investors
The final step to reaching your retail investors is to reward and incentivize them. Retail investors are not only looking for financial returns, but also for emotional and social benefits, such as recognition, appreciation, belonging, and fun. Therefore, you need to offer them some rewards and incentives that can make them feel valued and motivated to invest in your company and spread the word. Here are some examples of rewards and incentives you can offer to your retail investors:
- Free samples, discounts, coupons, or vouchers for your products or services, or for related or complementary products or services from your partners or affiliates.
- Swag bags, merchandise, or branded items, such as T-shirts, hats, mugs, stickers, etc., that can showcase your brand and logo, and make your retail investors feel proud and connected to your company.
- Loyalty points, status, or tiers, that can reward your retail investors for holding your stock for a certain period, or for reaching a certain number of shares, or for referring other investors to your company, and that can unlock more benefits or privileges, such as exclusive access, priority service, etc.
- Contests, sweepstakes, or raffles, that can create excitement and buzz around your company and stock, and that can offer your retail investors a chance to win some prizes or experiences, such as a trip, a gift card, a meeting with your CEO, etc.
- Recognition, appreciation, or testimonials, that can acknowledge and thank your retail investors for their support and contribution, and that can feature them on your website, social media, or newsletter, or invite them to share their stories or opinions on your company or products.
How to Leverage ShareClub to Create Your Own Shareholder Club
If you are looking for a simple and effective way to reach your retail investors, you should consider creating your own shareholder club with ShareClub. ShareClub is a platform that helps public companies create and manage their own digital communities of retail investors, and offer them various benefits, such as rewards, communication, and education.
Shareholder clubs are a win-win for both public companies and retail investors, as they can help:
- Increase your retail investor base, retention, and loyalty, by attracting and rewarding your retail investors, and making them feel more connected and engaged with your company and brand.
- Improve your stock price and stability, by reducing volatility and increasing demand for your shares, and by aligning your retail investors with your management and vision.
- Enhance your brand awareness and reputation, by turning your retail investors into advocates and influencers for your company and products, and by showcasing your values and impact.
- Save time and money, by streamlining and automating your communication and education efforts, and by reducing your reliance on expensive and inefficient intermediaries, such as brokers, analysts, or advisors.
Creating your own shareholder club with ShareClub is easy and affordable. All you need to do is:
- Sign up for a free trial or a subscription plan that suits your needs and budget, and get access to ShareClub's platform and features.
- Customize your shareholder club with your own branding, logo, colors, and content, and choose the benefits and rewards you want to offer to your retail investors.
- Invite your retail investors to join your shareholder club, by sending them an email, a social media post, or a website banner, and asking them to verify their stock ownership and enroll in the club.
- Engage with your retail investors through your shareholder club, by sending them updates, offers, invitations, or surveys, and by receiving their feedback, questions, or referrals.
The Bottom Line
Reaching your retail investors can be a game-changer for your public company. Retail investors can provide you with many benefits, such as long-term loyalty, alignment with management, low-cost engagement, and brand awareness. However, reaching your retail investors can also be challenging, as they are often anonymous, diverse, and demanding. Therefore, you need to follow some best practices and tips, such as:
- Identify and segment your retail investors, using data from your transfer agent, broker-dealer, surveys, polls, online tools, or platforms, and group them into different categories based on their common characteristics.
- Communicate and educate your retail investors, using plain and simple language, highlighting your value proposition, providing regular and consistent updates, being transparent and honest, encouraging feedback and questions, educating them on the basics of investing, and inviting them to your events or webinars.
- Reward and incentivize your retail investors, using free samples, discounts, coupons, vouchers, swag bags, merchandise, loyalty points, status, tiers, contests, sweepstakes, raffles, recognition, appreciation, or testimonials.
If you want to make your life easier and reach your retail investors more effectively, you should also leverage ShareClub to create your own shareholder club. ShareClub is a platform that helps you create and manage your own digital community of retail investors, and offer them various benefits, such as rewards, communication, and education. Shareholder clubs are a win-win for both you and your retail investors, as they can help you increase your retail investor base, retention, and loyalty, improve your stock price and stability, enhance your brand awareness and reputation, and save time and money.
Ready to reach your retail investors with ShareClub? Sign up for a free trial or a subscription plan today, and start creating your own shareholder club. If you have any questions or need any help, feel free to contact us at [email protected]. We'd love to hear from you!
