The balancing of product-investor relations is a crucial exercise in the running of a successful company. While many believe that the product is the ultimate end goal of any effective firm, the truth is that without effective investor support, capital can dry up, and with it, the confidence in the working and long-term effectiveness of the company.
The product growth strategy involves improving, diversifying, and selling goods, services, or both to end users. The more the users buy these offerings, the bigger the profit the company makes. However, investor relations also come into the picture as they provide the company with crucial lines of finance, communication, marketing, and compliance. Both private and institutional investors play crucial roles in successful enterprises.
Why do these Two Concepts Need to be Aligned?
Investor relations and product growth strategy need to be strategically aligned. Without growth, the product range starts to stagnate, and the revenue can simply not keep up with the cash flow goals. On the other hand, product growth cannot be achieved if capital streams are choked, which can negatively impact the future of the expanding enterprise. The two sides complement each other at every turn and need to be monitored closely by the top management.
A great example is Flutter Entertainment, which has an impressive 40% sales growth on a yearly basis. This strong performance has built a high level of credibility and trust among its investors. The firm is widely viewed as a revenue powerhouse, with investors anticipating a valuation increase of up to 30-50% each year.
Understanding Product Growth & Investor Relations
Product growth refers to the expansion of market share, sales, and overall product development.
Types of Growth
- Organic growth involves slow, internal growth that utilizes existing resources and demand.
- Inorganic growth involves a rapid growth model driven by market demand, company mergers, and/or acquisitions.
Investor relations come into the picture more frequently as capital needs to be borrowed or invested to help develop, distribute, and promote product lines. Without these important capital streams, product growth can suffer and ultimately the company is not able to meet its targets.
Core Functions
The primary functions of investor relations include communication and marketing with investors, maintaining investor confidence, and compliance involving taking investors into confidence regarding performance and future expectations.
Case Studies: Success Stories in IR & Product Growth
Goldman Sachs
Goldman Sachs is one of the world’s largest investment banks, and it is based in the USA. The investment giant is known for its successful operations, and they are backed by the most efficient digital communication channels for their investors. Its growth is slated at around 18% on a yearly basis and is one of the biggest commercial success stories in the financial world.
DraftKings
DraftKings is perhaps the most successfully run sports betting conglomerate in the United States. It is listed on Nasdaq and runs effective social media campaigns focused on real-time developments in the sporting world. It boasts a stellar product with 50-70% annual growth. However, betting is considered a risky industry overall.
SAP
SAP is one of the largest providers of Enterprise Resource Management (ERP) systems in the world, with a whopping 80% of the market share in Europe. Sales growth is set at 4% per annum, which is on the lower side of the two other firms in this case study, but it is a much more serious company with strong revenue streams. It offers long-term market value for its customers.
Investor Relations and Product Growth-A CCO’s Perspective
From the perspective of a Chief Commercial Officer, investor relations and product development constitute the two essential pillars of commercial success. The crux resides in comprehending how these components interrelate and bolster one another.
Vitaly Makarenko, CCO of Quadcode, explains: “What is your product? Who is your customer? How do you sell and is that sale profitable? Those are the main questions asked by founders and investors to us.” These essential inquiries illustrate the intrinsic connection between product strategy and investor communication—both stakeholders require unequivocal responses about market positioning and profitability.
Furthermore, the digital communication component is very vital in the contemporary business landscape. According to Makarenko, “Digital communications with customers are 80% of all venues in services industries worldwide.”
This figure underscores the necessity for organizations to prioritize digital platforms not only for customer involvement but also for investor relations. The identical platforms that promote client acquisition can enable transparent contact with investors.
Notably, this dual-channel strategy fosters sustainable growth trajectories. “Communicating that way guarantees organic growth on the market and constant gradual return,” explains Makarenko. When organizations use uniform digital communication strategies across customer and investor interactions, they establish more predictable and sustainable development trajectories.
The strategic value becomes clear when considering resource allocation. As Makarenko explains, “Good investor relationships give resources to go further than step-by-step strategy,” allowing companies to move beyond incremental improvements to more significant product development initiatives.
Role of the Chief Commercial Officer (CCO)
The CCO is in charge of the overall commercial success of the company. The professional is essentially a business process owner for streamlining the commercial strategy of the firm and ensuring its enduring success.
The primary responsibilities of a CCO include:
- Driving Commercial Strategy: Help ensure the provision of sustainable revenue and maintain product-market fit.
- Overseeing Product Growth: Work to identify opportunities in the market and help reduce customer retention/acquisition costs.
- The CCO is an important bridge between the product side and the revenue side. He/she also focuses on:
- Customer Focus: CCO defines customer profiles and market segments.
- Investor Communication: CCO ensures product strategy aligns with investor expectations, thus fostering trust and transparency.
The Deep Connection Between Product Growth and Investor Relations
Key Takeaways of this deep dive into product growth and Investor Relations are:
- Product growth and IR are two sides of the same coin, driving long-term success
- The CCO’s job is to manage the commercial strategy of the company, maintaining the delicate balance between product growth and IR.
- The end goal is to create long-term value for customers, and both product growth and IR complement each other in this regard.
