Firms providing customers with valuable, free-of-charge insights related to their products or services can reap substantial financial rewards from this practice. Marketing gurus name this concept ‘educational content marketing.’
Considering current global corporate reporting trends, implementing an education-based marketing strategy has become immediately relevant to Investor (and Public) Relations functions. Here is the reasoning behind this argument.
Thanks to an educational content marketing strategy, firms can present themselves as knowledgeable authorities, thought leaders, and, ultimately, solution providers. Academics note that an education-based marketing strategy boosts consumer brands and, ultimately, revenues ‘by developing consumer engagement, trust, and relationships, which are intended to cultivate sales indirectly and in the long run.’
This strategy has proven to be especially effective in demystifying new business models or technologies. It helps achieve two goals: to expand the total addressable market by stimulating demand and to increase the share of that growing market.
I vividly remember watching a French TV program called ‘Capital’ in the early 90s. It discussed how some consumer goods companies created a new market: bottled water. Through customer education, they underscored the benefit of drinking water (health) and drew consumers to the bottled kind (health, safety, convenience). Positioned as original authorities in the industry, they achieved a leadership position buttressed by a loyal customer base in a fast-growing market. This commercial feat, also related here, represents an example of successful educational content marketing.
Now, all firms engage in marketing activities in parallel worlds. On the one hand, they market products and services to real-world customers. On the other hand, to fund these activities, they market securities to financial customers, i.e., investors.
In ‘The Race Is On’ (2023), it was highlighted that these customer-investors are faced with the disclosure of a multitude of new, pre-financial data, which are challenging to interpret from a corporate finance perspective. This situation creates a prime opportunity for some corporates to set themselves apart by implementing a full-blown educational process. Instead of simply disclosing pre-financial data, they may provide some relevant context and instructively explain how such data drive decision-making processes and business plans. Such an educational IR strategy would allow these firms to establish themselves as pioneers in the new world of corporate finance.
Although the task at hand is daunting, the prize is significant. By going to great lengths to educate investors, instigating firms can grow the demand for investments in companies prioritizing a holistic approach to performance and risk management. This marketing strategy would also position them to capture an outsized share of that incremental demand.
If an educated customer is a better customer, an educated investor is, by analogy, a better investor.