A NEW study from influential Web usability firm Nielsen Norman Group provides some interesting insights into how potential investors actually use investor relations websites when assessing whether to invest in a company’s stock.
Based on usability tests with 42 people, most of them inexperienced retail investors, the report says that IR websites are generally too complicated for many retail investors.
It also finds that the nine professional investors or analysts in the study rarely used IR websites for financial research, preferring to use richer resources like Bloomberg and Reuters. Institutional investors are more interested in “the story” behind the numbers and use IR websites for this type of information.
The report contains 65 guidelines for designing IR sites based on watching investors as they tried to complete assigned tasks. The guidelines have been covered on this site before and include such basics as including a clear link to your IR site on your company’s homepage, to narrower guidelines.
Nonetheless, the study provides valuable insights and concrete affirmation from actual users of IR websites. If part of your objective is to provide prospective retail investors with the information they need to make a decision to invest in your company’s securities, then this report will provide you with some useful guidelines.
Here are a few of the more interesting findings and guidelines from the report which support our own work:
Sites undermine their own credibility
According to one of the report’s authors, Dr. Jakob Nielsen, widely viewed as the world’s best known usability expert, IR sites undermine their credibility with investors in many ways.
“The worst problems were caused by overly complex charts and tables that individual investors could not interpret correctly. We also had several cases where users could not discover the “story” behind the company: what is it really up to and where does management want to take it. If people can’t find this information, they may suspect that something is wrong,” he says.
Other things that undermined the credibility of sites included:
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Using non-international date formats or not clearly specifying the currency used for numbers, an important point for companies that want to attract international investors.
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Boilerplate FAQs which do not address real questions but rather what the company wished users would ask.
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Inadequate contact information, such as general departmental email addresses or forms. For more on this, see our article Investor relations contacts pages.
For more on IR website credibility see our article on how to create a credible IR web presence.
Sites overuse PDF format
IR websites frequently overuse and misuse the PDF format. This is highlighted again in the Nielsen Norman study which reveals intense dislike among participants for large PDF files.
“We have seen horrible usability problems with big PDF files in many other studies besides this one, ranging from employee manuals on intranets over price lists and spec sheets to press kits and PR information on websites,” says Nielsen.
“Because we see big problems with PDF, no matter what we test, I am convinced that it is worth the extra money to convert information into a usable format (like HTML),” he adds.
Registration and contact forms put users off
The study found that investors were averse to filling in registration forms to access webcasts or use forms to send email to the IR department.
“In our study, a few people clicked on webcasts but immediately backed out because they had to register to proceed. Don’t put obstacles in the way of people who want to use your site,” the report says.
Webcasts hamper access and need transcripts
The study also confirms the need to make webcasts more usable. The report recommends segmenting webcasts by speaker and topic.
While not specifically addressed in the report, Nielsen said in an interview that he agrees with our recommendation that providing transcripts may be the best way to make webcasts more useful to investors.
“A transcript is much easier to scan than a recording. Also, transcripts work with search engines and are obviously required to support any users who are deaf or hard-of-hearing. The ideal interface would have three parts: Overview, transcript, and recording.”
If the study has one limitation it’s that it focuses only on investors who are unfamiliar with a company. It doesn’t fully address, for example, the needs of people who already know your company, like covering analysts, existing retail and institutional shareholders and employees.
These people are the most frequent users of your site and have different information needs and interests from prospective new investors, so in this respect the study is a little one-sided.
However, if you only implement half of the guidelines in Nielsen’s report, you’ll be ahead. So in that sense, the report is well worth a look. You can buy the 120-page report in PDF for $248 for a single user, or $468 for the right to make copies within your organization.
Dominic (bio & disclosures) is IR Web Report‘s founder and an online investor relations consultant. He advises leading public companies and investor relations service providers worldwide on using the web for disclosure, engagement and profile building. You can contact him via the contacts page.
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