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Perks Can Turn Investors Into Brand Advocates

In addition to financial returns, modern shareholders want the same type of value offered by a membership club, such as education, events, discounts, networks and experiences.


John Bohan, the founder of Jigsaw Business Solutions, says "perks and discounts are a particular draw for younger shareholders, who love deals and are savvy about how to find them.”

EQ’s Shareholder Voice research showed that over 25% of UK Gen Z investors ranked perks and discounts as a top-three reason for buying shares in a particular company.

In addition, many retail investors want more exclusive experiences such as advice, education and in-person events.

Benefits such as rewards and discounts for retail investors have become less fashionable in recent years.

Some share issuers question the value of providing such benefits to retail shareholders when professional investors generally hold more sway over boardrooms. Also, as rapid online trading allows shares to change hands at unprecedented speed, will reward programmes have any effect on stock owner loyalty?

But with retail shareholders increasingly flexing their investing muscles and the maturing of a generation that cherishes the “membership economy”, it may be time to revisit these questions.

Customer Shareholders

Some companies in consumer-facing sectors are starting to see the value of investors who are also customers. By keeping them happy, the firm can perpetuate a positive stream of social media and online PR that bolsters the brand and share price.

The EQ data shows that 50% of shareholders own consumer goods stocks, the most for any sector. 66% say they prefer to buy shares in companies where they’ve had a good experience as a customer.

“In the past, many companies considered customers and investors as separate,” says Mark Bullen, managing director, share registration services at EQ. “But the connections individuals make with companies via their retail activity are starting to permeate into how they think about what stocks to invest in.

“This goes far beyond stock analysis and opportunity for value growth. Many shoppers also connect with retailers for ethical reasons, and this has become a strong factor in stock picking.”

Offering membership benefits can make equity ownership more attractive because many people can’t resist perks and other offers that give them a feeling of exclusivity.

John Bohan, the founder of Jigsaw Business Solutions, says perks and discounts are a particular draw for younger shareholders, who love deals and are savvy about how to find them.

“With so many younger people now holding shares, they may expect that same world of discounts and offers related to their shareholding,” says Bohan. “For companies, it’s a great way to interact with shareholders, rather than just pushing information to them.”

But many benefits and rewards that companies give shareholders are still too rigid, Bohan says. “To maximise the benefit, rewards should hit all the demographics of your shareholder base and where people are in their financial journey,” he adds. That will help companies avoid the exclusion of a particular section of consumers.

“Slick communication is also key,” Bohan says. “Demonstrate to people that the more they trade with you, the more that unlocks benefits. Remind them what benefits they’re getting regularly, and make sure they’re valued and being used.”


Affiliate Benefits

One effective way of offering rewards is through affiliate brands – for example, a US financial services firm offers its shareholders a discount with a well-known insurance brand.

“Using other brands that are stronger than yours helps get your message across and create more incentive [for the shareholder] to act,” says Bohan. “It’s not just about offers. The social media content plays a big part in this piggybacking off other brands.”

This practice helps make investments more fun and increases awareness to attract this next generation of shareholders, Bohan adds. “The emotional connection to a brand has become much more important.”

Offering membership benefits to shareholders has its challenges, one of which is the cost and difficulty in measuring the return on that expense.

But Bohan says one way to counter this is to make sure the customer cannot get the benefits you offer elsewhere.

“If you make people’s money work harder for them, they will value that scheme,” he says. “Also, with the discount cards we offer to employee benefit scheme members, people want them instantly because they can see something online that they want to buy. So, your benefit needs to be instantly available too. If it needs to be sent in the mail, people are less engaged.”

EQ is the UK’s leading share registrar and employee share plans provider. We handle multi-billion pound corporate actions and support new companies making their debut as a listed company.