Investor relations is all about storytelling. Your ability to effectively communicate the company’s story is the primary way you will be assessed as an IRO – both internally and by analysts.  Try to keep that in the back of your mind as today we’re going to cover a few different aspects of communication, starting with memory. And in particular, we’re going to look at how graphic design can be a critical ir tool for enhancing the the memory of earnings data.
How do analysts remember?
It’s important to understand that analysts are human beings. They’re not robots who can instantly remember earnings data at will. Sometimes we can fall into the trap of seeing them as down right mechanical in their ability to take in information, and this means we often don’t make their lives easy enough. In the case of quarterly earnings releases, analysts are forced by convention to use auditory memory to retain the information from your earnings conference call. While auditory memory can be as effective as visual memory in some circumstances, studies by the University of California suggest that visual memories are more easily retained overall.
When we hear something, our brain processes this information into its own images. Effectively, each listener creates their own unique story of mental illustrations from the words we say, and then stores it for recall later. Financial analysts are subject to the same memory processes and challenges as everyone else. As story tellers, our effectiveness is predicated in large part on our ability to create stories that are easy to remember. Given that visual memory is more powerful than auditory memory, it would be wise for our storytelling to reflect this.
Bottom-up processing is the interpretation of outside stimuli by our brains. The primary receptor of outside stimuli is our eye. A human’s eyes are never still. In fact, we iterate through a series of saccadic movements of the eye in order to process information quickly and determine where to place our attention . The primary visual triggers for our eyes are:
- edges of shapes
As story tellers, we can use these visual triggers to attract attention to specific information on a web page, in a press release, or in any other kind of supporting material. Visual triggers have the effect of grouping elements together, grounding relationships between facts and enhancing interconnectedness of information. This occurs rapidly without us even knowing. While it’s difficult to create motion in an earnings release, there are many ways of re-purposing earnings information so that our brains can quickly find associations between different facts.
Impact of previous knowledge
Now that we understand how our brains are stimulated by new information, let’s discuss the most powerful impact on new memories: old memories. The top-down process is driven by prior knowledge and goals. Our brains tend to retain information that is perceived as immediately useful to us. Interestingly, what we find immediately useful can be dramatically different for men and women . But the general rule is that what we know shapes our interpretation of the things we see and we will commit to memory; things that are familiar to us. This is why the use of visual triggers to promote patterns of information can be very valuable to story tellers who are trying to promote memory of facts and figures.
How facts are recalled
Up to this point, we’ve been talking about how facts are committed to memory. But this is obviously only half the battle. We also need to consider recall of those memories. Whereas we can make graphic design decisions that enhance storage of information, we have less influence over recall. This has more to do with ‘working memory’, which is influenced by a person’s age, processing speed, distractability, and expertise. The demands we place on working memory are known as ‘cognitive load’. Some memory tasks place very little cognitive load on working memory (chewing, walking etc) but comparison of changes in information over time increases cognitive load considerably.
Generally, the information that an IRO presents to investors and analysts requires considerable cognitive load to be understood. We should also understand that financial analysts are distracted by many other things and that our message needs to resonate without being drowned out by others. Some things to think about when we’re performing earnings data graphic design for analysts might be:
- Experience level — How much experience do your analysts have? Design accordingly.
- Distractibility — Less distraction means more focus. Create designs that distract less.
- Visual literacy — The knowledge of symbols used and familiarity with convention of your analysts can help you decide which symbols to use. This is particularly important when presenting non-GAAP metrics.
- Motivation — More motivation leads to more focus, which leads to a greater understanding of your message.
- Culture — Many cognitive skills are culturally based. Culture sets context for meaning and interpretation. This is particularly important if you’re trying to reach an audience of offshore investors.
- Reading skills — Better reading skills lead to better understanding of your visual hierarchy. This affects how well analysts pull quotes, read captions, titles, decks, etc in your earnings release and on your IR website.
Earnings design implications
It helps to know what you’re up to. What story are we trying to tell with this data? Ask what the narrative’s high points are – what’s the intended takeaway?
Once we know this, we can start to organize graphic design elements and visual triggers to enhance commitment and recall of specific information. If the purpose of including a piece of non-GAAP information is to enhance recognition, we need to call attention to it using visual triggers like contrast, scale and dominance. If we want to extend our analyst’s understanding of a specific business vertical, we want to make the information clear and connect the information together with a graphic design hierarchy. If a specific element or metrics can’t be tied to a clear purpose, it’s time to rethink the information.
Infographic design resources
If you’re looking to enhance the visual memory of your analysts, feel free to download and implement our earnings infographic template. It incorporates many of the visual triggers we talked about in this post for enhancing analyst recall.