Best Practices in Annual Report Design & Communications
As Updated & Compiled from Award-Winning Annual Reports of LACP's 2009 Vision Awards Competition
Here are some outstanding ideas brought to life in annual reports in recent years:
Unique Style and Formats. Some designs were not only memorable but highly effective in getting their message across to investors. PPIC’s annual report was in the form of a AAA-style road map, complete with compass. Jack in the Box cleverly spoofed Sports Illustrated to add a flair to their messaging. Hibbett Sporting Goods’ annual report resembled a well-worn, beloved manila folder complete with coffee stains, Post-It notes, labels, and all.
The important thing is that all of these annual reports captured readers’ attentions and—for all intensive purposes—demanded investors to review the annual report now. More importantly, each of these annual reports told their story well. The unique formats were adapted to tell the companies’ stories from a refreshing perspective, building toward message comprehension and retention rather than distracting from it.
You don’t have to be a folksy company to get away with clever designs. FEMSA, Readsoft, City of Tacoma, Shell, KPMG, General Electric, and a handful of other ’serious’ companies all decided to do things a little bit differently in order to create a distinct and lasting impression—everything from embossing and die cuts to collectors’ series covers, pull-out bookmarks, and pop-open windows.
What we don’t recommend is adopting over-used methods of differentiation such as using a black, blue, or white signature color or projecting an edgier or hipper company image. They don’t work. Be yourself and let your annual report passionately convey how you’re different from your company’s roots.
Sell the Story. People love anecdotes. There’s a reason clergy use stories to spice up sermons: they entertain; they convert theory into tangible practices to reinforce learning; and they are memorable. These are all attributes you want for your annual report. We encourage sidebar stories—even as short as 30-100 words in length—that talk about real-world results achieved by whatever topic is being discussed in the current spread.
So, instead of merely talking about process improvements reducing variable costs by 30%, make it more real and concrete in people’s minds. Mention how Jane Doe, a warehouse manager at the Springfield facility, sought a way to reduce shipping weight and materials costs. After calling up a host of leading mail order companies, she realized that moving to foam-based packing materials was the way to go. The result? Faster packing times, lower shipping weights and packaging costs, and higher customer satisfaction—oh and yes, a savings of $1.7 million in the first year alone.
Cover All the Bases. It’s a given that financial performance and long-term viability are the chief concerns of investors reading your annual report. However, they do care about the issues beyond that. Readers want to understand how your company does what it does; in which ways it supports local communities; where research is taking place; and what the firm’s products and services actually do.
For investors, the “means to an end” really do matter. Just ask investors in Enron, MCI, and Xerox about that. Help investors out by showing what’s underneath the hood and part of the engine driving your company forward. Ultimately, issues such as employee morale, community attitudes, and product development all play important roles in determining the firm’s future success.
So provide visibility into these matters—you’ll address the questions brewing in investors’ minds and validate your organization as being more than the numbers in a spreadsheet at the end of each quarter. You’ll also gain by building a greater tolerance for financial missteps—it’s one thing to have to report that R&D spending is twice that of your competitors, but it’s another to feature a story on how some of that research is near fruition; years ahead of everyone else; and could very well save seven-year-old Sally’s life.
Give Investors a Reason to Come Back to You. One key marketing model is to build a recurring revenue stream—a product or service that customers return to time and time again on a regular basis. This model has led to the success of Book-of-the-Month clubs, frequent flyer programs, and private label (store-brand) credit cards. You want the same from your customer, the investor: someone who holds and buys your stock religiously and with less sensitivity to fluctuations in value.
An annual report can help. Consider throwing in coupons for a free company t-shirt or pen set for those who redeem them. Glue on a CD-ROM equipped with a Windows screensaver that slideshows images of your company and products. Provide them with an exclusive web site for product discounts. Provide an elite status card that provides VIP services and assistance to its bearers. Figure out what it takes to turn stockholders from being cynics to becoming advocates. Yes, it may cost some money, but you just spent hundreds of thousands of dollars on producing an annual report, and the value of having countless shares stay in investors’ portfolios may well be worth it.
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