How To Measure LP Engagement & Relationship Quality

While there is a lot of emphasis on engagement in the investment thesis, most investors really only roll up their sleeves and get involved if there’s an issue or event that requires additional effort or buy-in. 

Without ongoing communication or dialogue from your firm, valuable investors and portfolio members may not have the opportunity to voice their opinion, putting you at risk of missing out on key insights and expertise. By implementing an engagement strategy, you can boost the relationship quality with your most valued LPs. 

But how can you effectively measure that engagement and relationship quality? It all starts with strategy.

The Importance of LP Engagement

Before diving into a strategy, it’s important to understand why LP engagement is such a critical component of your firm’s success. Engaging your key investors and portfolio members not only benefits them but also arms your firm with the opportunity to focus on delivering more value to your shareholders while opening the door to new opportunities and more robust lines of communication.

Engaging with LPs on an ongoing basis puts your firm in a position to gain new perspectives, opportunities, and feedback that leads to improved performance and firm practices. Whatsmore, these members have powerful networks. Engaging with them regularly builds relationships that unlock access to new networks and opportunities you may not have had access to otherwise.

3 Strategies to Improve LP Engagement and Relationship Quality

  1. Shift How You View Engagement

    The first step to improving engagement is to rethink precisely what engagement with your LPs looks like. After all, new strategies require new ways of thinking. If your go-to engagement strategy has always been one-sided (such as press releases and announcements), it’s time to shift to a two-sided communication approach.

    To do this, encourage dialogue from the top-down, including interactive discussions and invitations to raise concerns and new ideas. While the probing questions may differ based on your sector and firm, the fundamental goal should be to really listen. Be open to feedback and change, so you can leave the conversation with a better understanding of how your LPs view your firm and improve your tactical improvements.

  2. Engage Through Every Stage of the Pipeline

    From outreach to monitoring, engaging your LPs through every stage of your firm’s pipeline is critical. Outline your deal flow process and align engagement tactics for each stage. Whether that means external communications in outreach, meetings during due diligence, and workshops during monitoring, set up how you’ll engage with LPs, and at what frequency, and then act upon it. 

    To ensure the feedback and conversation dialogue they collect is neutral, constructive, and objective, you’ll also want to identify a neutral facilitator for each of these conversations (like an analyst, for example).

    Finally, be sure to document each conversation so you have details, feedback, and tactics to act upon when you’re back at the office. To streamline this process and organize your data in one place throughout each stage of your pipeline, leverage a Private Equity CRM so your team has access to all of the data—and the full story it provides—at any given time.

  1. Meet Informally

    Strong relationships are not built through annual meetings—they’re built over time. So while annual stakeholder meetings are critical for collaborative check-ins, informal check-ins move the needle much further. Leverage your LPs to test and discuss new and infrequent ideas, and gather their insight on a regular basis to fuel your decision-making. This will not only make them feel like more valuable members of your portfolio, but will also help foster better relationships since you’ll be in touch more often.

Metrics to Analyze Engagement 

Due to the overall qualitative nature of relationships, measuring the success of your engagement strategy can be a bit tricky. To effectively measure and analyze your results, spend some time setting up key metrics and performance indicators (KPIs) that define success for your firm. 

In the research phase, this looks like time spent researching, potential investors identified, number of meetings accepted, number of rejections, and number of no responses. Once you move to investments secured, these KPIs unveil insights like total research time per investment to identify the level of effort required to engage with qualified investors long-term.

From a qualitative standpoint, we could argue that the most important metric is gaining valuable insight from your most influential members and ensuring you address their concerns first to enhance your relationships for the long term.  

Strengthen and Streamline Your LP Engagement Strategy 

As we mentioned earlier, the qualitative nature of LP engagement and relationships makes it a tough strategy to measure. However, the GP-LP relationship is evolving faster with each market fluctuation and performance request, meaning firms need to improve the investor experience to remain relevant. 

Through a centralized software designed to bring all of your engagement metrics and conversations into one place, you can begin to turn that data into quantifiable results, while bolstering your relationships and engagement of your investors.

Altvia’s Virtual Data Room & LP Portal, ShareSecure, is designed specifically to strengthen LP relationships through leveraging data, interactions, and market expertise to build stronger investor relationships while providing next-level transparency by letting the data do the talking. Improve the investor experience with market-leading, secure technology, and easy-to-use communication tools.  

If you’re ready to upgrade your LP engagement experience, the first step is to contact our team to see how ShareSecure can help. 

LP Engagement

A traditional crm was built for general ‘customer’ scenarios

Software platforms have made the world a better place by making work a better place. Indeed the world is better off when people enjoy their jobs even marginally more, and workplace applications on big CRM platforms like have done that and much more.

But the potential that platforms like these offer presents diminishing returns: once the platform provider has engineered too many industry specific components into its platform, its usefulness for other industries begins to be threatened, and with that so do the usefulness of the component tools built into the platform.

So it is with the CRM category that has defined: it is generic enough to work for many industries, and yet still offers the potential for others to round off the edges and nail more vertically-oriented and extremely tailored software solutions.

Private capital markets are actually a great demonstration of this dynamic. Where generic CRM platforms simplify — appropriately so — to assume there’s a business, a customer, a sale, and service of that customer, there are a few industry-specific pieces that are missing.

Take for example, that investors become customers by investing through legal entities the GP raises. It’s a subtle but important nuance that just doesn’t make sense at a platform-as-a-service level (because it’s overly complicated for a simple one-time sale that many industries require), but which can easily be added without 10 years or software engineering. Once provided, the rest of the platform’s components become tremendously powerful again and you’re set to take over the world.

As a traditional CRM in our pillars methodology, these nuances must be present to properly account for investors in these legal entities, potential target companies and which are owned by these entities, the context of all interactions with these parties (as well as the appropriate overlap, ie co-investments), and how you’re arriving at finding these opportunities on both sides of the equation, such that you’re able to piece together what’s effective and what’s not. Not just because we say so, but because these are the very relationships and data that are key to the motivation behind a CRM in any industry.

It’s critical, too, that the valuable publicly-available information that helps to enrich CRM systems and save users painful steps of entering it themselves is fully-integrated at the platform level.

Again, look no further than the 3,000+ pre-built integrations that — the creator of the CRM platform concept — has at a platform level to do so, and which only exists by way of holding just short of overly-specifying certain industry workflows that would present challenges to properly integrate.

Stakeholder reporting and communication (investor relations) draws on a range of datasets

The traditional “customer service” model of CRM systems once again makes overly-simplified assumptions about the customer relationship when applied to private capital markets.

In fifteen years I personally have yet to hear the terms “warranty” or “service call” in this market because it’s just not the same. But make no mistake, as uncomfortable as it may be to say aloud, customer service is more important now than ever and it’s constantly happening; the industry is, after all, considered to be a financial “service”.

As it turns out, that service is primarily information-based — it’s driven by data and takes the form of reports and analysis that drive decisions, and then end up again in investor-facing reports and analysis.

The foundational elements of a private capital markets CRM must be built such that they accommodate this data (like we discussed above), but so too that it can accommodate additional supporting data that investors (customers!) need in the context of service.

Oftentimes this supporting data — financial metrics and time-based values, for example — is believed not to meet the traditional definition of CRM and the natural thought is “well, better do this in Excel!”.

While I happen to believe Excel is still the greatest software application ever built, its introduction to this value chain we’ve discussed herein actually creates the problem many firms suffer from: key data needed to provide customer service (again: effectively the entirety of a firm’s reports and analysis) is now in disparate systems and detached.

Both of those dynamics are important and distinct: not only is this supplemental data disparate, but when brought together there is no logical association that can be made between the two data sets.

Allow me, then, to make the point very simply: not only can this financial and time-based value data (you may be thinking about is as “portfolio monitoring” or “accounting”) be a part of a CRM, it is arguably the most important part of a CRM because it’s at the core of what providing service to the customer entails — information that comes out of data!

Firms need a digital method to engage stakeholders (ie investor portals)

Investor portals are not new; in fact, for many of us — including myself — they conjure up horrifying nightmares in which we’re aimlessly guessing at folders to find the newest document we need.

So in lies the opportunity: not only have the portals we’ve come to hate not simplified the process of acquiring information, they’ve failed to create an entirely new experience that is “customer service” driven.

To be fair, this is not a B2C market where you’d be long out of business for not having focused on customer service and thus the customer’s technology-driven experience. But don’t expect to be around too much longer if you aren’t thinking about this shift.

Today’s institutional investors increasingly expect this same consumer-like experience, and a massive opportunity is being missed by not providing it. It’s not about providing them the experience they desire; it’s more about the ability to measure engagement that is had in return.

Put simply: what’s keeping the market from providing this experience is the availability of the information that’s required to create the service that provides the experience.

If you’ve hung in this long, you know that by focusing on your CRM, you have the data that’s required to manage the customer relationship and the technology-driven experience through which that information is shared to create a differentiated and opportunistic customer experience.

LP engagement