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Consumer Collaboration Investment:
The Communispace Client Index vs. the S&P 500

Introducing the Communispace Client Index — an index designed to track the stock market performance of our top 25 clients (i.e., those clients investing the most in consumer collaboration) against the S&P 500. Our nerd-o-licious intent was to see if our clients — companies who are engaged in an ongoing collaborative relationship with their consumers — are doing any better than the rest of the companies out there.

  • Companies collaborating with consumers are growing. The companies in the Communispace Client Index produced a 34% cumulative return in four years, or a compound annual growth rate of 8%. That’s equivalent to the growth rate of China. When compared to the 3% growth of the Standard & Poor's 500 in the same span, the Communispace Client Index outperformed tenfold the S&P 500.
  • Consumer collaboration is part of their growth. Our job is to help companies harness the power and inspiration of consumers to drive business growth. The companies in the Communispace Client Index are growing at a pace faster than the broader market. Maybe it’s in part because these companies are closer to their customers. Maybe it’s because they are building consumer relevance into more of what they do than the broader market. Where we can show examples anecdotally, to be clear, we’re not taking credit for our clients’ growth rates. But we are happy to be a part of their growth.
  • We keep good company. Our clients have done well. So maybe it means that companies performing well value the relationship they have with their consumers as partners. Maybe it means that companies who aren’t doing well collaborate with their consumers to do better. Either way, if we are judged by the company we keep, judge away.
  • There is value in good times and in bad. The Communispace Client Index is highly correlated with the S&P 500, as one might expect, given that our top 25 clients are leading global companies. But beyond the correlation or the outperformance of the Communispace Client Index vs. the S&P 500, it’s also interesting to look at the peaks and valleys of both indices. During periods of market growth, the peaks of the Communispace Client Index are more pronounced than those of the S&P. During periods of market decline, the valleys of the Communispace Client Index are shallower. This seems to suggest that in good times and in bad, the companies who collaborate with consumers are better equipped to ride the wave or weather the storm.
  • Maybe we should quit our day jobs. Given a market reality where 76% of fund managers fail to outperform the S&P 500, and the Communispace Client Index beat the S&P by ten times, if we actually created a fund from this exercise, we’d be doing pretty well ourselves.

This exercise doesn’t prove a company’s share price will appreciate when they work with us (although it would be nice if it did). And it doesn’t say we’re taking the credit for our clients’ collective performance. But it does say some pretty cool stuff that we get all nerdy excited about, so we thought we’d share. We’ll continue to track it and update it annually and we’ll let you know how it goes…

Oh, and if you’re looking to invest, please let us know.

This post first appeared on the Communispace blog on April 22, 2013.


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