Stakeholder, shareholder, target, and prospect.

In this post I will take a moment to provide clear definitions of four words that are often used in business contexts: stakeholder, shareholder, target, and prospect.

Stakeholder

Stakeholders are all those who have a vested interest in the success and growth of the business. It follows that every company has stakeholders since the owners themselves are stakeholders. Stakeholders also include employees, customers, associates, suppliers, governmental agencies, and the local community where the company does business. The interests of stakeholders depend on their relationship with the business. For example, employees certainly have an interest in the soundness of the company but may be primarily interested in job security and fair pay, while customers will be more interested in the quality and value of the company’s products and services. Stakeholders influence the behavior and success of the company in many ways. For example, if customers are satisfied they will be more inclined to buy again and recommend the product/service to others, while suppliers, if paid fairly and treated with respect, will be more inclined to deliver quality materials on time.

Shareholder

Shareholders are a subcategory of stakeholders who hold ownership shares in the company. When a company is listed on the stock exchange, anyone can buy shares and become a shareholder (subject to regulations). Shareholders’ main interest in the company is financial, their main objective is to maximize returns on their investment. 

Shareholders can influence the company’s performance in several ways:

• They take part in the shareholders’ assemblies and can vote on various issues (executive pay, acquisitions, mergers, capital increases…)
• They can communicate with company executives, offering suggestions or criticisms of the company’s strategy and management.

Target

Commercial targets are individuals or groups that a company wants to reach through its marketing strategies. A company may have many targets with different characteristics. Targets may be existing customers or potential customers for the company’s products/services. Choosing the right targets is important for companies because they represent potential revenue streams. By effectively reaching targets, a company can grow its customer base and its business.

Prospect 

Prospects are groups of people who have shown some interest in a company’s product or service, but have not yet become customers. For example, someone who signs up for the newsletter or starts following the company on social media can be considered a prospect. Prospects are important because they represent potential customers who already have some contact with the company and could make a purchase in the future. 

While all of these groups play important roles in the success of companies, there are, as we have seen, some interesting differences between them. Understanding these differences is essential to interacting correctly with each of them to build and maintain the right relationships and achieve goals.

If you want to know more about brand building and brand values, you may want to read the complete guide to strategic marketing, Da Zero Al Brand by Daniela Bavuso and Natale Cardone (in Italian).