How effective marketing can increase company valuation

Strong profit and potential are two of the key factors that make a business an attractive proposition to a buyer. Creating and executing an effective marketing strategy can help you achieve both, laying the foundations for a successful future sale.

How marketing impacts profit and potential

First and foremost, marketing should be viewed as a profit centre, rather than as a cost to the business. You wouldn’t expect your business to function without a dedicated salesperson or team; marketing should be viewed the same way and the impact of marketing and sales working collaboratively should not be underestimated.

Marketing is a key contributor to revenue growth, getting your brand in front of your target audience on the channels they consume and in a way that engages, driving awareness and consideration of your products or services. It also enables you to drill down and target specific segments of the market, using personalisation to speak to niche audiences with relevant messaging, honing your resource and ensuring that your spend results in strong ROI.

Marketing can also create competitive advantage. By understanding the competitive landscape, you can hone your USP and craft messaging that effectively communicates this with your audience, standing out from the crowd and increasing market share and ultimately profitability.

At the same time as driving new customer acquisition, your marketing activity should equally nurture existing customer relationships, which will typically become more profitable over time as their spending increases. Tactics such as loyalty programmes and regular channels of communication will help keep your brand front of mind among customers and strengthen relations.

As your reputation becomes more established, your marketing efforts will build brand equity, improving customer retention and attracting new customers as well as investors and partners. This in turn will enable you to nurture higher value customers and increase profit margins.

Furthermore, your marketing efforts can lead to identifying new market opportunities, unlocking further revenue streams and therefore increasing the potential to turn a profit.

Short and long-term marketing outlook

It’s important that businesses develop a long-term approach to their marketing. While short-term tactics, such as social ad campaigns, can drive immediate leads and sales, longer-term tactics like thought-leadership and reputation management will build brand awareness and positioning over time, equally becoming growth drivers that impact the bottom line.

A proven track record of an ongoing marketing programme that is yielding results will, as well as impacting profit over the period, enable you to demonstrate the potential of the business further down the line.

However, there’s marketing and there’s strategic marketing

Time and effort are required to build out a robust strategy for any successful marketing programme and it’s important that the c-suite understand the value of a well-considered approach and are included in the goal setting and planning phase.

While there may be some short-term, quick wins, the delivery of any marketing programme will only be truly effective if informed by a well-devised strategy. A full understanding of the business context and goals alongside research and insights are a fundamental part of this; any strategy based on merely assumptions as opposed to facts and data will always be destined to fail – or at the very least not reach its full potential.

Only when research and analysis is complete can a plan of action be devised. Each activity stream should be balanced with measurable goals and milestones and KPIs agreed.

When it comes to implementation, consider whether you have the right mix of skillsets in-house to execute each task expertly or if you need external resource to bolster your team to maximise success.

And finally, measuring and reviewing each activity stream as you go is imperative. While every good strategy is based on data and insights, once activity is underway, there will always be further learnings made and elements that can be enhanced as a result.