Why marketing is key to a successful exit strategy
Marketing plays a bigger role in your exit strategy than most entrepreneurs realize.
That’s because a buyer is likely to pay much more for your business if you can demonstrate that you have a well-established brand and a reliable system for acquiring customers.
This is why an effective marketing strategy is key to increase the value of your business in the lead-up to selling it.
But the challenge for most business owners is that they simply don’t know where to start with marketing.
There are so many confusing messages out there and ‘gurus’ peddling the latest must-do tactic that it’s no wonder marketing is one of the least trusted professions.
Not to mention all the acronyms you have to get your head around: SEO, PPC, CRM.
And then there’s the bewildering number of marketing tools – 3,874 of them to be precise.
No wonder most business owners feel completely lost when it comes to acquiring customers.
And it doesn’t help that marketers are just as prone to shiny object syndrome as us business owners.
A marketing lesson from Stephen King
The proliferation of marketing tools brings to mind a story from Stephen King – his own nightmare, I imagine...
King says that every time he speaks at a conference, someone asks: “what kind of pen do you use?”.
The truth is a Waterman fountain pen won't turn you into a novelist.
And the same applies to your marketing – a certain tool or tactic isn’t going to suddenly supercharge a spluttering marketing strategy.
Most aspiring writers also think that if they implement a few tips and tricks from Stephen King’s toolbox they’ll knock out a bestseller.
And of course, there are certainly some lessons to be learned from masters like King.
In the same vein, it’s well worth studying how the world’s biggest brands market themselves and what today’s thought leaders recommend.
But it’s important to realize that there are millions of marketers out there, all screaming about how to market your business. And I’d hazard to guess that eighty percent of them are regurgitating the same bullshit and have little to no experience putting any of it into practice.
The fact is: the brands that succeed in the long-term have sound strategies that have been built through a process of trial and error – not on what the latest guru says.
The specifics – the tools, tactics, tips, and tricks – are just the cherry on top. A conscious strategy that aligns with your business’s unique goals is what drives real and lasting results.
What marketing is (and what it isn’t)
Marketing is fundamentally about connecting your products or services with people who need them.
Not targeting or pestering or otherwise irritating people you’d like to buy from you.
But getting your products or services in front of people with a genuine need for them, and doing it in a compelling way.
And that’s very different from throwing money at interruption tactics that are more likely to damage your brand than boost sales.
The four simple foundations of successful marketing
Good marketing isn’t complicated.
Get the basics right and you’ll be in a better position than 90% of your competitors, who are more than likely spinning their wheels chasing the latest trend.
Get these foundations in place and you’ll be well-placed to dominate your niche and become an incredibly appealing asset to potential buyers:
“Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat.” – Sun Tzu
This quote from Sun Tzu neatly sums up the marketing problem most businesses face: random acts of marketing in place of a consistent strategy.
The fact is, you aren’t going to get anywhere with your marketing until you have an effective strategy in place.
Your strategy is the bridge between your business’s overarching objectives and the tactics your marketing department executes on the front lines. It’s an outline of what you want to achieve that spells out the exact role marketing is going to play in getting you there.
Without a well-defined strategy, it’s not clear whether you should invest your marketing budget in channels that will build brand awareness or increase conversions. With one in place, your goals are clear, which means the tactics you need to use to achieve them are too.
Without that clearly defined strategy in place, you can run all the tools and tactics in the world, but they’ll prove useless.
However, if you have a strategy, you can test marketing tactics, quickly identify the crappy ones, and double down on the ones that work.
So the bedrock of marketing success is strategy.
Your brand goes beyond your logo and the colors you use on your website. It reflects your values and your culture. It attracts talented people and ideal customers. And it’s something that you need to nurture and protect.
But building your brand doesn’t mean you have to spend a fortune. You don’t need to run $50k brand awareness campaigns or fly a hot air balloon across the Atlantic – although I can see the allure.
At its core, your brand is a reflection of your core values. Apple, Nike, and Tesla all have brands that stand for something to their customers, who use their products to tell the world (and themselves) something about who they are as a person.
If you need convincing about the power of the brand, look no further than the drinks manufacturer Innocent.
Innocent is a household name across the UK, and its smoothies can be found in every supermarket and café across the country.
Given Innocent started as a stall at a music festival, it certainly didn’t leverage a mountain of cash or piggyback off an existing brand to achieve this success.
And while its smoothies certainly taste good, Coca-Cola didn’t acquire the company for £320 million ($445 million) for its secret recipes.
Coke bought it because it had carved out a unique differentiator – an instantly recognisable and much-loved brand:
Here’s what the likes of me and you can learn from Innocent’s story: the most well-marketed brand in history clearly decided it would be easier and more cost-effective to buy Innocent than try and go toe-to-toe with them in their niche.
Essentially, Innocent’s brand was worth $445 million.
I can’t promise you’ll have quite as much success as this, but don’t be surprised if building a strong brand adds a zero to what your business is worth.
The first step in building a strong brand of your own by getting clear on your core values and working from there. Remember, it’s about far more than your logo – it’s the way you communicate with your customers, the position you take in the market, and even the way you do business.
People are the heart of any business.
As your business grows and your culture takes shape, effective marketing can help communicate your brand’s values internally through your job adverts, onboarding process, and internal communications.
And when you’ve got a strong brand and a crystal clear strategy, your employees have something to rally behind, which can make your business far more than the sum of its parts.
A 5% increase in customer retention correlates with at least a 25% increase in profit, according to an analysis by Bain & Company.
Plus, it costs five times more to acquire a new customer than to retain a current one and 16 times more to get new customers to the same spending level as existing ones.
But it can be easy to forget how hard it is to win – and keep – a customer once you’re out of the plucky start-up phase.
Perfecting the customer onboarding process is a crucial step in building up a roster of happy and loyal clients, and it should be the focus of your marketing efforts for the best chances of success.
Think about when you open up a product or start using a new software application.
How fantastic is it when the seller guides you through the process of using your new gadget or makes you feel excited about your purchase? When you receive regular communications helping you make the most of your purchase?
Effective marketing creates customer loyalty through a great onboarding process. And customer loyalty will seriously drive up your asking price during your exit strategy.
Why your marketing isn’t delivering results
Ever looked at your company’s finances and wondered what you have to show for all the revenue you sink into marketing?
You’re far from alone. In fact, most entrepreneurs fail to see a tangible return on investment on their marketing spend.
Here are a few reasons your marketing isn’t delivering results:
You’re putting a bandaid on a bullet wound
Many businesses hit a growth ceiling because they’ve stretched their resources to breaking point.
Typically, this comes down to having too many products or services, supported by a strategy that goes something like “sell as much stuff to as many people as we can”.
The problem here isn’t your marketing.
The root cause is that you have too many products and services. Your customers are confused about what your business offers and how you can add value to them.
To get traction, you need to change how you do business, not post more on LinkedIn or by Google ads.
You have to create a system that enables your business to outgrow its current constraints if you increase the value of your business, has the potential to scale is the single most important thing acquirers are looking for in a business.
And the latest marketing tactics and tricks aren’t going to demonstrate your business’ potential to scale to potential buyers. They can certainly help if they’re executed in service of a strong strategy, but they’ll be a bandaid on a bullet wound if your business’s strategy is fundamentally flawed.
Focusing on the wrong metrics
I spend a lot of time mentoring marketing teams and helping business owners perfect their client acquisition systems, and I’m constantly amazed by the metrics owners use to measure the success of their marketing.
If you’re holding your marketing department accountable for metrics like the number of people that see your tweets then you’re optimizing for completely the wrong things.
A focus on vanity metrics like your social media statistics naturally leads to tactics that might boost the metrics that don’t matter at the expense of those that do – the strength of your brand and, ultimately, your bottom line.
Engage in spammy tactics like posting on social media dozens of times a day or automating hundreds of LinkedIn connection requests a week and you won’t just annoy people, you’ll be wasting time and money – not to mention tarnishing your brand.
This approach stems from optimizing for metrics that don’t matter, like display ad impressions and LinkedIn “leads”.
The only fix for this is to get clear on what the actual metrics are that are going to directly lead to more customers and more revenue. Then to trial and error tactics to improve those metrics without ever losing sight of what your real goals are.
You spend your days chasing one shiny object after another
We’re entrepreneurs. And as entrepreneurs we’re creative. We can think of 500 new ideas before finishing our morning coffee.
But the trouble is that all this unchanneled creativity is wasted – and often even wasteful. It leads us down a dozen different rabbit holes at once, dragging our marketing department with us.
The key is to direct your creativity in the right direction. And that starts by defining the problem you’re trying to solve as specifically as possible.
Fail to take this crucial step and your enthusiasm is almost certain to lead to “shiny object syndrome” – dropping everything to chase your latest and greatest idea… and then doing it all over again when the next one comes along.
Know the numbers
Time and time again I see business owners launch a new offer and then freak out because it doesn’t go the way they want straight away.
Then they start changing stuff randomly: the offer, the advert, the pricing.
But before you change anything you need to know your numbers. How many opt-ins? How many sales calls? How many applications? How many appointments?
Once you have a handle on the numbers you can see if you really need to change anything or if you’d be better off staying the course – bearing in mind that these things take time.
This is another reason a solid strategy is essential. If a considered strategy doesn’t quite go as planned out the gate, it’s a lot easier to hold your nerve until results start to show. Without one, panic will set in a lot sooner and you’re liable to start changing things on a whim with no real method to our madness.
Why you should never kill marketing spend before an exit
When they’re on the home straight with their exit, most owners think about cutting marketing expenses.
Now, killing all marketing spend in the months before a sale might sound clever. After all, what’s the point in pouring money into attracting customers only for the next owner to enjoy all the profits?
But let’s think that through for a moment...
Pausing your marketing budget will typically cause fear and concern in the mind of a buyer that earnings will not continue after the sale. And there may also be a need for increased marketing or advertising after the sale to win back brand awareness.
So, be sure to keep marketing spend steady throughout your exit strategy to make sure you stick the landing rather than risk spooking an investor.
And make sure that marketing spend is funding an effective customer acquisition system.
Building a simple customer acquisition system that works
One thing that often gets lost in the noise is that marketing is about one thing – acquiring customers.
And when it comes down to it, acquiring customers is pretty simple. You generate leads, make an offer, follow-up, and close.
Now, the trouble starts with the leads. If you don’t know who your ideal customer is, you’re going to waste time and money attracting rubbish leads.
Secondly, most companies I work with don’t have an offer to put in front of their leads, or at least a process for delivering that offer.
Third, follow-up is typically the salesperson shooting over one or two emails.
Fourth, the close. Most companies don’t have a system for teaching salespeople how to close the deal. And when they do close, there’s rarely a process in place for handing the customer back over to marketing to make sure they’re properly onboarded, have a fantastic experience, and want to buy more.
And this is all compounded by the fact most marketing folks concentrate entirely on generating leads – most of which disappear into a black hole.
And everything we’ve talked about so far – an obsession with following the latest trends rather than executing a considered strategy – only adds fuel to this fire.
To ensure your marketing strategy is firing on all cylinders, make sure you’re not getting lost in the details instead executing an effective strategy that’s based around these four foundational steps in acquiring customers.
Get this right and your business is bound to be an appealing investment to potential acquirers.
If your marketing strategy isn’t delivering and you need help transform it into a customer-acquiring machine before your exit, find out how you can work with me.
And be sure to check out my blog and subscribe to The Freedom Experience podcast for more insights into building a valuable business you can sell for a premium.
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