Some business owners do not believe social media does, or could ever have any impact on them or their business. So, they do not use it personally or professionally.
However, if you own a business, a well-executed, social media marketing strategy can help grow your business and ultimately increase your company’s valuation, when managed and executed strategically and efficiently.
Five ways effective social media can increase your company’s valuation
By Joe Chavez
- Raise brand awareness. Social media is the most effective marketing tools marketers can utilize to raise brand recognition and awareness. Social media can boost brand favorability quickly. According to a 2011 study by Ogilvy & Mather and ChatThreads, social media appeared to have the strongest impact on shifting brand favorability higher. Most important, we find that acquirers are typically willing to pay a higher valuation for a business with a strong brand.
- Grow sales. Social media isn’t simply a way to reconnect with old friends. Savvy marketers (and business owners) know that the top social sites offer a variety of tools to help drive sales. A recent article on CIO.com cited three significant examples to reinforce this fact: $3 million in sales for Dell Outlet using Twitter; $2 million in sales for Starwood via one Facebook campaign; and a 1,600 percent ROI for VMware through hosting a Google+ Hangout.
Successful businesses that evolve and use new avenues to consistently expand sales are more desirable to acquirers than businesses with outmoded sales models that prove to be less and less effective. The more confident an acquirer is in your company’s future sales potential, the more likely they will be to pay a higher valuation.
- Enhance your company’s industry reputation through thought leadership initiatives. LinkedIn tends to lead the pack as a marketing resource for B2B organizations, because the site makes it easy for individuals to connect with others in their industry. According to LinkedIn, 60 percent of the site’s members are interested in garnering industry insights while engaging with the social channel.
LinkedIn can position your key management as thought leaders (through sharing industry insights; posting relevant, original content; initiating or commenting on LinkedIn group discussions, etc.), you can boost the reputation of both business’s leadership and the business itself. Investors seek out successful companies that are well known in an industry niche, and will be more likely to offer a higher valuation than they would to a similar but lesser known company.
- Improve customer service and satisfaction. The happier the customer, the more likely an enduring business-customer relationship will result. Today, 74 percent of Internet users utilize social networking sites according to Pew Research. People (especially millennials and younger age groups) expect to communicate with businesses via social media.
Acquirers will monitor the social sites of companies they are researching to see how customer service comments, inquiries and complaints are handled, as well as the frequency and type of inquiries, kudos and complaints received. If your business does not proactively engage with customers and address inquiries or complaints, an investor may question your ability to retain customers and repeat sales, which may compromise a favorable valuation.
- Broadcast your success stories. Social media offers a multitude of channels to share success stories and case studies that distinguish your business from others. You can distribute any success story from your website, YouTube channel, PR sites or in news stories through social channels to gain visibility and positive traction for your company.
When an investor is researching your business on social media sites, your success stories can provide an inside look at the business’s operations and personnel, while reinforcing your ingenuity and accomplishments. The stories might also illustrate potential synergies more clearly for strategic buyers, who could potentially offer a higher valuation.
Investor’s social eyes are on you, so get your social media plan in order
If you are considering selling all or a portion of your business, don’t neglect the importance of your social media presence. Acquirers will closely scrutinize information about your business (as well as the activities of your key management) on social sites. Be proactive about strategically managing your social profiles and shining a bright light on your accomplishments and capabilities. With an effective social media plan in place, you may be able to secure a higher valuation for your business than you ever would have imagined.
Joe Chavez has diverse M&A background working with middle-market business owners across numerous industries including: energy, manufacturing, housewares, pet foods and others. A version of this article originally appeared on Inc. Read more blogs from our staff and other industry leaders here.