Why Marketing Audits Are an Essential Part of the Due Diligence Process
Author: Elliott Holland
Gathering as much information as possible before buying a business helps you make an informed decision
Key Takeaways
Performing due diligence ensures you know as much as possible about a company before buying it
Marketing audits uncover the business's marketing ecosystem and identify problems and opportunities
Conducting a proper marketing audit requires multiple steps
A Quality of Earnings report helps you understand what you're buying
It’s a good idea to gather as much information as possible about a business before you buy it to check if the company is viable. This data also makes it easier to secure a loan and can help you negotiate with the seller.
Once you gather data, analyzing it through the due diligence process is the next step. You'll typically use a third party to assist with the due diligence process, which scrutinizes the company's financial records, assets, procedures, policies, management, human resources, and growth potential.
A marketing audit is often part of the due diligence process, as it investigates the strategies and operations that could drive or hinder marketing performance. This audit helps you identify the company’s marketing problems while also spotting new sales and marketing opportunities.
Here's some information on conducting a marketing audit as part of the due diligence process when purchasing a business.
What is a marketing audit?
In short, a marketing audit examines a business's marketing environment. It looks at the organization's goals, strategies, and principles, allowing a potential buyer to identify areas of weakness and opportunity.
A successful marketing audit should apply to all of the business’s marketing activities. Audits that overlook certain aspects are called functional audits, and they might lead to oversights that limit their conclusions.
Effective marketing audits should also consist of a step-by-step process that looks at internal marketing systems, marketing activities, and the company's strategies and goals to create a clear picture of the business's marketing program.
Successful companies have good communications with their customers through their marketing plans. They can identify what their clients need, offer pricing, promote the benefits of their products, and set themselves apart from the competition.
Learning how a company positions itself through its marketing program is essential before investing in the business, and the following steps can help.
Seven steps to conduct a marketing audit
Completing a marketing audit isn't a quick and easy process. A lot goes into gathering and analyzing this data, and taking a systematic approach is your best bet so you don't miss anything. The seven steps you'll want to follow are:
1. Learn the marketing goals and objectives
Before all else, your marketing audit should uncover the company's goals and objectives. The company should have measurable and achievable long-term and short-term goals. Figuring out what the company wants to accomplish allows you to develop areas of opportunity. Once you identify where improvement is possible, you can devise strategies for increasing visibility, market share, sales, and usage among existing customers.
2. Create an ideal customer
Next, learn who the organization is trying to sell its products to, as this gives greater insight into the marketing strategy you'll need. Your buyer persona should include job titles, locations, industries, and income ranges. Knowing who the company is marketing to provides a better picture of why the current strategy is succeeding or failing.
3. Identify the competition
The company you're looking at buying has rivals, and your marketing audit can analyze the competition to see if its marketing strategy helps the organization stand out from the crowd. Note how competitors position themselves in the market and where their services and products overlap with the company you're auditing.
4. Review the products and services
What is the company selling? You should get a clear idea of the benefits, sizes, prices, and distribution methods of the company’s products or services from the marketing plan. Consider the products’ strengths and weaknesses, as well as historical data on how well these products perform compared to the competition.
5. Document marketing assets
Your marketing audit should take a deep dive into the company's marketing inventory. This includes any marketing methods the business uses, including websites, radio spots, and newspaper ads. It should also go deeper into online sources by looking at content types, position by keyword, click-through rates, metadata, social media shares, and engagement to identify where improvement might be possible.
6. Analyze the information
These marketing audits contain a significant amount of data, so you'll need to analyze the content to determine where the company stands compared to its competitors and identify areas where improvement is necessary. In some situations, you may find marketing issues have damaged the organization beyond what you wish to repair. In other cases, the audit might inform you of areas of opportunity that excite you.
7. Update the plan
A marketing audit remains extremely valuable if you purchase the company because it provides insight into gaps and areas where improvement could drive sales. Once you take control, you can update the organization's marketing plan based on this vital information.
Systematically addressing a marketing audit by following these steps makes it less likely you'll overlook anything while digging into the organization's marketing strategy. From there, you can determine if the business has room for growth based on its current position in the market.
Get the due diligence assistance you need
Due diligence isn't something you'll typically address alone because it's too much work for a single person. However, assistance is available through a Quality of Earnings (QoE) report, which digs into a company’s true financial picture and can help you understand potential risks and revenue trends. And this can help reduce your worry as you acquire a business.
Guardian Due Diligence can create a QoE report on the business you want to buy, giving you an in-depth review of the company’s financial health. This crucial step will help prepare you to make an informed decision about the business you’re interested in acquiring. Contact Guardian Due Diligence to schedule a call or download a sample QoE report.