The Power of Data in Marketing

The following was adapted from Post-Acquisition Marketing by Shiv Narayanan.

“I need to know the truth, and I need to know it fast.”

Those were Henry’s first words on his first call with me, shortly after Fleetsync, his fleet-management software company, was acquired by the private equity firm North Star Capital.

Henry was the new CEO, who had taken over as the two founders transitioned out after the acquisition. He got the role because, in his former position as COO, he had helped build the business to this point. The board trusted him to lead the company through the transition.

“We’ve got really ambitious targets to hit next year. I’m going to need to scale Marketing to get there,” he said. “But I’m not going to invest any more of our budget until I understand the data behind it.”

Henry was understandably frustrated because he was flying blind. His VP of Marketing insisted they were adding tons of value to the company, but his new VP of Sales disagreed. He had no way to judge who was right. Even worse, he had no time to figure it out.

As COO, Henry had helped build a $30 million business that was profitable and already growing fast — which is what led to the buyout in the first place. But post-acquisition, he had to face aggressive sales projections, shortened timelines, and a hyper-focus on efficiency and financial discipline.

It was unfamiliar territory.

What Henry didn’t realize was that he wasn’t the only one who found himself in this position. Every year, fast-growing, profitable companies emerge. Every year, private equity acquires those companies and sets aggressive expectations for growth. And every year, those companies run into the same problem: they need more pipeline to hit their sales targets but don’t know how to scale Marketing to get there.

With ambitious expectations, scaling Marketing becomes a pivotal growth lever. The problem is that most marketing organizations do not have their data in order. Without data, it is impossible to illustrate the ROI of marketing activities. If you can’t illustrate the ROI of marketing activities, it is impossible to get approval for increased budget. And if you can’t get increased budget, it is impossible to scale Marketing.

This problem is not about size either. A company doing $10 million in ARR needs to get its data in order just as much as one doing $300 million. In fact, as companies get bigger, the complexity increases. There are more acquisitions to integrate, more opportunities to capture, and more data to manage.

Very few marketing organizations can tell you their impact on revenue back to exact dollars invested in specific programs, campaigns, and channels. They may be able to tell you their contribution to pipeline, but there is a lot of fuzziness around what “contribution” actually means.

Post-acquisition, there can be no room for fuzziness.

Private equity investors buy companies like Henry’s after intense, data-driven due diligence cycles — financial, legal, sales, technical, market, customer — to triangulate the true potential of a particular business. The ultimate objective is to create enterprise value and increase the overall valuation of the business.

The stakes are high. Jobs are on the line. Hundreds of millions of dollars hang in the balance.

Unfortunately, Marketing teams are underprepared to play their role because most organizations do not look to Marketing as a primary generator of revenue, and therefore don’t give it the right amount of budget to succeed.

For more advice on scaling the marketing in your business, you can find Post-Acquisition Marketing on Amazon.

Shiv Narayanan is the Founder and CEO of How To SaaS, a management consulting firm that helps private equity firms and their portfolio companies drive enterprise value with marketing. Previously, Shiv was the CMO of Wild Apricot, which was acquired by Rubicon Technology Partners in 2017 and flipped to Pamlico Capital in 2018. Shiv is also an advisor and mentor to technology startups from accelerators like Y Combinator, Techstars, 500 Startups, and the Kellogg-Schulich Executive MBA Program.