Did You Know, One of The Most Overlooked Monumental Flaws in Startup Valuations ...is not Assessing Marketing Assets !!!

“Return on Marketing Assets Assessments – Missing in Most Valuations”?

“Growth at all costs” is the most dangerous assumption mindset. High time to determine the value of a company by analyzing its marketing, sales, and customer assets.?

When was the last time you assessed your marketing, sales, and customer assets???

?In spite of the current focus on marketing accountability and the growing body of research into customer marketing equity and customer lifetime value, the finance community has not shown any noticeable interest in these increasingly critical marketing, sales, and customer assets assessments and how to evaluate these revenue critical assets. In fact, few companies have adopted them. Around 99% percent of startup founders do not know any of these marketing assets exist even. There is a problem here:?marketing has failed to find credibility in the very field it intends to address, which is the accountability of marketing and its contribution to shareholder value. It's not just a separate function/activity, it’s a crucial strategic revenue pillar for the very firm's existence.

Most (not all) of these founders attend start-up accelerators,?the simple misleading formula for Reasonable Startup Valuation = Traffic + Conversion + Paid Users. This is a very?basic and superficial?concept,?that does not give all answers to assess a start-up in today's?environment, that too when they are looking at higher rounds of funding. These formulas are big myths/lies and dangerous assumptions ruining most startups.?

Today, Return on Marketing Assets….is an important pillar of valuation, most do not understand its?impact nor have a system to evaluate these critical assets. Most of these start-ups do not have a well-evolved framework to attract new customers, sell more to existing customers and improve the number of transactions.?

A well-evolved marketing process setup, which also includes sales and customer experience units will have over 600 + processes that need?to be in place,?so that the enterprise is ready to scale or like now, its mostly an excel sheet driven conventional projections-driven gambling. Most start-ups, do not have even 30 of these assets,?so?how are they ready to scale. Scaling is not about expensive ads with celebrities. Most of?these rounds and fresh funding is used to?pay salaries and to buy ads,?that's not really sustainable growth or marketing with precision, nor this money is used to build robust marketing systems and processes. Without these assets in place, most of these startups will fail or will be sold out at a lesser valuation.?

Most of these start-ups are not even customer-funded, in fact?they have no?clue what that is all about. They have no system or process to lock in customer money, rather its become easy just to raise expensive funding.?Funding a startup without marketing assets is the greatest gamble most VC's are playing. Only few get?lucky. Most partners have no clue if we could assess a startup's marketing assets.

If you look at crisis in today’s?edtech space, most of them burnt cash to expand without building their marketing assets, now the segment is consolidating and they have no cash left. Most money is just gone into expensive celebrity ads and they have no clue how to really nurture and retain their customers and position Post-Covid times.

Customer-based marketing assets valuation CBMAV, is a method that uses customer marketing metrics to assess a firm’s underlying value, which go beyond brand valuation. Brand valuation does not give you all answers. Over 600 internal customer, marketing-centric revenue impact factors are assessed. This decides if the start-up is ready to scale or how much time and money it will need to build these important marketing assets. These 600-plus revenue impact factors will?bring a much higher degree of precision, accountability, and diagnostic value to the new loyalty and organic virality the start-up’s brand attracts.

There is no value of a one-time-only customer any more, who is not active today and is not giving you recurring revenue. Most customer data lists are dead in many of these companies and they have no concrete plan to revive this customer?or most have no clue what to do with them. Its not about just sending an email "We Missed You", its about a strategic sequential communication plan to revive. Business is more a marketing game than an innovation game. So CBMAV, gives power to conventional accounting principles, to make valuation and revenue forecast more focused. In a way, it is down to every customer’s individual customer behavior and its impact on revenues.

Matured Marketing Assets?= Business Performance & Stability = Better Valuation & Lower Risk.

Our Conventional Aaker’s Brand Equity Model, just gives you 20% answer, to our precise valuation problem.?How do you determine if a start-up is ready to scale and if they have built the required marketing assets over a period of time? Everyone is behind moonshots, 10X growth, 100X growth. In my view, the original value of these startups is just 50% of it current value without these assets in place.?

What I’m saying is that it makes smart business sense to first maximize and optimize?internally?(or what I call "Internal 600X Profit Impact Factors ”) before raising the next round of funding and?also these VC’s have to be extremely careful to fund such companies which do not have well-evolved marketing assets.

If 600+ marketing, sales, and customer assets are built/nurtured and developed/installed and implemented, then it's easy to scale and finance new initiatives and if funding fails, you have the required cash flow?to fund your external risk, survive, to protect your primary revenue – and?to provide reset/pivot money whenever you may need. YOU WILL BE THE MOST VALUABLE STARTUP IN YOUR SEGMENT, NOT BY CHANCE, BUT BY INFORMED ACTION.

So, these 600 plus separate “internal” exponential customer marketing growth factors (most aren’t even aware they exist) are within the heart of their current revenue system to generate multiplied profits – without risks or additional investments, profits to fund expansion plans and in most cases you will never need a VC. Startups will be able to raise funds at a better valuation, with these marketing assets in place.

Seriously,?if you could just do a back-of-the-envelope simple calculation if you even implement a few of these 600 plus revenue impacts factors, you will easily see at least?20% plus improvement by just implementing 20 plus internal revenue factors, that far exceeds any funding/valuation yield profit-wise.

All I am?saying is first to tap into maximizing your internal growth, before trying to fund your startup. Without these marketing assets, no startup is really ready to scale. All you are doing is just gamble…

Life, that’s not analyzed is not worth living. A business that’s not testing on a daily basis is not worth having….The only way to know your market and whats working is by testing...?Testing is the only way to grow..there are over 600+ plus systems/processes/methodologies to test… here are a few…

1. What are all the facets you’re testing with your sales force? What else could be tested??Like skills, to transcripts, to routines... etc..

2. Have you tested multiple different variables? Different ways to open a relationship? Different ways to advance the relationship and maintain constant two-way communication with your existing and future customers.

3. Have you tested a multitude of sequential communications that involve call, letter, email, text, and more and their impact. Did you test different healines.

4. Have you tested different messaging to reach people that is value-based or provocative, sustainable or progressive communications that can be built on?

5. When communicating with someone, do you test different premises, propositions, and preemptive ways of addressing issues ahead of time?

6. In what ways are you defining, distinguishing, and delineating your product/service/company/people?

?7. Have you tested what you can do to accelerate the purchase?

8. Have you tested what you can do to upsell the purchase?

9. Have you tested what to do after the purchase?

10. Have you tested making arrangements with other people who have additional and/or complementary products and services?

This is how you build your firm's marketing powerhouse.

It's extremely critical to segment your marketing assets after testing into various categories namely… Overlooked Assets, Underperforming Activities, Hidden Opportunities, Under Valued Relationships, Underutilized Collaborative Opportunities, Intensity & Volatility.

So, do you have a systematic well-defined process to test??Similarly, there are many more marketing assets like this.?

Its time most startups scientifically build these assets, that will build real foundation to scale.

You could get $2 out of your Marketing investments or $10 out of your marketing investments, it all depends on how well you target and how well you communicate value to your prospects...

In fact,?you have a marketing problem, not a funding problem. Hope I could give at least a few some clarity and direction.

Let me know your feedback.

Thank you

P.S.Mahesh

Linkedin.com/in/psmahesh?