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The Role Social Media Can Play to Increase the Value of Your Business

The Role Social Media Can Play to Increase the Value of Your Business

When Selling a Business, What Role Does Social Media Presence Play?

Over the last several years, social media has become an integral part of our daily lives. It has also become a major component of many businesses and its use has now evolved to cover many corporate functions. Social media is being used not just for marketing campaigns, but also for building brand awareness and communicating with customers and clients. Social media is usually the first format in which consumers (and potential acquirers) connect with a company, and it can have a significant impact on the value of the business when the owner is ready to sell.

Social Media Strategies

There are several social media strategies a business can use: increase engagement with a brand’s followers, increase hashtag usage, and increase visibility by connecting with “Influencers”. These are all key elements to increase a brand and business’s value through social media.

Engagement is Everything

Engagement (such as likes, shares and comments) may be considered the most important metric for evaluating the success of a social media strategy, followed by the number of followers. Therefore, building a community that will follow and connect with your brand is the key to increased valuation. Ways a company can grow its following and social media presence are to (1) post high-quality content several times a day (especially content that can be shared or reposted, which can lead to new followers), and/or (2) pose questions in order to spark conversation with its followers. Social media was made for people, so businesses have the extra hurdle of trying to create a human connection with social media users. The company could respond to comments on social media and create a two-way conversation, which may deepen the relationship with the company’s existing audience and foster a connection with potential new followers. These actions make the brand feel more relatable and increase its recognition. Those looking to acquire companies are willing to pay a higher valuation for a business with a strong brand and engaged social media following.

Hashtags and Increased Sales

Another social media strategy is to create a hashtag personal to your brand or one that encourages followers to create their own content as a way to increase engagement and ideally sales too. For example, Oreo’s #PlayWithOreo Instagram campaign resulted in followers taking their own pictures featuring the ways they play with Oreo cookies. Followers that love Oreo had a chance to interact with the brand, and followers purchased the product in order to participate. Finding a way to adapt your company’s product or services into a visually appealing, fun, and entertaining social media campaign could be a good way to gain extra exposure and more deeply connect with your followers, as well as increase sales. Showing a potential acquirer that your company can evolve and use new forms of social media to consistently expand sales may make your company more appealing and lead to a higher valuation.

Influencers and Enhancing the Company’s Reputation

Another strategy to increase brand recognition and enhance brand reputation is to have your company connect with someone who already has an established reputation and following. Word-of-mouth is one of the most valuable forms of marketing. Potential consumers are more likely to be receptive to recommendations from people they respect and trust. With social media, companies can connect with an “Influencer”, who is simply someone who has influence over others and is basically an online celebrity. Influencers typically make their own content and can incorporate a product or business into a post, reaching their powerfully engaged following. These Influencers, who already have the trust of their following, can expose their thousands or even millions of followers to a new brand, enhancing the reputation, and sales, of that brand. For example, the e-commerce site Revolve partnered with many fashion Influencers this summer. Revolve hosted a #RevolveintheHamptons party, essentially creating a sorority house for social media stars, in which Influencers took and posted pictures in clothing sold on Revolve.com. The overall effect was a cool-girl reputation for Revolve, enabling the company to organically reach several hundred million social media users. Revolve then repurposed the posts of the Influencers on their own social media pages. This helped Revolve achieved a tremendous buzz surrounding its brand. It is important, however, that the posts feel authentic to both the company’s and the Influencer’s brand personality. These days, FTC regulations are a huge factor when working with Influencers. Be sure to review the relevant FTC guidelines and to require an Influencer to use #ad or #sponsored, as required or appropriate.

The more exposure a follower has to the business (especially by a trusted source like an Influencer), and the more interaction a follower has with a company, the more a follower feels loyal to the company. If the company focuses on building a highly engaged audience and creating a strong brand reputation, profits are more likely to follow. Sales and the number of eyes on a brand have a huge impact on the valuation of the company.

Social Media Is More Than Just Being Social

The value of social media expands beyond just the new opportunities to connect with consumers. It brings value to other aspects of your company as well, including learning more about your company’s target audience, building brand awareness and retaining existing customers. Social media can also be used as an effective customer service tool.

Social media delivers measurable results in sales, leads and branding. It also enables a company to reach a large number of people at a low cost. The number of followers, shares and the reach (how many people have seen the post) can impact the value of your brand. With an effective social media plan in place, a company may be able to secure a higher valuation at the time of sale.

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Allison W. Rosenzweig, Esq. is an associate in Salon Marrow Dyckman Newman & Broudy LLP’s Corporate and Commercial Law Department. She concentrates her practice in business and transactional matters for a wide range of clients, including startups, family-owned businesses and national companies. She can be contacted at ARosenzweig@salonmarrow.com.


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