The 10 Things Sellers of an E-Commerce Company Should Consider During Marketing Due Diligence

If you're considering selling your e-commerce company, preparing for marketing due diligence is crucial. Buyers will scrutinize your marketing performance and capabilities to determine the true value and growth potential of your business. Whether you're a seller or a broker representing a seller, understanding what buyers are looking for during the marketing due diligence process can help you optimize your sale and avoid surprises.

Here’s a comprehensive guide on the 10 key marketing areas that buyers will focus on during due diligence—and how you can prepare to showcase your business in the best possible light.

1. Demonstrating Product-Market Fit

The first thing buyers will look for in marketing due diligence is whether your business has achieved product-market fit—meaning that your products satisfy a strong demand in the market. Evidence of product-market fit can be shown through consistent sales growth, customer satisfaction, and high repeat purchase rates.

As a seller, ensure that your marketing data demonstrates the strength of your product in the market. Highlight the success of your most profitable products and provide data on how your business is meeting customer needs.

Key takeaway:

Present data that showcases strong product-market fit. Be transparent about your best-performing products and how they contribute to overall business success.

2. Proving the Sustainability of Customer Acquisition Costs (CAC)

Buyers will scrutinize your Customer Acquisition Cost (CAC) to assess the efficiency of your marketing spend. A low CAC relative to your Lifetime Value (LTV) shows that your customer acquisition strategy is sustainable and profitable.

As a seller, it's important to demonstrate that your CAC has remained consistent or improved over time. If CAC has increased, be prepared to explain why and how you plan to manage it moving forward. Additionally, highlight any optimization efforts you’ve made, such as improved targeting or reduced ad spend while maintaining acquisition levels.

Key takeaway:

Ensure your CAC data is solid and provide context if CAC has fluctuated. Highlight any successful optimization efforts to show you’ve actively managed acquisition costs.

3. Showing a Strong Lifetime Value (LTV)

LTV is a key metric that helps buyers understand the long-term value of your customer base. A high LTV indicates that your customers make repeat purchases and are loyal to your brand, making your business more attractive to potential buyers.

To maximize the value of your business, you should present data that shows how LTV has grown over time and outline strategies you've implemented to improve customer retention. Buyers will want to see a healthy LTV relative to CAC to ensure that the business can generate long-term profits.

Key takeaway:

Emphasize your LTV and retention strategies. Demonstrate that customers are returning to make multiple purchases and that you have plans in place to keep them engaged.

4. Highlighting Repeat Purchase Rate (RPR)

Buyers will want to understand the percentage of your customers who return for a second purchase, also known as the Repeat Purchase Rate (RPR) or Second Order Rate. This is a crucial indicator of customer satisfaction and the likelihood that your LTV will grow.

A strong RPR shows that your product meets customer needs and that your marketing and post-purchase engagement are working effectively. If your RPR is low (under 20%), be prepared to address this red flag and discuss any steps you’re taking to improve retention, such as loyalty programs or improved customer service.

Key takeaway:

Highlight your RPR and the efforts you've made to increase repeat purchases. This shows potential buyers that your business has room to grow and foster long-term customer loyalty.

5. Demonstrating Diversified Marketing Channels

Buyers prefer businesses that have a well-rounded marketing strategy, diversified across multiple channels like Google Ads, Meta (Facebook/Instagram), SEO, email marketing, and social media. Relying too heavily on a single channel can be seen as a risk because it exposes the business to fluctuations in that platform’s performance or pricing.

Ensure that you can present a balanced marketing strategy. If your business is over-allocated to a single channel, such as Meta, explain how you plan to diversify in the future or why this channel has worked particularly well for your product or market.

Key takeaway:

Showcase a diversified marketing mix. Buyers want to see that your business isn’t overly reliant on a single platform and can perform well across multiple channels.

6. Proving the Viability of Social Media Advertising

Discovery-based advertising platforms, such as Meta, TikTok, Pinterest, and Snap, are key to creating demand for your products. Buyers will look at your success with social media ads to determine whether your business can scale through these channels.

If your social media advertising efforts have not yielded results, this could be a red flag. Be prepared to discuss the challenges you've faced and any changes you've made to your strategy. Showing a willingness to experiment and improve is important here.

Key takeaway:

If you have a successful social media advertising strategy, showcase it. If you’ve struggled with social ads, be prepared to explain why and what steps you’ve taken to address it.

7. Demonstrating SEO and Organic Traffic Growth

Buyers will pay close attention to your business's SEO performance and organic traffic growth. Organic search is a cost-effective channel for driving long-term growth, and businesses with strong SEO performance are less reliant on paid advertising.

Make sure to highlight your SEO efforts and provide data on your organic traffic, keyword rankings, and backlink profile. If SEO has not been a strong focus, this could be an opportunity for the buyer to invest in and improve the business post-acquisition.

Key takeaway:

Present data on your SEO strategy and organic growth. Buyers want to see that your business can attract customers through non-paid channels as well.

8. Proving the Efficiency of Paid Media Campaigns

Buyers will closely examine your paid media strategy, including platforms like Google Ads, Meta Ads, and any other PPC efforts. They will want to see that your paid campaigns are efficient, well-optimized, and scalable.

Be ready to share your Return on Ad Spend (ROAS), Cost Per Click (CPC), and Cost Per Acquisition (CPA) for each platform. If you’ve successfully scaled your ad spend while maintaining or improving ROAS, this will be a key selling point.

Key takeaway:

Present detailed metrics on your paid media campaigns. Buyers want to see that your advertising is profitable and scalable.

9. Showcasing Competitor Differentiation

Potential buyers will want to understand how your business differentiates itself from competitors. Whether through unique product offerings, innovative marketing strategies, or exceptional customer service, your ability to stand out in the market will be a major selling point.

Ensure you have a clear narrative around your competitive advantages and can provide examples of how you’ve outperformed competitors in key areas like market share, customer loyalty, or digital presence.

Key takeaway:

Clearly articulate your competitive differentiators. Show buyers why your business is better positioned than competitors in the market.

10. Preparing for Questions About Marketing Scalability

Buyers are looking for businesses that can scale. One of the biggest questions they’ll have during marketing due diligence is whether your current marketing strategies can grow as the business expands. This includes your ability to scale ad spend without seeing a significant drop in efficiency or ROI.

If you’ve already experimented with scaling, share your results and any lessons learned. If you haven’t yet scaled, discuss the potential you see in your current strategy and any adjustments that may be needed for growth.

Key takeaway:

Be prepared to discuss scalability. Buyers want to understand how your marketing efforts can expand as the business grows and how you plan to manage any challenges that arise.

Conclusion: Marketing Due Diligence from the Seller’s Perspective

Marketing due diligence is a critical part of the sales process for e-commerce businesses. By understanding the key areas that buyers will focus on—such as CAC, LTV, RPR, channel diversification, and scalability—you can better prepare your business for a smooth sale. Ensure you have clear data and a compelling narrative around each of these elements to present your company in the best light and maximize its valuation.

The 10 Things Sellers of an E-Commerce Company Should Consider During Marketing Due Diligence

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