Marketing can feel like a black box for investors. You know it’s necessary, but connecting the dots between a tactical ad campaign and the portfolio company's EBITDA often feels like guesswork.
The clearest path to understanding that connection starts with asking better questions.
We recently published a white paper that breaks down exactly how private equity firms can link digital marketing levers to business financials. Included in that guide is an "investor cheat sheet." It outlines the specific questions you should be asking your PortCo marketing teams to cut through the noise and evaluate their strategy.
Without these questions, you are flying blind regarding how marketing performance is actually hitting the bottom line.
You can download the full white paper here for the step-by-step guide to building a financial model that connects marketing to EBITDA. In the meantime, here is a look at the questions you should be asking in your next board meeting.
Questions on Acquisition
Most investors start with the obvious question: "Which channels are driving the most new customers?"
That is a fine place to start, but it doesn't give you the full picture. It tells you what is happening, but not why or if it is sustainable. To get to the truth of the strategy, you need to peel back a few more layers.
Follow up with these questions:
- What are the specific tactical priorities for these acquisition channels?
- Which input metrics (like spend, click-through rate, or conversion rate) are driving those priorities?
- Why do we believe this specific impact is possible?
- How confident are we that these tactics will work, and what is the basis for that confidence?
- What tests can we run right now to validate that confidence?
These questions force the marketing team to explain their rationale. It moves the conversation from general observations to specific, defensible strategies that impact the P&L.
Questions on Retention
It is almost always cheaper to keep a customer than to find a new one. Yet, retention strategies often get less scrutiny than acquisition. You can apply the same rigorous framework here.
Start by identifying which touchpoints actually keep customers coming back. Once you identify those levers, push deeper:
- What are the tactical priorities for retention right now?
- Which input metrics (such as order frequency or average order value) are we trying to move?
- Why do we think we can move them?
- What is our confidence level in these tactics?
- What data do we need to collect to prove it works?
When you ask these questions, you get a clearer view of the customer lifecycle. It allows you to offer better strategic guidance that goes beyond just asking the team to "reduce churn."
Questions on Discount Strategy
This is where things often get messy. Heavy discounting can drive volume, but it can also mask underlying performance issues and erode brand value.
If your portfolio company relies heavily on sales and offers, you need to understand the long-term cost. Ask these questions to see how the discount strategy influences EBITDA:
- How is our discounting affecting acquisition and retention metrics specifically?
- Has the effectiveness of these discounts degraded over time?
- Do we have a plan to change or exit this discount strategy eventually?
- How does constant discounting affect our ability to run clean tests?
That last question is critical. We see many companies fall into a cycle where they offer a discount once a month. The sale lasts a week, and then sales flatline for the next three weeks because customers are waiting for the next drop.
In that environment, your team loses the ability to learn. You cannot run a clean test or get a read on baseline performance because the data is skewed by the discount cycle. You need to ask how the team plans to gain insights outside of those sale periods.
Ask Questions That Drive Value
The questions above will give you a head start. They help you determine if a marketing team is moving the needle or just spinning their wheels.
To take the next step, you need to map these answers to a financial model. When you build a tactical layer into your models, you can flip a single toggle—like ad spend or conversion rate—and see exactly how it flows through to the enterprise value of the company.
For a guide on how to build that layer, download our white paper. It serves as a roadmap for maximizing your investments through better data.
If you need support auditing the digital marketing at your portfolio companies, we are here to help. Contact the Aux Insights team to schedule a brief consultation.