Sage credits marketing investment in helping drive double digit growth

B2B business Sage has credited the investment it has made in marketing to support growth as it reports double digital jumps in revenue and profit.

The company, which provides accounting and HR technology for SMBs, says total revenue hit £1.87bn in the six months to 31 March, up 10% year on year. Underlying operating profit climbed 14% in its first half year on year to £227m.

The company has invested heavily in brand to drive sustainable growth, as increasing its spend on traditional and digital media to build mental availability. Sage, which was shortlisted for Marketing Week’s brand of the year in 2022, was the second biggest B2B brand spender on linear TV in 2022 increasing investment by 39% to £13.4m, according to Thinkbox.

Investment in sales and marketing, which CEO Steve Hare said in a statement helped “drive results”, increased to £411m in its first half, up from £395m a year earlier.

Sage hails increased marketing spend as customer acquisition jumpsDespite the jump, spend as a percentage of recurring revenue declined from 43% in the first half last year to 40% this. The company insists that in absolute terms investment has grown as revenue outpaces spend.

In a call with analysts today (17 May), Hare pointed to increased efficiencies in spend from a global approach to marcomms and the digitalisation of the sales process.

“The digital marketing journey is increasing in efficiency all of the time,” he said. “But we are also making more use now of global integrated campaigns so when we’re putting together marketing campaigns, we’re able to do that much more on a global basis and then modify them for local consumption.”

He added that the campaigns are “not always brand new, separate campaigns”, so the business is gaining marketing efficiency “through both better digitisation and more effective use of campaigns and brand expenditure”.

Sage is making efforts to digitise its sales journey, as Hare recognised the people-based cost of the function. “What we are doing is not increasing the number of people we need in line with revenue, so we are adding less people because we are able to drive more of the journey digitally, both in small and medium (business),” he said.

“As we look to continue to improve the margin, the bulk of that margin improvement will come from sales and marketing efficiencies,” he added.