Sage hails increased marketing spend as customer acquisition jumps

B2B brand Sage is crediting its increased investment in brand and marketing over the last 12 months with driving stronger customer acquisition and boosting its recurring revenues.

Investment in sales and marketing represented 41% of recurring revenue for the financial software business over its 2022 financial year, which ended on 30 September. The business invested £756m in sales and marketing this year, over £50m more than the £698m it spent in 2021.

Sage reported recurring revenue growth of 9% over the year to £1.92bn, underpinned by a 24% uplift for Sage Business Cloud. Organic operating profits were also up 8%, from £353m in 2021 to £383m this year. The business’s organic operating margin increased to 19.9%, which it attributes to its focus on “efficiently scaling the business”.

Approximately £180m of annual recurring revenue came via new customer acquisition this year, up from £140m last year. Speaking to investors on a call today (16 November), CEO Steve Hare credited sales and marketing with driving this shift.

Sage’s increased marketing spend this year came as the business refreshed its brand and revealed its first-ever purpose statement: ‘To knock down barriers so everyone can thrive’. In its results, the business said the refreshed brand is “landing well” with stakeholders and “helping to build stronger customer connections”.

At the time of the brand refresh, CMO Cath Keers told Marketing Week she believes decisions around software and payroll systems for small and medium businesses are actually “very emotional”. She dismissed the idea of differentiating between B2B and B2C in marketing.

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“For me, it’s actually about human to human. People buy from people,” she said.

The business also launched an above-the-line brand campaign and platform, ‘Helping business flow’ to support its new purpose, which replaced the financial tech firm’s former brand platform ‘Boss It’. This was supported by partnerships with major sporting events such as The Hundred cricket, Major League Baseball and the Six Nations Rugby.

Sage has invested in its brand consistently across the year. In its half year results in March, Hare hailed the effect of its then-£25m boost in sales and marketing investment and promised to continue investing to “accelerate growth”.

Going forward, the business believes delivering the best products and experiences is the way to retain a strong relationship with customers and drive growth.

“If we do these things well, these customers will stay with Sage, increasing their lifetime value, becoming our greatest marketing advocates,” the business wrote in its presentation for the year.