Tuesday, April 23, 2013

Marketing Automation - Is it worth the investment?

When a Modern Marketer contemplates purchasing, implementing and integrating marketing automation (MA) to their modern marketing tool kit, the concept is usually proposed to management with a supporting business case.   It's fairly easy to show how MA should improve efficiency of the marketing team and increase sales, but it is very difficult to execute a plan that achieves these results.


Read this related blog post
from Lead Views
My premise begs the question, "is MA worth it?" and, of course the answer is "it depends".  Your initial investment in MA will likely cost at least $40k per year and could be as high as $200k per year depending on many factors.  It's not a one time purchase price, but an ongoing subscription and therein lies the financial beauty of the MA business model.  Your typical NPV (net present value) calculation is more attuned to a capital purchase, so it won't help with justifying an MA purchase.  The danger in determining if MA is worth the investment is there are many hidden costs that don't show up in the fancy statistics and slick brochures offered by the MA vendors. 

Hidden costs may include:
  • Staff man-hours spent on learning how to use the tool
  • Complexity = hidden cost
  • Vendor cost for set-up and training
  • Opportunity cost (could your time and money be better spent on something else?)
  • Internal selling cost
Suppose you submit to the annual expense and agree to absorb the hidden costs, what is the payback and are you capable of utilizing the tool to realize a payback?  I liken MA to Adobe's Photoshop software.  Most common marketers have the ability to use Photoshop, but we only use about 10% of it's total capacity.  According to the Marketing Sherpa 2012 B2B Marketing Benchmark Report, only 24% of B2B marketers are using MA.  Of those 24%, at best, 53% have implemented core functions.  Only 30% have fully implemented advanced functions such as report dashboards, lead management, nurturing or lead scoring.  In order to see a good ROI, you need to utilize at least 85% of the functions available in a full blown MA system.

One must wonder, how many of those MA systems out there are only being used as glorified email platforms?

Is MA worth it?  Yes, definitely if you are able to leverage the power and implement all the core functions to your marketing plan.  No, if you're strapped for resources and won't be able to invest in the time and absorb the hidden costs that are incurred to optimize the MA system.