Why do so many companies fail to achieve ROI on their marketing automation systems?
We asked ourselves this question a few years ago when we were marketing automation consultants. At the time, we worked with a number of tools, including the most popular ones at the time, Hubspot and Salesforce. Regardless of the system, we saw that companies almost always underestimated the true cost of marketing automation.
We often see this today when we get customers who want to switch from an existing system to FunnelBud, which we sell and implement ourselves. A common scenario is:
- You purchase a system
- You realize that it was more difficult to implement than the supplier had promised.
- You're only using 5% of the potential but still paying for the other 95% – a simpler system like Mailchimp would give you better results and be cheaper.
Why is this happening?
Unfortunately, this is often due to unexpected additional costs that many suppliers have no interest in informing customers about.
To get a good implementation and ROI from your system, it is important that you are aware of these associated costs. Then you can plan for and manage them, and thus get a good ROI.
In this blog post, we will clarify these additional costs and what you can do about them.
Costs associated with Marketing Automationimplementation
When purchasing a marketing automation system, it is easy to become fixated on the price. If price were the only factor, ROI would be a no-brainer.
However, the direct system cost pales in comparison to the four peripheral costs we have been able to identify:
1. Strategy cost
To successfully implement marketing automation, you need management approval and continuous initiative. This requires meetings, energy, and time.
In addition, there is a more subtle strategic cost. Once your company has invested in a digital system, the employees who have driven the process forward become psychologically bound to strategies linked to the system. Even though non-digital, traditional strategies are sometimes more appropriate.
For example, the focus may be on generating new leads via the internet when physical networking events could yield much better results. Or on digital follow-ups with contacts when phone calls to book physical meetings could create better customer relationships.
The best approach is often a combination: traditional sales strategies with digital support, combined with purely digital strategies. But the new approach is often forced in even where it is not suitable, creating internal conflict between those who advocate digital and those who advocate traditional methods.
2. Content cost
A marketing automation system is powered by content. Content is the fuel, while your system is the car.
The cost in time and money to create content is often several times higher than what you pay for a system.
Some argue that they already create content today and that it will therefore not entail any additional costs. This is only partially true and depends on the type of content you already create.
Most of the people we meet who have not yet acquired or started working seriously with a marketing automation system produce product-related content, such as product brochures, manuals, and materials for trade shows. Some write news articles on their websites, but again from an inside-out perspective. The articles are often news about the company or its products.
A good inbound strategy instead thinks from the outside in: What problems do customers experience? What are they searching forbefore they even know that a product of the type you sell actually exists? What content would they be willing to give their email address for in order to get from you? And how can you then talk abouttheir problems without even mentioning your product?
This is new content, aimed at a new group of people who are not addressed by the company's current content.
3. Implementation cost
The technical implementation often costs many times more than the system itself. This is also where we see most people get stuck, as technical system expertise is not one of the company's core competencies. That's why our Marketing Automation experts help you with all aspects of implementation.
The implementation cost comes in three phases:
Phase 1: Understand what your marketing automation system can do from a technical standpoint
The popular marketing automation systems available on the market today include a whole host of features. I often compare them to buying a large box of Lego. If you've never built a ship before, you won't succeed on your first attempt.
It often takes several months to test all the features and gain a good basic understanding. It is these "nitty gritty" details that you need to test and understand in order to get started at all.
Phase 2: Iterate your first working end-to-end processes
The first end-to-end processes could be, for example, "from visit to qualified lead," "from webinar invitation to follow-up thank-you sequence," or "nurturing to sales opportunity back to nurturing." There are a bunch of marketing automation sequences you can implement. After 3-6 months of full-time work, you will hopefully have a good basic implementation that generates results, and the satisfaction of sitting back and watching the machinery and processes you have built is great.
Phase 3: Optimize your machinery and internal processes
Once you reach this point, you can start to see really interesting results. The company will often give you more resources. This is when the real fun begins.
Your job now shifts from proving what is possible to improving what works and doing more of it. Question marks are replaced by exclamation marks, and testing is replaced by production.
You start measuring and optimizing which types of emails work best. You look at your flows and replace the parts that don't work. You reuse the parts that work in other flows. You also start using personalization features to better target your message.
4. Selling expenses
Does it cost money to get more leads? Yes, it does!
To top it all off, when you reach the stage where you are continuously generating highly interesting and qualified leads for your sales team, you run the risk of getting a slap on the wrist from them. Do you remember what we discussed under the heading Strategy Cost?
To avoid this, management needs to understand that a new type of sales approach will be required to handle the leads that are generated. Otherwise, everything you have done so far risks being for nothing. Leads will not be handled properly, results will not be achieved, and in all likelihood, you or the system will be blamed.
In our experience, there are two ways to deal with this:
- Your existing sales force is pushing for a more digital strategy: The sales force should have been involved in driving digitalization from the outset. Otherwise, the prevailing culture, processes, and working methods will be difficult to change, often resulting in digital leads not being followed up.
- You create a new parallel sales force that works digitally:This sales force becomes your "inbound sales" team, working 100% digitally and only with inbound sales. We have noticed that the results are best when they report to the marketing manager rather than the sales manager. Your role as marketing manager therefore grows from a brand focus to digital sales responsibility.
Marketing becomes sales. Sales becomes relationships. And inbound becomes your new sales channel.
If you put in the work required for your MA strategy, the rewards are great.
All this talk about the costs associated with the system may scare some people. That is not my intention. I have worked with over 20 companies, both as an independent consultant before I started FunnelBud, and with FunnelBud. The pattern I see consistently is that those who have the right expectations in advance about the resources that will be required succeed – while those who expect a "magic bullet" fail.
Why? Marketing Automation has the potential to deliver fantastic results. Those who succeed will see a flow of new, qualified leads to their sales force, leading to significant revenue, professional and personalized communication with existing contacts and customers, and a stronger brand that spreads further and further.
But results don't come by themselves.
I believe that companies with realistic expectations think more long-term, while those expecting a "magic bullet" instead focus constantly on the next event, the next mailing, the next article. Without a long-term focus, it is difficult to build an integrated machinery with systems, processes, and organization that work in harmony. Such an integrated total solution can achieve 10x results with the same effort.
What ROI can your MA strategy deliver?
Let's look at an example company and what both their cost structure and ROI looked like.
A Swedish software company with 20-30 employees selling enterprise solutions had the following cost structure after three years of marketing automation implementation:
- System cost: SEK 6,000/month
- Strategy costs (meetings, etc.): SEK 9,000/month
- Content and setup cost: SEK 30,000/month (half a full-time position in the marketing department)
- Sales cost: SEK 30,000/month (half a salesperson working on incoming leads that would not otherwise have existed)
Total cost: SEK 75,000/month.
Please note that the above is only an example of how it might look. Both the ratios and the size of the figures above will vary depending on, for example, how big you are, how far you have already come in your sales and marketing work, what your sales processes look like, what you sell, and many other factors.
For the company in the example above, the number of leads began to increase quite rapidly, but due to a long sales process, there was a lead time before any revenue was generated. However, after just over six months, they had closed their first inbound deal. After two years, the company saw SEK 5,000,000/year in closed deals that were directly generated by the Marketing Automation system. That is, over SEK 400,000/month.
The direct ROI was therefore over 5x, including all related costs, month after month.
If we include indirect ROI, the following benefits are also added:
- Increased closure rate on ongoing deals, even deals not directly related to the Marketing Automation strategy (thanks to the stronger brand, more professional impression, and better follow-up)
- Increased innovation and efficiency thanks to the fact that the costs we estimate above generate so-called "externalities" (because those who work with the Marketing Automation strategy also spend time on other things and spread new ideas in other areas).
- Better customer care and more indirect business opportunities (thanks to the Marketing Automation system's ability to segment and maintain personal contact even with existing customers, leading to more referrals).
Although it is difficult to put a monetary value on the indirect ROI, it is clear that the total ROI was well over 5x per month, with all costs included.
Consulting help for the MA strategy or do it internally?
As you have seen, the biggest cost item is not the system, but the implementation and execution of the strategy. But if you can pull it off, the benefits will be well worth it!
How can this be achieved?
In general, you can say that you must first and foremost expect these costs to arise in one way or another. Once you and your company have accepted this, the question becomes: How will you pay for this cost? Here, you really only have two options: You can pay with your time or with money.
Our recommendation is undoubtedly a combination.
There are now consulting firms that specialize in helping companies adapt their sales organizations, including both roles and processes, to "the new model." By utilizing outside expertise that knows in advance what pitfalls and shortcuts exist, you can both streamline your work and avoid many rounds of iteration and testing.
At the same time, we at FunnelBud help you significantly reduce implementation costs (point 3) because training, system implementation, and ongoing setup assistance are included.
Our final advice to you is therefore as follows:
- Ensure that management is on board with the end goal and understands the costs and strategic changes that this will entail.
- Ensure that you can produce the type of content required to get the most out of the system.
- And finally, work with a system provider who is with you every step of the way, not one who leaves you in the lurch and then charges extra to get it done.
At FunnelBud, we help you with marketing and sales systems and system support (point #3), while our partners work with strategy, organization, and content (points #1 and #2).
For example, we recently collaborated with Certus Growth to assist a telephone provider in creating and implementing digital sales channels, worked with Hägvall & Sjöman to develop a digital content strategy and content for a recycling group, and partnered with JobAssigner to create inbound marketing campaigns that generate leads for a parking and security services company. Can we help you achieve ROI with Marketing Automation too?
