Marketing Automation Systems: The 4 peripheral costs and how to get ROI

Marketing Automation: The 4 peripheral costs and how to get ROI

By Yusuf Young | Marketing Automation

Aug 23

Why do so many companies fail to get ROI on their Marketing Automation system?

We asked this question to ourselves a few years ago, when we were Marketing Automation consultants. At that time, we worked with a number of tools, including the most popular, HubSpot And Pardot. 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 clients who want to switch from an existing system to SharpSpring, which we ourselves sell and implement. A common scenario is:

More...

  1. You buy a system
  2. You realize it was more difficult to implement than you had been promised by the vendor
  3. You only use 10% of the potential but still pay the full cost - a simpler and much less expensive system such as Mailchimp would be able to do the job, sometimes even better

Why does this happen?

Often, unfortunately, due to unexpected peripheral costs that many providers do not have an interest informing you about.

To get a good implementation and ROI out of your system, it is important that you are aware of these costs. Then you can plan for and manage them, and thus get a good return on your investment.

In this article, we'll clarify these peripheral costs and what you can do about them.

Non-system Marketing Automation costs

When investing in Marketing Automation, it's easy to make the mistaken assumption that price will be the major cost driver. If that would have been the case, ROI would almost certainly be a no-brainer.

But the direct system costs fade in comparison to the four peripheral costs we have been able to identify:

1. Strategy Cost

To succeed with a good Marketing Automation implementation, the management team's approval and proactive initiative are needed. This, incidentally, is our first peripheral cost: Management energy and time.

In addition, you will also have a more subtle strategy cost. Once your company has invested in digital marketing systems, employees who have promoted the initiative will be psychologically tied to related strategies. Even if, sometimes, non-digital marketing and sales strategies are the better option.

For example, your team might focus on driving leads online, when events or other types of promotion would produce better results. Or on digital follow-up nurturing, when phone calls to book meetings would create better customer relationships.

The best is often a combination: traditional sales strategies with digital support, combined with purely digital strategies. But the new digital way is often forced, even when it's not the best choice - creating an internal division between those who advocate it and the traditionalists.

2. Content Cost

A Marketing Automation system is powered by content. Content is your gasoline while your system is the car.

Content creation cost is almost certainly going to be several times that of the system.

Sometimes, companies who want to convince themselves that Marketing Automation will a good investment reason that there will be no additional content cost, because they're already creating content. This is only partially true and depends on the type of content you are already creating.

Most pre-Marketing Automation companies we meet produce product based content, such as brochures, manuals and trade show materials. Some write news articles on their website, but again from an inside-out perspective. Such articles are often news about the company or its products.

A good Inbound Marketing strategy operates outside-in: What problems do our customers experience? What are they searching for online before they know our product category even exists? What content would be so valuable for them, that they'd be willing to trade their contact details for it? And how can you talk about their problems, without even mentioning your products?

This is new type of content for most companies, to a new group of people that the current content rarely addresses.

3. Implementation cost

The technical implementation often costs many times more than the system itself. This is also where we see the vast majority getting stuck. Most companies lack technical Marketing Automation skills. That's why our Marketing Automation experts will help you with any implementation.

The implementation cost manifests itself in three phases:

Phase 1: Understand what your Marketing Automation system can do technically

Most of today's popular Marketing Automation software are simply a bunch of features bundled together. I often compare them with buying a big box of Lego. You will rarely, if ever, succeed in building a nice Lego ship on your first attempt. And it will take a lot of time, trial and error, and learning.

With Marketing Automation, It often takes several months to even test all the features and get a basic understanding. It's this "nitty gritty" that you get a feel for before you're able to start building what you really need.

Phase 2: Iterate your first working holistic processes

Examples of such processes may include: "From visitor to qualified lead", "from webinar invitation to follow-up sequence" or "from nurturing to sales opportunity and then back to nurturing". There are many marketing automation sequences you can implement. After 3-6 months of full-time work, you'll hopefully have a good basic implementation that generates some results, and the satisfaction of leaning back and looking at the machinery and processes you've built is great.

Phase 3: Optimise your machinery and internal processes

This is the point when you can really start showing off some impressive results. It's also at this point where you're able to prove your numbers and get more resources. This is where the real fun begins.

Your job now changes from proving what is possible to improving and doing more of what works. The question mark is straightened out to an exclamation, and testing is replaced by production. The organization as a whole starts adopting what you've built by changing its related processes (such as the sales process) accordingly.

You start to measure and optimise the types of mail that work best. You look at your processes and replace the parts that don't work. You reuse the parts that work in other processes. You'll also start using personalisation features to better target your message.

4. Selling cost

Does it cost to get more leads? Yep!

To top it all off, when you are able to finally provide your sales force with a steady stream of highly interesting and potentially valuable leads, your efforts may be met with a slap on the wrist! Do you remember the section about Strategy Cost?

To avoid sales backlash, management needs to be fully onboard with your plans! This includes a new type of sales process, to handle the leads you generate. Otherwise, everything you've done up until this point may be a big waste of time. Why? Without proper leadership, leads will not be taken care of, which will cause results to suffer. And who'll take the blame? Well of course, your system and your "new way of selling"!

In our experience there are two ways to deal with this:

  1. Including your existing sales force on the change journey: To succeed in changing behavior, your existing sales force needs to be with you all along, from initial idea to testing and implementing. Otherwise, the prevailing culture, processes and ways of working are difficult to change and often result in the digital leads not being followed up.
  2. Creating a parallel "digital sales force": This will be your "inbound sales" team. They don't know any other way. They're 100% digital, and 100% inbound. Interestingly, we've noticed that the result is best when they report to the marketing manager, rather than to the sales manager. Your role as marketing manager therefore grows from brand focus to digital sales responsibility.

Marketing transforms into sales. Sales transforms into customer relationship. And Inbound becomes your new sales channel.

If you persevere, the rewards are great

Don't let all this "peripheral costs" talk scare you off. That is not my intention. I have worked with over 20 companies, both as an independent consultant, and at FunnelBud. This is the pattern I see: Those who are aware of the full cost pattern before they start are consistently more successful than those who expect the system to be some sort of silver bullet.

Why? Marketing Automation has the potential to provide amazing results. Those who succeed get a flow of new, qualified leads, and a sales force that are able to convert those leads into huge revenue gains. Customer communication is more professional and more personal - both pre- and post sale. The brand is strengthened. Loyalty increases.

But these results do not come without effort.

I believe that companies with the right expectations plan for the long-term gainst, and thus they're more willing to make the necessary investments. The ones who do not do this always seem to have a horizon that doesn't stretch further than a constant focus on the next event, the next email campaign, or the next article. Without a long-term focus it is difficult to build an integrated machinery with systems and processes that work in harmony and an organization that supports it. Such an integrated overall solution can achieve 10x the results with the same effort.

Case study: What ROI can your MA strategy provide?

Let's look at a case: An enterprise IT solutions provider with 20-30 employees (grew) that I used to work for (I implemented their Inbound Marketing strategies - in fact that's where I learned many of the lessons in this article).

After three years of trying our best to implement Marketing Automation, we had the following cost structure:

  • System cost: $650/month
  • Strategy Cost (meetings, etc.): $950/month
  • Content and setup costs: $3200/month (half of a full-time position in the marketing department)
  • Selling cost: $3200/month (half a sales role dedicated to working on Inbound leads)

Total Cost: $8000/month.

Please note that the above is just an example of what it might look like. Both the conditions and the size of the figures above will vary depending on, for example, how big you are, how far you have already come in the sales and marketing work, how your sales processes look, what you sell and many other factors.

For the company in the above example, the number of leads began to increase rather quickly, but thanks to a long sales process it took a while before revenue resulted. Nevertheless, after slightly more than 6 months, they'd closed their first deal that was generated by Inbound. After 2 years, the company could confidently attribute over $525,000/year in revenue to their Marketing Automation initiative. That's over $43,000/month.

So the direct ROI was 5x the total monthly cost. Month after month.

If we include indirect ROI, the following benefits should also be considered:

  1. Increased closing rate of ongoing business, even business without direct connection to the Marketing Automation strategy (thanks to the stronger brand, the more professional impression and the better follow-up)
  2. Increased innovation and efficiency, because the investment generates so called "externality benefits" (those who work with the Marketing Automation strategy also inadvertently spread excitement and new ideas to other parts of the organization)
  3. 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 references).

Although it is difficult to put a monetary value on the indirect ROI, it is clear that the total benefits far outstrip the pure monetary 5x ROI.

Should you do it yourself or hire consultants?

As you have seen, the largest cost record is not the system, but the implementation and execution. And you've also seen that the benefits far outstrip the cost, monetary or otherwise.

So what's the best way to accomplish this?

First of all, accept that there is no way around the costs we've outlined (at least we haven't seen it). So the question becomes not "how to avoid the costs", but "how to get most bang for the buck?" Time or money.

Our recommendation is undoubtedly a combination.

Today there are consultants specialized in helping companies transform their sales organization to "the new Model". By using outside expertise, you can avoid many testing and learning iterations, avoid traps, and using some shortcuts.

At the same time, we will help you to substantially reduce the implementation cost (item 3) because training, system implementation and ongoing help with set are included.

Our final advice to you will therefore be as follows:

  1. Make sure that management has a clear vision of the end result and what it will take to get there.
  2. Make sure you can produce the type of content required to benefit from this type of strategy.
  3. And when selecting your Marketing Automation platform, select a system who will be your implementation partner, not just a system developer.

We at FunnelBud help you with Marketing Automation and CRM software, strategy and implementation (points #1 and #3).

Examples of industries served include: Helping a telephony provider create and implement digital sales channels with our partner Certus Growth, creating a digital content strategy and content for a recycling group with our partner Hägvall & Sjöman, and creating Inbound Marketing campaigns that generate leads for a parking and security services company with our partner with our partner JobAssigner. Can we help you get ROI with Marketing Automation, too?

Follow

About the Author

Yusuf helps companies use Marketing Automation to grow B2B sales. In his career, he has generated $20M inbound pipeline and built a sales team and sales process that closed $2M in revenue. As a certified consultant in Hubspot and Pardot, Yusuf saw the need for better services at a lower cost. Today, he offers just that to Swedish companies, using SharpSpring's revolutionary Marketing Automation-system.

  • Yusuf Young says:

    Thanks Uttam.

  • >