Why do so many companies fail to get ROI from their Marketing Automation system?
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 at the time, Hubspot and Pardot. Regardless of the system, we saw that companies almost always underestimated the true cost of Marketing Automation.
We often see this even today when we get customers who want to switch from an existing system to SharpSpring, which we sell and implement ourselves. A common scenario is:
- You buy a system
- You realize that it was harder to implement than what you had been promised by the supplier.
- You only use 5% of the potential but still pay for the other 95% - a simpler system like Mailchimp would give you better results and be cheaper.
Why is this happening?
Often, unfortunately, due to unexpected ancillary costs that many suppliers are not interested in disclosing.
To get a good implementation and ROI from 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 ROI.
In this blog post, we will clarify these additional costs and what you can do about them.
Costs related to Marketing Automation implementation
When buying a Marketing Automation system, it's easy to focus on price. If only price were a factor, ROI would be a no-brainer.
But the direct system cost pales in comparison to the four ancillary costs we have identified:
1. strategic cost
A successful Marketing Automation implementation requires management team approval and continuous initiatives. This costs meetings, energy and time.
There is also a more subtle strategy cost. Once your company has invested in a digital system, employees who have driven the process become psychologically tied to strategies associated with the system. Even though non-digital, traditional strategies are sometimes better suited.
For example, the focus could be on getting new leads online when face-to-face mingling could give a much better result. Or on digital follow-up on contacts when phone calls to book face-to-face meetings could create better customer relationships.
A combination is often best: traditional sales strategies with digital support, combined with purely digital strategies. But the new way is often forced in even where it doesn't fit, creating an internal conflict between digital and traditional advocates.
2. content cost
A Marketing Automation system is driven by content. The content is the gasoline 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 people argue that they are already creating content and therefore it will not be an additional cost. This is only partly true and depends on the type of content you already create.
Most people we meet who have not yet acquired or started working seriously with a Marketing Automation system produce content of a product nature, such as product brochures, manuals and materials for trade fairs. Some write news on their website, but again from an inside-out perspective. The articles are often news about the company or its products.
A good inbound strategy instead thinks outside-in: What problems do customers experience? What are they searching for before they even know that a product of the nature you are selling actually exists? What content would they be willing to give their email address to get from you? And how can you then talk about their problems, without even mentioning your product?
This is new content, for a new group of people that the company's current content does not address.
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 because the technical system competence is not part of the company's main competence. That's why our Marketing Automation experts help you with all the implementation.
The implementation cost comes in three phases:
Phase 1: Understand what your Marketing Automation system can technically do
The popular Marketing Automation systems available on the market today are packed with features. I often compare them to buying a big box of Legos. If you haven't built a ship before, you won't succeed on the first try.
It often takes several months to test all the features and get a good basic understanding. It is this "nitty gritty" that you need to test and understand in order to even get started.
Phase 2: Iterate your first working holistic processes
The first end-to-end processes can be e.g. "from visit to qualified lead", "from webinar invitation to follow-up thank you sequence" or "nurturing to sales opportunity back to nurturing". There are tons of marketing automation sequences you can implement. After 3-6 months of full-time work, hopefully you have a good basic implementation that generates results, and the satisfaction of sitting back and looking at the machinery and processes you've built is great.
Phase 3: Optimize your machinery and internal processes
When you reach this point, you can start showing really interesting results. The company often gives you more resources. This is where the real fun begins.
Your job now shifts from proving what's possible to improving what works and making more of it. Question marks become 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 the personalization features to better target your message.
4. Cost of sales
Does it cost to get more leads? Yes!
On top of that, when you get to the stage of continuously generating highly interesting and qualified leads for your sales force, you run the risk of getting a slap on the wrist from them. Do you remember what we discussed under Strategy Cost?
To avoid this, management needs to recognize that a new type of selling will be required to handle the leads generated. Otherwise, everything you've done so far may be for naught. Leads will not be well managed, results will not be achieved, and most likely you or the system will be blamed.
In our experience, there are two ways to deal with this:
- Your existing sales force pushes for a more digital strategy: The sales force should have been involved in driving digitalization from the beginning. Otherwise, the existing culture, processes and ways of working will be difficult to change and often result in a failure to follow up on digital leads.
- You create a new parallel sales force that works digitally: This sales force becomes your "inbound sales" that works 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 a marketing manager therefore grows from brand focus to digital sales responsibility.
Marketing becomes selling. Sales becomes relationship. And inbound becomes your new sales channel.
If you put the necessary work into your MA strategy, the rewards are great.
All this talk about all the costs of the system might 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 throughout is that those who have the right expectations about what resources will be required succeed - while those who expect a "magic bullet" fail.
Why? Marketing Automation has the potential to deliver amazing results. Those who succeed get a flow of new, qualified leads to your sales force that leads to high revenues, a professional and personalized communication with existing contacts and customers, and a stronger brand that spreads further and further.
But results do not come by themselves.
I believe that companies that have the right expectations think more long-term while those who expect a "magic bullet" instead constantly focus 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 overall solution can achieve 10x in results with the same effort.
What ROI can your MA strategy deliver?
Let's look at an example company and what 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: €6,000/month
- Strategy costs (meetings etc.): 9 000 SEK/month
- Content and set-up costs: €30,000/month (half a full-time position in the marketing department).
- Sales cost: €30,000/month (half a salesperson working on incoming leads that would otherwise not exist).
Total cost: 75 000 kr/month.
Please note that the above is just an example of what it might look like. 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 above example, the number of leads started to increase quite quickly, but due to a long sales process, there was a lead time before any revenue came in. But after a little more than six months, they had closed their first inbound deal. After 2 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 thus over 5x with all related costs included, month after month.
If we include indirect ROI, the following benefits are also added:
- Increased closing rate of 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 calculate above generate so-called "externality benefits" (thanks to the fact that those working on 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 references).
Although it is difficult to put a monetary value on the indirect ROI, it is clear that the total ROI was far higher than 5x per month, with all costs included.
Consulting for the MA strategy or doing it in-house?
As you have seen, the biggest cost item is not the system, but the implementation and execution of the strategy. But if you get it right, the benefits will be well worth it!
How do you do that?
Generally speaking, you must first of all expect that these costs will be incurred, one way or another. Once you and your company have accepted that, the question becomes: How will you pay for this cost? Here you really only have two options: you can pay with your time or money.
Our recommendation is undoubtedly a combination.
There are now consulting companies that specialize in helping companies adapt their sales organization, with both roles and processes, to the "new model". By using outside expertise that knows in advance which traps and shortcuts exist, you can both streamline the work and avoid many rounds of iteration and testing.
At the same time, we at FunnelBud help you to significantly reduce the implementation cost (point 3) as training, system implementation and ongoing help with set-up are included.
Our final advice to you is therefore the following:
- Make sure that management is on board with the end goal and knows what costs and strategic changes this will entail.
- Make sure you can produce the type of content required to get the maximum benefit from the system.
- And finally, work with a system provider that is with you all the way, not one that leaves you in the lurch and then charges extra to get it right.
We at FunnelBud 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 worked with Certus Growth to help a telephony provider create and implement digital sales channels, with Hägvall & Sjöman to create a digital content strategy and content for a recycling group, and with JobAssigner to create Inbound Marketing campaigns that generate leads for a parking and security services company. Can we help you get ROI with Marketing Automation too?
