What Marketing Automation ROI can you expect? Is marketing automation software worth the investment?
As one of SharpSpring’s leading agencies, we’ve helped over 70 clients implement marketing automation and CRM processes that help them get more sales. Not only SharpSpring, but also HubSpot and Pardot. So were the investments worth it?
What Is Return on Investment (ROI)?
Return on Investment (ROI) is a performance measure used to evaluate the efficiency of an investment or compare the efficiency of a number of different investments. ROI tries to directly measure the amount of return on a particular investment, relative to the investment’s cost. To calculate ROI, the benefit (or return) of an investment is divided by the cost of the investment. The result is expressed as a percentage or a ratio.
The return on investment formula is as follows:
ROI = (Current Value of Investment−Cost of Investment) / Cost of Investment
In this article, we’ll look at what kind of marketing automation ROI you can expect, from three different angles:
- Multiplying the effectiveness of your salespeople.
- Saving time by automating tedious work.
- Pure monetary ROI from increased conversion rates in your sales process.
First angle: Multiplying sales force effectiveness
A typical B2B sales person salary costs somewhere between $5,000 – $10,000/m or more incl. taxes, social fees, vacations and insurance.
So for the same cost, you can either have a salesperson working 4h per week (10% of a 40-hour workweek), or a Marketing Automation system that helps make your existing sales force become more effective. Which one is worth more?
To find out, let’s do a side-by-side comparison.
|Marketing Automation||Salesperson 4h per week|
|• Automate follow up and nurturing of a large number of contacts that are in the long-term pipeline.
• Improve timing and response rates by helping sales focus on contacts that are currently hot and active on your channels.
• Have more relevant and impactful conversations by providing additional information about prospects’ interests and behaviour.
• Improve efficiency and quality with ready-made templates, tools and suggestions.
|• Send a few emails or make a few calls per week.|
A well-implemented Marketing Automation system can be likened to a sales assistant working for you 24/7, multiplying each salesperson’s effectiveness.
How much more effectiveness would it need to add to an existing salesperson to give you ROI and pay for itself?
If you have a single salesperson, it would need to improve that person’s output by 10%. If you have two, 5% per person. If you have three, 3% per person. And so on.
So it’s clear that if you have just a few salespeople or more, it makes a lot of sense to use a Marketing Automation system that improves each person’s output. In our experience, in such cases, even a simple nurturing sequence that takes care of unhandled leads can give you back your investment many times over.
Second angle: Saving time on routine work
Marketing Automation is meant to automate. So another way to look at Marketing Automation ROI is to look at how much time it saves.
From the calculation in the previous section, we know that Marketing Automation costs roughly as much as 4 hours of working time per week for a standard salaried person. So if it can save more than 4 hours per week, it will pay for itself.
Here are some ways a Marketing Automation system can save time for a typical company:
|Activity||Manual approach||Marketing Automation||ROI: Time saved per week|
|Monthly newsletter||Import leads from a CRM system into a newsletter tool and then email them. Copy-paste content from the website into the newsletter.||Automated lists containing your correctly segmented lists. Automated RSS sections auto-populating with content from your latest articles.||2h|
|Distribute leads||Regularly check the info@.. Inbox, cross-compare with info in the CRM, and forward new contacts or requests to the right department or salesperson with several emails back-and-forth if it is unclear who should take it.||Automatically distribute leads or requests to the correct department or person, either via automated routing or directly in the CRM system.||2.5h total if we include several people emailing each other sometimes to find out who is taking care of something.|
|Research new leads||The salesperson tries to find the same contact in the CRM, asks colleagues if they have been working on it or on the prospect company, and checks own email inbox to try to find old conversations. Add them to the CRM manually if they’re new.||See all communication in one place, including other departments or colleagues working on the same contact or company and emails they’ve sent and received.||2.5h|
|Monthly webinar or event||Import a list of people to invite and email them. One week prior to the event, cross-check invitation list against sign-ups and send another invite to those who haven’t signed up. After the event, export list of participants and email them from newsletter tool. Manually check who clicked and send to sales for follow up. Sales follow up manually.||Always-up-to-date lists of people who pre- and post-event/webinar. Automated invites to whoever did not sign up, and automated follow up email and qualification criteria that send them to the CRM for standardized follow up using pre-made templates.||5h|
|Send material leads requested on forms||Send brochures or materials to people who request it on web forms.||Automatically send the material via a thank you email.||0.5h assuming you have a couple of such leads per week.|
|Populate newsletter lists||Add people who downloaded brochures or materials to your newsletter list.||Automatically add relevant people to the newsletter list, alternatively via a tickbox on your forms.||0.5h assuming you have a couple of such leads per week.|
|Qualify new leads||Research people who have downloaded material and email them other relevant emails or ask them if they’re interested in a phone call after a week.||Automatically nurture people with related and relevant material, based on their “digital body language”. Add lead score and send them to sales if they click, read pages etc. that indicate potential buying intent or if they fill out another form requesting more info.||1.5h assuming you have a couple of such leads per week (or equivalent loss of potential sales if you don’t do this).|
|Social media posting||One person posts on social media 2-3 times per week, then a couple of other people share those posts on their channels.||Scheduling all the month’s social media posts on key people’s social media accounts in advance.||2h total for all involved.|
|Outbound prospecting vs. B2B advertising||One day per week, gather a list of prospects, email them, call them etc. to book meetings. Resulting in one booked meeting per full day’s work, i.e. one lead per week.||Equivalent to a spend of $200 per week which will typically produce one lead per week that is automatically nurtured by follow up sequences and lead to a meeting.||If one hour costs internally $40, then a weekly ad spend of $200 is worth 5h. So the time saved is equivalent to 3h per week.|
|Outbound prospecting vs. Inbound Marketing||One more day per week, same as above.||Getting one qualified lead per week via a standard Inbound Marketing Funnel: New visitors via SEO optimized articles who download material and get nurtured with a sequence of 5-6 emails until they have a high lead score and get a trigger-based email requesting contact. Sales get bookings directly in their calendar.||8h|
|Spend half a day per week emailing people you were in touch with but who didn’t get back to you.||Automatically nurture opportunities salespeople haven’t touched in over a month with automated but relevant content and digital retargeting, and notify the relevant salesperson if they click.||4h|
These are just some of the most basic things you can do with a good marketing automation solution. But already here we see a weekly saving of 31.5h per week, which is 7-8x the cost.
This time can instead be used to improve the automated processes, content and conversion points that will help you leverage the tool to even greater effect.
Case study: How Marketing Automation produces the same value as a full-time prospecting person for a recycling company
One of our clients working in waste collection and recycling for housing estates gets (at the time of writing this) on average 9 leads per week via organic search. Of these, they have estimated that 30% (2.7) find them via pure keyword searches not related to their brand name and then get nurtured via one of three series of 6 emails.
This equates to building new relationships with 2.5 companies per week who find them via keyword searches, and who would have otherwise not known about their brand. This is equivalent to what a full-time salesperson would be able to accomplish and is in line with the estimates we have made in the table above.
Today, they are instead spending the time this has freed up for them improving their content, creating more granular follow up sequences, implementing new follow up ideas, and other ways to get even more leverage from their sequences.
Third angle: Monetary ROI from optimized conversion rates
The third and final way to estimate ROI from Marketing Automation is the most obvious one: How much more can you sell from optimized conversion rates?
To find out, we created a model by interviewing many of our B2B clients from different industries. We concluded that there are really only three ways to increase your sales:
- Get more leads
- Convert more leads to sales or referrals
- Increase revenue or referrals from clients
Marketing Automation can increase conversions in each of these steps. Here are some examples:
- Get more leads with classic inbound or outbound marketing.
- Improve conversion rates by segmenting better and improving your automated nurturing sequences.
- Help sales close more with web visit or email click alerts that improve their timing, lead scoring that help them focus on the right leads and a more structured sales process.
- Build better client relationships with a personalized client newsletter or reduce churn with NPS implementations.
- Upsell more effectively with dynamic web content.
After studying several clients, we were amazed to see how even incremental and small improvements in each step can have a large impact on the bottom line! It’s like compound interest: Each incremental improvement builds upon the next.
As an example, consider this:
One client estimates an average deal value of $15,000 per deal. They were getting 5 leads per week (260 per year). Of these, they were estimating that they closed 14 deals per year (i.e. 5.38% total close rate).
By increasing the number of leads by just 10% (i.e. 286 leads per year instead of 260) and close rate by another 10% (i.e. closing 5.92% instead of 5.38%), they close 16.8 clients per year instead of 14 (i.e. 2.8 more deals per year).
2.8 more deals per year might seem like a small number, but it equates to $42,000 more in sales per year. There’s a clear ROI compared to the marketing automation cost, which is $7,800/year ($650/m).
Most businesses can reach these and much better results by following standard methods we’ll help you implement.
Test your own Marketing Automation ROI by adding numbers from your own business in our Marketing Automation ROI calculator.
Of course, these conversion rates do not magically go up by themselves. There’s a lot of work and cost behind getting Marketing Automation to work. But most of that work is typically one-off type work to set up the system, content and processes.
After laying the foundations, you’ll reap the rewards continuously. And it’s totally worth it!
Summary: How much ROI can your Marketing Automation system give you?
A well-implemented Marketing Automation can leverage your business with automations and time savings no matter which angle we look at it from. We have identified at least three ways Marketing Automation gives you clear ROI:
- Increase the output of each salesperson.
- Save time doing mundane work.
- Improve leads and conversion rates.
Of course, all of this requires upfront effort. But once that’s done, you’ll free up time that you can instead use to improve and optimize the systems and processes you’ve built, to multiply ROI even further.
In upcoming blog posts, we’ll dive deeper and look at specific ways and methods you can use to determine exactly what you should focus on to achieve just that.