Recently, I was on stage during a Marketing Automation event talking about how to become a Revenue Rockstar as a Marketer. Essentially, I addressed the value drivers and the economics behind the business case when considering or deploying Marketing Automation.
After all, empowered by social and mobile, marketing has become the steward of the whole customer journey. Marketing is no longer only about organising events, throwing parties or setting up marketing campaigns. Today’s marketing is about becoming accountable. From providing demand generation to taking care of customer advocacy. It’s because of that increase in responsibility that transparancy and accountability becomes a requirement.
Where did it all start?…
Where and when did the Marketing Automation hype start?
Back in 1999, when Marketo and Eloqua – both Silicon Valley start-ups at that time – created these platforms, they were not called Marketing Automation, but were referred to as Revenue Performance Management systems (RPMs). Their main goal was to provide transparency on marketing investments and its return. And today this is actually key to cut through the noise of more than 300 suppliers of Marketing Automation software. It’s not only about automating repetitive tasks. No. It’s about translating Marketing spent into hard ROI and getting rid of Marketing vanity metrics.
A recent Survey amongst 300 marketers in Belgium tells us that 50% of marketers have not yet implemented Marketing Automation due to a lack of budget. And if they had already implemented it, research shows that 80% of the cases achieve a positive ROI within 9 months. We know that companies use only 10% of Marketing Automation’s functionalities. Even though this is an average across all the users, this says a lot about the possibilities of this technology.
So… what is the economical impact of a predictable, performance driven marketing machine?
Well, first of all: marketing technology is creating a shift in the Marketing industry – and that shift is actually driven by new customer behaviour. As our customers have adopted a mobile and social lifestyle, we need to do marketing in another, smarter way. Some vendors refer to this as inbound, others call it modern marketing or engagement marketing. But it all comes down to this: we need to shift from paying for attention to earning attention in a smart way. This by using content to go into dialogue with our customers and use data better to tailor our message to the context and behaviour of our customers. This means Marketing Automation as a mindshift at first and an economical shift in budgets secondly. Typically we see a lot of companies shifting budget spend on campaigns – sometimes run by external agencies – to internal budgets in content generating inbound traffic.
The great thing? All of this makes marketing more predictable. Because with marketing automation, you control all your marketing programs, tactics, channels, customer touchpoints and investments yourself. Forrester ressearch show that 76% of B2B-marketers’ ability to track marketing ROI gives them more budget and resources. It’s more like a ‘show the money and you’ll get the money’-principle.
What is needed to see marketing as a part of a machine that drives revenue and profits? Enter Marketing Metrics…
I guess we can say we are coming to an age of attribution. Marketing Automation allows you to measure many of the levers you have in marketing. And it’s less and less about vanity metrics such as number of website visitors but more about revenue performance metrics.
Most of the time marketers only measure first click attribution (48% according to an Econsultancy study). This means that in a lot of cases the marketing department is stuck in its role of generating top of the funnel marketing which is still considered as a cost center. However, It’s important to measure every touchpoint, conversion point and their performance.
Which value drivers support the business case of Marketing Automation?
What are the right kind of metrics to improve your accountability? How do you start with Marketing Automation?
According to a recent survey in Belgium, these are the top three value drivers and benefits marketers see after the implementation of Marketing Automation:
1. Enhanced targeting
This is the known story, right? It’s about bringing together your data and your content and then link them to your customer centricity programs. It’s about how technology can be used to become more relevant taken into account with the context of your customer and how it can be used to do dynamic segmentation based on your customer’s behaviour. And that is what industrial marketing in the 21st century industrial is all about. It’s more pull than push, it’s more about automated processes instead of the traditional campaign- product or promotion centric approach.
2. Improved lead management & nurturing
Let’s show some striking statistics. Do you know that on average:
- Only 25% of leads are legitimate and should be sent to sales;
- 50% of leads are qualified, but not yet ready to buy;
- 79% of marketing leads never convert into sales, with a lack of lead nurturing as the common cause;
- 61% of B2B marketers send all leads directly to sales;
- However, only 27% of those leads are qualified.
As a result, only one lead out of 1000 leads generated by marketing gets closed. Marketing Automation, however, is about synergizing with sales, and the sales efficiency gains are as important in the business case as all the rest. It’s about doing things differently, resulting in strong process redesign, which then impact conversion throughout the funnel.
3. Increased efficiency and productivity
This is obviously one of the key drivers. But this paradigm also means that we still consider marketing as a cost center. While his is a minimum criteria to be the best of the class in this era of customer centricity, being the most efficient or productive marketing machine will not always be enough to get you your seat at the revenue table.
So, how does all of this translate into the business case?
What’s the opportunity?
These value drivers (translated into the business case) can create many opportunities.
We can bucket these wins into 3 pillars:
- Tactical ROI or the quick wins, these are the shifts in budget: Often we see Marketing Automation being implemented to fix tactical challenges such as email deliverability or the improvement of event attendances. While this indirectly creates an impact on the ROI of your events, content, etc. it does not translate as a direct impact on your revenue. Therefore, marketing remains to be considered as a cost center.
- Strategic ROI or the most beneficial, where you change the game: This is where you gain most benefit from in the long run. Since this is the era where you must create an impact on the customer experience and improve the relevance of any marketing initiative you take.
- Operational ROI or doing things differently: Marketing Automation easily leads up to 15% savings on creative production and 5% reduction in marketing waste. Event triggered marketing can potentially save you 80% of your direct mailing budget. Also, if you know that the average marketing department uses 11 different applications, Marketing Automation can be a catalyst to consolidate and simplify your marketing technology stack.
OK great, but what’s the story behind these metrics?
As stated earlier, the worst kinds of metrics to use are “cost metrics” because they frame marketing as a cost center. If you only talk about cost and budgets: others will associate your activities with cost as well. These are performance metrics, so basically about the ‘How did we do?’. It’s looking in the past, using a rear view mirror. Now there’s nothing wrong with that. The only thing is that by the time you have taken a decision based on your metrics, you are a couple of weeks further down the road. Which is not ideal in today’s volatile world.
So what do you have to use then? The more mature metrics are the diagnostic metrics. They tell us ‘how are we doing?’. It’s the current state of the business. They allow us to steer our decisions more accurately.
And finally, the more advanced marketers use leading indicators. They tell us ‘how will we be do in the future if….?’. This is about being predictive.
In order to achieve accountability, we need to talk about revenue, margin, profit, cash flow, ROI and shareholder value metrics. Or in other words, your company’s marketing ability to generate more profit and faster growth than your competitors.
Why is all of this important?
While you were reading this post you are probably at the first stage and still exploring the benefits of marketing automation or you already have adopted a technology and you look for ways to improve. In any of those cases, you are probably looking for the bigger picture on how to approach marketing automation.
In a nutshell, marketing automation helps you increase your organization’s accountability. It improves transparency. But remember it’s a change management process. The catalyst behind the economics is all human. It’s about putting your customers first, becoming convenient for them. Internally, it’s thinking about industrial marketing in the 21st century and considering the different levels of internal resilience towards these new methods.
Ping me if you want to discuss or get a coffee…
Renout van Hove