How to Improve Your Marketing Automation ROI
Effective B2B marketing processes plus automation yield outsized returns
A recent research study by Sirius Decisions (sponsored by Marketo), Calculating the Return on Marketing Automation, shares a framework for establishing a return on marketing automation, and discusses why the purchase of a Marketing Automation Platform (MAP) alone - without the proper processes and skills wrapped around it - will likely produce disappointing results.
According to the study results, Marketing Automation technology paired with appropriate, systemic processes can yield four to five times the number of closed deals when compared to deployed technology alone. The magic lies in realizing higher conversion rates throughout the Sales cycle. It’s not about generating more leads; it’s about identifying the right leads.
Companies using technology alone to solve their demand creation issues experience lower returns than companies who have no marketing automation AND no processes. The report breaks companies into three segments:
- No Marketing Automation with no processes
- Marketing Automation with no/weak processes
- Marketing Automation with average processes.
No MAP / No Processes
This group features organizations that exhibit a complete set of legacy demand creation tendencies. They have a funnel with an extremely wide top that quickly narrows to a trickle by its end. With no shared processes in place between Sales and Marketing (e.g. target market definitions, lead handoff criteria, service-level agreements), lead generators have little choice but to flood the funnel with any prospect who shows the slightest interest. Email is the most typical tool, yielding a response rate of roughly two percent.
Almost all responses are passed on to a qualification function (usually inside sales). Conversion rates from response to ‘lead’ can range as high as 85 percent. The lack of qualification at the top results in abysmal conversion rates at the middle and bottom. An average of only five percent will be qualified as true leads by telemarketing. “Sales fatigue” sets in over time in terms of leads that come from Marketing. Telemarketing finds out these leads are of low quality, so reps turn to cold calling, preferring to control the quality of their lead destiny themselves. Field reps will likely ignore Marketing’s output even more. Given a starting marketing database of 50,000, this scenario yields roughly one closed deal (or average additional revenue of $100,000) per marketing program.
MAP Plus No / Weak Processes
This group is made up of organizations that purchase a MAP, but don’t spend the time building all (or any) of the processes that drive true MAP performance. By itself, a MAP can help marketers refine their targeting and the assignment of specific content to prospects; together these drive greater response rates. This yields a response rate of three percent. Improved data quality within the MAP means that Marketing will reject more inquiries, dropping the conversion rate at the first juncture to 75 percent. This rate is still too high, overflowing the telemarketing function with even more unqualified leads. The middle and bottom conversion rates are unchanged from the first scenario. The close rate remains the same, but costs increase.
According to the study, a typical software-as-a-service-based MAP runs roughly $100,000 in the first year - when one includes the platform, implementation, integration, training and support. In this "MAC plus NO or Weak Processes" scenario, an organization with a database of 50,000 will see revenues increase only about $100,000 in the first year. In addition, if Marketing has raised expectations that lead quality will increase due to this MAP purchase, greater friction between Sales and Marketing results.
MAP Plus Average Processes
The third group consists of organizations that purchase a MAP and drive alignment between Sales and Marketing around target market definitions, lead handoff criteria and service-level agreements. When this occurs, marketers are able to take advantage of broader MAP functionality including lead scoring, portfolio marketing and lead routing. The value of this functionality shows in performance. Improved focus on the best targets raises the response rate to roughly four percent. A significantly lower conversion rate of only four (compared to 85 and 75 above) percent ultimately yields much better results, because these are true Marketing Qualified Leads (MQLs).
With a handoff process in place, Sales now accepts and processes more than 58 percent of MQLs. The higher quality of these leads in turn yields an increased close rate of a bit more than 23 percent. An organization can expect to close roughly five deals per program based on a 50,000-name database. That’s a revenue increase of about $400,000.
Processes should always precede technology. Deploying technology without Sales and Marketing processes in place will only highlight the problems you always had. The key is to rethink your approach and use technology to leverage your processes, not the other way around.
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