Marketing Automation: Understanding the Hidden Costs

By: Christopher Antonopoulos, founder, and CEO, Measured Results Marketing

Over the past decade, Automation has become a tainted, horrifying word. Why? Because every news story or Hollywood movie promotes automation as a way to entirely eliminate the need for human beings. But let’s be realistic; that is a bit dramatic and probably won’t ever happen – at least not in our lifetime. Instead, automation is actually just making our lives easier.

No matter what industry you are in or how big your organization is, I can guarantee you that there is a need for automated processes. Marketing departments are no exception. Marketing has become so much more than the “make it pretty” department and is really starting to see the benefits of becoming enabled with technology. In fact, according to Forrester’s U.S. Marketing Technology and Services Outlook, 2017 to 2022 report, “By 2022, chief marketing officers in the U.S. will spend over $122 billion on investments in marketing technology (martech) and services.” This is not surprising given the fact that 1,500 new martech solutions were introduced to the market in 2017 alone.

If marketing automation is new to you, then let me take a step back and explain. Marketing automation is software that allows marketers to automate repetitive tasks, such as planning campaigns, engaging on social media channels and executing email campaigns. In doing so, marketers are able to increase operational efficiency, grow revenue faster and prove it to the C-suite through detailed analysis. Turning to automation is essentially like going from an herbal tisane to downing a triple espresso with caramel brownie chunks. I don’t know if that last thing is real but it should be.

However, this article is not intended to sell you on marketing automation. Instead, it is aimed at helping organizations that are investing in or switching marketing automation platforms understand all of the associated costs.

Social Marketing

If social marketing is a large part of your strategy, then consider how well your software enables you to do what you need now and in the future. Some bring everything inside the tool such as building out an editorial calendar, routing posts for approval, posting and analytics. Others may not have any integration, and you’re stuck with going to each channel or purchasing another tool. In that latter case, you have a hidden cost of purchasing additional tools and/or the time it takes your team to perform the activity.

Building Emails

Here the hidden cost is the time it takes your team member to create all the components for an email campaign. You’re typically looking at the initial creation of templates, then configuring the individual emails for your campaign, programming what gets sent when looking at the back-end notifications and alerts and even how to trigger analytics down the road. The software does a lot of the heavy lifting but it still easily burns uptime. In some products, everything is in one place and they have wizards that guide you from step to step all the way to the final check. Others are less intuitive and dependent on your team member knowing where to go and what to check in QC.

Getting Qualified Leads to Sales

If a prospect is ready to engage with the sales team, it’s extremely important for them to hear from someone quickly. Failing to make contact in time could mean a lost sale, which is a huge hidden cost. It’s important to determine how and how quickly the software on your shortlist will communicate potential buyers to your sales organization. If that functionality isn’t supported, then your cost burden comes from someone on your team passing the leads over. Delays from that manual process can cause friction between sales and marketing, which believe me, has a cost. Even if the software has the ability to send leads to the sales organization in some cases the software takes up to 24-hours to sync, which may be a deal-killer in your business.

The MarTech Stack Neighborhood

One painfully expensive realization that many marketers experience is when the software is purchased without consideration with other tools in the tech stack. Perhaps you use event management software. Many of those do integrate well with marketing automation, but if they don’t you’ll face switching costs when you get a new event tool or you’ll have to develop workarounds which may not create the best experience for your staff or attendees.

Sales CRM Integration

Another increasing area of costs is not considering how the marketing automation software will integrate with the sales tools in use. You can buy solutions that have both marketing and sales portfolios, or you can look at building integration with a Sales CRM. You should calculate whether the solution with both sales and marketing functionality means switching costs as you get the entire revenue team onto the new tool. If you go down the route of setting up the integration of your marketing automation system with your existing sales CRM, please realize that the out-of-the-box “turn on sync” isn’t going to cut it for 99.9997% of businesses. You will need to fund an internal or external consultant to consider your entire demand generation ecosystem and appropriately map out the connection.

People Costs

You may have noticed a lot of instances where the cost is produced because of continued reliance on a manual process or a new workaround. Unfortunately, there are even more hidden costs associated with the People aspect of this “People Process Technology” for turning on a new marketing automation tool. Most software is going to have some sort of training (which may have a cost), but some tools are just harder than others. You could be looking at either additional training costs, certification classes or external consultant fees to help you even run a monthly newsletter. Many companies have more junior resources on their team, that while technically savvy, won’t know how to manage an entire system which will rapidly become the lifeblood of your revenue cycle. Calculate the people’s costs of the new tool.

Contract Terms

Every vendor takes a different approach, and the hidden costs of the contract really come down to caveat emptor. Here are some things to look at. Very often you can get a great introductory deal on an initial tier (number) of contacts. As your database grows, it’s exponentially more expensive to add additional tiers. Think about whether that introductory deal is really worth it or if you should just buy-in at a certain level or change the contract terms. Other Hidden Costs are to do with renewals. A place you must look at is whether you have an auto-renewal clause in your contract. It’s good to have one for ongoing operations, but is there a price increase at the end of a certain period? Even if there’s not an auto-renewal mechanism, you may find a price increase at the end of your contract term, for which you have to pay or you have to pay to switch systems again.

Reporting

The great thing about marketing automation is it gives you all sorts of data. The problem is that sometimes it doesn’t give you the results you need out of the box. A common example? Campaign Attribution to Revenue. Many people assume that all those data points mean they can answer the CFOs’ ever-present question of what did that spend to get us? Your cost to get to that answer stems from 1) The need to bring in data from the sales system (which deals closed) and 2) A standardized approach that ensures the entire organization measures results in the same way. Eg what’s an opportunity? Is it when you’ve had an initial phone conversation or when you’re sending a proposal out the door. Both are right, but everyone needs to agree.

There is obviously a lot that goes into marketing automation. If you think it’s a good fit and that your team can help put the tool in motion, then do not delay your decision to invest. Trust me, while the tech investment can add up, it will pay for itself. According to Adestra Marketer vs. Machine (2015), 74 percent of marketers say automation saves time; 68 percent says it has proven to increase customer engagement; 58 percent says it has provided more timely communications; 58 percent says it increases opportunities including up-selling. We need automation to help make time for us humans to explore that idea of a caramel brownie chunk expresso but let’s do it so it makes financial sense as well. No Hollywood nightmares here.