Why You Need Marketing Automation Software
The Business Case for Marketing Automation Systems
Nearly 9 out of 10 B2B buyers now begin their purchase process online. They initiate their buy cycle journey using search to find independent product reviews, asking friends in social networks who they recommend and reading customer forums to see what existing customers have to say. Research shows that B2B buyers educate themselves with online content and complete about three-quarters of their buy cycle before they ever engage a vendor. In fact, they’ve usually reached a vendor short-list by the time they interact with those vendors. Unfortunately for vendors, if they’re not found in the online discovery process, they’re excluded from the sale opportunity.
Marketers are keenly aware that the vendor led sales cycle has been replaced with an online buyer driven buy cycle, and in response are shifting their marketing budgets toward digital marketing campaigns. Inbound marketing, content marketing, email marketing, paid marketing and social (media) marketing are increasingly becoming the favored methods for attracting and engaging online buyers.
The Business Problem
Marketers increased investments in online marketing methods incur several tactical challenges.
- How do you identify, track and engage anonymous online buyers?
- How do you link the volume of digital history to each online buyer?
- How do you know which online buyers are qualified and which are not?
- Once you get an online buyer to your company website, how do you convert them to a recognized person?
- And how do you do these things without adding staff?
Now consider how these tactical impediments contribute to much bigger challenges.
When sales are slow, sales staff opine they don’t get enough leads from marketing. Many times they’re right. When sales are good, sales staff opine the leads delivered by marketing are crap. And again, research shows many times they’re right. The just released CSO (Chief Sales Officer) Insights, Sales Optimization Study, found that nearly two thirds of sales professionals rated their lead gen capabilities as “needs improvement.” More troubling, the research found that marketing only supplies 30% of the leads sales needs.
From a lead gen perspective, marketing is charged to bring segmentation, highly tested messaging, relevant and personalized content, and scale to demand generation campaigns in order to acquire the volume and quality of leads needed to achieve revenue objectives. But this is a tall order, and when the leads buying intent is unknown or sales harps for more leads, marketers too often throw all the leads over the fence which in turn incurs several ramifications.
- Good leads fall between the cracks when marketers also include unqualified leads in their lead distributions to sales. It’s an age old problem that both sacrifices the goods leads and grows the cultural divide between sales and marketing.
- Sales productivity falls when sales people become lead qualifiers rather than lead verifiers. Sales productivity falls even further if sales people are forced to become their own marketing shops.
- The cost per lead rises dramatically when sales people acquire their own leads one at a time, as opposed to marketing applying repeatable processes and scale to acquire leads in bulk.
- Leads acquired outside of marketing don’t benefit from nurture campaigns and other marketing programs, and have a much higher propensity to languish and be lost.
The Business Solution – Marketing Automation Software
The solution to the problem is for marketing to acquire the bulk of leads using repeatable processes and only transfer qualified leads to the sales team. But this solution is much easier said than done. Fortunately, marketing applications have responded with methods and automation to tackle both the online marketing challenges and the overarching demand generation objectives.
Marketing automation software brings precision, process, scale and analysis to lead generation campaigns. Or more specifically, these marketing applications track, acquire, score, nurture and transfer sales-ready leads to the sales team. And here’s how they do it.
Digital Tracking. Marketing automation systems track anonymous visitors using cookies, store click-stream data by cookie ID and apply IP reverse lookup to identify the company. When the anonymous visitor becomes known, the cookie history is associated to the lead record. These marketing systems include visual tools so that non-technical marketers can create landing pages and registration forms which also convert anonymous visitors into known contacts. By tracking a lead’s digital footprints, including what content they’ve consumed and what search terms they’ve used, the marketer can begin to understand their buyer role, buyer preferences and where they are in the buy cycle.
Lead Scoring. Most leads consuming content and visiting the company website are still researching. Forwarding these leads to the sales team annoys buyers and wastes valuable sales time. Instead, marketers must offer educational content to help the buyer advance and monitor the lead to know precisely when they are ready to speak to a salesperson. This is where lead scoring is useful.
Lead scoring is a process of assigning point values to lead attributes and behaviors in order to measure a leads fit and propensity to purchase. Capturing and scoring implicit buyer behaviors such as the volume of visits to the website, the type of searches performed, the specific pages read, and the type and number of collateral downloads can provide specific and actionable data points which automatically update lead scores—and upon reaching or exceeding a threshold score can automatically forward the sales-ready lead to a designated sales person for timely follow-through.
Marketing automation systems also score explicit criteria which include demographic factors such as Company Size, Contact Title and other criterion which align with the company’s target market or ideal customer profile. When leads are objectively scored to indicate when they are sales-ready, marketing passes fewer but higher quality leads to sales. By eliminating low quality leads, the qualified leads get more attention and sales productivity increases. In fact, one study found that a 10% increase in lead quality generates a 40% increase in sales productivity.
Lead Nurturing. Buyers are no longer forced to engage with sales people to learn about a company’s products. The abundance of product information available online has changed the way buyers search and research solutions. According to SiriusDecisions, “70% of the buying process is now complete by the time a prospect is ready to engage with sales.” Marketing now owns the majority of the buy cycle and must implement techniques which engage buyers before those buyers down select their finalist vendors. Marketing automation software uses nurture campaigns to deliver progressive email communications of informational and educational content to engage and advance leads until they become sales-ready.
In the B2B space, research consistently shows that about 25-30% of new leads are sales-ready when received, about 45-55% are not sales-ready when received but about three-quarters of this group will eventually become qualified, and about 25-30% of new leads are not sales-ready when received and never will be. This data highlights how nurture campaigns can produce just as many leads from the not-yet-qualified volume as the initially qualified group. It’s a high impact revenue opportunity that goes untapped by most companies.
Lead Transfer. Marketing software can automatically forward sales-ready leads to the sales team once those leads reach a threshold score. But finding the right balance so that qualified leads are not held back from the sales team and unqualified leads are not forwarded to the sales team is a fine line. Continuously enhancing scoring models will improve learning and lead transfer results. Many marketers are also finding that by delivering intelligence with the lead—such as including the lead’s online behavioral history and appending the lead with demographic or social attributes—they can save even more valuable sales time.
The CSO Insights Sales Optimization Study found that 20% of a sales rep’s week, one full day, is spent researching new prospects. If marketers can deliver more intelligence with their leads, with history, content or links to valuable sources, they can empower sales people with more time for selling. Similarly, marketers can use their marketing software to deliver alert updates when previously transferred leads engage in new or unusual behaviors.
Lead Analytics. Business intelligence from a closed loop reporting cycle is essential for continuous process improvement. Marketing systems have the capability to tie every lead, customer and revenue dollar back to the marketing program that created them. However, this is not an out of the box capability and in reality is seldom realized. Further, almost no marketing automation systems capture or integrate marketing costs which reside in financial or ERP software so key metrics such as campaign ROI and ROMI (Return on Marketing Investment) remain elusive. To do better than the norm, begin your revenue attribution by defining your lead to customer conversion cycle stages and metrics.
For example, in the B2B enterprise software space, on average, 25% of inquiries will become MQLs (Marketing Qualified Leads) and if MQLs are tightly defined pursuant to objective scoring models, the MQL to SAL (Sales Accepted Lead) rate will be near 100%. About 26% of the new leads will become sale opportunities. The average opportunity to win rate is about 22%, however, best in class companies with developed revenue cycles achieve a 35% close win rate. It’s incumbent upon marketers to learn and apply their own conversions and operational results to establish a baseline and then test new variables in order to show steady performance increases.
Beyond improved lead to customer conversion results there’s another benefit for marketers. It’s not uncommon that the head of marketing doesn’t possess the same clout as the head of sales in the eyes of the executive team. This is often a result stemming from the tradition whereby the head of sales regularly projects revenues to the company and is therefore associated with revenue generation, while the head of marketing all too often fails to project revenue contribution and is therefore associated with costs. According to Forrester Research, 76% of B2B marketing professionals agree or strongly agree that their “ability to track marketing ROI gives marketing more respect.”
IDC predicts the marketing automation software market will grow to $4.8 billion in 2015, up from $3.2 billion in 2010. Forrester Research estimates that taken together, lead origination and lead nurturing account for 21% of the overall B2B marketing budget — the largest component of marketing spend. These trends are significant and highlight rising interest in this technology. However, while marketing automation software offers tremendous potential it's clearly not a panacea and not without risks—which is why my next blog post will by titled Why Marketing Automation Software Fails to Deliver.