While analyzing record second quarter earnings for Salesforce.com a few weeks ago, CEO Marc Benioff gave partial credit for a 30% revenue bump to the company’s addition of ExactTarget—and specifically its Pardot marketing automation arm—to its Marketing Cloud. Salesforce had just acquired the company in June. Could it really have made a difference that quickly? Or was Benioff justifying the whopping $2.5 billion price tag to shareholders? It nagged at me to get on the phone with people who know better (than me, that is) to answer the overwhelming question: What’s the magic behind marketing automation and why are companies like Salesforce and Oracle shelling out a billion bucks and more to add it to their arsenals?
I recently hosted a webcast featuring a company called Demandbase. Its approach is to use data to help B2B players sell the most stuff to the most appropriate prospects while breezing by the tire-kickers. That sounded a lot like the promise of marketing automation to me, so I asked Demandbase CMO Greg Ott if marketing automation was living up to its notices.
“Companies are spending a lot of money on marketing, and marketers are spending a lot on technology, but what kind of technology you buy depends on your type of business,” he said. “The fact is that most marketing automation is used by B2B companies in concert with their email marketing programs. ExactTarget was first and foremost an email marketing company when it bought Pardot, and that turned out to be one of ExactTarget’s most astute business moves. They paid about a hundred million for it and it accounted for about a billion dollars worth of the Salesforce deal.”
Ott’s ultimate point is that marketing automation is but one layer in the marketing tech stack. He ticks off several significant new methods being used by marketers that are untouched by marketing automation: content marketing, customer engagement enhancement, and testing and optimization.
“It’s kind of the girl with the curl right now,” Ott said. “Everybody figures, ‘I’ve got to have this thing.’ “But the 80-20 rule is in play with marketing automation. Eighty percent of the people who have it use only 20% of its capability.”
And an even smaller percentage actually have it. “Only four to six percent of companies are using marketing automation, and a big chunk are tech companies,” says VP and GM of Pardot Adam Blitzer. “They’re the quickest to embrace change, but we’re starting to cross that chasm now. Some really good-size businesses outside of tech are coming on board.”
So while one might wonder why Salesforce would spend $2.5 billion for what appears to be a niche business used by only 5% of industrial enterprises, Blitzer’s retort is that Salesforce got into the game for the promise of the other 95%. Blitzer, a personable and plain-spoken tech exec, was able to make a simple case for the importance of marketing automation that I, summoning up my six years of experience in sales, was able to appreciate. It goes something like this:
Marketers are increasingly being looked upon by senior management at B2B companies as revenue-generators. Because sales cycles tend to be long in those companies and are closed by sales reps who take most of the credit (and all of the commission), the only way B2B marketers can earn their bonuses is by producing and tracking solid leads that convert.
Salespeople tend to focus on the low-hanging fruit—big legacy clients. Marketers’ opportunities, then, reside higher up the tree (and the sales funnel) where a feature of marketing automation called lead nurturing comes into play. While sales shuns these prospects, marketing uses automation and data analysis to examine their buying process and conversion potential. Once categorized, the system automatically communicates with the prospects in a manner and frequency that could bring them back into the discussion. If they take certain actions laid out by a company in its marketing automation platform, they are promoted as warm leads and sent back to sales. Sales now has a qualified lead and potential new account that it spent no time nurturing. That makes both sales and marketing happy, and the B2B world is a better place.
An automation program can also keep a seller’s name in front of lost accounts. “We all lose deals,” says Blitzer, “But if you’re good enough to have been a finalist and you know who you lost to and the duration of the contract signed, you can position yourself for the next deal.” A common approach is to keep light contact with lost accounts with content-driven emails providing thought leadership and information on trend-setting products. “Your automation system will increase contact as the contract expiration approaches. If you win back only 5% of these accounts, it moves the needle on your business,” says Blitzer, who notes that the process is something few salespeople have the time or inclination to do.
The final raison d’etre for marketing automation stems from analytics – an area most CRM systems are isolated from. Marketing automation will engage in social listening and website monitoring of top-of-the-funnel prospects being ignored by salespeople, who will be tipped off, for instance, that Mr. X was on the company site checking out Product Z and maybe could use a call or an email. Once again, it’s potential found money for sales and a trackable lead for marketing.
Marketing automation may not be setting the world on fire yet, but it is a catalyst for B2B marketers to take themselves to a place senior management is insisting they inhabit. It’s a scary place called The Land of Measurable ROI, and you have to journey over the stormy Sea of Sales to get there.
“Marketing automation is not just a matter of changing tools and systems,” Blitzer says, “It’s also a matter of changing your process if you want it to be as successful as it can be. The more agile companies are the ones more likely to adopt it. ”
