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Calculating Marketing Automation’s Total Cost of Ownership

When used effectively, there is no doubt that marketing technologies help companies to excel in their overall business. This is true for marketing automation, BI, CRM, and other core platforms. However, there seems to be a real challenge in realizing the total cost of ownership of such platforms. While this post will focus on marketing automation, the same is true for other technologies as mentioned above. The number one mistake companies make when evaluating the cost of marketing automation is the fact that they are focusing on technology costs as the main cost element. While technology is an important ingredient in overall costs, it is far from being the main one. Let’s take a look at the main cost elements of marketing automation and how to optimize them.

License

License cost is the most fundamental element in the total cost of ownership of marketing automation. Most vendors price their products based on the amount of records in the system, and specific features. When calculating the amount of records you need, start with the size of your current database and then add to it the expected growth over the next 12 months. This should be the baseline for your calculation. You can reduce the upfront costs by: 1. Cleaning your record database and sizing the system only based on relevant leads. 2. Buying the minimum amount of records needed for the first quarter or two, and top it up as it grows. 3. Buying the features and modules needed for the first 6 months, and adding them down the road when needed.

Implementation Cost

Initial implementation covers the basic integration of your marketing automation platform with your website, CRM, and other systems, and the implementation of the necessary workflows, processes, and campaign templates. This could be a simple project, but it could also easily derail and become a major, unexpected expense. In order to best run this phase, I recommend to do the following: 1. Write your 6–12 month marketing plan, and make sure that the required features and processes are covered in the implementation project, 2. Do the same for the activities done in the last 6 months, so you can make sure that you have everything you need from the start, 3. Don’t try to define every process and need that might arise 12 months from now – things change rapidly, and you might be wasting money on implementing features that would not be needed eventually.

Ongoing Operation

While companies usually include the sections above in their cost calculation, this one is often missed. If you want to make the most of your marketing automation platform, you need to have a dedicated resource to support the system on an ongoing basis. It could be an internal resource, or an external service provider, but this cost will be added to your operation expense no matter what. It doesn’t matter how easy the product seems to be – without a person running it for you, you will not make the best of it. Ongoing operation covers campaign implementation, scoring adjustments, workflows and processes implementation, etc.

Training

When it comes to training, there are two types of training that you should take into account:

  1. Business user training: Training sessions that are aimed at introducing the business value of using marketing automation. This training is important due to the fact that marketing automation is changing the way companies run and measure their marketing programs.
  2. Technical training: Even if you are working with a vendor to run your marketing automation operation, it’s important to have a person in your company who understands how the product works so that he or she will be able to better guide the vendor when it comes to implementing new campaigns and features.

Campaign and Marketing Process Adjustments

A classic case of dissatisfaction with marketing automation is what I call “the glorified MailChimp phenomenon” – companies invest a considerable amount of money in a marketing automation platform, and then use it only to send newsletters. As marketing automation offers new ways to engage with your audience and measure marketing effectiveness, I recommend that  you review your marketing processes and adapt them to the new capabilities that were added to your arsenal.

Content

Last but not least, using marketing automation is all about engaging in smart ways with your audience. To do so, you’ll need personalized content in the form of nurturing emails, white papers, newsletters, blog posts, and so on. Without content investment, you won’t be able to engage your audience effectively.

By clearly defining the total cost of ownership of marketing tech, you’ll be able to figure out and manage your marketing technology investment. But more importantly you’ll be able to make the most out of one of the most crucial technologies in B2B marketing today.