Do Small Businesses Need Marketing Automation?

Summary: Vendors who target small businesses include provide functions beyond traditional marketing automation. This helps business owners who need to generate revenue as efficiently as possible. But larger firms need to be efficient too: so expect all marketing automation systems to eventually expand in similar ways.

The replies are rolling in from the survey of vendor features that I mentioned last week. (Reminder: you can upload the 150+ questions for your own RFP from www.raabguide.com.)

One interesting reaction has come from vendors serving the smallest companies (I’m talking really small here -- under 10 employees). These include Genoo, Hubspot, Infusionsoft and OfficeAutoPilot. A couple have noted that my questions only cover standard marketing automation functions (email, landing pages, nurture campaigns, lead scoring, CRM integration and reporting), while their products offer additional functions. The most common added function is sales force automation, but some also offer different combinations of e-commerce, order processing, customer support, blogging, Web site optimization and paid search.

On one level, this broader scope makes perfect sense. Small companies don’t have the money to pay for multiple systems and, probably more important, lack the technical resources to integrate them. In addition, most small firms have pretty basic needs, so even the “light” editions of full-featured products like Salesforce.com can be overkill.

But if small companies really want a single system, why hasn’t one grown to dominate the marketplace? Vendors like NetSuite do offer such products, but they’re not targeted at very small businesses. Rather, the most successful small business systems tend to do one thing: think accounting (Intuit Quickbooks), Web hosting (Godaddy), email services (Constant Contact) or CRM (Salesforce.com).

Some of these vendors have tried to poach on other territories, but without much success. I think that’s because there is relatively little interaction between the different systems. As a result, small businesses haven’t felt much pain from keeping them separate.

Marketing among very small businesses is often limited to a bit of local advertising and a Web site. Among those who use actual marketing systems, the most common are simple outbound email. More aggressive businesses might add auto-responders such as Aweber, with pricing as low as $19 per month for 500 subscribers. From there, it's a logical progression to the small business marketing automation vendors I mentioned earlier, although the big jump in prices poses a hurdle: costs start upwards of $200 per month.

The progression from outbound email to auto-responder to nurture campaigns and the rest of marketing automation makes perfect sense, corresponding to new marketing efforts as a business grows more sophisticated. But broader scope inevitably encroaches on other existing systems.

In the case of marketing automation, landing pages encroach on Web hosting and search engine optimization vendors while marketing databases encroach on CRM and social media management. As the elephants in those fields begin to notice flea bites from marketing automation systems, they’ll eventually consider extending their own systems in return. We’ve already seen this with Oracle’s purchase of Market2Lead (now apparently embedded in the Oracle OnDemand CRM system) and, depending on how you look at it, in IBM’s purchase of Unica. We’ve also seen various Web content management vendors (Marqui, SiteCore) add marketing functionality.

Generally speaking, nipping the ankles of elephants is more likely to get you crushed than make you rich. But the case may be different for marketing automation vendors. This will depend on showing that they’re replacing a cost center (e.g. Web hosting, customer service) with a revenue generator, or that their integrated approach yields more revenue than the current isolated systems (e.g. sales automation, search engine marketing, outbound email).

This means that the small business vendors who feel my survey is too narrow are right. Their buyers need more than traditional marketing automation features. I expect vendors in that space will continue to expand their scope accordingly, even as vendors in other spaces add marketing automation features for the same reason. And I expect this broader scope will eventually percolate upwards to larger companies, although this will happen more slowly because of organizational barriers to cooperation.