Wednesday, September 01, 2010

Hard Data to Justify Your Marketing Automation Investment

Summary: So you want some hard numbers to prove the value of marketing automation? Here's a bunch.

A client asked yesterday if I had some benchmark information to justify the cost of her marketing automation project. This set off an hour-long scavenger hunt through my hard drive, followed by sporadic afterthoughts later in the day. Since this is a question that comes up pretty often, I figured I’d share some of the more useful results. If anyone else cares to expand on this list, even better.

1. NeolaneMaking the Business Case for Enterprise Marketing Software”. This paper contains step-by-step instructions for building a business case and even a link to a slide deck you can use as a template. It includes five pages of properly sourced industry statistics from Aberdeen, Forrester, Gartner and SiriusDecisions. Some of the more helpful tidbits:

• 10% or greater revenue increase within six to nine months In 2009 for companies that automate lead management processes (Gartner, “The Top Six CRM Marketing Processes for a Cost-Constrained Economy,” 2008)

• 15% reduction in five-year total cost of ownership for companies that integrate inbound and outbound marketing (Gartner, “Cost Optimization in Multichannel Campaign Management,” 2009)

• 25% or greater improvement in Waterfall Conversion Rates for companies with best-in-class processes vs. companies with average processes (SiriusDecisions, "Field Marketing 2.0: The Heart of Growing Conversion Rates," 2008)

Best in ClassAverage% higher
Inquires to Marketing Qualified Leads (MQLs)nearly 10%3.9%150%
MQLs to Sales Accepted Leads (SALs)nearly 75%58%29%
SALs to Sales Qualified Leads (SQLs)nearly 61%49%24%
SQLs to Closed Business31%23%35%

Incidentally, SiriusDecisions reported newer but very similar figures in the recent Neolane-sponsored Webinar 'Making the Business Case for Marketing Automation'.

2. Eloqua The Business Case for Integrated Demand Generation” offers data from Forrester, CSO Insights and several Eloqua clients. The data is a couple of years old but still valid. Statistics include:

• 16.5% higher campaign response rates and conversion rates

• 50% decrease in time to execute campaigns

• 100% increase in number of campaigns

• 85% decrease in cost per lead

• 18% higher revenue

• 9.3% higher sales quota achievement and 7% higher win rates

• 100% increase in deal size

3. Aberdeen Group has published many studies related to marketing automation. These follow a standard format: use performance to classify companies as best-in-class (top 20%), average (mid 50%) and laggard (bottom 30%) companies, and then look at differences the business processes and technology. This makes sense if you want to profile top-performing companies, but it also means Aberdeen never directly compares results of companies that use a particular type of system to companies that don’t. That makes it a bit harder to use Aberdeen data to justify a marketing automation investment. But lots of people do anyway.

Aberdeen Group, “Lead Lifecycle Management,” July 2009

Best in ClassAverage% higher
Return on Marketing Investment75%45%67%
Lead to Sales Conversion Rate8%3%167%
Average Increase in Response Rate12%7%71%

Aberdeen Group, “Crossing the Chasm with Automated Lead Management”, January 2010

Best in ClassAverage% higher
Average Revenue Growth59%9%556%
Average Email Clickthrough Increase23%6%283%
Average Lead to Sales Conversion Improvement23%13%77%

Aberdeen Group, “Sales Intelligence: Preparing for Smarter Selling”, February 2010

Best in ClassAverage% higher
Win/Loss Rate34%26%31%
Lead Conversion Rate27%21%29%
% Reps Achieve Annual Quota52%44%18%

Aberdeen Group, “The Convergence of Sales and Marketing Technologies”, December 2007
(These figures differ a bit from the other Aberdeen data. First, they compare Best-in-Class to all other companies, rather than Average performers. Second, they also report improvements that respondents specifically said were “a result of integration between marketing technologies and CRM”.)

Best in ClassNon-Best-In-Class% higher
Bid-to-Win Ratio Increase24%18%33%
Lead Conversion Rate increase23%16%44%
Average Revenue per Account increase15%12%25%
Average Deal Time decrease13%10%30%
Average return on marketing campaigns inrease27%13%108%

4. CSO Insights publishes highly regarded studies of sales performance. I don’t have their most current data available but figures from earlier years are widely cited.

CSO Insights, “Optimizing Lead Generation: What’s the Payback,” 2006

Best in ClassAverage% higher
% reps making quota66.1%56.8%16%
% firms w/lead to first call conversion > 50%48.7%32.2%51%
win rates55.6%48.6%14%
% firms w/ramp-up time for new sales people of 7 months or more49%65%-25%

5. Two final tidbits on the every popular question, What’s lead nurturing worth?

Marketo, in its Webinar Secret Sauce for Demand Generation, generously revealed its own results comparing nurtured vs. non-nurtured leads. The key finding here is that nurturing tripled the number of “slow” leads (taking longer than one month) that eventually reached Marketing Qualified status:

with nurturingwithout nurturing% higher
Fast Leads
Slow Leads
(MQL>1 mo)

Market2Lead (before they were absorbed by Oracle) told me they had analyzed their own customers' data and found:

• 9% higher average deal size for nurtured leads vs. non-nurtured leads

• 23% shorter deal time for nurtured than non-nurtured leads.

1 comment:

SimonDL said...

Thanks David, A great hour spent on your hard drive! Interesting that Marketo's data points to the existence of the Long Tail. (Sometimes compared to Nessie!)