White Paper: Bridging Gaps and Closing Sales: Marketing Automation and Your Marketing ROI www.netline.com
INTRODUCTION Your business cannot survive without marketing. It is the mechanism by which you convert a theoretical universe of prospects into a tangible collection of people who are ready, eager, and able to buy your products & services. But while a necessary investment, you've seen how marketing can be a frustrating one. Even the best-planned marketing efforts can fail, and difficult economic times have only compounded the frustration. You've been forced to cut your marketing expenditures drastically at the same time you're being asked to accomplish more. This white paper introduces the concept of marketing automation: a technology-driven process which enables you to tightly entwine your marketing and sales programs and, as a result, realize a positive return from your limited marketing resources. THE SALES & MARKETING DIVIDE Marketing frequently doesn't translate into sales because of missed opportunities missed opportunities to generate new business from current customers and missed opportunities to nurture leads into customers. Adding to the problem, out-of-sync timing between marketing and sales can result in wasted effort and potentially lost sales. And marketing's traditionally "task-based" methods can be inconsistent with the sales-driven approach of the rest of the organization. Customer Neglect Common sense tells you that your current customers can be your best future customers. After all, given the existing relationship it costs a lot less to sell more to a current customer than to find a new one. But lack of time and resources can prevent marketing from continuing to support the sales effort once a lead becomes a customer. So it's not surprising that, in most organizations, when marketing passes a lead on to sales it severs its connection with that person. Lead Neglect You spend a significant amount of time and resources bringing in leads. But then you can lose an inordinate number of them. Consider the sales lead categories, and their generic definitions: The "A" lead. A person who's ready and has the authority to buy. The ones sales must contact immediately. The "B" lead. A person who's interested in your product but needs more time (awaiting budget, approval from his manager, etc.). The majority of leads fall into 1
this category, and, if properly cultivated, can very well become A leads. The "C" lead. A former B lead who, over time, does not sustain sufficient interest in your company. In many organizations marketing passes all leads directly to sales which means sales has the burden of reviewing and evaluating them. Given its focus on A leads, sales understandably ignores any lead that doesn't seem ready to buy. So sales' resources aren't used efficiently and potential future sales are lost from the B leads you've already spent money to secure. Assume one of your lead generation campaigns brings 2000 new leads and 10% of them (200 people) fall into the A category. That means 1800 start as B's. Say that you convert 15% of those 200 A's to customers a total of 30 closed sales. But say that, over the next year, half of the B leads (900 of them) become ready and able to buy. If you convert 15% of them to customers (using the same percentage applied before), that's a total of 135 additional customers. Out-of-Sync Timing Pass a lead from marketing to sales too early and you risk losing a significant amount of money. Specifically, once sales takes over a lead you shift from low-cost interactions (or "touches") to high-cost ones. The average cost of an email touch is $0.30. Usethe phone to contact a lead and the cost shoots up to $3.00. And once you choose to have a direct one-on-one meeting, the cost skyrockets to $200 per interaction or more. 1 On the other hand, if marketing gives a lead to sales too late (or sends a lead to the wrong salesperson), one of your competitors may have already closed the deal. So you've potentially lost the sale entirely. Task-Based Marketing Figure 1: Average cost per interaction by channel (source: Giga Information Group, February 2002) In many companies, "marketing" has embodied a series of isolated tasks: the next press release, the next email blast, the next ad campaign. But from sales' point of view, selling is a process. It's the ongoing dialogue that takes place until a sale is made. Task-based marketing can often fail because, at its core, it doesn't work to initiate a dialogue that a salesperson can bring to closure. THE BENEFITS OF MARKETING AUTOMATION Through use of a database, marketing automation enables you to learn more and more about leads and customers. It allows you to automate communication processes and maintain relationships electronically. The results: 2
Improved customer retention A consolidated view of your customer and lead base Better lead qualification and retention More efficient sales & marketing processes Improved return on sales force technology investment Better tracking, improving future marketing ROI Which translate to: Marketing automation doesn't just link marketing with sales. It helps marketing drive sales. Reduced operational costs Reduced marketing costs More revenue Marketing automation doesn't just linkmarketing with sales. It helps marketing drive sales. MARKETING AUTOMATION: HOW IT WORKS Basic Concepts Marketing automation is the combination of: 1. A database 2. An ongoing series of communications which continually enrich that database 3. Reporting and analytics The database is the heart of a marketing automation effort. It is what enables you to store a rich trove of information about every single customer and lead. With every communication you have with an individual, his database record becomes more and more comprehensive. Regardless of which communication vehicle you choose email, direct mail, print advertising, trade shows, etc. details you automatically capture or manually enter will, over time, enable you to gather actionable intelligence. With that intelligence in hand, you'll be able to better execute future marketing programs. As previously noted, email is the lowest-cost communication tool in your marketing arsenal. Plus it gives you the highest degree of measurability. For example, with email you know whether someone actually saw your message, because Details you capture (about each lead and customer) will, over time, enable you to gather actionable intelligence. With that intelligence in hand, you'll be able to better execute future marketing programs. you have the ability to track the message's open rate. By contrast, you can't measure whether someone sees a print ad or a mailer. Also, with electronic communications each of your database records can automatically update itself with every communication (meaning you don't have to continuously import new data or input that data manually). Finally, the reporting and analytics component of marketing automation enables you to dig into all the raw details in your database and learn from them. You do this by making information requests, or "queries." To illustrate: 3
1. Which prospects are my most and least active responders to email? 2. Over the last six months, what has been my response rate for one type of communication versus another? 3. What number of prospects responded to this month's product promotion versus the one we did three months ago? It all depends on what you'd like know. Marketing Automation Approaches The 'automation' component of marketing automation can get quite sophisticated. If you so choose, you can apply rules to your electronic communications, letting you program a series of communications in advance. For example, those rules can dictate: Which leads fall into which categories and when Which information gets routed to which people What messages go to which leads / customers and when A "cascading campaign" is one way to put rules-based communications into action. How it works: Every email communication you send depends on how a given prospect responds to the one before it, starting from when you first establish the relationship. So someone who responds to "email 1" will receive a different "email 2" than someone who doesn't. And so on with all emails after that (see Figure 2). In other words, every communication a prospect receives is unique to her. You can also ask her questions, discover what kinds of information she'd like to receive, and then deliver it automatically. Or you may simply choose to have your marketing staff make these decisions on a case-by-case basis, rather than pre-establishing a sequence of rules. Either way, you're building a large vault of data from which you'll be able to continually make better decisions. And in the case of electronic communications, every response still gets automatically tracked and every database record is updated accordingly. 1. first electronic contact 2. first action 3. second electronic contact 4. second action Figure 2. Cascading Campaign Marketing Automation Applied For best overall results, marketing automation should be applied across all marketing activities giving you a complete picture of every lead and customer and how they have responded to each of your programs. Whatever your goal whether it be lead generation, prospect conversion, awareness building, or customer retention marketing automation technologies can help improve the return on your investment. 4
Lead generation. Marketing automation helps you efficiently capture, qualify, and route leads. For example, say you want to execute an email-based lead generation campaign. Using marketing automation technology, you can start by tracking whether each recipient opens the email, which links she clicks, and more. A lead who clicks through to your Web site can then qualify (or "score") herself, using criteria you've predetermined. Based on the information she gives you, she will be automatically routed to the right contact in your company which may be a salesperson if she meets the "A lead" criteria. Prospect conversion. Using marketing automation, you can move your B leads along the sales cycle by setting up a similar scoring system. So as you build a relationship with each prospect, your system determines what actions a B lead must take before he is upgraded to A, and what will cause him to be downgraded to C. If you like, you can program it all to run automatically (the "cascading campaign" concept). Awareness building. Because B leads need time before they're ready and able to buy, marketing automation helps you keep your company on their radars. Specifically, using marketing automation technology a lead can tell you what he's interested in receiving and then you can deliver it accordingly. Based on his preferences those he's explicitly provided and those you've learned from analyzing his existing database record you can send him customized newsletters, targeted product announcements, and more. Customer retention. Marketing automation lets you apply the same concepts of "awareness building" to existing customers. Plus, based on their prior actions, you can offer upgrades on products they already have and cross-sell different ones. Going further, a frequent buyer might receive rewards that encourage her to keep buying, while a customer who hasn't replied actively to your communications might receive more aggressive incentives. Marketing automation ends lead neglect. Most importantly, you can tie it all in with sales. Every message you send to a customer can "originate" from her individual sales representative, plus you can set rules determining when and how often that representative is notified about customer developments. HOW MARKETING AUTOMATION ACHIEVES ITS BENEFITS Improved customer retention. Following on our discussion of customer retention, marketing can use an ongoing series of communications to solicit feedback from customers and encourage them to do more business with your company. Marketing can then uncover opportunities to upsell or cross-sell products and, when appropriate, deliver that information to sales. Overall, marketing automation helps you keep customers happy while doing so with less expense and effort. A consolidated view of your customer and lead base. Using queries, you can discover broad trends in your database. Adding to the examples we gave earlier, you can answer questions like: "How long does it take us to convert a lead to a customer, on average?" "How many leads in the last year moved from 'B' to 'A' status?" "Which marketing program produced the lowest cost per lead? Which one produced the highest quality leads? 5
Better lead qualification and retention. Marketing automation ends lead neglect. With ongoing electronic communications, marketing can inexpensively cultivate B leads and learn more and more about their problems and what your company can do to solve them. Over time, those leads who meet certain criteria can be moved into the A category and those who don't can be moved into the C one. Once C leads are identified, you can choose to stop marketing to them which means saved time and resources. More efficient sales & marketing processes. Marketing automation streamlines communication between marketing and sales by giving them the means to establish a consistent information flow. As a result, salespeople will receive what they need from marketing when they need it, and won't get involved too early or too late in the sales process. Inexpensive touches will more often replace costly ones referring again to the "cost per touch" statistics and A leads are less likely to be lost to competitors. Improved return on sales force technology investment. Your sales force automation(sfa) systems are only as effective as the information that goes into them. So if sales isn't receiving useful, appropriate, or timely information from marketing, even the best SFA tool won't do any good. Because marketing automation can be set up to integrate with sales force automation systems, marketing and sales can ensure the "consistent information flow" they establish. In other words, marketing automation enables your salespeople to realize the full benefit of their SFA system. Better tracking, improving future marketing ROI. When you put everything into your database, you're able to generate comprehensive reports about every single marketing activity you execute. You can break down every metric, letting you determine what worked and what didn't. This all means you're able to allocate your resources as efficiently as possible helping you to improve ROI with each future program. Finally, marketing automation eliminates "task-based" marketing and makes marketing function like sales: Both work to establish a dialogue with leads and customers that brings them closer to a sale. CONCLUSION The new corporate mantra is "Do more with less" and, from our discussion, you can see how marketing automation helps you do exactly that. It enables marketing to nurture the leads and customers you already have instead of continuously (and expensively) seeking new ones. It gives marketing the ability to take greater ownership of lead and customer relationships, which keeps the cost per interaction as low as possible. And when applied across all of your marketing activities, marketing automation leads to a wealth of actionable intelligence. This means you can continually improve the effectiveness of your marketing efforts rather than potentially repeat what hasn't worked. All in all, marketing automation makes your marketing programs more successful and removes obstacles between marketing and sales. The result: Your company generates more sales at alower cost-per-sale. 6
ABOUT NETLINE NetLine Corporation is a premier provider of lead-generation and online marketing services for advertisers, marketers, and publishers, specializing in delivering high-quality leads and maximizing the results of customer interactions. NetLine goes beyond conventional online advertising and e-mail. Through NetLine's Lead Source, Sub Source, Email Marketing services, and Enterprise Marketing Management Solutions, NetLine enables highly effective marketing programs throughout the customer acquisition and relationship lifecycle. NetLine's many successful client relationships include Juniper Networks, Autodesk, Taunton Publishing, and CMP, among others. Founded in 1994, NetLine is privately held and is headquartered in Los Gatos, California. For more information, please visit www.netline.com or call 408.340.2200. 2006 NetLine Corporation NetLine Corporation 90 Albright Way Los Gatos, CA 95032 http://www.netline.com P: 408.340.2200 F: 408.340.2250 E: sales@netline.com 7