Marketing Automation

How Much Does Marketing Automation Cost?

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You are ready for marketing automation and are excited to get started. But you have to convince your internal stakeholders first. When building a business case for marketing automation, in addition to estimating the revenue growth and cost saving benefits, you’ll also need to understand the investment required to develop the other side of the business case. Guaranteed your stakeholders will want a complete cost analysis.

While yesterday’s legacy, on-premise solutions were sold as software licenses, most modern marketing automation platforms are delivered via SaaS as recurring subscriptions. Available on a monthly, quarterly or annual basis, subscriptions can start under $1,000 and scale up to six figures per month.

The main factors that drive the cost of your subscription are:

  • The number of leads and contacts in your marketing database. This includes those for whom you have contact information, such as email address, postal address, or phone number.
  • The functionality in each edition. Many vendors provide different editions of their solutions; maybe an edition to facilitate lower-cost entry and another with more powerful, higher-end functionality. For example, Marketo provides a Spark edition, which is optimized for small businesses and first-time marketing automation users; a Standard edition that adds more capabilities that are appropriate for most companies; and a Select edition for enterprises with highly sophisticated marketing requirements.
  • Many vendors provide discounts for the annual commitments, so be sure to evaluate contract lengths.
  • Most solutions do not typically charge for each marketing user, and provide access for an unlimited number of emails (within reason).
  • Many vendors also have an additional per-seat charge for named Sales users to get insight and action inside the CRM system.

For sample pricing, see www.marketo.com/pricing.

Estimate Based on Budget

If you want a simpler rule of thumb, you can estimate that marketing automation will take up between 3-5% of your marketing programs budget.  On average, large technology companies report that marketing automation accounts for 3.1% of their programs budget, and 1.6% of staff allocations, according to IDC’s 2013 Marketing Planner. Meanwhile, MarketingSherpa’s 2012 Marketing Benchmark indicates that companies spend an average of 7% of their overall budgets on marketing automation. (Note: MarketingSherpa reports a larger percentage because it surveys smaller companies across more industries than IDC.)

Other Investment Factors

Most marketing automation vendors offer add-ons to their basic software subscriptions—including new-customer enablement, premium support packages, consulting services and instructor-led education and training. The purpose is to accelerate ROI and time to value, and costs tend not to exceed 20% of the software subscription.

Moreover, the best results come from looking beyond only the software. You should also look at the end-to-end process to make sure you have all the ingredients for success.

Here are some questions to ask:

  • Do I generate enough leads?
  • Do I have enough content?
  • Do I need to modify my end-to-end business revenue process and/or improve marketing-sales alignment?
  • Do I have the right skills on staff?

Depending on the complexity of the vendor you select, your marketing automation maturity, and ROI goals, you may need to look at additional investments in these areas.