At Software Advice, we talk to hundreds of companies each year that are searching for marketing automation solutions.
To find out what drives organizations to purchase these systems, what’s fueling growth in the market and the most common marketing automation buyer trends, we recently analyzed data from 896 interactions with buyers seeking a new solution.
These buyer interactions occurred between January 1, 2013 and December 31, 2013. Here are our key findings.
- The vast majority of buyers (91 percent) were evaluating marketing automation software for the first time.
- Lead nurturing topped the list of desired capabilities among buyers, ahead of marketing analytics and lead scoring.
- Twenty-five percent of buyers were in the high tech industry, making it the most represented industry.
To provide further insights on the data, we shared our results with marketing technology thought leader David Raab, publisher of the B2B Marketing Automation Vendor Selection Tool, VEST. Raab’s thoughts on the data are included in the report below.
“Today there are more channels to market in, more types of marketing programs, more data available for buyer segmentation and higher expectations among your buyers and prospects. As a result, there’s an increasing need for a marketing automation solution to manage these challenges.”
David Raab - Raab Associates, Inc.
Most Are Evaluating Marketing Automation for the First Time
The majority of buyers we spoke with (79 percent) were already using some type of software to manage marketing operations. However, only 9 percent of buyers had a marketing automation system in place. Here’s a breakdown of the other systems in use:
- 48% used some form of CRM software (either an integrated suite or a best-of-breed application, such as sales force automation)
- 7% used an email marketing program
- 6% used proprietary (i.e. home-grown) software
Meanwhile, 21 percent of buyers used no software at all, instead relying on manual methods such as pen and paper, spreadsheets or one-off emails.
Buyers’ Current Methods of Managing Marketing Activities
According to Raab, many companies are first-time buyers because “there’s been mixed publicity about how hard it is to use marketing automation software and how successful an implementation can be.”
However, he continues, “As more studies have come out showing that you can generate a return on investment (ROI), and there’s greater recognition of success in using the software, more buyers are starting to consider it as a viable option that can work for them.”
Companies Want Marketing Automation to Improve Efficiency
The most commonly-cited reason for evaluating marketing automation software was to improve lead management—40 percent of buyers cited this as their company’s primary motivation. Buyers looking to improve lead management voiced two needs: to nurture buyers until they’re sales ready, and to score leads to better determine when a buyer is sales ready.
Meanwhile, 30 percent of buyers cited the need to automate processes, such as sending triggered email messages based on customer behavior on their website.
Top Reasons for Evaluating Marketing Automation Software
One interesting thing we heard from consulting companies was the need to improve the services they provide to customers. Several companies mentioned wanting the ability to manage their client’s email marketing campaigns as well as their lead scoring and nurturing strategy.
These buyers were also seeking software to improve their ability to track which marketing campaigns and channels are most effective in order to demonstrate their ROI. Marketing automation software helps buyers do this by better tracking the resources required to run a campaign.
Lead Nurturing and Analytics Are Most-Requested Features
The top features buyers requested are consistent with their need to improve lead management. The majority of buyers told us they required lead management features—81 percent requested lead nurturing, while 64 percent requested lead scoring.
Most-Requested Marketing Automation Features
Reporting and analytics was also a major focus, with 70 percent of buyers requesting these features in a marketing automation system. In Raab’s experience, most buyers are seeking basic reporting features to track response rates across email campaigns and attribute revenue to a particular campaign. A small portion of buyers also evaluate these features to track campaign ROI, optimize spend and create fractional attribution models.
Our data matches Raab’s observation—several buyers told us they “have no way to measure the ROI of their marketing campaigns or identify metrics” and were looking for a better way to report on marketing’s effectiveness. Meanwhile, only a handful were seeking features such as ROI tracking.
Email marketing was another highly desired feature, with 47 percent of buyers citing the need for this capability. On the other hand, although many marketing automation vendors now include social media marketing features within their platform (or integrate with popular tools), only 6 percent of buyers requested social media features. This is not surprising, as buyers have many options to manage their social media marketing outside of a marketing automation system.
The High Tech Industry Is the Most Active Buyer Segment
High tech topped our list of industries, making up 23 percent of buyers. This was expected, as the technology industry is known as an early adopter of marketing automation software.
Consulting and manufacturing were also among the top industries evaluating marketing automation, representing 11 percent and 8 percent of the sample, respectively. According to Raab, marketing automation is particularly well-suited to manufacturers, as they typically deal with high-ticket transactions, a long sales cycle and complex decision processes that can benefit from a system built to nurture long-term prospect relationships.
Indeed, 85 percent of manufacturers in our sample cited the need to nurture leads due to relatively long sales cycles associated with their product. Several manufacturers also mentioned wanting to create a marketing branch within their organization in order to begin marketing their products online.
Top Industries Among Prospective Buyers
Small to Midsize Companies Also Want Marketing Automation
Company sizes in our sample varied greatly, ranging from two to thousands of employees. Fifty percent of buyers had fewer than 50 employees, but 15 percent had 500 or more. The prevalence of small companies in the sample is somewhat surprising, given that mid-size and large companies have more aggressively adopted marketing automation systems. However, many vendors are now focusing on selling to the small and mid-size business market.
Employee Count of Buyers’ Companies
When looking at annual revenue, the largest portion of buyers in our sample were again, small and mid-size companies. Seventy-six percent generated under $50 million in annual revenue, while roughly 18 percent generated $100 million or more.
However, relative to our overall buyer sample, we discovered a greater percent of large companies were replacing marketing automation software rather than buying for the first time. When looking solely at companies replacing marketing automation software, the portion of companies generating more than $100 million in annual revenues jumped to 30 percent—a 12 percent increase.
Annual Revenue of Buyers’ Companies Replacing Marketing Automation
As the market continues to mature, Raab expects “continued strong growth in marketing automation buying activity and use over the next few years as marketers become more familiar with how to use these systems, and vendors develop products suited to different industries and marketing organizations.”
If you have questions about our research or would like to discuss this report further, feel free to contact me at firstname.lastname@example.org.
The detailed methodology for this report can be found here.