By: Andrew Rose
(Post 1 of 2)
If you haven’t been recently approached by HubSpot, Salesforce, Pardot, or one of the dozens of other marketing automation platforms, just wait—it is only a matter of time. I’ll admit, the pitch is enticing. These companies will fill your pipeline with prospects (for a fee, of course), and each of these prospects will be slowly reeled in like a fish to be served up on a porcelain platter. All you have to do is push a few buttons, then sit back and wait for the bounty to arrive.
Does this sound too good to be true? Many firms are finding it is an expensive morass that requires more capital and resources than it yields. In a business to consumer (B2C) world, marketing automation makes more sense because you are likely selling a commodity. The hurdles become higher when you are using automation as your method to create a personal relationship with another business professional.
What is Marketing Automation?
Marketing automation is centered on moving leads from the top of the marketing funnel to become sales-ready leads at the bottom. Prospects are scored based on their activities, and then presented drip campaign messaging via email and social channels. Marketing automation involves many facets of the marketing industry, but generally speaking, it is the marriage of email marketing technology coupled with a structured sales process.
One of the more common marketing automation platforms is Hubspot. The relationship typically starts when a Hubspot reseller reaches out to you or you get caught in its sticky web by downloading a whitepaper, also known as inbound marketing. I have experienced a salesperson contacting me as quickly as ten minutes after downloading an article to try and convince me to buy their other services, also known as outbound marketing. Regardless of how it started, you are caught in the cycle, circling the lip of an outbound black hole and unable to escape the gravitational pull.
Before we delve further into the merits and myths of the inbound and outbound variants of marketing automation, let’s ask ourselves how a CPA firm usually obtains new clients. If you are like the typical firm, you receive 85% of your business from referrals and 15% from other means such as advertising and sponsorships. Keep these figures in mind as you look at the proportion of your marketing budget that will need to be allocated towards marketing automation to achieve a return on investment.
How Much Does Marketing Automation Cost?
When you purchase a complex software system, it will still require outside specialists, internal staff training and other services to optimize it, and additional costs may apply. Looking at Hubspot, you will spend almost $12,000 for the first year and almost $10,000 each year afterwards for the middle level of service, which equates to around 1,000 email contacts. For the more robust version, you are looking at almost $35,000 for the first year and more than $28,000 per year thereafter.
Once you have this platform, you will want it to integrate into your other systems. As an example, you can hire consultants for an additional fee to have Salesforce talk to the system.
I see these systems consuming larger portions of a firm’s marketing budget year after year. In defending these spends, I have heard CPAs talk about “that one big client” they landed as a result of using marketing automation. While I don’t doubt the statement, I do suspect many of those prospects that turned into clients also visited the firm’s website, read the CPA’s personal LinkedIn profile, or even met the staff at an event.
Does the cost justify the return? That depends on who you ask. If we look at Hubspot itself, using their S-1 filing with the SEC, there are some revealing tidbits of information. First, they haven’t made a profit. The company is running a cumulative deficit of $123,800,000. A company representative’s own words paint a bleak picture of their viability.
“We will need to generate and sustain increased revenue levels in future periods to become profitable, and, even if we do, we may not be able to maintain or increase our level of profitability . . . customers may choose not to renew their subscriptions for a variety of reasons, including an inability or failure on the part of a customer to create blogging, social media and other content necessary to realize the benefits of our platform.”
In other words, Hubspot and other similar platforms should never be mistaken as an expensive silver bullet. Stay tuned for the next post where Andrew shares his thoughts on what marketing automation does well.
Stay tuned for part 1 of this series!
Andrew Rose spent 11.5 years as the Director of Marketing and Business Development for a regional CPA firm based in Maryland. He is now the President of Zest SMS, a digital marketing and business development firm that specializes in professional service companies. It provides responsive website development, custom designs, branding and social media account management, in addition to many other marketing services. You can email Andrew at Andrew@ZestSMS.com or call him at 443-275-7992. Learn more about him on the company’s website at www.ZestSMS.com or follow him on Twitter at @ZestiestRose.