Magic 8 Ball

I have a Magic 8 Ball on my desk. It’s about 30 years old; surely the age of sage wisdom for a predictive plastic orb.

So I posed this question (asking it three times to mitigate the fluke-factor): Will smaller companies increase their adoption of marketing automation this year?

To which Magic 8 Ball replied:

  • Answer 1: It is certain
  • Answer 2: Outlook good
  • Answer 3: Reply hazy try again

Twice is a trend, right?

Fortunately, the evidence gets better.

Much better, in fact, according to new research from Software Advice, whose 12-month study (Jan 1 – Dec 31, 2013) analyzed 896 interactions with marketing automation software buyers.

The results are published in a new report: Marketing Automation Software BuyerView 2014.

The takeaway: Small and mid-sized businesses are actively considering marketing automation as a viable tool that can increase efficiencies, improve lead management, and drive revenue.

It’s a good day when Magic 8 Ball and empirical research agree.

Findings that surprised

SMBs take a seat at the table

A handful of findings raised an eyebrow, though the first was less “surprise” and more “happy confirmation” of what Act-On sees every day (and the jump point of this blog post):

A large majority of the companies searching for marketing automation software were small and mid-sized.

Here are the numbers:

Employee Count of Buyers’ Companies

Employee Count graph

Said Software Advice’s marketing analyst – and author of the report – Derek Singleton, “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.”

Marketing methods are all over the yard

Of equal intrigue was data about the systems that buyers were using to manage their marketing:

Buyers’ Current Methods of Managing Marketing Activities

Managing marketing activities

See the red pie wedge labeled 21%? That’s the percentage of companies using no software systems at all to manage their sales and marketing. Most likely they used (and possibly still use) spreadsheets and one-off emails to generate leads and create demand.

Two other data points to note:

  • Only 9% had a marketing automation system in place; meaning 91% were evaluating marketing automation for the first time among the study’s sample.
  • A mere 7% of those surveyed used an email marketing program.

“Seems very low,” Act-On CMO, Atri Chatterjee, told CMSWire in reference to the second bullet point. “We see 25% of our wins coming from companies currently using email marketing software and looking to bridge the gap from email to digital with marketing automation.”

I’m in the same camp as Atri – email is the most highly used marketing channel and tactic among businesses of all shapes, sizes, and industries; thus, 7% feels inaccurate. Perhaps the respondents didn’t feel they used email marketing software to “manage” their marketing activities but as a tactical point solution to send out emails.

Findings that didn’t surprise

Lead management is the top motivator

Unsurprisingly, improving lead management was the primary motivation for marketing automation buyers – 40% voiced the need to improve their lead nurturing and lead scoring capabilities.

Automating processes (e.g., triggered messages, drip campaigns) was second on the list, which makes sense since these buyers were, after all, evaluating marketing automation software.

Top Reasons for Evaluating Marketing Automation Software

Reasons for Evaluating MA

Leads continue as major features focus

When it came to top-requested features, the theme continued, with leads and data creating a predictable trifecta. The chart is below. Here are the percentages:

  • 81% – lead nurturing
  • 70% – reporting and analytics
  • 64% – lead scoring

Most Requested Marketing Automation Features

Most requested MA features

The overall focus on “leads” is consistent with what we’ve observed, particularly among businesses new to marketing automation (which comprised the majority of the study’s respondents). That is:

Leads are of the utmost importance to keeping the doors open and the lights on.

Getting leads into the funnel, using data and analytics to gain incremental insights over time, nurturing and scoring leads effectively, measuring results, and iterating to improve … these are all essential and basic needs for any business.

Social and segmentation are “meh”

Although social media marketing receives a lot of hype and import – often justifiably so – it’s no surprise that marketing automation buyers don’t rate it as a must-have feature (a low 6%). Two reasons that I see are (1) there are innumerable options readily available for managing social media marketing, and (2) many companies are not convinced about social’s ROI, and thus are still experimenting with the medium.

Segmentation is another story. It’s not surprising, but it IS illuminating. At least to me.

Here’s the data: Out of 896 buyer interactions, only 3% cited segmentation as an important feature for marketing automation. Assuming each buyer interaction was unique, that’s a mere 27 participants.

One explanation is that segmentation (and social media marketing and even campaign management, for that matter) is not the biggest business pain point. Lead management is. Everything else is secondary until the funnel is humming.

So by that rationale, it makes total sense that segmentation ranks in the basement.

But here’s why it’s illuminating:

One does not have successful lead management without segmentation.

They’re complementary. Yin and yang. Hand in glove. What good is learning about your prospects and customers – who they are, what they’re interested in, where they are in the buying cycle – if you’re not going to use that intelligence to deliver a more valuable experience to them?

Segmentation is what allows you to take advantage of your data and ultimately communicate with your prospects and customers effectively.

And this disparity between lead nurturing and segmentation suggests that among service providers and vendors, there is work to be done to help marketers better connect the important dots and harness the power of automated digital marketing.

And there you have it

As this study and an increasing bevy of research supports, marketing automation is mainstream. For small and mid-sized businesses, 2014 is shaping up to be a good year for marketers, as more and more recognize the power and ROI potential of marketing automation and are making the business case to adopt it.

As Magic 8 Ball would say, “You may rely on it.”

Did you know:
Forrester recently identified Act-On as the only leader for both SMBs and large enterprises? Download the full Forrester Wave Report »

Image of Magic 8 Ball from ursonate, used under a Creative Commons 2.0 license.