Marketing Automation vs. Inbound Marketing

If you believe everything you read (and lately there’s been a lot) about marketing automation, you’d think it is the killer app to solve all your lead generation problems.

Then there are scores of B2B marketers who swear by inbound marketing as the path to lead generation nirvana.

How do you separate hype from reality, especially when it comes to industrial marketing? Are we comparing apples to oranges when we talk about marketing automation versus inbound marketing?

Let’s take a closer look at both.

How manufacturers are marketing today

“Quality of leads delivered” was considered as most important by 464 respondents from the manufacturing sector as reported in Trends in Industrial Marketing 2010 released by GlobalSpec. It scored 8.6 on a scale of one to ten. This was way ahead of quantity of leads and number of click-throughs to a company’s Web site.

Industrial marketers seem to face the same challenges year after year. For the past three years, marketers have listed too few marketing resources, not enough high-quality leads and a need to improve ROI as their top three challenges.

Despite all the promises of online marketing tactics, industrial marketers are still wrestling with the same lead generation problem year after year. 48% of respondents still said they are not generating enough high quality leads for their sales teams.

Notice how marketers are now talking about quantity of quality leads and not just filling the top of the funnel.

MarketingSherpa had also reported the same problem, “Generating high-quality leads is b2b marketer’s number one challenge.”

Is this a case of the age-old disconnect between sales and marketing or is something else at play here?

Ardath Albee, CEO of Marketing Interactions, wrote a very interesting post about the unified definition of a high quality lead. She wrote, “Part of the problem is often that marketing and sales view the idea of “leads” differently. Quality is in the eye of the beholder, if you will.”

IMO, she nailed it in her conclusion where she said, “I don’t particularly care what you label a “high quality lead” – I just want to know what that means—exactly.”

So where do we go from here?

Reasons to use marketing automation

I’ve read quite a bit about marketing automation and do firmly believe in its benefits. I came across a recent post by Lauren Carlson of Software Advice where she has provided seven key reasons why B2B marketers are adopting marketing automation.

I’ll summarize them for you here and give you my take on her post.

  1. Buyers want content of real value: Marketing automation helps you automate deployment based on set criteria
  2. Buyers are increasingly wary of the phone: Delivering the right content over time is a great way to “warm up” buyers until they are ready to talk to sales
  3. Desire for marketing accountability: Marketing automation empowers marketing to define its contribution to the sales pipeline, tracking each sale back to one or more marketing campaigns
  4. Sales cycles are longer in a down economy: Marketing automation supports drip marketing campaigns for lead nurturing to maintain top of mind awareness over a longer sales process
  5. B2B sales processes are becoming “consumerized.” Marketing automation is good at supporting a self-service model that B2B buyers are accustomed to from their personal online experiences
  6. Marketing channels have changed and grown: Marketing automation helps you quickly to easily track, monitor and see the “big picture” by using a unified dashboard
  7. SaaS (software as a service) systems are greasing the skids: Subscription pricing eliminates the need for big upfront costs and allows marketers to prove ROI quicker

My take: Lauren’s seven points are all very strong and valid reasons for adopting marketing automation. I can’t say I have issues with any of them. The three key benefits in my opinion are:

  • Aligning sales and marketing by agreeing on a unified definition of a sales qualified lead
  • Objective lead scoring based on a set of predetermined rules
  • Lead nurturing of a vast majority (up to 70% according to some studies) of site visitors and prospects who are not “sales ready” right now

Marketing automation is very effective in moving prospects through the middle of the marketing funnel until the handoff to sales and provides a good closed-loop system for lead recycling that would otherwise go to waste. However, you shouldn’t count on marketing automation to solve all your lead generation problems. Just like any marketing tactic or tool, there are pros and cons.

Making a strong case for inbound marketing

Proponents of inbound marketing argue that marketing automation fails to address the problem of filling the top of the marketing funnel with a large quantity of high-quality leads.

In case you are not familiar with the term inbound marketing, it refers to marketing tactics that focus on helping your prospects and customers find and contact you as opposed to interruptive outbound marketing such as telemarketing, direct mail, radio and TV advertisements. Some marketers also refer to it as content marketing.

Content is the heart and soul of inbound marketing because that’s how your prospects and customers will find and engage with you. It helps you with:

  • Search engine optimization (SEO): Being there where your prospects and customers are searching for a solution to their problem
  • Social media: When others tweet about your blog post or content, it provides social proof and makes you more trustworthy versus you pushing it out which is usually looked at with suspicion
  • Referrals: Inbound marketing drives interested leads to your site just like a word-of-mouth referral. The theory is they are already interested and less resistant to what you have to say
  • Costs less: Lower costs and higher ROI from inbound marketing because there are no built-in costs such as media buys and booth rentals at tradeshows. Social media accounts like Twitter, Facebook and LinkedIn are free to set up
  • Better engagement and relevance: Since visitors self-qualify via online forms, you are able to deliver content that is of interest to them. Tracking behavior and site interactions leads to serving up relevant content that engages visitors at each stage of the buying cycle

These days B2B and technical buyers start their search online and go much deeper into their decision making cycle using the Internet. So it would make a lot of sense to make content marketing a priority to attract these people to your site. (See my earlier posts on industrial buy cycle).

Let me share a recent experience with a new client to highlight the problem when it comes to selecting between marketing automation and inbound marketing.

This client who manufactures components used in automotive, aerospace & defense and medical equipment industries, contacted me because he was having trouble converting leads into sales even though he was getting a decent amount of traffic. He attributed that to poor lead nurturing because of a lack of in-house expertise. He wanted to retain me as a consultant to find the right marketing automation solution for his company.

Of course I was thrilled with the retainer but decided to dig a little deeper despite the little voice in my head telling me not to rock the boat.

Over several phone calls and after reviewing his current marketing program, I uncovered issues that had to do more with filling the top of his marketing funnel and less with his nurturing and conversion problems.

To make a long story short, jumping right into marketing automation wouldn’t have produced the kind of results he expected because automating an ineffective marketing strategy wouldn’t produce better results.

In this case inbound marketing proved to be a better fit. Installing a marketing automation system would have been useless since the top of the funnel lacked enough qualified leads and he didn’t have a stock of relevant content to nurture them through the entire buying cycle.

Bottom line: Think carefully about your business objectives and analyze where you are today before jumping into either marketing automation or inbound marketing.

Focus first on attracting a steady stream of quality traffic, establish an agreed upon definition of a sales qualified lead, score prospects objectively before handing them off to sales and produce valuable content to nurture those that are not sales ready yet.

It is not an either–or proposition. I recommend starting with inbound or content marketing and then moving on to marketing automation to make the entire lead generation process smooth and efficient.

[Update 10/24/2010] Eric Goldman (see his comment below) pointed out a key benefit that was left out in my post and that is Marketing Automation’s ability to measure ROI easily and accurately. This is vital to prove marketing’s contributions with hard numbers. His company Gossamar has developed a handy online tool called the ROMI Calculator (Return on Marketing Investment Calculator). Thanks Eric.

6 replies
  1. Chris Bailey
    Chris Bailey says:

    Achinta, you’re spot-on with your final paragraph where you say it’s not an EITHER-OR proposition (though it took a while to get to that point). It truly is an AND proposition where inbound marketing and marketing automation work in unison. I can’t imagine inbound marketing being truly successful if you don’t have the automation to deliver the ‘just right’ content to your prospect. And I can’t imagine an automation platform being effective without compelling content beaconing to prospective customers. Simply put, they’re both necessary for any successful marketing program.

    Reply
  2. Eric Goldman
    Eric Goldman says:

    What a great post Achinta! Such a pleasure to read a balanced and informed view without the hyperbole.

    We use Inbound Marketing and Marketing Automation on our own site, but just to be clear about where I’m coming from, we sell and support Marketing Automation software packages and consult to clients on how to implement them within their companies. And because in our minds, the two are a paired concept (like the song, they go together like a love and marriage or a horse and carriage), we call the concept, “Inbound Marketing Automation”. (IMA)

    Now one of the powerful IMA features which neither Lauren nor your post list is that of ROI. With today’s Inbound Marketing Automation systems gathering all the data one needs to calculate Return on Marketing Investment or ROMI, the only excuse now is that most of us don’t know how to use the data to arrive at a number. But even that, too, has changed, with the release of an easy-to-use ROMI calculator, specifically designed for IMA. Not only does the tool make it easy with step-by-step instructions on what data you need and where to find it, but it also provides best practices guidelines to help educate you on how you are doing versus your competition.

    Before I give you the link, it may help to know why one does the calculation in the first place. Calculating ROMI is in fact the only way you KNOW if a campaign was a good one or a bad one. No other metric is as useful and as universally accepted. And using ROMI is a great way to prove just this to your executive team. No more will marketing’s budget be trimmed just because everyone else was able to justify their expenditures, but marketing couldn’t.

    If you’d like to start calculating ROMI for your own campaigns, here’s the link: http://www.inbound-marketing-automation.ca/romi-calculator/

    Reply
    • Achinta Mitra
      Achinta Mitra says:

      Eric,

      Good to hear from you again. Thanks for taking the time to read my post and leaving your thoughtful comment.

      You’ve made a very good point about Marketing Automation’s ability to measure ROI, which has become crucial for marketing to prove its worth. Your online ROMI Calculator is very useful. Thanks for the link. If it is okay with you, I would like to share that URL with my readers.

      I really liked the way you’ve married the two and called it Inbound Marketing Automation.

      Reply
  3. Mark Stonham
    Mark Stonham says:

    A great post Achinta, and reply Eric,

    I work on the model of Attract, Engage, Nurture, Transact and Deliver. I help clients identify where they could improve the process and optimise their sales results.

    If the process is broken then improving just one element will not deliver the best results. Conversion from each stage to the next matters. Maybe Inbound is the priority, if Engage and Nurture are in good shape. If Sales can’t Transact the deals and if the Delivery stage doesn’t create delight customers and make a profit then that would need looking at.

    In B2B it’s worth recognising differences between target audience, suspects, prospects and leads. Someone registering on the landing page to download a white paper is not yet a prospect without some nurture and qualification.

    In a multi-touch, multi-channel, multi-media environment it’s more difficult to measure which ‘campaign’ performed better than another.

    And B2B or Industrial Sales is a team activity. Sales should be able to call upon Nurture activities across a longer buyer cycle that they are orchestrating. Multi-touch also means phone calls, meetings with multiple people in the Decision-Making Unit (DMU, reference visits, and more, typically managed through an SFA or CRM system.

    Challenging and exciting times.

    Mark Stonham

    Reply
    • Achinta Mitra
      Achinta Mitra says:

      Mark,

      Thank you for reading my post and sharing your insights.

      Attract, Engage, Nurture, Transact and Deliver — Great model! You’ve done a very good job of breaking up the entire process into discrete steps that are easier to monitor and manage. I see where it would be a big help in diagnosing a problem and fixing a specific phase.

      I agree with you, it’s a process and not an event. Sales and marketing should be playing on the same team, each feeding on the other’s strengths. Wishful thinking on my part? May be.

      As you’ve said, these are challenging and exciting times indeed.

      Reply

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