Marketing Automation ROI: A Complete Guide [2024]
Marketing automation ROI is a key topic for marketing leaders. And has become more crucial as funding dries up and businesses and their financial teams have to justify investments in marketing automation tools.
With all that in mind, you probably need to take a stand on decisions such as:
- Should we ramp up our investments in marketing automation tools?
- Should we change our marketing automation strategy?
- Do we need to adjust our marketing strategy?
Well, in this in-depth guide, we answer these questions while also defining what marketing automation means for marketing teams, how to measure the ROI of your marketing automation use case, and more.
Key Takeaways
- The ROI of marketing automation is an important metric and helps assess the benefits of any marketing automation tool your team uses versus its cost.
- You can track its ROI financially via metrics like conversion rates, customer lifetime value, customer retention, and customer acquisition costs. You can also use non-financial metrics such as time saved on projects and increased innovation.
- To improve or catalyze the benefits of an automation tool, explore AI-enabled automation software or take advantage of personalization.
What is Marketing Automation ROI
Marketing automation ROI tells you whether implementing marketing automation in your business is a good idea. It calculates the cost and revenues associated with investing in a marketing automation tool.
Going through this process helps with future investment decisions and guides how you approach your overall marketing strategy.
How to Calculate Marketing Automation ROI?
So how do you measure marketing automation ROI?
Whether you're running an enterprise marketing automation model or one focused on a smaller business, you'll need the costs of setting up and running your marketing automation platform. You also need all revenue directly associated with all marketing campaigns driven by your automation program. For example, if 10% of your website visitors converted into sales or your automated email marketing program made $30,000 in sales in the past month, that's the sort of data you need.
Once you have that, the next step is to calculate if you run an effective marketing automation program using this formula: the difference between marketing automation cost and sales growth divided by the marketing automation cost.
This calculation can get complex depending on the size of your business. For example, if you run your lead generation program across multiple channels, you must factor all that into your calculation.
While increased revenue or cost savings are easier to quantify, efficiency improvements aren't usually that straightforward. I explore this and more below. But first, let's take a look at the four metrics that can help confirm the health status of your automation efforts.
How to Measure Your Marketing Automation Program's Health
In addition to the formula we worked out earlier, the below metrics can provide insight into a successful marketing automation implementation. These metrics are leading indicators of your marketing automation efforts.
Conversion Rates
The conversion rate measures the percentage of people who have completed a specific action. Your definition of conversions and conversion rates will vary depending on the campaign you are running or your industry benchmarks. For example, if you run personalized email campaigns, your conversion action could be click-through rates to the sales page.
So, before you track this number, make sure to define the key conversion actions for your business. Also, take a look at your industry conversion rates for your primary marketing campaigns and channels.
Customer Lifetime Value
The customer lifetime value (CLV) measures the total income expected from a customer over the course of your business relationship. An increased CLV after setting up an automation program means your marketing automation works.
You can calculate this metric calculated using the formula: Average transaction value X number of transactions + retention period.
Customer Retention
Customer retention measures the percentage of customers who remain loyal to your business over a certain time period. This could be measured monthly, quarterly, or yearly. Monitoring this metric helps you gauge if your marketing retention automation efforts are playing a part in preventing customer churn. This is a great metric to consider before you bother calculating marketing automation ROI.
Customer Acquisition Cost (CAC) and Lead Quality
Lead generation is one major reason for investing in automation. So, measuring the quality of leads coming in and the cost of acquiring those leads makes sense. If it costs you more to generate leads or the leads that come into your sales funnel end up in lost sales or don't close, it's time to take a harder look at your automation program.
Non-Financial Metrics for Measuring the Health of Your Marketing Automation ROI Program
While financial ROI or other related metrics, such as lead quality, are the most common ways of measuring the success of an automation program, you can also use non-financial metrics to measure if your marketing automation tool has a positive ROI. Here are the three most common metrics of this nature:
Reduced Time on Tasks
One of the significant benefits of using marketing automation software is the time you and your marketing team save on tasks. Repetitive tasks such as data entry and scheduling are eliminated. And your team can focus their energies on more creative tasks such as writing the copy for the email marketing campaign.
These tools can often achieve these tasks more quickly than humans can. So once this is on the rise across your organization after implementing marketing automation, that's a good sign.
Improved Accuracy on Tasks
When you implement marketing automation software, you expect to see improved accuracy across all affected marketing tasks.
You don't need to worry about routine tasks such as inputting the data during data migration or running the numbers when analyzing the results of your lead nurturing program. With automation, the chances of doing any of these marketing processes the wrong way are significantly lower.
However, if you notice that you are seeing more mistakes on tasks, then your automation program might have some issues.
Increased Innovation and Creativity
Implementing marketing automation is one way to boost innovation and creativity across the company.
This happens because when marketers automate mundane tasks, they can focus on the most creative parts of their job. This could include writing customer-focused blog posts, responding to or implementing customer feedback, and brainstorming new campaign ideas.
3 Tactics to Improve Your Marketing Automation ROI
So, you've calculated your ROI, and it's lower than you expected. Here are a couple of tactics to help improve your marketing automation efforts.
Take Advantage of Personalization
Personalization increases the value of your marketing automation program. You not only eliminate the generic tasks, but you also improve on the overall customer or prospect experience. For example, when you segment your audience and tailor your messaging and how you address each segment, your prospects feel like they are in a one-to-one marketing funnel.
This leads to improved customer engagement and conversion rates.
Take Advantage of AI
Artificial Intelligence (AI) enables you to take automation up several notches. You can analyze customer data and craft personalized content and email campaigns while automating repetitive tasks. What's not to like about AI?
The good thing is most automation software include large language models (LLMs) within the tool, making moving over to AI-enabled marketing software easy. All you probably need to do is upgrade your tool or subscription.
Track and Optimize Your ROI Metrics
Tracking the various metrics we mentioned earlier, analyzing the data, and then using the data to optimize your marketing campaigns is a great way to improve your automation approach. These metrics help you pinpoint what isn't working, what needs to be upgraded, and what needs to be stopped.
This could mean changing the tool you are using for automation or changing how you currently use the tool.
Or you can take advantage of our marketing automation implementation checklist.
4 Marketing Automation Mistakes that Reduce ROI
Here are some marketing automation mistakes that can tank your ROI.
The Trap of Over-Automation
While automation can greatly improve the return on your marketing strategies and the efficiency of the team, an overdependence on it can result in generic or bland messaging. The result? A disconnected prospect or customer who bounces off your landing page and does not convert into revenue for your business.
The best way to prevent this from happening is to use segmentation to split your customer base into various buckets and then personalize by segment.
Using Poor Quality Data
Using low-quality data can affect the ROI of your automation program. Poor data means your program is flawed from the start. And that can only mean disaster. Garbage in, garbage out.
So, ensure your email database is clean and up-to-date and that any other prospect data that serves as the backbone of your marketing automation program is of the highest quality.
Working with Data Silos
Data silos happen when data sets are not shared between your marketing and sales teams. It could also happen when data isn't shared across your multiple marketing programs. This reduces your ability to spot revenue opportunities or any other opportunities for improvement across the customer journey.
Using the Wrong Marketing Automation Tools
You must use the right automation tool that suits your business stage or needs. Marketers sometimes make decisions based on what's popular with other marketers or an automation tool they've used at their last job.
This can work in some cases. But you must consider your business needs when picking a marketing automation tool. You also need to consider how well it integrates with other tools in your tech stack. Get this wrong, and you might have a costly piece of software junk on your hands.
Essential Marketing Automation Tools to Consider
If you're in the market for automation tools, you can explore our guide on the best marketing automation software for a detailed comparison and recommendations that help you make a choice best suited for your needs.
Here are some of our best picks:
- EngageBay: EngageBay is best for small businesses looking to combine their sales, marketing, and support functions into one workflow. It's also affordable and has a free version that stays free.
- Intercom: Intercom is best for businesses looking to automate their customer service functions. They've got chatbots, a knowledge base that helps reduce the need to speak with a customer rep, and customer profiling tools.
- Eloqua: Eloqua by Oracle is one of the best omnichannel marketing automation platforms on the market. It offers A/B testing, ROI tracking, customizable CTAs, the ability to set up personalized email campaigns, and more.
- HubSpot Marketing Hub: HubSpot is one of the most popular tools among B2B SaaS marketers. AI-powered chatbots, multiple integrations, and analytics, what's not to like?
- ActiveCampaign: ActiveCampaign is probably the best option for businesses looking to automate their email campaigns. It offers dynamic content, landing pages, omnichannel marketing, and more.
Time to Create a Great Marketing Automation ROI Report
The key to getting marketing automation ROI right is understanding associated costs and revenue, optimizing your metrics, and using the right tools. But remember, while automation can handle the heavy lifting, the human touch is irreplaceable.
Striking the right balance between automation and human interaction will ensure your marketing efforts resonate with your audience and maximize your ROI.
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Frequently Asked Questions
What is marketing automation ROI?
Marketing automation ROI is a financial metric that factors in the costs and revenues associated with investing in marketing automation tools, providing a numerical measure of the return on investment.
What are some key metrics to measure the ROI of marketing automation?
Some key metrics to measure the ROI of marketing automation are conversion rates, customer lifetime value, customer retention, and customer acquisition cost. These metrics provide insights into the effectiveness and efficiency of your marketing efforts.
What are some common marketing automation mistakes that can reduce ROI?
Avoid common marketing automation mistakes like over-automation, poor data quality, data silos, and using the wrong tools to maximize ROI and effectiveness in your campaigns.