At Software Advice, we talk to hundreds of software buyers each day, helping them determine the best system for their needs. We pick up on a lot of insights about the market through these discussions. One in particular is the confusion about how marketing automation (MA) contrasts with email marketing. To our surprise, many buyers mistakenly think that MA is a fancy name for an email tool and, as a result, are evaluating vendors like Eloqua and Marketo against email services like MailChimp and Constant Contact.
We want to clear up the confusion and help buyers decide when to go for email marketing and when to opt for a more sophisticated marketing automation system. Let’s start with the basics.
The Source of Confusion
A key source of confusion between marketing automation and email marketing stems from the fact that both use email as the primary vehicle to communicate with a prospective buyer. From that perspective, MA is, in part, an email marketing tool. However, while the two systems have functional parity in some areas (see Figure 1), marketing automation goes much deeper.
The mechanical difference between these tools is that marketing automation systems track the entire chain of online interactions that buyers have with a company, and can take intelligent actions based on those behaviors; in contrast, email marketing tools typically only track interactions related to email campaigns. Some more advanced email systems allow you to set up elementary logic based on past sends or engagement, but the majority don’t “do” anything with the results of campaigns.
Four Important Differentiators
- Process – The purpose of MA and email marketing is the same: to “keep in touch” with prospective customers in the hope that some of them ultimately convert to paying customers. The two systems approach this differently. With email marketing, each prospect typically receives the same or similar communications, such as an email newsletter, which usually has limited effectiveness. In contrast, MA attempts to convert prospects through more targeted efforts, such as by sending progressively more relevant email communications or even presenting custom webpages when the prospect returns to the website. This helps nudge prospects through the stages of the buying process and provides better insight into where they stand within that process.
- Awareness – To do what they do, MA systems are “aware” of more things. They “know” that a particular prospective customer clicked a link in your e-newsletter, went to a specific page on your website, downloaded certain pieces of marketing collateral, and ultimately filled-out a contact form. Some of the more advanced email marketing tools support this functionality to some degree, but the majority of them would lose track of this prospect after he clicked the newsletter link.
- Integration – Arguably the most important differentiator is that MA systems integrate tightly with sales force automation (SFA) and other CRM tools. This allows you to use data to segment and personalize your campaigns, as well as provide your sales team with insights into how their prospects engaged with those campaigns. With this information, Sales can have more productive conversations with the prospect in the later stages of their buying process. Ultimately, MA gives you the power to change how you market and sell. With most email tools, there is very weak integration, at best, to SFA and CRM systems, so the longer-term picture of the prospect’s interaction with your organization is unclear.
- Action – Furthermore, MA systems don’t just track—they act. Based on what prospects do, MA systems can respond differently, automatically (hence the term “automation”). For instance, a prospect who visits a particular product page on your website could receive a different series of email over the next few weeks than a prospect who visited a different webpage. Email tools don’t segment audiences or respond in this way without manual intervention. In this sense, MA enables organizations to better scale their email marketing efforts.
| Features | Email Marketing | Marketing Automation |
|---|---|---|
| Lead capture |  | |
| Basic segmentation | | |
| Email templates | | |
| Create & send emails | | |
| Automation & triggers | | |
| Reporting & analytics | | |
| Mass email delivery | | |
| Email campaigns | | |
| SEO management | |
|
| Web behavior capture | |
|
| Resource management | |
|
| CRM integration | |
|
| Behavior-based segmentation | |
|
| Social media management | |
|
| Lead Scoring | |
|
| Multi-channel campaigns | |
What Kind of Buyer Are You?
Now that you have a solid understanding of each system, the next step is to take a look at your needs and resources. The three main things to consider are: complexity of your customer base, cost, and your ability to produce content.
Complexity
Let’s cut to the chase: if you’re a small firm with limited resources and your target market is homogeneous, you won’t benefit from marketing automation. A great example is a dentist’s office. A dentist likely has her own practice, with a fairly uniform patient roster that seeks, for the most part, fairly standard dental procedures such as a cleaning, filling or cosmetic treatment. With a fairly homogeneous customer base, the dentist would require a basic email marketing system that allows her to send out appointment reminders and the occasional promotional email: “20% off root canals for the month of February!”
Marketing automation starts to make sense when an organization finds that its customer base isn’t very uniform. Maybe you’ve added more products or services, or expanded into new markets. The more varied the customers are, the more each would benefit from a unique marketing approach. Consider a software company that sells three different product lines to the three tiers of education (primary, secondary and post-secondary or higher). That requires nine (3×3) different marketing approaches to appropriately target the entire customer base. If you can segment your customers into distinct groups, MA can help you tailor your marketing approach to each and scale to serve them without a lot of manual campaign set-up.
Cost
In terms of cost, marketing automation is a bigger investment than email marketing. The pricing of email marketing tools is based either on the number of emails sent or the size of your mailing list. You can expect to pay about $20/month on average. Some vendors, like MailChimp, even offer a basic service for free.
The pricing models for marketing automation systems vary widely, as does pricing in general. At the low end, you can expect to pay around $200/month, but many systems run upwards of $1,000/month. While MA is a significantly larger investment, the added cost of a marketing automation system is justified if it helps a company win more business through more effective marketing.
Content
The final consideration—and most difficult one to pull together—is content. Email marketing requires minimal content: set up some standard email templates, add some freshened content, and cycle them out every so often. But with MA, compelling content and offers for additional content (e.g., white papers) is the gasoline that fuels the engine.
A key capability of MA is lead nurturing, which is a series of communications designed to push the buyer through the sales funnel. In order to nurture, however, you need more compelling and varied content than, say, a generic email newsletter. This might include white papers, videos, blog posts and more. You also need a creative individual or team to churn out that content. Many buyers overlook this requirement and end up with an MA implementation that ultimately fails due to lack of content.
Some Final Comments
Both email marketing and marketing automation are excellent tools designed to help companies achieve their marketing goals. But before making the investment, it’s important to define those goals and understand which system will be most effective in helping you achieve them. We suggest checking out demos of products. Many companies offer free demos or a free basic subscription that will allow you to sit down and play with the system for a bit. A good rule of thumb is if it feels too complex for your organization, it probably is.
For more information on the systems currently on the market or for help in choosing one that’s right for you, check out our Marketing Automation Buyer’s Guide page. You can also call (800) 918-2764 and speak directly with one of our trained software analysts.
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