Email Marketing vs. Marketing Automation: Which is Right For You?

by Lauren Carlson

CRM Analyst,

1/18/2012

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.
FeaturesEmail MarketingMarketing 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.

Special thanks to David Raab and Gaea Connary for their assistance.

 

5 Comments

Very useful post. Lots of companies mix up the two – and vendor salespeople make their product sound great regardless.

This is why an unbiased comparison like this really helps.

Comment by Jeff Ogden
01/19/2012
 

Hi Lauren;
As usual, a great article – thanks for posting. While the essence of all you say is correct, if I may I’d like to delve into a few other differences, and also provide some additional pricing information on marketing automation.

To begin with, marketing automation (MA) is usually only used in B2B companies as its particular strengths make it invaluable in educating prospects across a complex “sales cycle”. This terms is more properly these days called a “buying cycle” because the buyer is now in control of the process, not the seller. While B2C companies can (and probably do) use MA, the payback is higher with complex cycles because more content is sent out during the cycle (brochures are larger, technical spec sheets are needed, sometimes design guides are required for prospects to understand how they would use the system, etc.)

Inbound Marketing Automation systems, as we call them, not only do this emailing on behalf of the organization, but they both help to qualify prospects and deliver more insight into their online needs and preferences.

The qualification process assigns a “Score” to prospects based on their activities on site – what we call their digital footprints. They more they explore your site. and the more of your content they download, the higher their score rises. As such, their score is a measure of how interested they are in your solution.

The better marketing automation solutions also incorporate a “Grade” into this qualification process. Prospects’ Grades are based on their answers to the questions which are posed when they download your more valuable content. The content is “free”, but to collect the “better” pieces, prospects are required to register on site and they do this by supplying their name, email address and possibly job title or company name. Each time the prospect returns for more content, they answer a few more questions about themselves, thus building up an extensive profile over time. Obviously, student are awarded a Grade of F, while Executives are awarded a higher grade and this the grade is a measure of how interested you are in the prospect.

In addition, the better Inbound Marketing Automation systems also collect information available in the public domain for all prospects who supply their name and email address. The IMA system then displays this information about prospects in the form of their LinkedIn profiles, Twitter handles and streams, JigSaw and Zoominfo profiles, etc.

When you examine all this information for each prospect, you develop a greater insight into who each one is, and what they looked at on your site (which products, which approaches, whether they were serious enough to examine your price list, etc.).

Email packages of course do none of the above.

And finally, in terms of pricing. Loopfuse and Genius both offer versions of their packages which are free until you exceed certain limits. They are good products, but in the end, one tends to get what one pays for and the lack features which the more established players offer. Products like ActOn ($500/m and up), Pardot ($1,000/m and up), and Eloqua and Marketo even more than this (although Marketo announced a “smaller” version recently, for which they charge a fee between ActOn and Pardot.

Our website contains many resources concerning the exciting ways Inbound Marketing Automation can increase your profitability by raising revenues and reducing costs. Our Calculator allows you to use your own organization’s data to calculate precisely what your ROI would be, using these techniques.

http://inbound-marketing-automation.ca/romi-calculator/

Comment by Eric Goldman
01/19/2012
 

Great article and distinctions Lauren.

It makes sense that businesses would desire to use the wide lens that marketing automation provides in order to better understand the behaviors, influences and relationships of their audience across multiple channels.

You may have somewhat undervalued the isolated impact of email marketing when you said, “With email marketing, each prospect typically receives the same or similar communications, such as an email newsletter, which usually has limited effectiveness…”

Email marketing does what it does very well and continues to provide an impressive ROI of $40.56 for every dollar spent in 2011. That bottom line is directly impacted by that email marketing piece of the equation.

Truth be told, many individual and small business customers of our email newsletter software inform us that they simply don’t have the time or resources to do more than get their email marketing campaigns out to their customers every few weeks. It’s not that they wouldn’t like to have access to a more comprehensive system in place — they just don’t have the time or resources to pay for or manage it.

For example, all GroupMail customers have access to email tracking at a nominal subscription rate. You’d be surprised at how many companies don’t even track the open and click-through rates of their email campaigns today. They just want the sales spike that occurs after they send their newsletter out each month. They aren’t really interested in how or why it happens.

Of course, for those who have the resources, they would be wise to think beyond the inbox.

Thanks again for a great article Lauren.

Tom O’Leary

With best regards from the GroupMail Team
Tom O’Leary (marketing)
————————————————-
GroupMail Newsletter Software
http://www.group-mail.com
Celebrating 15 Years!

Comment by Tom O'Leary
01/27/2012
 

Lauren,

You make some good points in the article about the distinction between the two technologies, but I think the article downplays the effectiveness of email marketing, particularly with your comment that, “each prospect typically receives the same or similar communications, such as an email newsletter, which usually has limited effectiveness.”

Here at StrongMail, we serve sophisticated enterprise marketers, many of whom are sending one-to-one messages by actively leveraging data from other channels via integration with web analytics, CRM systems, customer databases and other business systems. Going beyond the one-size-fits-all newsletter to send more relevant communications based on customer preferences and behaviors is why companies turn to StrongMail.

It should also be noted that while Marketing Automation Solutions typically offer strong cross-channel capabilities, they come at the expense of the sophisticated and high-performance email marketing capabilities that a point-solution like StrongMail can provide. In fact, Marketo has partnered with StrongMail to offer high-performance email delivery and tracking to its clients. We also have many customers who integrate StrongMail with Marketing Automation providers like Eloqua and Aprimo, as well as CRM providers like Teradata and SAP.

For BtoB companies with a limited email file, Marketing Automation providers might be sufficient, but BtoC companies needing to send highly personalized messages to say 50 million customers or more or more will likely find the performance of Marketing Automation systems lacking.

Enterprise email marketing solutions like StrongMail also go beyond your simple batch-and-blast description of email marketing solutions with sophisticated, multi-step lifecycle marketing capabilities with continuous testing and winner selection that can be set up with an intuitive drag-and-drop interface and no ongoing IT involvement.

Comment by Jason Klein
02/03/2012
 

Thanks Lauren, great post! You synthesize in excellent manner.

Comment by Marino Fadda
02/21/2012
 

Leave a comment