I get it. You’re ready to buy a Marketing Automation (MA) platform, but you’re struggling with what to put in the budget to satisfy your boss’ question: “How much is MA going to cost?”

Before I answer this question, consider the total return on investment (ROI) of an MA tool. According to VentureBeat, 80% of marketing automation adopters saw their number of leads increase, and 77% saw the number of conversions increase.

Automating your marketing programs is perhaps the fastest way to see an increase in leads, and that means an increase in revenue. The base cost of an MA system could be justified by ROI.

OK…let’s get down to it.

4 Key Questions to Help Determine if MA is Worth it to Your Company:

1. How many contacts are you marketing to?

This is the most important question to answer. The majority of MA vendors charge you based on the number of contacts you have in your database. Usually this is the total number of contacts and leads stored in your CRM system. If you don’t have a CRM, it’s the number of contacts and leads you upload into the MA system. Typically, B2C companies will have more contacts than B2B.

Some MA vendors distinguish between all contacts and active contacts. An active contact is anyone you send an email to in a given time period (usually a month). In most cases, vendors apply higher blanket costs for all contacts than for active contacts.

2. How many licensed system users will you need?

Small marketing departments might have about three licensed system users, but larger enterprises might close to a dozen. Many vendors charge extra for each system user, but some allow for a small number of system users at no charge.

Some vendors also have an additional per-seat charge for system users who have access to marketing information from their company’s Customer Relationship Management (CRM) system. This type of user is called a sales user.

3. Do you have a CRM and do you want to integrate to it?

Beyond the number of sales users, consider whether or not the MA system you’re checking out is compatible with your CRM. If it isn’t, and you require an integration, you could be in for some steep development costs. The good news is that most mainstream CRM systems will integrate most MA systems.

4. Do you need a full MA system or do you just need email management tools?

While both of these tools manage how you use email to engage with your audience, email management tools only track the actions taken by recipients of your email blasts. A full MA system, on the other hand, monitors every digital interaction between you and your leads. This includes website visits and social media interactions. Email management tools will cost less to buy and use, but you will miss out on the many potential marketing channels of MA systems.

How Much Does MA Cost?

You should estimate that an MA system will cost about 5% of your marketing budget.  Larger companies with larger budgets tend to spend less, by percentage.

If you only need simple email management, you’re looking at $50 per system user per month for 10,000 contacts or less. A small marketing department with two users and a few thousand contacts would spend no more than a few thousand dollars per year.

However, a mid-sized company that needs a full MA system will see a range of prices from $5,000 a year to $5,000 per month. These companies tend to have five users, 50,000+ contacts, and a need for sales users to get access to the marketing data.

The high-end enterprise systems are priced “by quote only,” but expect to spend six figures annually for those tools.

Additionally, most vendors offer add-ons to their basic software subscriptions, including new-customer enablement, premium support packages, consulting services and instructor-led education, and training. The purpose of these add-ons is to accelerate ROI and time to value. These add-ons usually cost less than 20% of the initial price of the software subscription.

Other Questions to Consider When Evaluating MA Options:

1. What kind of support would I get?
2. Are integrations possible, if one doesn’t already exist (is there an open API)?
3. What security protocols are in place? (Think: GDPR)
4. Who hosts the system and will they charge me for hosting services?
5. What happens if I exceed my allotted number of contacts?

Bottom Line

If you’ve gotten this far, you’re probably thinking: “Okay, Kevin. So, what should I tell my boss?” The honest answer is that it depends on your unique needs and requirements. The good news is that we help companies of all sizes figure this out every day, and with a quick call, we can help you get closer to an answer that will satisfy both you and your boss. Contact us and we’ll get you what you need.