When Should You Invest in Marketing Automation?

According to a recent study by SocialMediaToday, 75% of online marketers invest in marketing automation software. And the majority of them have seen a significant increase in generated leads and conversions.

Marketing automation is an excellent way to boost revenue, monitor your marketing efforts, improve customer retention — all of that while saving time to focus on other parts of the business.

But…

While marketing automation can be essential to streamlining your sales funnel, it could also slow your growth and development. For instance, exhausting your budget on tools and strategies that you don’t need will hurt your business in the long run. 

So:

How do you know when it’s the right time to invest in marketing automation? And when is it too early for your business?

Here are four questions to ask yourself:

Is Your Business Making Enough Profits?

When it comes to whether you should invest in Marketing Automation, this question is the most obvious one, which is why it should always come first.

Marketing automation tools require a significant financial investment to set up and run successfully. Most marketing automation platforms cost hundreds if not thousands of dollars, depending on the payment plan you choose.

So ask yourself:

Can your company afford additional business costs? Are you making more profits that you’d like to reinvest into the business?

If the answer is no, then you’re better off without marketing automation for the time being. 

Simply because marketing automation isn’t a magic wand that you can just wave and solve all your marketing challenges. The best way to grow instead is to improve your offers and continue to create more brand awareness.

Do You Waste a Lot of Time on Administrative Tasks?

One of the main reasons why you’d want to invest in marketing automation is to save time. Automating repetitive processes is a super-efficient way to increase productivity and maximize profits.

For example:

There are endless ways to distribute your content and reach wider audiences on the internet. But, wasting hours on that every day can cost your business a lot. Especially when you could’ve spent your time improving your offers or serving more clients.

So…

If you find yourself dealing with many recurring administrative tasks, it’s time to implement automation tools into your process and free up more of your time.

Here’s one way you can do that:

Use an email marketing platform to automatically segment your audience based on their position in the marketing funnel. That enables you to send them highly relevant emails and quickly move them closer to the decision stage.

How Many Leads Is Your Business Generating?

Just like any other online business, most of your prospects aren’t going to convert from the start. After all, the average conversion rate for businesses across all industries is only about 3%. 

Marketing automation software can help you increase those conversions by up to 10% — sometimes even more. You can do that by automating customer tracking, lead scoring, customer communication, etc.

But here’s where it gets tricky:

Unless you’re generating enough leads with a high revenue per lead (RPL), the slight increase in conversions will barely boost your net profit. Because if you get 50 leads a month, generating five more leads may not increase your revenue by much. 

You may even be losing money if you factor in the monthly costs for setting up and using the automation system.

Therefore:

Before you invest in marketing automation, you need to forecast your revenue and compare it to your customer acquisition costs. Also, make sure to consider the time and the efforts you put into building a successful marketing automation plan.

Will Repeat Customers Be Profitable For Your Business?

Repeat customers can be a gold mine for your business because of their increased lifetime value. They already trust your brand and love your products, which makes them easier to earn and retain.

But here’s the thing:

Customer retention may not always be the best growth strategy, especially if you’re mainly offering one-time-purchase products. It’s best fit for companies with a subscription business model. And it’s also an excellent technique if you have a wide variety of products or services that you can benefit from selling to the same customer. 

Now, you might be wondering… How does all of that happen?

It’s simple!

Marketing automation can help you send dynamic offers to your customers based on their purchase history. That allows you to connect with your audience more effectively while you maximize customer lifetime value.

For example:

You can set up different email marketing campaigns to educate your customers around subjects related to your offers. As you learn more about their interests, you’ll segment them into specific sub-categories and send them even more relevant offers later.

Conclusion

Automation software remains one of the best advancements in the digital marketing world. But unless you’re in real need of these tools, they can cost your business a lot and slow your success.

The four questions in this article will help you better assess your needs and look at things more clearly as you invest in Marketing Automation. Sit down with your team and take your time to answer them based on your current numbers as well as your objectives for the future.

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