In today’s modern selling landscape, there are a number of tools out in the marketplace that claim to improve your sales and marketing effectiveness. The two most popular technology investments for sales and marketing funnel management include CRM and marketing automation software.
While the names alone imply inherent differences, more and more CRM and marketing automation solutions are adopting a holistic approach, offering tools for both sales and marketing teams. If you’re like many executives out there, this has you wondering if you really need both tools or if you can save budget by only investing in one or the other.
But before you make a decision on whether to invest in a CRM system or marketing automation software, there are some things you need to know to avoid missing out on key benefits of each tool.
CRM and Marketing Automation Definitions
First things first, let’s define what both CRM and marketing automation are, and explain the benefits of each tool.
Customer Relationship Management (CRM)
A CRM is a software solution used by sales and service teams to cultivate deeper relationships with interested buyers and active customers. Used to house prospect and client data, the CRM system has a collection of information for each contact in your organization, information your teams can then leverage in their client meetings and communications.
Marketing has historically tracked campaigns in CRM for internal reporting purposes, but with modern business intelligence (BI) and reporting tools, that is no longer a requirement. The “subscription economy” has lead to CRM deployments moving away from expensive on-premise management architectures and are offered as license based Software-as-a-Service (SaaS) model where hosting and maintenance is managed in the cloud. For the purposes of this article, CRM is best utilized when managing bottom of the funnel opportunities in the sales process.
Marketing automation is a software solution used primarily by marketing teams to measure and strengthen marketing’s impact on funnel activity and pipeline development. Marketing automation exists for the primary goal of automating marketing-focused actions and tasks. Many marketing departments are challenged with complex manual processes to execute campaigns and repetitive tasks such as email marketing, social media distribution, and other website actions that can hinder marketing’s performance as programs scale.
The technology of marketing automation makes these tasks easier to manage and execute. One primary difference with CRM is that Marketing Automation systems can track behavioral and demographic data for marketing engaged prospects to automate nurture programs that encourage certain buyer actions. Marketing automation is best utilized for nurturing leads and prospects with content to advance their stage in the buyer journey.
What’s the Difference Between CRM and Marketing Automation?
While CRM and marketing automation systems may look very similar on the surface, they cater to different roles in an organization. However, these differences are what make them more valuable to the unique teams they serve and the objectives of each team.
Marketing’s core objective is to feed the pipeline for sales. At the end of the day, the sales team is marketing’s number one client. Marketing’s role in the lead nurturing process has grown over the last decade to align with the lengthening sales prospecting process. Most B2B purchases—especially technology purchases—span multiple departments, which means there are multiple stakeholders involved in any buying decision. According to CEB, 5.4 people now have to formally sign off on each purchase, this is 40% larger than it was 2 years ago.
Long gone are the days of importing a list of “leads” from a trade show and assigning the contacts as “leads” for sales. Marketing’s job is to not only attract attention (brand awareness) but their role has evolved to further qualifying leads that engage with the brand before passing along to the sales team. A simple model marketing can follow to qualify leads is identifying B.A.N.T. criteria.
- Budget – Does the prospect have budget forecasted?
- Authority – Are you speaking with the right buyer who has the authority to spend said budget?
- Need – Is there a true market fit for your solution?
- Timeframe – When is the prospect looking to buy? 3 months? 6 months? Longer?
Marketing Automation solutions like HubSpot, Pardot, and Marketo provide automation capabilities that help capture demographic lead data and can even measure engagement based on behavior activity like website visits, time on site, and returning visitor traffic. All this information can be used to help inform B.A.N.T. criteria for sales.
Once marketing has qualified a lead based on B.A.N.T., the sales team’s core objective is to close deals and increase revenue. Both sales and marketing processes follow a funnel-like approach to nurturing leads and opportunities, but each solution is customized to track and serve a different type of contact based on their stage of the buyer journey. Similarly, CRM is designed to help the sales organization forecast the deals they plan to close each month or quarter.
Most funnel processes in sales will align around a “stage” model, and each stage is associated with a percentage that indicates how confident sales is that opportunity will become a new customer. This process is where CRM shines.
Here is an example of the sales process funnel:
- Stage 1 – Sales Qualified Lead – SQL ( 0%)
- Stage 2 – New Opportunity (10%)
- Stage 3 – Engaging All Buyers & Validating Opportunity (25%)
- Stage 4 – Confirming Value and Commitment (50%)
- Stage 5 – Contract Negotiations (75%)
- Stage 6 – Obtaining Signature (90%)
- Stage 7 – Closed/Won (100%)
In my experience, many organizations falter when they do not consider the downstream impacts of selecting marketing automation and CRM in tandem. Even though they are resources that support different departments and stages of the funnel, they can be the bridge to successful marketing and sales alignment.
And with your marketing and sales team working closer together to move leads through both funnels, lead velocity can then be realized at a faster pace.
How are CRM and Marketing Automation Similar?
Just like sales and marketing teams overlap to drive business results, CRM and marketing automation systems also overlap and share similarities in addition to the differences we’ve reviewed. At their core, both solutions have the ability to house prospect and customer demographic information, but most marketing automation solutions will charge additional fees based on the size of your database, which typically makes it more cost-effective to use CRM. The big challenge facing an organization using these technologies is maintaining data quality and integrity in both CRM and Marketing Automation software.
Overcoming Data Quality Challenges
According to CLIENTSFirst Consulting, 30% of contact data changes every year. A contact will move addresses, get a new job, or might even retire, causing the data in both of your systems to become out of date. When putting this in a larger context where a company has 200,000 contacts in their CRM, this is potentially 60,000 contacts that end up having inaccurate data every year.
That’s 164 contacts per day!
To combat inaccurate data in both systems, organizations turn to data cleansing projects on an annual or biannual basis. However, considering how long this process can take, odds are that by the time the data is scrubbed clean, a segment of those freshly cleaned contacts are already obsolete.
What both tools lack in this case is relationship intelligence automation (RIA). Through RIA, manual data entry, management, and analysis are eliminated, keeping contact data and insights accurate in both systems. This enables a more holistic and seamless marketing and sales handoff process that speeds up sales cycles and saves valuable time.
Accelerate Your Deal Velocity with CRM and Marketing Automation
The misalignment of sales and marketing teams costs businesses $1 trillion each year due to lost productivity and wasted efforts, according to HubSpot. If your CRM and marketing automation software are also misaligned, you can expect that number to rise due to longer sales cycles, inaccurate forecasts, and more.
A well-aligned CRM and marketing automation system can have huge impacts on your sales cycle, including:
- Increased lead and deal velocity with more client touch points
- Reduced sales cycles with more educated and informed buyers
- Improved visibility of growth potential and pipeline development
- Enhanced pipeline and sales forecasting accuracy