What's the Difference Between CRM and Marketing Automation in B2B Demand Generation?

I spoke at a breakfast roundtable in late June — hosted by Silverpop partner AcquireB2B — that was presented for senior marketing and sales executives from B2B companies throughout the Boston/128 area.  Those in the room were not early adopters of marketing automation technology, but they were all savvy leaders that realize their demand generation environment is changing and that their approaches must subsequently evolve.

These executives struck me as ‘down-to-basics’ types of business people.  Their questions were very frank and straightforward.  They wanted to be able to break everything into simple concepts and to relate the impact to their businesses.  I should not have been surprised to get the simple request:  “Can you explain the difference between CRM and marketing automation?”

Sure.  Good question. 

As I started to dig into the details with them, answering their questions, it became clear that there was significant interest in this issue.  These sales and marketing executives needed the scoop.  They wanted me to give the quick, high-level strategic case on one hand, and then they also wanted the down-and-dirty tactical details on the other hand.

It reminded me that it’s important to periodically revisit this topic — to make sure the distinctions are clear and to help educate the next generation of marketing automation adopters.

CRM and marketing automation have purposes and capabilities that are related and complementary but very different, and these differences are salient to what we’re trying to accomplish with B2B demand generation.  Several CRM vendors in recent years have suggested that their platforms are capable of a range of marketing automation functions, yet this is a gross overstatement of these capabilities.  Similarly, I’d be wary of the perspective of adopting marketing automation for B2B demand generation purposes without syncing it to a CRM platform. 

The two are integral.  You need both, but you need to understand what each one does for you, and what it doesn’t do.

So here’s a look at CRM versus marketing automation — focusing first at a strategic level and then digging into core features and capabilities.

A First Look

A surface-level comparison of the two platforms highlights some likenesses and differences; yet it does not necessarily clarify each platform’s goals.  For example:

• From an overall business perspective, CRM is more focused on aggregating knowledge about existing customer accounts and managing new-customer pipelines; whereas, marketing automation is more focused on orchestrating one-to-one communication with early-stage prospects and on scoring/routing new prospects to mange subsequent marketing and sales actions.
• From the perspective of sales/marketing roles, CRM is focused more on new sales, account management and service, and it is the system your sales team is most likely to spend their time in; meanwhile, marketing automation is focused almost exclusively on the marketing team and on the front end of demand generation. 
• From a technical perspective, CRM is more of a database, but it does enable some minor execution of communication activities and certainly has basic rules processing to automate account management functions; meanwhile, marketing automation is much more of an execution platform — with robust rules processing and enterprise-grade email/digital-communication sending capabilities — yet it also does help store and track critical marketing data, particularly prospects’ organic Web behaviors, as well as actions with content offers and downloads in response to nurturing emails.

Analyst and consultant David Raab, who also is author of the Raab Guide to Demand Generation Systems, has put together a conceptual chart that helps to rationalize the ‘big picture’ role of CRM versus marketing automation.  (See graphic below; used with permission.)  I like this graphic, although I believe B2B marketing automation can play a larger role in holistic demand generation — i.e., a role that goes beyond initial customer acquisition and extends into nurturing throughout the entire customer lifecycle, so I think this is a limitation of Raab’s model.  But to be fair to him, I do take Raab’s implicit point that ‘traditionally’ B2B marketing automation has been deployed more for net-new-type demand generation activities.

Source: David Raab; click to enlarge graphic

So it’s a start at comparing the two, but we’ve still only touched the surface of this comparison. 

The Goals of CRM and Marketing Automation

Perhaps the best way to understand the differences between CRM and marketing automation is to look at both from the standpoint of what each platform aims to accomplish.

> CRM ‘s goals:  CRM — at it’s most fundamental level — was developed as a platform to assist a company’s relationship managers with tracking and targeting opportunities to deepen and extend the company’s existing customer relationships.  CRM was supposed to free up our salespeople’s time, to make them more effective and to provide the overall organization with a ’360-degree’ view of the customer.

Paul Greenberg recounts these roots of CRM in the Fourth Edition of his book, CRM at the Speed of Light: 

[At the inception of CRM, the] idea of how you were going to manage your customers in ways that retained them — or in more lucrative periods acquired them — became of paramount importance as the playing field in the competition for customers became more level.  CRM 1.0 promised efficiencies in your operations, especially with customer-facing activities like marketing, sales and customer service, that would free up your representatives to spend more time with customers doing what they did best — selling to them, solving customer service problems.  Sales force automation (SFA) was the lead application and sales effectiveness the primary strategy.

It is this strategic direction for CRM that has governed its evolutionary course over the last two decades — even as more capabilities have been built into platforms such as Salesforce.com to enable ‘light’ marketing.  CRM remains primarily a relational-data infrastructure — consolidating all manner of customer-based information — with some sales-oriented workflow management, that enables companies to manage, analyze and leverage their customer relationships.  Not surprisingly, it has become a key application for tracking, analyzing and managing the performance of sales teams — providing key insights into metrics such as ‘time to close’ and ‘win/loss rate.’ 

Ironically, it also is this strategic direction that makes CRM at once both a great organizational repository of customer interactions and also a lousy data set from which to launch structured marketing activities, particularly nurturing.  Stephanie Tilton calls out part of this challenge in a Savvy B2B Marketing blog post:  “How can B2B marketers reconcile the use of CRM to manage prospects at the account level with use of marketing automation systems that enable one-to-one dialogue?”  She continues,”[M]arketers need to address each relevant contact at a prospect’s organization, and keep track of each interaction and the progression of the relationship. At the same time, their sales teams manage opportunities at the account level. The last thing any organization wants to do is duplicate efforts while interacting with prospects … .”

These challenges together with the strategic direction for CRM have limited the ability of the technology by itself to effectively support nurturing activities or to really drive B2B demand generation processes.  There is immense intelligence in a CRM system, and yet there is virtually no way to take actions based on this intelligence that are meaningful to marketing’s role in modern B2B demand generation.  Moreover, the email capabilities of CRM platforms are incredibly limited, and most CRM vendors have a very poor track record with email deliverability — even for one-off B2B marketing communications. 

“My conclusion is that the typical CRM system does not have strong marketing functionality,” comments Jep Castelein on his Lead Sloth blog in an analysis of the differences between CRM and marketing automation.  “At the same time, a CRM system is a necessity to support an efficient sales force. So your company will need both.”

So the net result?  For B2B demand generation, adding marketing automation into the mix is not a ‘nice-to-have,’ it’s a ‘got-to-have.’

> Marketing automation’s goals:  Marketing automation — at it’s most fundamental level — was developed to help marketers better target and execute one-to-one communication with key prospects within the context of demand generation efforts, simultaneously orchestrating and tracking marketing resources against this activity.  CRM consolidates a great deal of information about prospects and customers; however, it provides virtually no framework or tools for true nurturing of earlier-stage prospects, and it definitely is not a communication platform.  Marketing automation leverages CRM and addresses these gaps, but it then presents new capabilities for B2B marketers that enable them to take their demand generation programs to the next level.

I think of marketing automation as the technology infrastructure you need to power buyer-centric demand generation.  It is a critical element in scaling and managing a pattern of dynamic campaigning that is buyer led and that engages buyers on a ‘mass one-to-one’ basis. 

It’s important to think of marketing automation in this integral and strategic fashion, not as a stand-alone technology.  I characterized this point of view in a MarketingProfs post as the ‘strategic’ (versus ‘operational’) view of marketing automation.

Operational efficiency is very important, but marketing automation is more than this.  We can’t efficiently conduct mass one-to-one campaigns without some horsepower, but what differentiates demand generation from traditional email ‘mass marketing’ or top-of-funnel lead generation?  It’s the one-to-one part … the buyer-led part … the semantic capability to engage a buyer on his/her own terms and at his/her own pace — via scoring, segmentation, routing and automated campaign management.  This is the strategic part.  This is the part of automation that enables us to better manage middle-of-the-funnel dynamics and to focus on educating the buyer as the appropriate way to nurture relationships and deliver sales-ready opportunities in the modern era.

Below is the graphic I use to show the central role marketing automation plays in powering your core B2B demand generation processes — and how it helps support and execute against both your lead management process and your content marketing strategy.

Source: Silverpop; click to enlarge graphic

So given a well-defined lead management process and content marketing strategy, marketing automation becomes the engine for moving the B2B demand generation process forward.  It monitors our engagement with buyers; it semantically serves up content offers and/or responds to buyer-initiated page views and downloads; it learns from interactions with the buyer, developing an understanding of where (s)he is in the buying process; it uses this to nurture prospects; and it eventually governs hand-off of a buyer from the marketing to the sales organization.  This ultimately makes sure that sales engages with a prospective buyer only when the time is right … and with the buyer already having been nurtured and educated.

To do this, the marketing automation engine takes continual cues from lead scores — driven both by buyer demographics and by behavioral cues (e.g., downloading a whitepaper) — as well as segmentation and routing logic.  It uses these cues to make sure that leads are moved forward through the lead management process.  And this is an intelligent, ’semantic’ sorting that the marketing automation engine does very quickly — triggering content actions, nurturing steps and sales-team routings that are based on what it learns.

A Features and Capabilities Look

So far we’ve dug into the strategic roles of CRM and marketing automation, but you probably are still asking the what each platform actually does.  What are their specific features and capabilities?

Obviously this set of features and capabilities varies by vendor.  If you’d like to learn more about Silverpop’s capabilities, you can click here.  But I wanted to take a more vendor-neutral point-of-view, and so I’ve put together charts from several of our ‘professors’ on our B2B Marketing University tour to help break it down.

> Comparing CRM, marketing automation and ‘batch and blast’ email:  This is a great graphic via Malcolm Friedberg at Left Brain Marketing.  (See graphic below; used with permission.)  His chart gets to the root of why marketing automation addresses the gaps you’d have as a B2B marketer if you simply relied on a combination of CRM and ‘batch and blast’ email.

Source: Left Brain Marketing; click to enlarge graphic

> Comparing Salesforce.com to marketing automation:  These two charts were put together by Jep Castelein — a.k.a., The Lead Sloth.  (See graphic below; used with permission.)  He focuses specifically on Salesforce.com — currently one of the most popular CRM platforms — and compares the Salesforce.com features to mainstream marketing automation.

Source: Jep Castelein/Lead Sloth; click to enlarge graphic

Source: Jep Castelein/Lead Sloth; click to enlarge graphic

> Breaking Out Marketing Automation’s Core Capabilities:  This final chart is from my own deck that I use on the B2B Marketing University tour.  It aligns the capabilities of marketing automation to the B2B demand generation model I showed you above.

Source: Silverpop; click to enlarge graphic

What do you think?

I hope this comparison, together with these resources, has been helpful — and has touched on the differences at several different levels.  What are your own experiences with CRM vs. marketing automation?