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September 6, 2017

5 Reasons Custom Local Marketing Solutions are Out of Style

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Organizations today are experiencing a technological revolution, which has been described as the age of “digital transformation.” As enterprise brands are moving away from a traditional work environment and into the digital future, they are also changing the way they use software. McKinsey research reveals that companies riding this “third wave” are unlocking a competitive advantage: They are building a culture that embraces change and encourages disruptive thinking across their entire organization.

Today's MarTech landscape is exploding. Enterprise software vendors are being disrupted by agile, new Software-as-a-Service marketing technologies. Demand for new MarTech tools has led to a 39 percent year-over-year growth in the marketing technology field. While enterprise organizations have traditionally used custom software for managing all kinds of marketing, more and more enterprise brands are choosing agile MarTech platforms to meet their local marketing needs.

For many enterprise organizations, choosing a ready-made, SaaS-based tool for local marketing today offers many advantages over a custom solution. In this article, we'll cover why SaaS technology may have an edge over homegrown software when it comes to local marketing management, and how to best meet your enterprise's local marketing requirements while staying agile.

Custom vs. SaaS Local Marketing Solutions

Custom local marketing solutions are developed in-house or via third-party contractors to meet a single brand’s needs. The organization commissioning the custom software is responsible for defining the requirements of the project from beginning to end, overseeing the software development phase, and every aspect of implementation – down to training the users.

Ever since they really started to ramp up digital efforts in the early 2000s, custom software initiatives have often been the most logical choice for enterprises. In the pre-iPhone era of dot-coms and databases, many CMOs worked closely with CIOs to construct the ultimate set of business rules for what was imagined to be a proprietary, competitive advantage-making investment in next-generation technology. The reason that custom apps were being built was because it was the only effective way of getting business requirements met. There were no "standard products" to choose from.

While the concept of software-as-a-service (SaaS) originated in the 1960s, it wasn’t until recently that cloud-based apps became an appealing choice to enterprise organizations. In 2011, 13 percent of enterprises were using SaaS apps. Today, that figure exceeds 74 percent. SaaS is inherently multi-tenant and delivered through a subscription model. Enterprise firms benefit from the fact the software is ready-made, globally accessible, and continuously improved upon by the vendor.

The Software Enterprises Need for Local Marketing

Software applications like Local Marekting Automation (LMA) provide enterprise organizations with a useful tool set to support local marketing activities. While LMA allows brands to create automation around managing workflows and tasks, its features extend to help brands improve their branding identity in local markets — not only automate tasks and workflows. LMA typically supports:

  • Advertising Creation: Enabling local marketing representatives, such as franchisees, dealerships, or regional brand representatives, to create customized local marketing. This is typically accomplished via marketing templates for digital, print and other media applications.
  • Brand Alignment: Supporting a brand’s need for consistency in messaging and identity at the local level by putting assets and templates that are aligned with national campaigns in the hands of local marketers. Brand managers can protect key messaging and branding elements through approval workflows or by locking certain template attributes or fields.
  • Asset Management: Allowing organizations to achieve asset organization with Digital Asset Management (DAM); including the storage, organization, and retrieval of brand assets such as images, text, information for local marketers, and campaign materials.

A great local marketing solution makes it possible to run brand campaigns seamlessly at the local level, and serves as a central point-of-reference for all things marketing for the local affiliates. It should also simplify high-quality marketing execution at the local level by integrating seamlessly with other tools, such as email sending platforms (ESPs), content management systems (CMS), and print vendors.

Achieving these minimum requirements for a good local marketing solution is something that any kind of technology can achieve. So, why then are enterprise multi-location brands moving to SaaS over custom?

For more ways to implement effective local marketing, get The Local Marketing Playbook: Download The Local Marketing Playbook

5 Reasons Enterprise Brands are Adopting SaaS Over Custom Local Marketing Solutions

Technology has revolutionized the options available to enterprise brands over the past decade. In 2007, purchasing a SaaS application didn’t stack up against building your own custom tool, if you were an enterprise brand. In terms of cost, security and comprehensiveness, a custom solution was very often the best option. Today the risks and rewards associated with custom development versus SaaS LMA have shifted significantly.

At the same time, enterprise brands have encountered an increased pressure to generate a higher volume of customized local assets. Consumers now use more devices and channels than ever to interact with brands. The ideal marketing mix for multi-location brands looks much different in 2017 than it did in 2007.

Cost, risk, and convenience are some of the reasons that enterprise organizations are increasingly choosing standard products over homegrown local marketing solutions. Enterprise marketing leaders have changed their technology purchase preferences in recent years in reaction to both changing consumer behavior and the SaaS revolution. CMOs and others in the marketing leadership cohort have converted to SaaS in large part because of five simple trends.

1. Initial Investment Costs

While it’s difficult to define what’s “typical” for any custom project, developing a custom application for an enterprise can start at $250,000 or more just to get off the ground. Brands are then also responsible for ongoing maintenance of a custom-built tool, including software and security updates, fixing bugs post-launch, and implementation costs. It’s not uncommon for companies to invest budgets nearing $1 million before they’re able to start appreciating a return on investment or even validate their original concept through usage.

While pricing varies, SaaS Local Marketing Automation for the enterprise often comes in at a very reasonable price for each individual user, or location, in the network. This could cost as little as $20 each month for each franchisee in your network and means that the brand can defray the cost over a large number of users, instead of having a huge upfront expense. One of the great benefits of working with a SaaS vendor is that they align to an operational expense model. The cost of the software is predictable, billed on a monthly basis, and often paid upfront annually. The great benefit of this for brands? You're not on the hook for expensive software development that might fluctuate, or pop up at any moment, and cost a fortune.

2. CapEx vs. OpEx & TCO

Homegrown solutions require upfront investment or Capital Expense, abbreviated CapEx. In contrast, the monthly billing structure of SaaS LMA is a recurring Operational Expense, known as OpEx. Increasingly not only are brands finding that the upfront cost of building a custom solution is really high, but the cost to maintain that solution is much greater than it would be to just run a SaaS standard product.

Ultimately, the most effective cost measure of how custom solutions stack up against SaaS LMA is generally total cost of ownership, or TCO. This is a comprehensive, lifetime measurement of total dollars invested in the software for the duration of time your organization is using the solution. While estimating the cost of SaaS is simple, estimating the cost of custom projects is much more challenging and should involve:

  • Developer, QA, and Project Management Resources
  • Monitoring, Evaluating, Feedback, and Testing
  • Scope Creep, or Unexpected Costs as the Project Evolves
  • Ongoing Costs for Maintenance, Updates, and New Feature Development

3. Scalability

“That’s great, but does it scale” is a common refrain around custom software projects. While custom local marketing solutions are often built to align with an enterprise organization’s growth goals, your solution may not fit the needs of your company if you expand from 500 users to 1,000 rapidly. This is because with a custom solution you often need to reengineer the software to accommodate these changes in business condition. A SaaS product will let you get your hands right on the product and make the updates yourself, instead of relying on vendors for additional services or development work.

Not only does SaaS scale for your business requirements, SaaS products are inherently scalable on the technology side of things. There is no need to invest in extra server capacity or license new software if your requirements change. Meeting your need for more users just requires that you update your subscription price.

4. Risk

Savvy enterprise CMOs and CIOs know that custom software initiatives always carry risk. Fewer than one-third of enterprise software projects in the last year were completed on-time and on-budget. Even more depressingly, 75 percent of business leaders staring down a custom technology initiative expect the project will fail in some way, including budget, time, or user satisfaction. Unfortunately, there’s almost no way to tell whether your organization will be in the successful minority. Apart from your prior track record there's nothing to say you won't invest hundreds of thousands of dollars only to find out no one wants to use the software.

SaaS local marketing automation solutions are inherently low-risk. Organizations can engage in demos prior to purchasing, or try the product for themselves before committing by deploying it across their full network of local marketers. If your adoption rates are abysmal, you often have support from the provider to identify areas for improvement.

5. Opportunity Cost

Enterprise organizations are starting to understand that custom local marketing solutions bring with them an overwhelming opportunity cost. This is because in today's digitally oriented economy continuous innovation is essential, and custom solutions don't allow brands to innovate in their area of expertise. Instead, custom solutions require that brands lead innovation in the area of software development, which is not their strength. Not only does this mean that you need a team to just build the software, if your needs change dramatically you will be stuck waiting for new budgetary room before you can invest in new capabilities.

In contrast, SaaS LMA supports the need for agility in today’s age of digital transformation. As best practices evolve, leading LMA vendors work to continually improve their product’s feature sets and ensure their customers' needs are met.

Moving toward Digital Transformation with Local Marketing Automation Tools

68 percent of modern enterprise organizations consider “agility” one of their most important initiatives. In an age where consumer behavior, marketing best practices, and technology offerings are all in a state of rapid change, being able to quickly pivot and adjust your marketing offerings can be the difference between enterprises that succeed at local marketing and the ones that lose market share.

For many enterprise organizations, the growth of SaaS has created a MarTech landscape where investing in SaaS LMA makes more sense than a custom local marketing solution project. The pros and cons of LMA make it a superior choice to a homegrown tool when taking factors like cost, TCO, risk, scalability, and the opportunity cost into consideration.

Did you know that some of the world’s most renowned enterprise brands like The Marriott, Melting Pot, Polaris, and Adecco are choosing SaaS LMA over custom-built software for their local marketing execution needs? Learn more insight into their technology selection and local marketing secrets in The Local Marketing Playbook: The Templates, Campaigns and Tools. Download The Local Marketing Playbook

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