Account based marketing
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30mar
ABM: Best practices, pitfalls, and budgets
Posted by Christopher Hosford
Account based marketing is perhaps the most au courant topic in BtoB marketing. Its key elements include identifying your most qualified accounts; pinpointing key stakeholders and their account needs; and developing a method for marketing and sales to work together to close more deals. I recently caught up with ABM guru Peter Isaacson, CMO at Demandbase, to discuss best-of-breed ABM practices.
Christpher Hosford: Peter, SiriusDecisions has found that the percentage of B2B companies that have a full ABM program in place grew to 62 percent of respondents as of early 2017, but in a separate study Chief Marketer says more than half of marketers have no ABM solution in place. What gives?
Peter Issacson: Yes, there hasn't been 100% adoption at this point, but it's not because of resistance to ABM. It's a new category developing before our eyes, and anything new has early adopters. There's been an early surge of ABM interest and adoption, and now the longer tail of people are hearing about it. But the rsults have been proven.
What we’re seeing is definitely A trend. Among our own customer base, we’ve seen the early adopters of ABM, such as software and tech companies, now expand more and more to financial, health care and manufacturing. These are more cautious industries in adopting new things, but it’s a clear migration.
Chris: What kind of technology are we talking about here?
Peter: At its most foundational level, the starting point is the development of an IP-based data asset, mapping IP addresses to your targeted companies. Once you’re able to identify the companies, ABM has developed the power for marketers to go across the full funnel, from the very start of account identification—that is, the right accounts you should go after. It also pertains to customizing and personalizing websites to specific accounts, how to convert those accounts, hand them off to the sales team to close, and lastly how to measure success at the account level. It can all be tied together into a complete story.
Chris: You mentioned the full sales funnel. How does marketing and sales work together to optimize an ABM program?
Peter: Collaboration and connection between the two is absolutely critical for ABM to work. The good news is that ABM facilitates that engagement between the two teams. The reason the divide even exists to begin with is that marketing has been focusing on the volume of leads to throw over to sales with no attention paid to whether those leads are good or bad, or even if they need to be followed-up on. Then an argument ensures with sales.
But ABM turns this on its head, because here sales also focuses on accounts, the accounts that matter most to sales and business. And that’s why the conversation with the sales team isn’t usually that difficult. ABM creates an alleluia moment, in that the company focuses most on those accounts that matter most to sales. The key is that sales needs to identify the accounts first, not marketing. Here, you’re coordinating sales and marketing efforts around the same set of targeted accounts.
Chris: Despite all the hoopla over ABM these days, it occurs to me that it’s not the be all and end all for every company, correct?
Peter: There are definitely cases where we tell people ABM isn’t right for you. Say a company is selling $500 widgets. They have a low-enough cost per product, and with an average deal size and high enough velocity, it probably doesn’t make sense to identify individual companies because they won’t make a significant impact on volume. If each target company is spending just $500 or $1,000, you’re going for a volume play. But ABM is about increasing the quality of engagements, not volume.
Chris: So, how do you make ABM work effectively?
Peter: You can’t just push the ABM button and it all magically unfolds. For one thing, many marketers are fearful of collaborating with sales and sharing account IDs, or even their own program plan. Many are comfortable working in isolation, and not with sales. The best thing that could happen is for sales to get into marketing’s wheelhouse, and get interested in what they’re doing, engage and collaborate.
In addition, for sales the compensation needs to be adjusted when taking an ABM approach. Normally, compensation is based on a volume metric but in taking an ABM approach you’re saying we’ll accept that there will be fewer leads because we’re focusing on special target accounts. And compensation for sales needs to adjust accordingly.
Chris: If lead volume isn’t a key metric, what is?
Peter: Marketers love volume-based metrics, things like click through rates, website visitors, lowering CPMs, etc., and these things are antithetical to ABM. ABM is about quality rather than quantity, and therefore the types of metrics you focus on are much closer to actual revenue and business impact. With ABM, you begin to measure things like close rates for the sales teams, the percentage of accounts coming into the pipeline that are actually closed, the actual contracted value, funnel velocity, etc. You have to migrate your thinking as well as the metrics over to business impact.
Chris: Lastly, can you address budget? How should companies adjust their marketing budgets to accommodate an account based marketing approach?
Peter: It’s very rare that a company allocates additional money; it’s more about how to spend existing funds. First, take a look at your overall investment. BtoB companies’ budgets vary, but they’re putting money into the same kinds of buckets, such as events, traditional marketing activities, field activities, and so forth. For ABM, it’s about redirecting money that's going to very, very broad things, such as search engine marketing which generates overall awareness but rarely connects back into the business. Paid social also is not directed at target accounts, so you can carve some money out of that as well.
Also, content syndication can be redirected to syndicators who are syndicating only to the accounts you want to pursue. We’ve actually gone to syndicators and told them they’re just papering the universe with content and many people may not be interested. They may say they can guarantee that your content will reach the accounts that matter, but it will cost more per unit. So, that’s a tradeoff—you’re spending more per unit to get to the accounts you want, rather than engaging in an indiscriminate volume game. But here’s the thing: We estimate you can actually cut your content syndication in half here. Yes, you’ll get fewer leads per quarter, but the actual conversion rate will be the same or more than when you’re spending double.