5 New Account-Based Metrics
Last week marked my one year anniversary at TOPO. For most of that time, my work has involved helping companies transition to account-based go-to-market strategies. I’ve observed that people within these companies bring diverse perspectives on what account-based is, what it does, and what it means. That diversity is actually important to preserve, and even embrace. Based on functional roles, the way account-based programs are designed and executed will vary. The diversity of perspectives makes marketing and sales outreach more compelling and engaging.
However, one key aspect of account-based strategy where differences need to be reconciled is that of metrics. It’s vital that organizations align on how success will be measured, and implement that alignment through standardized reporting, established meeting formats, and regular cross-functional meetings.
The metrics used in account based programs are different than those used in volume and velocity programs. The main difference is the shift in focus from the individual or the lead, to the account. In volume-based programs, we identify our total addressable market (TAM) and invest in owned, earned and paid media to attract, engage and convert leads. In account-based, we pre-identify the companies we are pursuing, whether or not they are currently known or engaged with marketing or sales.
With account-based, we still care about engagement, but we focus on it at the company level. And we still care about conversion, but we think about it at the pipeline level, and specifically in relation to the financial opportunity within the target account.
To illustrate, here are five metrics account-based organizations should adopt, with some additional commentary on newer concepts:
Potential Account Revenue (PAR) – the total available market for account-based efforts and is used as the basis for evaluating market share or penetration. Note: this is not a simple sum of all open opportunities. We’re looking for an estimate of potential revenue based on what we know about the account, e.g., revenue, employee count, locations, industry, etc..
PAR is not a forecast. So it does not have to prove itself to be accurate over time. It should be grounded in historical data and/or known comparables in the market. The point here is to keep ourselves honest about the true financial opportunity within each account, and measure pipeline creation and revenue against that standard.
Account Engagement Score (AES) – the definitive measure of an account’s interactions with an organization, including marketing, sales development, sales and customer success. How broad, deep and relevant is the engagement we are driving within our target accounts?
- Breadth: the number and levels of people engaged
- Depth: content consumed and sales/service conversations held
- Relevance: product- and/or stage-specificity of content and conversations
Measuring AES requires establishing the value of each interaction and identifying data sources for it, establishing the relative value of engagement with different roles (i.e. execs vs. end users) and the time period for measuring AES (which should be shorter than the typical sales cycle, so it reflects fluctuations in engagement).
Engaged Accounts (EA) – a target account is initially engaged when it reaches the minimum Account Engagement Score (AES). For example, a target account may reach the minimum AES via significant website visits. This score allows organizations to prioritize outreach efforts for accounts after that minimum is reached. There are a variety of factors that determine what your minimum AES should be.
Target Account Pipeline (TAP) – the current value of all opportunities created within your target accounts. Because we’ve selected accounts based on expected value, product-market fit, and likelihood to purchase, TAP should be higher, on average, for target accounts than for non-targeted accounts.
Total Account Value (TAV) – the sum of all Closed-Won revenue in each account within a given period. TAV allows us to measure ourselves against our potential (TAV/PAR). Applied at the account-level, it reveals accounts with significant expansion opportunities (PAR-TAV). Programs are measured in part on their contributions to TAP, and to incremental TAV within the target accounts.
Traditional, standalone volume-and-velocity metrics like deep web visits, open rates, or cost-per-lead still matter in account-based programs, but their role in the process is more peripheral. In contrast, by aligning on and implementing the five metrics within the revenue factory, organizations can be more factual, forward-looking and specific in how they plan and execute account-based programs.
About the Author
Tom Scearce is Senior Demand Generation Consultant for TOPO, bringing clients more than 20 years of experience developing and executing high-growth marketing and sales programs. Tom has an insatiable curiosity for the people, processes and platforms that drive world-class demand gen organizations.