Account Based Marketing: The Definitive Guide
Account-based marketing (ABM) is the hottest topic in B2B marketing. While the hype around ABM can seem overwhelming, in reality, less than 20% of companies are running mature account based marketing programs. Marketers name various obstacles when it comes to getting started, including lack of resources, strategy, and technology. The fact that account based is so nascent makes it hard for marketers to just get started – lack of confidence in the strategy, second guessing technology options, and often struggling to secure the resources required to make account based marketing work.
Having said that, there are powerful business dynamics driving the rapid adoption of account based marketing at high growth companies including:
Improved economics – More advanced sales and marketing organizations are realizing that specific types of accounts drive the most compelling revenue metrics.
Market dynamics – Many marketing organizations’ inbound, volume and velocity models have peaked and they must now pursue targeted, account-based models to drive growth.
Proven results – Early adopters are seeing impressive results, particularly with respect to strategic revenue metrics, where mature account based companies have seen a 150% increase in metrics such as LTV.
What is Account Based Marketing?
Account based marketing is the coordination of highly valuable, personalized experiences across all functions that impact the customer (e.g. marketing, sales development, sales, and customer success) to drive engagement at a targeted set of accounts. In fact, at TOPO, we prefer to use the phrase “account based” rather than “account based marketing” to describe this go-to-market strategy.
ABM has five defining characteristics:
- Targeted, high-value accounts – In an account based world, companies target and engage accounts that fit the ideal customer profile (ICP). A canonical target account list defines which accounts marketing, sales, and the entire organization will spend time and money on.
- Data and intelligence-driven programs and campaigns – High quality data and intelligence are essential to ABM. Contact data and account intelligence allow marketing and sales to engage buyers more effectively.
- Cross-functional orchestration – Orchestration is the sequenced coordination of different activities, programs and campaigns across marketing, sales development, sales and customer success to drive engagement with multiple stakeholders in target accounts
- Valuable and personalized experiences – In a shift from the volume and velocity model, where templatization is key and low value offers such as whitepapers create low conversion rates, account based marketing requires companies to deliver relevant, personalized, valuable experiences to specific buyers.
- Coordinated, high frequency, high effort outreach – ABM requires continuous high touch, high frequency campaigns against the target account list. Shifting from volume and velocity models where marketing focuses on measuring activities or tactics in bulk, account based organizations plan and track activities by target account.
The Ideal Customer Profile and Target Account List
The starting point for any account based marketing strategy is your ideal customer profile and target account list. The ICP defines the firmographic, environmental and behavioral attributes of accounts expected to become a company’s most valuable customers. It is developed through both qualitative and quantitative analyses; and may optionally be informed by predictive analytics software.
Unlike the term “target customer,” which is often used to describe any company that might buy a product or service, the ICP is focused on the most valuable customers and prospects that are also most likely to buy. The ICP should also not be confused with the total addressable market or total available market, which are calculations or estimates of the universe of potential target customers.
The ICP is a foundational, organization-wide decision impacting downstream sales and marketing efforts. It aligns marketing, sales, service and executive teams to the highest-value accounts. It also creates focus on scalable and repeatable strategies and tactics to engage and convert top accounts. And it drives target account list creation, segmentation, organizational structure, and other key activities.
Ideal Customer Profile Framework
Many companies believe that defining the ideal customer profile is the key to account based success. The ICP is key, but it’s not enough. Successful ABM programs are powered by high quality target account lists. The best account based practitioners use the ICP to guide the development of the target account list. That list is then tiered and a database enabling easy selection of target accounts is developed.
To develop a high quality target account list, marketers should focus first on gathering firmographic and environmental data to quickly shorten the target-account list. Data sources here may include internal data, third-party data vendors, and other account -research resources. You can also use specialized or higher-cost data points to further shorten the list until marketing, sales, and other constituent groups agree the target account list is final. Beyond this, there are a number of best practices that will help you maintain your list, including:
Refresh: Don’t let the target account list become static. Validate the ICP and refresh the account list at least once every 18 months.
Align: Develop the target account list on the basis of alignment. Good and aligned beats perfect every time.
Timing: During account selection, ignore accounts in the account list when insight indicates that the timing is wrong for that account.
Tier: Establish account tiers to appropriately align organizational resources to the highest-value accounts.
Account Based Marketing Process
ABM requires a different process than a traditional demand generation process where marketing, sales development, and sales are focused on hard handoffs and metrics that highlight alignment issues, rather than solve them.
TOPO’s Account Based Funnel provides an operational model and measurement tool for driving account based marketing. This framework contrasts sharply with siloed approaches in which each distinct function hands off responsibility to the next. An integrated go-to-market plan across key functions and focused on the highest value accounts requires a number of significant changes, highlighted in the key takeaways below.
TOPO’s Account Based Funnel
There are a number of best practices to consider when designing your account based process, including, but not limited to:
The Engaged Account replaces the MQL. A target account is engaged when it reaches the minimum Account Engagement Score (AES). Engaged Accounts are prioritized for outreach efforts (e.g. a target account may reach the minimum AES via significant website visits, which triggers an SDR to accelerate his/her prospecting into that account).
Target Account Pipeline (TAP) is the critical mid-funnel metric. An account based organization is not focused on early-stage leads. It is focused on growing TAP (i.e. pipeline from the target account list). Adopting TAP aligns early-funnel activity with the objectives of the sales organization.
Account-based marketing maximizes the ultimate revenue metric – customer lifetime value (LTV). In recent years, customer lifetime value has emerged as the most important metric in revenue. It’s also the ultimate account-based metric. With a well-defined target account list and effective account-based execution on both net-new and expansion opportunities, companies that use account-based will see significantly higher customer LTV.
Account Based Marketing Plays
Any account based marketing strategy needs to manifest itself in a set of tactics that marketing and sales can use to engage target accounts. At TOPO, we call these tactics “plays”. The most successful ABM programs leverage plays that engage buyers with valuable experiences that convert buyers at a higher rate than traditional marketing tactics.
High-value offers are a key component of creating a valuable experience for the buyer. The idea is to present prospects with an offer that is so valuable that they need to engage with you. These offers are typically focused on a high-priority challenge or opportunity confronting the target account (or segment of accounts). They are often personalized to the target account and provide prescriptive insights and best practices to the buyer. Effective offers also often provide the buyer with an experience that allows them to understand the benefit of being a customer.
High value offers can take many forms from assessments to account-specific onsite workshops, but they should always be relevant to the account and deliver tangible value. For example, marketing might develop a proactive assessment for top tier accounts and provide a summary of the assessment as part of the promotion of an account-specific workshop. This is a highly customized, account-specific offer that delivers valuable insights and recommendations.
Orchestration is another critical ABM tactic. Orchestration is the sequenced coordination of different activities, programs, and campaigns across marketing, sales development, sales, and customer success to drive engagement with multiple stakeholders in target accounts.
In fact, account based organizations that have met or exceeded their expectations within a year share one common trait: they leverage account based sales development. In other words, the fastest path to launching orchestrated campaigns and driving strong results is to focus on marketing-sales development orchestration. SDR-marketing coordinated campaigns will produce lift in target account pipeline. Organizations currently executing marketing-SDR orchestrated campaigns typically realize a 30-50% lift in “meetings set” at target accounts, with some organizations reporting a 100% increase.
An Account Based Orchestration Plan
The Account Based Organization
Account based marketing depends on a number of critical organizational dynamics. In fact, the number one challenge that companies face when moving to ABM is insufficient resources (staff and budget). At TOPO, we help our clients with a number of issues, but there are three that are essential to ABM success.
Alignment – Ongoing agreement, collaboration, and coordination between key customer-facing stakeholders in organizations, such as marketing, sales development, sales, customer success, and the executive team, is essential (this is why account based marketing can be a misnomer – the entire organization must be bought in).
Resource allocation – It’s essential to organize your marketing resources so that you can support your ABM efforts. For example, an account based marketing VP leads account based team of marketers aligned to custom campaigns (1 marketer per 10 accounts, custom) and semi-custom campaigns (1 marketer per vertical or segment, 80% template/20% custom).
Account based marketing skills – ABM is a relatively new field of practice for marketers. Companies need to invest in developing the skills necessary, through hiring and ongoing development, to create an effective account based team. It’s similar to how marketing teams started building out their demand generation teams 10-12 years ago.
Account Based Metrics
While ABM has emerged as one of the top initiatives for high growth companies in recent years, measuring the success of account based initiatives continues to be a key challenge. As account based investments continue to increase and adoption expands to include larger companies, solving the measurement and ROI challenges of account based marketing has become critical to its continued expansion.
That’s because the demand-centric approach to measurement, centered on the individual, MQLs, and a handoff-based process, is simply not sufficient for ABM. Companies that attempt to measure and manage account based initiatives against this traditional structure invariably struggle.
There are a number of measurement best practices that companies can adopt to overcome these challenges, but three critical ones areas:
Measurement must be account-centric. The objective is to progress target accounts, ultimately driving increased revenue and customer lifetime value. Account-Based companies measure the number of accounts progressed, not the number of leads or contacts.
Opportunity Rate and Account Win Rate are the key metrics for progression, allowing performance measurements across multiple performance groups, and facilitating planning and forecasting.
Target Account Pipeline (TAP) is the key indicator of value. TAP captures the ability to create high value opportunities within target accounts. Since target accounts have higher win rates, retention rates, and growth rates, TAP is the most valuable portion of pipeline to a company.
Account Based Metrics
Account Based Marketing Technology
Marketers are adopting data and technology tools that support account based and for good reason: today’s solutions are making account based marketing more scalable than ever before. In fact, TOPO forecasts that investment in account based technology will grow by 28% in 2018. Even so, many marketing organizations are still in the early stages of their account based journey, with limited investments in new technology and data solutions that are 100% dedicated to supporting account based marketing initiatives.
That’s why it’s critical that marketing organizations adopt ABM technology in a phased approach. Account based technology can initially be piloted using the technology already in place within many marketing organizations. Additional technology selected specifically to meet ABM requirements such as account based advertising solutions can then be added and integrated over time.
The Account Based Technology Stack
Today’s most widely adopted technologies are marketing automation, lead matching and routing, and contact data. Marketing organizations are simply looking to leverage existing technology investments to power their account based marketing programs even though this can present major challenges. We expect to see significant growth in technologies that are purpose-built for ABM in the years to come, especially in key areas such as intent data, orchestration, and account based metrics.
Ultimately, comprehensive account based platforms will be the single-most important category in the ABM tech stack in 2018 and beyond. These solutions will bring together planning, orchestration management, and measurement into a single solution. Over the next 12 months, we expect multiple account based platforms to emerge, with platforms becoming the central solution for executing, managing, and measuring a multitude of ABM efforts. Early adopters will be the primary purchasers in 2018, with category adoption expected to accelerate in 2019.
Key Account Based Takeaways
While adoption of account based marketing has accelerated rapidly over the last two years, fewer than 20% of companies are running mature ABM programs. Whatever your account based objectives are, it’s critical to leverage proven best practices as you start your ABM efforts.
First, make sure that the entire organization is committed to account based marketing. It’s critical to have support from marketing, sales development, sales, customer success, and the executive team. In our research, the number one cause of poor ABM programs is lack of cross-functional alignment across customer-facing functions. There needs to be an organization-wide commitment to mobilize efforts against a key set of target accounts.
Second, your ideal customer profile (ICP) and target account list are the north star of your ABM efforts. Make sure you invest sufficient time and resources in defining the ICP and building the target account list. Remember that, while a well-defined ICP is a good starting pointing, a high quality target account list is the most important element in account based marketing.
Third, don’t be afraid to start with small account based marketing programs that can deliver early wins. The move to ABM can seem like a daunting proposition and mature, optimized ABM programs can take up to two years to fully realize. That’s why it’s so important to pilot smaller programs such as orchestrated marketing/sales development campaigns that target a small number of accounts.
We are still in the early adopter phase of account based marketing – only 18% of companies have been running ABM programs for more than 24 months. In the next few years, we predict that over 90% of B2B marketing will be account based. That’s due to the fact that targeting and engaging a known set of accounts (however large that list might be) will yield better results than targeting a market. The simple act of defining the target account list allows marketers to gather data and intelligence about each account and deliver much more effective experiences to buyers based on that data. That’s precisely why account based marketing is having such a transformative impact on B2B sales and marketing.