Is Account-Based Marketing (ABM) Right For You?
Account-based marketing is a topic on the rise of popularity due to the evolution of digital content, which has led to changes in business to business (B2B) sales. With the rise of digital content, buyers are more well informed than ever, and the number of stakeholders involved in the decision process has increased.
This in turn, has resulted in longer sales cycles and has left customers in full control with the ability to research and identify profitable decisions before they are made. This means that one’s approach must be much more personalized and highly relevant in order to cut through the online noise and get through to key decision-makers. This has led many companies to adopt new ways of reaching their audience, and this strategy is being referred to as “Account-Based Marketing”.
Although so many have chosen to adopt this highly personalized, and hyper-focused strategy, you might be wondering if ABM is also right for you. After reading this article, you’ll be able to make an educated decision — Is account-based marketing right for you?
Please Note: If you’re reading this article because you’ve heard ABM is the best way to convert more enterprise deals, well.. you’re right. But if you work at a start-up or are looking to enter the enterprise market to go after the “Big Fish”, you first have to be real with your self and ask “does the solution that I offer match the expectations of enterprise corporations?” and “is my solution as good as the other vendors?“
Let’s first make sure we’re all on the same page about what account-based marketing means. ABM is a strategy that involves unified coordination between sales, marketing, and the customer success team. By working together, an ideal customer profile is chosen, and target accounts are selected based on the ideal customer profile’s (ICP) criteria and are segmented into 3 categories, tier 1, tier 2, tier 3.
Marketing campaigns and sales outreach work hand in hand, targeting a specific set of accounts. There are 3 different types of account-based marketing depending on the tier an account, is segmented into: 1 to 1, 1 to few, and 1 to many approach. ABM increases the chances of closing higher ticket deals because specific target accounts due to a more targeted and personalized approach.
Personalized campaigns are created for specific accounts, and success of the campaign is measure on metrics such as engagement time, conversations created, and the amount of meaningful engagement created. (Different metrics than traditional funnel marketing)
ABM isn’t as new as most people think. If you look at the info graph below you’ll see that it’s been around for years!
Click Here to see the full ABM trend report.
Is Account-Based Marketing (ABM) The Right Fit For Your Organization?
Below are some important questions you can ask yourself to determine if Account-Based Marketing is the right fit for your company.
Are you in the B2B space?
Business-to-business – “B2B” – refers to commerce between two businesses rather than to commerce between a business and an individual consumer (B2C).
At the core of account-based marketing (ABM), is nurturing prospects on the account level. Large corporations or enterprises comprise of a complex decision-making process involving more than one individual.
Therefore, the marketing and sales journey should also include decision-makers. It’s important to know that ABM is not relevant to B2C because you’re working on the lead level. With that being said, account-based marketing will only work for B2B companies since you need “accounts”.
What is a new customer worth to you?
ABM requires consistent effort from everyone on your team, especially in the beginning phases. In order to see a good return on investment with account-based marketing in the later stages, the annual contract value (ACV) for your enterprise deals needs to be a significant amount in comparison to all other deals you have closed. You need to be honest with yourself and ask whether the juice is worth the squeeze.
A great way to determine what a new customer is worth to you is by calculating the lifetime value (LTV) of a quality enterprise customer.
How to calculate Life Time Value (LTV) of a customer:
LTV = (Average Purchase Value – Average Purchase Frequency) x Average Customer Lifespan
Average Purchase Value = Total Revenue / # of Purchases
Average Purchase Frequency = # Purchases / Unique Customers
Average Customer Lifespan = Customer Lifespans Total / # of Customers Used in Equation
Estimating a customer’s lifetime value can help you decide whether ABM is right for you. You can determine whether you will be spending too much on a campaign to target accounts by comparing the potential lifetime value of a customer to their customer acquisition cost.
Understanding the opportunities that come along with acquiring a certain customer and the life time value will help decide whether spending time and resources on an ABM is strategy is the right thing to do.
What is your Total Addressable Market (TAM) number?
Total addressable market (TAM), also called total available market, is a term that is used to reference the revenue opportunity available for a product or service.
How to calculate total addressable market (TAM) number:
TAM = (Annual Contract Value) x (# of possible Accounts). Learn more about it Here
Your TAM is the number of companies, if in a perfect world, without competitors, would benefit from your solution and would be your client. The smaller your TAM number is, the better fit account-based marketing is for you.
This is important to note because absolutely no one has an infinite number of people they can acquire as clients. But many B2B companies treat their top-of-funnel as infinite, when in fact that number is finite.
Any misalignment or miscommunication between your sales and marketing team internally could result in a confused prospect, and destroy all chances of acquiring them as a customer.
The lower your TAM number is, the more strategic you must be in creating custom journeys and personalizing content for each decision-maker and deal influencer within your target account, to increase the likelihood of them becoming a client. If your company has a low TAM number, account-based marketing is a must.
However, if your TAM number is relatively high, it does not mean that ABM is not right for you. It means that in order to create a successful target accounts list, developing an ideal customer profile is going to be very crucial in order to narrow down the broad options.
Is your team open-minded?
Having an open mind and having the courage to try new things is always a favorable trait to have — especially in business. But this is something your entire team needs to have.
We still see so many companies using old selling tactics like in the Wall Street days where cold calling all day was the only way to get a “yes” or “no” without the help of marketing. This aggressive, one-touch point method is far outdated, but those who are still doing it are those who have not adapted to the modern population.
Even if this is your current technique, it doesn’t mean that ABM is not fit for you. But in order to implement a successful ABM strategy, your whole organization needs to buy into the idea, and be willing to learn and adapt to new situations. They have to be ready to change their approach to a more strategic and meaningful one. It also won’t be easy for marketing since they need to learn how to flip the funnel, market on the account level, and have transparent communication with the sales team.
Implementing a new strategy requires a lot of effort and even more so when the whole organization needs to change its traditional ways of doing business. This is why getting help from a consulting agency like Vertex Marketing Agency can help make that switch smoother.
The New Reality Of B2B Marketing
If you’ve answered yes to all these questions, it would indicate that account-based marketing is right for your organization! As ABM becomes more and more popular — as I’ve shown in the info-graph here, the ABM market will soon be saturated and will simply be known as good B2B marketing for its the ability to identify, target and engage meaningfully with the most ideal customers for your company.
When deciding to implement ABM as a strategy to help your organization close more high-ticket deals, you must not cease to include inbound marketing as part of your strategy. Though ABM itself can produce powerful results, ABM actually works really well with inbound! It allows you to expand lower-tiered target accounts by identifying who, of inbound leads is worthy based on your ICP, and create & engage more meaningfully with them on the account level.