I’ve been blogging and writing about trends in B2B marketing since 2006, and in that time I’ve written hundreds of posts on topics ranging from lead management to marketing automation to marketing metrics and ROI. But the one theme that all my posts have in common is the idea of demand generation, e.g. the stimulation and nurturing of awareness and interest in your company’s products with the goal of generating qualified sales pipeline.
But marketing keeps changing, and in the last year or so a new concept has emerged as a focus for B2B marketing professionals: account based marketing (ABM). While ABM is ultimately a type of demand generation, in practice it has many important and surprising differences from demand generation (at least the way I’ve been practicing, and preaching, it for the last nine years).
I think account based marketing is going to be the next big thing in B2B marketing, and that’s why I’ve recently started a new company, called Engagio, to build an all-in-one platform for account based marketing. (Read to the end of this article for some exciting news about Engagio!)
In this post, I’ll review some of the key reasons why account based marketing is different from demand generation – and why it is a radically better approach for some use cases and businesses. But first, let’s review what ABM is and why it’s so hot.
Account Based Marketing Defined
At its core, account based marketing encompasses everything that B2B marketers do to support sales at target accounts. This includes selecting and prioritizing account lists, generating new contacts, gathering account intelligence, building account plans, running field-marketing events, prospecting into new relationships, and engaging accounts online.
But I like to think that ABM should have a few other definitional characteristics as well:
Integrated: ABM activities should be intentional, integrated efforts and not what I like to call “random acts of marketing”. A dimensional mailer or online ad campaign may not have much effect as a stand-alone campaign, but they can be extremely effective as part of an integrated cross-channel program.
Aligned: ABM must coordinate marketing and sales efforts.
Personalized: Because ABM implies focus, it unlocks the ability for marketers to invest more time and resources into understanding accounts and increasing relevance. In it’s full expression, account based marketing is 1:1 marketing for B2B companies.
Full-funnel: ABM can help build awareness and generate new relationships, but it’s also great for deepening engagement with current customers as well.
Agile: ABM works best when it can be measured and activities can adjust based on what works.
(Note that SiriusDecisions talks about many styles of ABM, ranging from a very small number of very large accounts, to a moderate number of named accounts, to existing customer relationships, to a broad industry or segment focus – though I personally think the last one, industry/segment focus, is too broad to count as true ABM.)
Difference from Outbound Sales
Craig Rosenberg, AKA the funnelholic and a patron saint of ABM, recently nailed one of the common questions about ABM, namely what is the difference between account based marketing and outbound sales? He writes that ABM adds marketing-and-sales teamwork to the idea of outbound prospecting, saying:
In outbound sales, sales and/or sales development reps execute their own outbound patterns using a mix of touches such as phone, email, and social until they generate an opportunity with a particular account. Marketing may or may not run outbound marketing programs against this target list of accounts. If it does run an outbound campaign, it is often a one-off and not specifically customized to a specific account.
In account-based marketing, sales and marketing work together to create an always-on series of touches and relationship building aimed at these accounts. One meeting with an account is just the beginning – not the end – of an account-based marketing program.
Benefits
The benefits of account-based marketing include:
Focuses time and resources on accounts most likely to drive revenue (“zero waste”)
Improves marketing-sales alignment
Creates a better, more coordinated customer experience
In fact, according to the ITSMA, “ABM delivers the highest Return on Investment of any B2B marketing strategy or tactic. Period.” That’s pretty cool.
Account Based Marketing Is Hot
I’ve spoken with dozens of B2B marketing professionals over the last few weeks, and I’m pleased to see how top of mind account based marketing is today.
Megan Heuer, VP and Group Director at SiriusDecisions and another patron saint of account based marketing, wrote a blog post called Is Account-Based Marketing “The Next Big Thing” in B-to-B? In it, she declares a definitive yes, writing, “…it’s clear that we’ve passed the fad phase of ABM’s most recent comeback. Now, we’re solidly in the trend phase.” She also answers why ABM has become so much more attractive, citing three trends: technology; data and analytics; and the willingness of sales to collaborate with marketing.
A few more data points:
Craig Rosenberg also wrote that that “Account based marketing is red hot…Without prompting, several attendees [at a demand generation council] named account based marketing as their top priority right now.”
A recent survey from LeanData found that more than 80% of B2B companies say ABM is now a priority.
Search traffic on Google for “account based marketing” has steadily risen from effectively zero in January 2014 to an all-time high (see chart below).
Adam Waterson of Bloomreach captured the emerging ethos, writing, “I no longer think LBM (Lead Based Marketing) is the best overall approach. It makes more sense for my business to think about ABM (Account Based Marketing) to hunt an organization — not any one single person.”
When so many marketers start to adopt an idea, it enters the marketing zeitgeist and becomes self-perpetuating. That’s what’s happening with ABM in early 2015, and it feels familiar. In fact, account based marketing today is a lot like “lead nurturing” in 2008 . In other words, ABM is a hot topic that marketers everywhere are trying to figure out, but the best practices are still emerging and the modern tools to help with the execution are only now becoming available.
The bottom line: more and more marketers are switching their marketing strategies from broad demand generation to a more targeted, account-focused model. But how exactly is ABM different from more traditional demand generation?
US search traffic on Google of “account based marketing”
Key Differences Between Account Based Marketing and Demand Generation
In many ways, account based marketing turns traditional demand generation “upside down”. If demand generation goes left, then account based marketing goes right; when demand generation goes down, ABM goes up; if demand generation calls heads, account based marketing calls tails. In particular, here are the seven ways that demand generation and account based marketing are opposite sides of the same coin:
Demand Generation
Account Based Marketing
Fishing with nets
Fishing with spears and harpoons
Primarily inbound
Primarily outbound
Person-centric data model
Account-centric data model
Drives pipeline creation
Supports pipeline creation
Offer-focused campaigns
Account-focused campaigns
New business
New business and existing customers
Measure leads and opportunities
Measure engagement and sales productivity
Fishing with harpoons, not nets
Traditional demand generation is like fishing with a net: you put your campaign out there, e.g. a whitepaper or webinar or search campaign, and you start catching “fish”. You don’t care which specific fish you catch, as long as you catch enough fish in total. From there, you use nurturing and scoring to run them through the funnel with the goal that opportunities and customers come out the end. This is the model I’ve been using (and preaching) for years at Marketo, and when done well it can be remarkably effective.
But, there is another type of marketer out there, one who is going after “big fish” with spears and harpoons. These marketers are supporting sales teams that are closing six- and seven-figure deals (or more), focusing on a specific list of named accounts (often selected based on revenue potential and industry fit). Account based marketing is all about supporting this kind of marketing.
Primarily outbound tactics, not inbound (but not interruption-based)
Marketers who are “fishing with spears and harpoons” use different tactics (this section) and they use different metrics (see below).
With account based marketing, you can’t generally count on a target account wandering into your net. If your content and programs are great you may get some of them, but can’t get them all and there will always be a great amount of unwanted “bycatch”.
With ABM, though, you reach out to your target accounts directly. This has the advantage of “zero waste” — all your marketing is focused on the right accounts.
In the past, companies relied heavily on “interruption-style” techniques to do this: cold calls, non opt-in emails, and unwanted social media interactions. And recently we’ve seen a resurgence in outbound prospecting as a sales development technique. These tactics all can play a role in account based marketing, but let me be clear: account based marketing is outbound focused but it is NOT about interruption marketing.
Instead, account based marketing applies some of the best concepts from demand generation to outbound prospecting:
Content driven
Helpful and valuable
Focused on the buyer, not the company
Personalized and relevant
Highly measurable
Continuously improving
Deep sales and marketing alignment
As Craig Rosenberg writes in Account based marketing: How to hit a handful of needles in the haystack:
Understand and define your buyer then deliver relevant content to that buyer over time. That’s the rule. Follow that and you can win in outbound.
Account centric, not person centric
Virtually every marketing tool available today has been architected to be person-centric. This usually makes sense, because most marketing is to people, and in the end, people buy products, not companies.
That said in any complex business-to-business deal there are many people involved: the decision maker, the end user, the influencer, and so on. Each of these individuals is part of the account. To support selling into that account effectively, marketing needs to understand how each individual fits into the larger account: the relationships, the influences, the connections. Marketing needs to understand the aggregate level of engagement across the account, and know when that engagement goes up or down. And finally marketing needs to understand the context of the account relationship when deciding how to interact with any new person that comes into the system. All things easier said than done, especially when the CRM system separates leads from the account.
In the end, it is the account that is your customer, not any particular individual. That’s why true account based marketing takes an “account-centric” view of the data and campaigns.
Marketing supports pipeline creation, instead of driving it
In a traditional demand generation model, marketing takes responsibility for driving a significant fraction of the pipeline, typically sourcing 25-45% directly and influencing most of the rest. At Marketo, marketing sourced as much as 70-90% of the pipeline. In these deals, the buyer does not engage with sales until they are as much as 60-90% along in their buying process.
But in a named account model, sales engages consultatively with accounts much earlier in the buying cycle, building relationships and helping to challenge the status quo. As a result, marketing directly sources a much smaller proportion of the pipeline, and focuses more on supporting sales. This again has implications for the tactics and metrics that account-based marketers use.
Account-focused campaign framework, instead of offer-focused
A typical demand generation campaign starts with the offer: promote a new piece of content, get a discount, highlight a free trial. Marketing next selects the right people to target for that offer, and then runs the campaign. This approach is offer focused since, well, it starts with the offer.
Compare that to a best-in-class account based marketing campaign framework. This starts with a specific target account. Then, marketing and sales collaborate to define an account plan, including specific interaction streams for the various personas in the account. And only then should marketing think about which offers and content will resonate best for that interaction with that account. (Hint: it’s usually hyper-relevant and personalized to the account or at least their industry.)
It’s about customers as well, not just new business
One criticism of modern demand generation is that it is too focused on new business. All the marketer’s incentives are often aligned around new lead and opportunity generation.
The problem is that much of the revenue and even more of the profit comes from the existing customer base. In many companies, though, the demand generation team has no direct incentive to encourage cross-sell, retention, or advocacy. This is crazy! An account-based marketer’s time and resources should be roughly proportional to the amount of potential annual revenue (not bookings) earned from each account, weighted by the difficulty of earning that revenue. For those revenue marketers who earn a commission, like I had at Marketo, the quota should be based on a broader set of metrics, not just new opportunities and pipeline.
Measure engagement and productivity, not just leads and opportunities
Speaking of metrics, measuring demand generation has been refined to a science in the last few years. In the Definitive Guide to Marketing Metrics and Marketing Analytics, I wrote that marketing measurement should come down to two things:
Aggregate impact on new pipeline and revenue, as measured by movement through a revenue cycle waterfall, and
Return on investment from programs (where the return is typically measured by pipeline creation using a multi-touch attribution methodology).
In other words, demand generation is almost always measured by leads and opportunities created.
But leads and opportunities are not the right way to measure account-based marketing. As mentioned above, in ABM marketing needs to (a) support, not create, pipeline creation and (b) create customer revenue as well as new pipeline. This means that leads and opportunities, while still important, are not sufficient to measure account-based marketing. There are three additional categories of ABM metrics:
Coverage: do you have sufficient data, contacts, and account plans for each target account?
Engagement: what is the aggregate level of engagement for the account, e.g. web traffic, online interaction, attendance at events, and so on?
Productivity: how are the ABM activities improving sales outcomes such as sales cycles, average selling price, retention, and net promoter scores?
Modern account based marketers need dashboards that show all these metrics, and they should be available on-demand — not requiring weeks of support from marketing operations.
Big News: Announcing Engagio
Once I became convinced that ABM was solving a very different problem from demand generation, I realized there was an opportunity for a new solution that would work with a company’s current marketing automation platform, but that was built from the ground up to support the account-based marketer. There are some good tools out there to help with various pieces of ABM (e.g. web personalization, retargeting), but nobody is tackling the problem as a complete solution.
That’s why I started my new company Engagio, along with Brian Babcock. Engagio is building an all-in-one account based marketing automation platform to engage accounts and deepen sales-and-marketing alignment. We will provide functionality to:
Understand target accounts
Orchestrate integrated account plans
Prove the impact of your ABM efforts
We’re not yet taking beta customers, but if you want to be among the first to hear about our beta program then please sign up at www.engagio.com and we’ll let you know when we are ready!
We are hiring founding engineers to work at our new HQ in right in the center of downtown San Mateo, CA. If you want to help define the next great start up (or know someone who does), please email us at jobs@engagio.com.
Series A Funding
Lastly, I am pleased to announce that today Engagio announced a key milestone: our $10M Series A funding, led by FirstMark Capital along with Storm Ventures and First Round Capital. This is a huge validation for ABM. The funding gives Engagio the ability to hire world-class talent and deliver a series of great products that will help to define what it means to do account based marketing. It also gives us the runway and resources to build and scale a fast-growing SaaS company.
I am thrilled to welcome Amish Jani, FirstMark founder and Managing Director, to the Engagio Board of Directors. I’m also pleased that we will have the advice and support of other great investors including Tae Hea Nahm, Bruce Cleveland, and Doug Pepper (who collectively led Marketo’s Series A and Series B financings); Bill Trenchard; and Mike Dauber of Amplify Partners.
This is such an exciting time to be a marketer, and an entrepreneur. I want to share a heart-felt thank you with everyone who has helped us get to this point, and thank you in advance to everyone who will help us in the future!