| 3 minute reading
In the history of B2B marketing, account-based marketing (ABM) programs are still fairly new. According to the sixth State of Marketing Report, 64% of them were launched in the last five years. And they are growing in popularity because they generate results. New ABM search shows that most ABM programs generate a better return on investment (ROI) than other types of marketing. In 2020, three-quarters of programs cited a higher return on investment, and about a quarter cited a significantly higher return.
Better yet: these results do not only apply to experienced ABM practitioners. They include companies that are just starting their ABM journey.
Businesses typically use ABM for one or both of the following reasons:
- They have a limited addressable market
- They find the Pareto principle applies: 80% of revenue comes from top 20% of accounts, and they want to implement a more targeted approach to nurture high value customers
ABM is moving away from a generalized method of lead generation and taking a more strategic focus on large account growth. With this approach, account-based marketing is used to increase revenue by increasing your conversion rate and the average size of your transaction. We can model this as:
↑ Conversion rate x ↑ Average transaction size = ↑ Revenue
Is ABM Right For You?
More and more marketers are taking an ABM approach because it works. Most marketers claim that ABM delivers higher ROI and improves success rates and customer lifetime value. However, that doesn’t mean it’s automatically the right approach for every business. For example, a business that offers a low cost product and has a large addressable market may wish to use a broad-based marketing approach to expand its network in its target market.
So how do you determine if ABM is right for you? The first step is to strike up a conversation with your internal stakeholders. Make sure you include key players in Marketing, Sales, Demand Generation, Operations, and even your top performing sales reps.
Then go through this simple checklist to assess whether or not ABM is right for your organization:
The ABM checklist
- Do you have a B2B sales function?
- Do you have a limited addressable market?
- Do you have a large mid-size transaction?
- Do you value the quality of leads / accounts over quantity?
- Does your product / service have a long sales cycle?
- Do your customers demand a high level of personalization throughout the sales cycle?
- Are multiple buyers usually involved in a purchase decision for your product / service?
- Do you have high potential for upsell and cross-sell opportunities?
- Are sales focused on a limited number of large accounts?
- Is the alignment of your internal sales, marketing and service teams a priority to target large accounts?
If you answered yes to two or more of these questions, your business may benefit from an ABM strategy. If you answered yes to all among them, ABM is a must!
First steps with ABM
It can be intimidating to think about launching an ABM strategy, but it doesn’t have to be. These resources can help you get started:
This blog post was originally written and published by Daniel Newman in 2018 and updated in January 2021 by Jozi Hall.