The Marketing Strategist:
Like Fine Wine, ABM Improves with Age
Nothing beats account-based marketing (ABM) when it comes to return on investment, but it often takes time to generate substantial returns. Setting appropriate expectations and measuring interim results are essential for sustaining ABM initiatives.
A full 87% of account-based marketers say that ABM initiatives outperform other marketing investments, according to a new benchmark survey conducted by ITSMA and the ABM Leadership Alliance. And one-third of those respondents say that the difference is significant. So, investing in ABM should be a no-brainer—but it isn’t. Getting enough budget and justifying the program costs are still major challenges for many. Why is this?
ABM is different
ABM isn’t like other marketing initiatives. Even with all the new ABM-related tools and technology, creating a truly account-based approach is resource intensive, and many marketing organizations are stretched thin. Further, the time required to break even on the ABM marketing investment can be longer than with other marketing initiatives.
Most marketing campaigns have a short time horizon and concrete objectives. They’re designed to drive demand for specific services or solutions, to generate qualified leads, and, typically, to show results in 30–90 days.
ABM programs, on the other hand, have a longer time horizon. Initiatives are insight led and customer centric, and therefore the best opportunities to generate revenue aren’t always clear at the get-go. ABM is not a funnel-filling tactic; it is a strategic, mid- to long-term, relationship-building program that requires sustained investment.
ABM results build over time
In our research, we found a correlation between the length of time ABM had been implemented and the proportion of companies achieving a higher ROI (Figure 1). Companies that have had ABM programs running for more than two years are twice as likely to reap the benefits of higher ROI. ABM is a marketing example of high operating leverage. You invest. You may spend some time underwater. And when it pays off, it pays off big.
Figure 1. ABM results improve with experience
Experienced ABM marketers point to several factors that improve with age:
- Education of and collaboration with the wider marketing organization
- Maturation of the relationship with the sales team and other key stakeholders
- Processes, tools, and skills to track impact and report metrics
- Understanding of how to use marketing technology to optimize efficiencies and results
- Ability to develop campaign assets that are mass customizable
As one marketing executive told us:
“We have been doing ABM now for about one year with 1,250 accounts and this has been an incredibly efficient way for us to encourage sales meetings and generate pipeline. For every dollar I spend on ABM, I'm able to drive significant pipeline—a 672% return the last time I calculated.
Unfortunately, there's a ton of that pipeline still in play. The problem is getting the opportunities to close. It’s a key area of concern. We're struggling and trying to figure out how to make the investment pay off, not only in pipeline created, but also revenue booked. Not surprisingly, there's no silver bullet. It's a combination of market readiness, the long length of our sales cycle, our messaging, and our approach to sales execution.”
How to sustain momentum
There are two keys to sustain the momentum of an ABM program:
- Position ABM correctly at the start. ABM is not a demand generation tactic or a type of marketing campaign; it’s a company-wide strategic relationship-building initiative. Positioning ABM as a tactical marketing initiative rather than a company-wide business initiative may lead to under-investment and unrealistic expectations of quick returns.
- Show interim success, even without immediate revenue. Of course, you should measure ROI from day one, but be clear that the most significant financial return comes in the later stages. Reporting on interim success highlights quick wins and generates necessary support to keep ABM programs funded. Key metrics should cover improvements in reputation and relationship as well as revenue; important near-term metrics could include new executive-level contacts, references and advocacy, satisfaction with key deliverables (pre- and post-sale), and so on. (See also ABM Beyond Revenue: The Other Two R’s). Sales team satisfaction and support are also essential, and helpful in sustaining internal support.
There is no doubt that ABM works, but stellar growth results typically accrue over time. Showing interim results and leveraging early wins goes a long way to inspire patience and secure the resources needed to fortify and scale ABM.
For more information, see our ITSMA Update, ROI in Account Based Marketing: Delivering Consistent Results (available at no charge to ITSMA members).