Account-based marketing – another buzzword or something real?
One way to sell a new type of marketing software is to proclaim that marketing has completely changed, popularise a different model, and show how – conveniently – your platform is a way to be successful in the new paradigm. Is account-based marketing any different?
/ Photo by Vladimir Kudinov on Unsplash
For B2C marketers who might be unfamiliar with the modern B2B tech software world, there is one important thing to understand before I answer that question.
First, the traditional marketing department has been destroyed more than Duffy’s music career after that Diet Coke commercial in 2009. In classic theory, here is a simplified breakdown that I created:
Of course, there are the 4 Ps with the tactical mix under promotion. Marketing and communications were under one strategic roof. Everything that was responsible for the company making money – from product-market fit to customer service – was together in a single business unit. Everything else was pretty much overhead or administration.
However, here is where things stand in many tech companies today:
Pricing has gone to finance. Product has moved to a separate product team. Sales has become a separate team. So has customer support. Marketing has been reduced to only a small set of communications functions. And each of these teams has its own director or vice president that reports to the CEO.
The reasons for the fall of marketing in the tech world could be discussed for hours, but here are two major reasons. First, technology has led to vast increases in efficiency that have eliminated the need to hire masses of people, and tech companies are under extreme pressure from investors and competitors.
And where does that lead? To the flattening of organisations and the cutting of middle management. Having five small teams reporting directly to the CEO is cheaper than having them all report to an expensive CMO who reports to the CEO.
Second, the tech world values product and sales much more than communications. VCs do not want to spend money on it. Programmers do not understand it. (Ask how many times techies at various companies have said “marketing is bullshit,” not knowing I was within earshot.) Too many CEOs think that any good tech product should be able to sell itself.
Marketing failed to market itself.
As a result, tech companies sit with entirely separate marketing, sales, and customer support teams at the top, middle, and bottom of sales pipelines. In this context, marketing solely delivers leads to sales. Sales closes. Customer support answers questions. Customer success convinces users to pay more money over time.
And you wonder why the entire operation is inefficient and teams do not talk to each other.
Enter account-based marketing. According to Google Trends, ABM has been growing in popularity since 2016. Every day on LinkedIn, I see more and more advocates of the practice and sellers of ABM software publicising e-books, webinars, tutorials, and blog posts.
But what is ABM, exactly?
ABM in a nutshell
“ABM is sales and marketing coming together, finally, as one team with one purpose: to win, retain, and expand the most desirable, highest value accounts,” Steve Watt, co-founder of the upcoming Toronto ABM Summit in Canada in June, said. “It’s multi-threaded, multi-channel, multi-touch, and highly targeted. In fact, you can’t possibly afford to be so high-touch unless you’re ruthlessly clear in your targeting.”
“ABM started because we saw a problem that needed solving – sales teams capturing unqualified leads that went nowhere and marketing teams targeting prospects that never converted,” Sangram Vajre, co-founder and chief evangelist of Terminus ABM software, said. “By marrying the two efforts, companies are not only able to accelerate the velocity and volume of converting target accounts, but are also seeing more long-term ROI when they are retained over time.”
So, first, ABM is sales and marketing working together to gain specific, targeted accounts. Of course, it sounds logical – but I wonder if this would be a problem if the two teams had never been separated in the first place. Still, we cannot change the past.
Secondly, the other significant aspect of ABM is the use of precise targeting from the beginning. In the usual B2B tech pipeline, sales works on whatever leads they get from marketing. In ABM, the company creates a list of companies to target – and targets only those companies. (The businesses are typically enterprises, which tend to be the most profitable.)
Say that the CEO wants to gain British Airways, Coca-Cola and Oracle as customers in the following quarter. Marketing and sales – perhaps along with product and finance – would develop a different strategy for each company.
British Airways might have a certain product need, price point and relevant decision-makers at various levels and in different roles. Coca-Cola may need something entirely different. And Oracle. And so on. The main idea is to do whatever it takes to close those specific, desired accounts.
“ABM is a strategy employed by B2B organisations that generates business by directing targeted sales and marketing initiatives toward predefined accounts,” Anna Fisher, senior director of marketing at ZoomInfo, a growth acceleration platform, said. “It is a comprehensive approach that combines singular marketing segments – industry, product, marketing channels, and so on – into one, living, breathing target: your selected account.”
Of course, the idea is not entirely original.
“The concept of targeting specific accounts in itself is nothing new,” Andy Vale, the senior copywriter and content manager for call intelligence platform Infinity, said. “The idea of sharing a steak dinner, VIP box, or golf day with a valuable prospect or client has been around for years, and there are already industries built around it.” Vale also does ABM for Infinity and has freelanced for an ABM agency to do work for Google.
“What's new about ABM is that it focuses far more on being professionally useful to the audience and delivering a standard of tailored marketing that the recipient actively enjoys receiving,” he added.
And, in the ABM mindset, how does one do that? Personalisation through martech platforms.
The questionable popularity of personalisation
“Traditional B2B marketing is impersonal and doesn't necessarily drive the engagement levels many businesses strive to achieve,” Rebecca Clayton, SVP of global marketing at energy consultancy Wood Mackenzie, said. Her company has started to implement ABM.
“In many ways, ABM is the complete opposite,” she continued. “ABM is targeted, personalised, precise, and accurate – in a way, it's the sniper of marketing. Although ABM has been around since the early nineties, businesses are increasingly choosing to leave the one-size-fits-all approach to marketing behind in favour of a highly-targeted and personalised marketing strategy.”
Ashling Kearns, Salesforce’s VP of marketing for the UK and Ireland, agrees.
“ABM isn’t new to any of us who work in marketing, she said. “The chances are we’ve all employed ABM strategies to better target valuable account leads. What is new, however, is that marketing technology has caught up, and it can now more effectively enable and enhance ABM. These days customers are demanding personalised engagement. With the tools and technologies now available, ABM can really deliver this in a very effective way.”
Now, I have never worked in an ABM-driven marketing team. I can only discuss the issue from a theoretical perspective. In addition to ABM, personalisation in general is all the rage in the marketing world. Just look at this selection of headlines that I have saved from research:
It is certainly reasonable for B2B companies to tailor their marketing to each targeted company. Every business has different needs. But ABM can include the targeting of individual people at those companies as well. And few people like targeting and tracking on a personal level.
A University of Pennsylvania study found that 66% of Americans do not want direct marketing that is tailored to them. When told how marketers collect their data to tailor the ads, the percentage increases to 86%. This month, a Harvard University study found that if you track people like Facebook does and then tell them about it, then that admission “poisons” the ads. In a Marketing Sherpa survey, targeted online direct marketing of all types is the category of marketing that people like the least.
So, I’m not sure where the line falls between ABM and stalking. If I were one of the few targeted in an ABM plan for some reason, would I receive personal emails, telemarketing phone calls, postal mail at The Drum, and skywriting that I would see from a beach in Tel Aviv? I work in marketing, and I would never want to be a victim of a “highly-targeted and personalised” ABM plan. I would feel that the company was more obsessed with me than Eminem was with Mariah Carey.
Most worryingly of all, it seems that advocates of ABM focus only on direct response and have not given a thought to brand campaigns – thereby ignoring the longstanding 60/40 rule and the fact that online direct response is far less effective than traditional brand campaigns.
The problem of extreme segmentation
Still, my main issue with ABM is the intentional limiting of potential prospects to a few large companies.
When you look at the publicity materials of many B2B tech companies – especially startups – you will see that almost all of them claim that their products are so innovative that they do not have any competition and all enterprises will naturally want to use them. That is rubbish. Everyone always has competition of some sort.
Sure, you can target enterprises – but so does everyone else. And if your revenue goals consist of getting, say, five of five targets to sign up in the next quarter, you will likely lose a lot of money if just one falls through. There is a lot to be said for targeting smaller, mid-market businesses that might be overlooked by the competition.
And then there is the issue of the extreme segmentation itself by creating a separate marketing mix for every single target. Byron Sharp, the director of the Ehrenberg-Bass Institute for Marketing Science at the University of South Australia, would likely want a word.
In a prior column, I reviewed his new textbook in which he stated that “segmentation encourages managers to think of differences rather than look for bigger commonalities or look for ways to be inclusive. This is anti-scale and potentially anti-growth, and could reduce competitiveness.”
There is something to be said against extreme segmentation (as well as against no segmentation at all). If your ABM plan targets five different enterprise companies, how truly different is each one in terms of how you can help them?
A summary of ABM
So, in the end, what is ABM? Here is a summary:
- Select only a few high-value targets
- Create an individual strategy for each target
- Combine the efforts of marketing and sales
- Use targeting and personalisation in the resulting tactics
To the credit of those who I interviewed for this column and to answer my question at the beginning, no one seems to claim that ABM is some revolution in the marketing world. (Unlike those who work for other martech platforms.) Basically, it is a segmentation strategy that aims to unite the efforts of marketing and sales and use targeted and personalised direct response to deliver a few, select high-value accounts.
If ABM has delivered results for any given company, I cannot argue with that. But I do argue that B2B marketing would be more effective in general if the industry would return to classic marketing theory in which all money-making activity is under one person. There would be no need to unite marketing and sales if they had not been separated in the first place.
If pricing is kept in the silo of a CFO looking at a spreadsheet, how will he know whether marketing has determined that a penetration or premium price is better? If all customer feedback remains with the product team, how will marketing know how to manage the messaging? If only customer success know what gets people to spend more, how will marketing know how to communicate the benefits of different product usage plans?
ABM might be useful, or it might not – depending on the strategy. But what ABM gets correct is the need for communication between teams. That is always a good thing.
The Promotion Fix is an exclusive biweekly column for The Drum contributed by global marketing and technology keynote speaker Samuel Scott, a former journalist, consultant and director of marketing in the high-tech industry. Follow him on Twitter and Facebook. Scott is based out of Tel Aviv, Israel.