Cracking the Code on Strategic ABM Success

 The Story of ABM

Over the past two-plus decades, account-based marketing (ABM) has evolved from a niche marketing discipline used mainly by large IT services firms to become a core component of marketing at many B2B companies.

The Information Technology Services Marketing Association (ITSMA) (now part of Momentum) coined the term "account-based marketing" in 2003, and ABM soon became a central focus of its research and consulting.

ITSMA defines account-based marketing as ". . . a strategic approach to designing and executing highly-targeted and personalized marketing programs to drive business growth and impact with specific, named accounts." [Source]

The popularity of account-based marketing has grown dramatically because B2B marketers perceive that ABM is highly effective. In the 2023 Global State of Account-Based Marketing survey by ITSMA and ABM Leadership Alliance, 81% of the respondents said ABM programs deliver a higher return on investment than "traditional marketing initiatives."

As originally conceived, ABM was viewed as a special approach to marketing that would be used with a company's most valuable customers. Within a few years, however, the successes achieved by early ABM adopters prompted marketers to look for ways to scale account-based marketing so that it could be cost-effectively used with a broader range of accounts.

In its 2016 Account-Based Marketing Benchmarking Survey, ITSMA documented the rise of three distinct types of ABM - strategic ABM (a/k/a one-to-one ABM), ABM Lite (a/k/a one-to-few ABM), and programmatic ABM (a/k/a one-to-many ABM).

This three-part framework has become the standard way to describe account-based marketing, but the reality today is that one-to-few and one-to-many ABM aren't materially different from state-of-the-art conventional outbound B2B demand generation marketing.

This is not true for strategic ABM, which embodies a very different marketing approach. With strategic ABM, marketing activities and programs are components of a multi-faceted management plan for a single customer account, and they are customized for that account.

Strategic ABM Still Rules

While one-to-few and one-to-many ABM have broadened the reach of account-based marketing, the linchpin of any successful ABM initiative is still strategic ABM.

Strategic ABM remains the most widely-used type of account-based marketing, and most ABM thought leaders and practitioners agree that strategic ABM - if done well - will generate a higher ROI than one-to-few or one-to-many ABM. Put simply, it's hard to have a high-performing ABM program if don't master strategic ABM.

The functional centerpiece of a successful strategic ABM initiative is the account management plan. With strategic ABM, a separate plan is developed for each account in the initiative. This is the first distinguishing characteristic of strategic ABM. It's truly one-to-one.

An effective strategic ABM account plan is also distinguished by the process used to develop it and the content it contains.

Developing the Plan(s)

Strategic ABM is often implemented in companies that already have a key account management (KAM) program. Key account programs have existed in some large B2B companies since the late 1950s. Early KAM programs were usually led by a sales executive, and their primary focus was managing sales opportunities.

The discipline of key account management has evolved substantially over the past six decades. Many companies now have well-developed KAM programs that are designed and executed by cross-functional account teams, and led by dedicated, senior-level account managers.

Today, the best KAM programs are focused on identifying longer-term growth opportunities in the account and maintaining the long-term health of the customer relationship, as well as on shorter-term sales opportunities.

In these circumstances, strategic ABM is essentially synonymous with key account management. A marketer becomes a member of the account management teams (usually no more than 5) and brings marketing expertise to the formulation of the account management plans. ABM activities are fully integrated into the account management plan so that the company has a single, cohesive strategy and plan for each key account.

Content of the Plan(s)

An effective strategic ABM/KAM account management plan is essentially a full-fledged business plan that is focused on an individual customer. The objective of the account planning process is to formulate a strategy and set of actions that will (a) protect the current revenue you are earning from the customer, and (b) enable you to grow the revenue you earn from the customer.

I used the term "business plan" intentionally because an effective strategic ABM/KAM plan is similar to the kind of business plan you would develop for any strategic move, such as the introduction of a new product or service, or an adjacent market expansion.

You can easily find dozens of business plan templates by performing a simple Google search. The framework that I've found works well for an account management plan contains six major components.

Customer Description

The objective of this portion of the plan is to provide a comprehensive picture of the customer's business operations, competitive position, organizational structure, and financial performance.

This portion of the plan should describe:

• The market(s) the customer serves and the economic attractiveness and growth potential of those markets
• The products and/or services the customer offers
• The types of individuals and/or organizations the customer primarily serves
• The customer's principal competitors
• The customer's current and recent financial performance
• The customer's business strategy and strategic priorities
• Any recent or planned structural changes (expansions or contractions)
• The customer's senior leadership team

If the customer is a public company, much of this information, including financial performance data, can be obtained from the customer's regulatory filings. If the customer is privately owned, financial data can be more challenging to obtain.

A mindset that I've found useful when preparing this portion of an account plan is to imagine that you are a stock analyst who is preparing an evaluation of the customer for investment purposes.

Current Relationship

This portion of the plan is where you describe your current position with the customer. What products and/or services do you sell to the customer? How long have you been doing business with the customer? How has the revenue you earn from the customer changed over the past 2-3 years? Who are your principal competitors for the customer's business? How strong is your current relationship with the customer? Most importantly, what "share of wallet" are you currently earning from the customer?

Relationship Objectives

This portion of the plan details your objectives for the relationship with the customer. Most of these objectives will be about increasing the revenue you earn from the customer, and those objectives are usually best expressed in terms of increasing the share of customer spend you earn in relevant areas.

You may also want to include more "operational" objectives. For example, if the customer has several business units and you are currently doing business with only some of those business units, you may have an objective to win business from a new business unit.

Threats/Barriers to Success

This is where you identify the events or circumstances that could throw a wrench into your plan. Obviously, you can't foresee every possible threat or barrier, but if you have deep customer insights and a realistic picture of your company's capabilities, you can identify many of the plausible events or circumstances that could derail your success.

Measurable Outcomes and Milestones

Every account management plan should include specific outcomes that are quantitatively measurable. Obviously, these outcomes will include your ultimate relationship objectives. For example:  "Increase the revenue we earn from XXX by 15% in our next fiscal year." You should also include measurable outcomes that are milestones or leading indicators of progress toward your ultimate objectives.

Action Plan

This portion of the account plan details the actions you will take to achieve your relationship objectives. Your account plan should identify who is responsible for each action and specify a target completion date. This level of detail will enable the members of your account management team to organize their work, hold each other accountable, and track progress toward success.

Final Thoughts

It should be clear that developing this type of account business plan isn't a trivial undertaking. It requires a significant amount of time and effort, especially the first time it's done for a customer. That's why strategic ABM/KAM initiatives should be reserved for your most valuable customers.

The deep customer insights and level of focus resulting from the account planning process also go a long way to explaining why well-designed and executed strategic ABM/KAM programs deliver outstanding value and ROI.

Image courtesy of emiliokuffer via Flickr (CC).

Are Your Revenue Generation Programs Targeting the Right Customers?

 

Source:  Shutterstock

(This post is an edited/updated version of a post I published early last year. With the fourth quarter of 2024 now underway, many B2B marketing and sales leaders will have started developing revenue generation plans for next year. Measuring customer profitability accurately is critical for developing an effective revenue generation strategy. So, this post is particularly relevant now that "planning season" is upon us.)

Key Takeaways

• A growing number of companies are adopting revenue generation programs that treat customers differently based on their perceived value to the company.

• Most companies determine the value of customers based on current revenue and future growth potential, but most don't track customer profitability or use it to judge the value of individual customers.

• The lack of accurate customer profitability information creates a dangerous blind spot. Without it, companies can end up winning business from unprofitable customers.

The Rise of "Account-Based Everything"

The widespread adoption of account-based marketing is one of the landmark developments in B2B marketing of the past two decades. The use of ABM has been growing rapidly since it was introduced by ITSMA in 2003. While the early adopters of ABM were primarily large B2B technology and business services firms, it's now used by a wide variety of B2B companies.

A  few years ago, marketing industry analysts, consultants, and technology vendors began to argue that companies should adopt an account-based approach in other customer-facing business functions, including sales, sales development, and customer success/customer service.

This broader application of account-centered techniques was soon called "account-based everything." ABE (or sometimes ABX) is usually defined as "the coordination of personalized marketing, sales development, sales, and customer success efforts to drive engagement with, and conversion of, a targeted set of accounts." (Gartner)

The most rigorous and thorough discussion of this broader use of account-centric strategies and tactics can be found in Account-Based Growth:  Unlocking Sustainable Value Through Extraordinary Customer Focus by Bev Burgess and Tim Shercliff. In this book, the authors explain how B2B companies can use account-focused strategies and programs to drive profitable revenue growth.

The premise underlying account-based methodologies is that all customers are not created equal. In most B2B companies, a small percentage of customers account for a disproportionate share of the company's total revenue and profit.

The essence of the strategy described in Account-Based Growth is to identify those "vital few" customers, and then design and implement coordinated marketing, sales, customer success/customer service, and executive engagement programs specifically tailored for those high-value customers.

Burgess and Shercliff explain how to identify and prioritize high-value customers, develop effective account business plans, leverage data and technology to gain deep customer insights, and bring about the leadership and cultural changes necessary to succeed with an account-based growth strategy.

Perhaps most importantly, Burgess and Shercliff emphasize that many companies will need to "radically" reallocate marketing, sales, and customer success resources to effectively support an account-based growth strategy. When you adopt this kind of strategy, you are placing a large bet on the growth potential of a relatively small group of customers and prospects.

In the balance of this article, I'll adopt the Burgess/Shercliff terminology and use the term "account-based growth strategy" to refer to a go-to-market approach that involves identifying high-value customers and prospects and designing coordinated marketing, sales, and customer success/customer service programs to manage relationships with those high-value customers and prospects.

Customer Profitability Is "Missing in Action"

Companies that implement an account-based growth strategy segment their customers into multiple "tiers" based on the perceived attractiveness of each customer. Then, they use different marketing, sales, customer success/customer service, and executive engagement techniques for customers in each tier.

In general, companies will invest more time, energy, and financial resources to develop and execute high-touch and highly customized engagement programs for customers in the "top" tier, compared to those in "lower" tiers. This means, of course, that company leaders must determine which customers to place in each tier.

As part of the research for Account-Based Growth, Burgess and Shercliff surveyed 65 B2B companies. Ninety-two percent of the survey respondents reported having some kind of "top account" program.

When the authors asked survey participants what criteria they use to select accounts for their top account program, 87% of the respondents said the future growth potential of the account, and 76% said the current revenue from the account. These were the two most frequently used criteria by a wide margin.

Customer profitability wasn't among the top five selection criteria identified by the survey respondents. In fact, only 45% of the respondents said their company tracks gross profit at the account level, and only 20% reported tracking net profit by account.

This absence of customer profitability information results in an account selection/prioritization process with a major blind spot. As Burgess and Shercliff put it:  "Without this information, decisions about how much to invest in these top accounts and where to allocate resources are being made in the dark."

To make matters worse, many companies that track some form of profit at the account level still aren't getting an accurate picture of customer profitability because the methodology they use to measure customer profitability is flawed.

When you implement an account-based growth strategy, you invest substantially more in some customers than others. It's impossible to make such investment decisions on a sound basis without an accurate view of customer profitability. You can easily find yourself in the unenviable position of successfully winning business from unprofitable customers.

Why Customer Profitability Matters

If all your customers were equally valuable, there would be no reason to implement an account-based growth strategy, and measuring the profitability of individual customers wouldn't be very important. But the reality is that some customers are far more financially valuable to your business than others. There are three main reasons for this value disparity.

The Pervasive Pareto Principle

The 80:20 rule (a/k/a the Pareto Principle) states that 80% of effects come from 20% of causes. One business application of the rule states that, in most companies, 80% of total revenue comes from 20% of the company's customers.

In Account-Based Growth, Burgess and Shercliff argued that the 80:20 rule is nearly ubiquitous, and my experience supports their argument. During my career, I've analyzed sales data from dozens of B2B companies operating in many industries. In most of those companies, I found that the largest 20% of customers accounted for about 80% of total company revenue.

The 80:20 rule has important implications because it is fractal, or at least "fractal-like." By this, I mean that the 80:20 distribution pattern repeats itself as the breadth of data analyzed narrows, like a set of Russian Matryoshka nesting dolls.

To illustrate, the rule states that 80% of a company's revenue comes from 20% of the company's customers, but it further states that 64% of total company revenue (80% of the 80%) comes from only 4% of customers (20% of the 20%).

The implications of this aspect of the rule are profound. Suppose your company has $100 million of annual revenue and 1,000 customers. The 80:20 rule indicates that only 40 of your customers are likely producing about $64 million of your revenue.

When it comes to company profitability, the 80:20 rule doesn't go far enough because the distribution of profit is even more skewed than the distribution of revenue. Companies that accurately measure customer profitability frequently find that all their annual profit comes from a small percentage of their customers. (More about this later.)

The bottom line:  In most companies, a small number of customers have an outsized impact on financial performance.

Customer Profitability Varies Greatly

The second reason for the value disparity is that customer profitability varies greatly. When company leaders measure customer profitability accurately, they frequently find that they're earning a lot of profit on their most profitable customers and sustaining significant losses on their most unprofitable customers.

The following diagram depicts the customer profitability distribution found in many B2B companies. In this diagram, the horizontal axis depicts the percentage of total customers, with customers arranged (left to right) by profitability. The vertical axis represents customer profitability. The horizontal line across the middle of the diagram is the profit breakeven point (in other words, $0 profit). The red curved line in the diagram depicts the typical distribution of individual customer profitability.

This diagram illustrates that, in many B2B companies, a relatively small percentage of customers produce attractive profit levels, and a small percentage generate significant losses.

The most sobering point is that customer profitability isn't always correlated with sales volume. In other words, when company leaders measure customer profitability accurately, they often find large customers at both ends of the profitability spectrum. This explains why basing an account-based growth strategy solely on customer revenue is risky.

Customer Profitability Impacts Company Profitability

The third reason for the value disparity is that customer profitability has a major impact on overall company profitability.

The following diagram illustrates how the dynamics of customer profitability affect overall company profit. Once again, the horizontal axis in this diagram shows the percentage of total customers, and again, customers are arranged (left to right) from the most profitable to the least profitable. The vertical axis depicts the percentage of total company profit. The red horizontal line across the diagram is the actual annual profit earned by the company.

When companies measure customer profitability accurately, many find that their most profitable 20% to 40% of customers actually produce between 150% and 300% of total reported company profit. Customers in the middle of the profitability spectrum more or less break even, and the least profitable 20% to 40% of customers consume between 50% and 200% of profit, leaving the company with its actual reported profit.

So, all the profit above the red horizontal line in the diagram is unrealized profit. This is the profit the company earned and then gave away. For obvious reasons, this diagram is often called "The Whale Curve of Customer Profitability," and it dramatically illustrates why customer profitability is so critical to your company's financial performance.

A Final Word

As I noted earlier, companies using an account-based growth strategy segment their customers into multiple tiers based on each customer's perceived value. Then they develop and use more high-touch and highly customized engagement programs for customers in higher tiers than for those in lower tiers. 

One primary goal of measuring the profitability of individual customers is to provide business leaders with information that will help them make better decisions about where to place each customer in the value hierarchy.

In Account-Based Growth, Burgess and Shercliff recommended that companies prioritize their accounts based on two factors:

1. The "attractiveness" of each account; and
2. The competitive strength of their company in/with each account.

The research by Burgess and Shercliff clearly showed that an overwhelming majority of companies use current revenue and growth potential to determine the attractiveness of each of their accounts.

This article demonstrates that business leaders should also consider customer profitability when evaluating account attractiveness.

[Deep Dive] Why Your Account-Based Strategies May Not Be Focused On the Right Customers

 

Source:  Shutterstock

Key Takeaways

• A growing number of companies are adopting account-based programs that treat customers differently based on their perceived value to the company.

• Most companies determine the value of accounts based on current revenue and future growth potential, but most don't track account profitability or use it to judge the value of individual accounts.

• The lack of accurate account profitability information creates a dangerous blind spot. Without it, account-based programs can result in winning more business from unprofitable customers.

The Rise of "Account-Based Everything"

The widespread adoption of account-based marketing is as one of the landmark developments in B2B marketing of the past two decades. The use of ABM has been growing rapidly since it was introduced by ITSMA in 2003. While the early adopters of ABM were primarily large B2B technology and business services firms, it's now used by a wide variety of B2B companies.

About seven years ago, several marketing industry analysts, consultants, and technology vendors began to argue that companies should adopt an account-based approach in other customer-facing business functions, including sales, sales development, and customer success/customer service.

This broader application of account-centered techniques soon came to be called "account-based everything." ABE (or sometimes ABX) is usually defined as "the coordination of personalized marketing, sales development, sales, and customer success efforts to drive engagement with, and conversion of, a targeted set of accounts." (Gartner)

The most rigorous and thorough discussion of this broader use of account-centric strategies and tactics can be found in Account-Based Growth:  Unlocking Sustainable Value Through Extraordinary Customer Focus by Bev Burgess and Tim Shercliff. In this book, the authors provide a detailed explanation of how B2B companies can use account-based strategies and programs to drive profitable revenue growth.

The premise underlying all account-based methodologies is that all customers are not created equal. In most B2B companies, a small percentage of customers account for a disproportionate share of the company's total revenue and profit.

The essence of the strategy described in Account-Based Growth is to identify those "vital few" customers, and then design and implement coordinated marketing, sales, customer success/customer service, and executive engagement programs that are specifically tailored for those high-value customers.

Burgess and Shercliff include an in-depth discussion of how to identify and prioritize high-value customers, how to develop effective account business plans, how to leverage data and technology to gain deep customer insights, and how to bring about the leadership and cultural changes that are necessary to succeed with an account-based growth strategy.

Perhaps most importantly, Burgess and Shercliff emphasize that many companies will need to "radically" reallocate marketing, sales, and customer success resources to effectively support an account-based growth strategy. When you adopt the kind of strategy described in Account-Based Growth, you are essentially placing a large bet on the growth potential of a relatively small group of customers and prospects.

In the balance of this article, I'll adopt the Burgess/Shercliff terminology and use the term "account-based growth strategy" to refer to a go-to-market approach that involves identifying high-value customers and prospects and using coordinated marketing, sales, and customer success/customer service programs to manage relationships with those high-value customers and prospects.

Customer Profitability Is "Missing in Action"

Companies that implement an account-based growth strategy segment their customers into multiple "tiers" based on the perceived importance and value of each customer. Then, they use different marketing, sales, customer success/customer service, and executive engagement techniques for customers in each tier.

In general, companies will invest more time, energy, and financial resources to develop and execute high-touch and highly customized engagement programs for customers in the "top" tier, compared to those in "lower" tiers. This approach means, of course, that company leaders must determine, early in the implementation process, which customers to place in each tier.

As part of the research for Account-Based Growth, Burgess and Shercliff surveyed 65 B2B companies. Ninety-two percent of the survey respondents reported having some kind of "top account" program.

When Burgess and Shercliff asked survey participants what criteria they use to select accounts for their top account program, 87% of the respondents said the future growth potential of the account, and 76% said the current revenue from the account. These were the two most frequently used criteria by a wide margin.

Customer profitability wasn't among the top five selection criteria identified by the survey respondents. In fact, only 45% of the respondents said their company tracks gross profit at the account level, and only 20% reported tracking net profit by account.

This absence of customer profitability information results in an account selection/prioritization process with a major blind spot. As Burgess and Shercliff put it:  "Without this information, decisions about how much to invest in these top accounts and where to allocate resources are being made in the dark."

To make matters worse, many companies that do track some form of profit at the account level still aren't getting an accurate picture of customer profitability.

When company leaders adopt an account-based growth strategy, they will be investing substantially more in some customers than others. It's simply not possible to make such investment decisions on a sound basis when they don't have an accurate view of customer profitability. They can easily find themselves in the unenviable position of successfully winning business from customers that aren't profitable.

Why Customer Profitability Matters

If all your customers were equally valuable to your business, there would be no reason to implement an account-based growth strategy, and measuring the profitability of individual customers wouldn't be very important. But the reality is, some customers are far more financially valuable to your business than others. There are three main reasons for this "value disparity."

The Pervasive Pareto Principle

The 80:20 rule (also known as the Pareto Principle) states that 80% of effects come from 20% of causes. One business application of the rule states that, in most companies, 80% of total revenue comes from 20% of the company's customers.

In Account-Based Growth, Burgess and Shercliff argued that the 80:20 rule is nearly ubiquitous, and my experience supports their argument. During my career, I've analyzed sales data from dozens of B2B companies operating in a wide range of industries. In the vast majority of these companies, I found that the largest 20% of customers accounted for about 80% of total company revenue.

The 80:20 rule has important implications because it is fractal, or at least "fractal-like." By this, I mean that the 80:20 distribution pattern repeats itself as the breadth of data analyzed narrows, like a set of Russian Matryoshka nesting dolls.

To illustrate, the rule states that 80% of a company's revenue comes from 20% of the company's customers, but it further states that 64% of total company revenue (80% of the 80%) comes from only 4% of customers (20% of the 20%).

The implications of this aspect of the rule are profound. Suppose that your company has $100 million of annual revenue and 1,000 customers. The 80:20 rule indicates that only 40 of your customers are likely producing about $64 million of your annual revenue.

When it comes to company profitability, the 80:20 rule doesn't go far enough because the distribution of profit is even more skewed than the distribution of revenue. Companies that have an accurate picture of customer profitability frequently find that all of their annual profit comes from a small percentage of their customers. (More about this later.)

The bottom line:  In most companies, a small number of customers have an outsized impact on company financial performance.

Customer Profitability Varies Greatly

The second reason for the value disparity is that customer profitability varies greatly. When company leaders measure customer profitability accurately, they frequently find that their company earns a great deal of profit on its most profitable customers and sustains significant losses on its most unprofitable customers.

The following diagram depicts the kind of customer profitability distribution that exists in many B2B companies. In this diagram, the horizontal axis depicts the percentage of total customers, with customers arranged (left to right) by profitability. The vertical axis represents customer profitability. The horizontal line across the middle of the diagram is the profit breakeven point (in other words, $0 profit). The red curved line in the diagram depicts the typical distribution of individual customer profitability.

What this diagram illustrates is that, in many B2B companies, a relatively small percentage of customers produce attractive profit levels, and a small percentage generate significant losses.

The most sobering point is that customer profitability is not always strongly correlated with customer sales volume. In other words, when company leaders measure customer profitability accurately, they often find that they have large customers at both ends of the profitability spectrum. This explains why basing an account-based growth strategy solely on account revenue is a risky proposition.

Customer Profitability Impacts Company Profitability

The third reason for the value disparity is that customer profitability has a major impact on overall company profitability.

The following diagram illustrates how the dynamics of customer profitability affect overall company profit. Once again, the horizontal axis in the diagram shows the percentage of total customers, and again, customers are arranged (left to right) from the most profitable to the least profitable. The vertical axis depicts the percentage of total company profit. The red horizontal line across the diagram is the actual annual profit earned by the company.

When companies start to measure customer profitability accurately, many find that their most profitable 20% to 40% of customers actually produce between 150% and 300% of total reported company profit. Customers in the middle of the profitability spectrum more or less break even, and the least profitable 20% to 40% of customers actually consume between 50% and 200% of profit, leaving the company with its actual reported profit.

So, all of the profit falling above the red horizontal line in the diagram is unrealized profit - profit the company earned and then gave away. For obvious reasons, this diagram is often called "The Whale Curve of Customer Profitability," and it dramatically illustrates why customer profitability is so critical to your company's financial performance.

A Final Word

As I noted earlier, companies that are using (or plan to use) an account-based growth strategy segment their customers into multiple tiers based on each customer's perceived value. Then they develop and use more high-touch and highly customized engagement programs for customers in higher tiers compared to those in lower tiers. One fairly typical approach is to use three tiers, with Tier 1 customers being those with the highest perceived value.

One primary goal of measuring the profitability of individual customers is to provide business leaders with information that will help them make better decisions about where to place each customer in the value hierarchy.

In Account-Based Growth, Burgess and Shercliff recommended that companies prioritize their accounts based on two factors:

1. The "attractiveness" of each account; and
2. The competitive strength of their company in/with each account.

The research by Burgess and Shercliff clearly showed that an overwhelming majority of companies use current revenue and growth potential to determine the attractiveness of each of their accounts.

This article demonstrates that business leaders should also consider customer profitability when evaluating account attractiveness.

[Book Review] A Must-Read Guide To Igniting Account-Based Growth

Source:  Kogan Page

The rapid adoption of account-based marketing (ABM) ranks as one of the most significant developments in B2B marketing of the past two decades. The popularity and use of ABM have been growing steadily since it was introduced by the Information Technology Services Marketing Association (ITSMA) in 2003.

Numerous studies have shown that ABM can deliver superior marketing results, and this track record of success has led a growing number of B2B companies to adopt an account-centered approach in other customer-facing business functions, such as business development, sales, and customer success/customer service.

It's easy to find ebooks, white papers, articles and blog posts that discuss this "account-based everything" model, but these materials aren't comprehensive. Therefore, they don't provide company leaders a sound road map for implementing an account-based everything strategy.

A new book by Bev Burgess and Tim Shercliff fills this critical need. Account-Based Growth:  Unlocking Sustainable Value Through Extraordinary Customer Focus (Kogan Page, 2022) provides a rigorous and comprehensive description of how to implement an account-centered growth strategy. Bev Burgess and Tim Shercliff are the co-founders of Inflexion Group, a UK-based consulting firm that helps clients implement account-based growth strategies.

Both authors have impressive professional credentials, but Bev Burgess can speak with particular authority on the topic of account-based strategies and programs. She served as a Senior Vice President of ITSMA and led its ABM practice for many years. In 2017, she co-authored A Practitioner's Guide to Account-Based Marketing, which was the first (and, in my view, the best) full-length book about ABM. 

What's In the Book

Account-Based Growth is structured in four parts.

Part One (Chapters 1-2)

In Chapter 1, Burgess and Shercliff state the business case for making account-based growth a key component of a company's overall growth strategy. That business case is largely reliant on the 80/20 rule, which holds that 80% of a company's revenue is generated by just 20% of its customers. The authors also explain that the 80/20 rule is fractal, which means that, in many cases, 3% or less of a company's customers will produce over half of its total revenue.

In Chapter 2, the authors describe how account-based growth programs are working in practice. This chapter is based primarily on a survey of 65 B2B organizations that Burgess and Shercliff conducted for the book.

Part Two (Chapters 3-6)

Part Two of Account Based Growth discusses four elements that are essential for an effective account-based growth strategy. These are:

• Account prioritization and revenue allocation (Chapter 3)
• Integrated account business planning (Chapter 4)
• Managing data, technology and operations (Chapter 5)
• Leadership, culture and change (Chapter 6)

Part Three (Chapters 7-10)

Part Three examines the roles that a company's customer-facing functions need to play in an effective account-based growth program. Chapter 7 discusses account management and sales, Chapter 8 covers account-based marketing, and Chapter 9 addresses customer success. In Chapter 10, Burgess and Shercliff discuss how a company's senior executives can more effective engage with their most important customers.

Part Four (Chapter 11)

Part Four contains an assessment tool that will enable readers to benchmark their company's position on the key criteria for a successful account-based growth strategy.

My Take

Account-Based Growth is an important book that should be required reading for any B2B business leader who has some responsibility for revenue growth. The book is well organized, and the authors include several interviews ("Viewpoints") and case studies that provide real-world insights about account-based growth in action. In addition, the authors' writing is clear, which makes the book easy to read, even thought it takes a rigorous approach to its subject.

Burgess and Shercliff contend that ". . . companies should take a more aligned view of how they manage, sell to, market to, provide customer success and deliver services to and leverage their executive relationships for their customers, particularly the three per cent or so that are driving half their profitable revenue." Then, the authors provide detained instructions for how companies can design and implement such an account-centered business strategy.

The essence of the strategy described in Account-Based Growth is to identify the "vital few" customers that produce most of your company's revenue and profit, and then design, fund and implement coordinated marketing, sales, customer success/customer service and executive engagement programs that are specifically tailored for these most valuable customers.

In a very real sense, therefore, the strategy advocated by Burgess and Shercliff is a customer experience management strategy that is focused on a company's most significant customers.

The adoption of this strategy will represent a major change for many B2B companies, and therefore it will present several significant challenges. For example, the first essential step in implementing the strategy is identifying which of your customers are contributing most of your company's revenue and profit.

In the survey conducted by Burgess and Shercliff, more than 90% of the respondents reported having a "top account" management program. When the survey participants were asked what criteria they use to select accounts for their program, 87% of the respondents said the future growth potential of the account, and 76% said the current revenue from the account. But only 45% of the respondents indicated that they track gross profit at the account level, and only 20% reported tracking net profit by account.

Having an accurate picture of customer profitability is critically important for an effective account-based growth strategy. As Burgess and Shercliff write, "Without this information, decisions about how much to invest in these top accounts and where to allocate resources are being made in the dark."

Getting an accurate picture of customer profitability is challenging for most companies because of flaws in the costing system that most companies use. It's possible to reduce the distortions created by these flaws, and because of the importance of this issue, I'll discuss the solution in a future post.

The challenges that come with the account-based growth strategy advanced by Bev Burgess and Tim Shercliff aren't insignificant. But that strategy can also be a powerful driver of profitable growth under the right conditions. If the 80/20 rule applies to your business, Account-Based Growth is a must read.

The Inevitable Convergence of ABM and Classic Demand Gen Marketing

For the past few years, Forrester Research has been arguing that account-based marketing and "classic" demand generation marketing are converging. In 2019, several Forrester analysts went so far as to predict that the term "ABM" would disappear by 2024.

Forrester's recent ABM research confirms that the convergence of account-based marketing and lead-based demand generation is beginning to occur. In the 2022 State of ABM Survey, Forrester asked survey participants about the current state of the relationship between their ABM and demand generation efforts and about how they wanted the relationship to change in the future.

Eighty-two percent of the survey respondents said their "desired future state" is to have ABM and demand generation efforts that are broadly aligned (sharing people, processes and tools) or fully aligned (combined in a single function). That was up from 54% of respondents in the 2020 edition of the survey.

The evolution of account-based marketing has actually foreshadowed its convergence with classic B2B demand generation. When ITSMA (the Information Technology Services Marketing Association) introduced the concept of account-based marketing in 2003, it defined ABM as, "treating individual accounts as markets in their own right."

As originally conceived, therefore, account-based marketing was not intended to replace a company's demand generation strategy or tactics for most customers or prospects. Instead, ABM was designed to be a "special" approach to marketing that would be used with a small number of the company's most strategic, high-value customers or prospects.

Within a few years, however, many companies began expanding their ABM programs to encompass a broader range of customers and prospects. In its 2016 Account-Based Marketing Benchmarking Survey, ITSMA identified three types or "flavors" of ABM.

• One-to-One ABM - "Marketer works with key account teams to develop and implement highly customized sales and marketing programs for individual accounts; typically with 5-50 strategic accounts."
• One-to-Few ABM - "Marketer works with specific sales teams to create customized campaigns for small groups or clusters of accounts with similar business attributes or imperatives . . . usually 5-15 accounts per cluster."
• One-to-Many ABM - "Marketers work with sales to target priority accounts at scale, using technology to support issue-based campaigns with personalization; typically hundreds or more named accounts."

Collectively, these three types of ABM can cover a wide swath of the target market at most B2B companies, and the reality is, there is little difference between one-to-many ABM and modern, well-designed demand generation programs. They use similar marketing tactics and channels (digital advertising, email marketing, webinars, etc.), and they typically employ similar levels of targeting and personalization.

In the 2021 ABM Benchmark Study by ITSMA and the ABM Leadership Alliance, about half (48%) of the survey respondents said they are using one-to-many ABM. Given this level of usage and the commonalities mentioned above, it shouldn't be surprising that ABM and demand generation are converging.

Technology Convergence Is Well Underway

The convergence is already well underway in the marketing technology space. Several providers of B2B marketing automation software have added features to make their solutions more capable of supporting account-based marketing programs, while some of the leading providers of ABM software have added capabilities (such as native email) that support classic demand generation programs.

These developments are likely to accelerate the convergence of ABM and demand generation by making it possible for marketers to manage the combined function within a single technology platform.

What Convergence Doesn't Change

The convergence of account-based marketing and classic demand generation marketing will have a significant impact on how B2B companies organize and manage their demand generation operations. But it's also important to recognize that this convergence will not change the basic recipe for effective demand generation.

Account-based marketing is a powerful approach to demand generation because it is based on two fundamental principles of B2B commerce. First, many B2B buying decisions are made by buying groups, not by individuals, and ABM recognizes this fact.

Second, not all customers or potential customers are equally valuable, and the three varieties of ABM enable B2B companies to align their marketing and sales efforts - and the related investments - with the estimated value of each customer or prospect. Marketing and sales professionals can use highly effective, but resource-intensive, one-to-one ABM programs with a small number of their most valuable customers and prospects, while using lower-cost one-to-many ABM tactics for those customers and prospects that are desirable, but have lower potential value.

Image courtesy of XoMEoX via Flickr (CC).

[Research Round-Up] ABM, Marketing Spending and Next Generation Events

 (This month's Research Round-Up features the latest ABM benchmark study by ITSMA and the ABM Leadership Alliance, Winterberry Group's latest forecast of marketing and advertising spending, and a survey examining the future of marketing events by the CMO Council and Cvent.)

Embedding ABM:  Next Steps for Market Leadership (2021 ABM Benchmark Study) by ITSMA and the ABM Leadership Alliance

Source:  ITSMA/ABM Leadership Alliance

• An online survey of marketers with ITSMA member companies and ABM Leadership Alliance contacts
• 313 respondents (91% affiliated with technology, finance and business services companies)
• 70% of respondents from North America and the Caribbean
• 24 interviews with leading ABM practitioners
• Survey fielded in August 2021 - report published in December 2021

This is the fifth annual ABM benchmark study by ITSMA and the ABM Leadership Alliance, and it includes several findings about the state of ABM in 2021.

For example, the research found that, on average, survey respondents were devoting 27% of their 2021 marketing budget to ABM, and 75% of the respondents expected their ABM budget to increase this year. Seventy-two percent reported that ABM delivers higher ROI than other types of marketing.

The latest survey also provides important insights about the attributes and practices of companies with high-performing ABM programs. The researchers divided the survey respondents into two cohorts - ABM Leaders and All Others. ABM Leaders were defined as the respondents who indicated their ABM efforts had produced a significant improvement in business results. By this definition, 33% of the survey respondents were classified as ABM Leaders.

The survey results showed that ABM Leaders:

• Have broader objectives and greater stakeholder alignment (particularly with sales)
• Are more proficient across a wide range of skills
• Invest more in tools, templates and processes that enable knowledge/best practices sharing
• Are more likely to be using data and analytics technologies
• Are more likely to be using ABM-related technologies to their full potential

If you're involved in account-based marketing, this research will be a valuable resource.

Outlook for Advertising, Marketing and Data 2022: The Rally Will Continue by Winterberry Group

Source:  Winterberry Group

• Spending estimates and forecasts for twenty media/marketing channels
• A review of trends that will shape the U.S. marketing and advertising industry in 2022
• Report published in January 2022

This report includes estimates of marketing and advertising spending in the United States for 2021 and 2022. It covers twenty media/marketing channels - nine offline channels (e.g. linear TV, direct mail) and eleven online channels (e.g. display advertising, digital video).

Winterberry's estimates are similar to the projections made by other forecasters, including most of the major advertising agencies. The firm estimates that U.S. marketing and advertising spending rebounded sharply in 2021 and will increase again in 2022. More specifically, Winterberry projects that spending on online channels will increase 16.6% this year, while spending on offline channels will grow 5.9%.

Among online channels, Winterberry predicts that influencer marketing will experience the greatest percentage increase in spending this year - 51.3%. Among offline channels, the firm expects addressable TV to garner the greatest spending increase - 27.4%.

Aligning Strategy, Teams and Tech for Success in the New Era of Events by the CMO Council (in partnership with Cvent)

Source:  CMO Council

• A survey of 150 global marketing leaders
• In-depth interviews with executives from Equifax, GE Healthcare, HCL Software and GfK
• Report published in February 2022

The COVID-19 pandemic decimated in-person conferences, trade shows and other marketing events for the better part of two years. In 2020, marketers and event sponsors and planners pivoted quickly to make many of their events virtual. Many marketers are now hoping for a return to normalcy in 2022, and they are thinking about what the future of events will look like.

This report by the CMO Council (in partnership with Cvent) provides several important insights about how marketers are thinking about the "new era" of events, and how what they learned during the pandemic will affect future event strategies.

Here are a few of the headline findings:

• Sixty percent of the survey respondents said restarting in-person events is very important or critical, but the same percentage of respondents expect future in-person/hybrid events to be smaller than pre-pandemic in-person events.
• Forty-four percent of the respondents said webinars and virtual events have slowed down but still deliver good value, and 20% said such events continue to deliver tremendous reach for their content.
• Sixty-four percent of the respondents said they are not effective or only moderately effective and executing virtual events that deliver value to their organization.

When asked about how what they learned during the pandemic will change event management strategies, 65% of the respondents said that all types of events will be better aligned to specific marketing outcomes.

Marketing Week Article Takes Aim At Account-Based Marketing

Marketing Week published an article earlier this month that is sure to provoke a strong response from proponents of account-based marketing. In "Account-based madness:  The new craze in B2B," authors Jon Lombardo and Peter Weinberg fire a broadside at ABM, calling it an "unholy monstrosity."

The authors reluctantly acknowledge that ABM is "a pretty decent idea" if it's done correctly. But they also contend that ". . . almost no one in B2B is doing ABM right."

Lombardo and Weinberg define ABM as ". . . a strategy in which the marketing department delivers personalised communications to best-fit accounts, which are prioritised based on data from the sales team." The authors note that this "seems to be" the most common definition of ABM, and they refer to it as "bad ABM."

Lombardo and Weinberg write that, ". . . bad ABM is actually three bad ideas - personalisation, hypertargeting, and loyalty marketing - mashed into one unholy monstrosity."

Here's how the authors describe the three "bad ideas" of "bad ABM."

Personalization - According to Lombardo and Weinberg, bad ABM assumes that every account has unique needs and that content personalized for each account will drive better marketing performance. The authors contend that, ". . . personalised creative does not outperform generalised creative, despite many unsubstantiated claims to the contrary." And they argue that added cost and complexity will cancel out any benefits of personalization.

Hypertargeting - Lombardo and Weinberg say that bad ABM also assumes that targeting the right customers is more profitable than targeting all potential customers. But they argue that, ". . . the best available evidence suggests that B2B brands grow by reaching every buyer in the category."

Loyalty Marketing - The third "bad idea" is that bad ABM assumes that marketing will produce more growth by targeting a few large accounts rather than a larger group of accounts of all sizes. The authors contend that this assumption is dead wrong.

Lombardo and Weinberg offer three suggestions for transforming "bad ABM" into "good ABM."

Target the Category - Good ABM targets all the potential buyers in the relevant category, not just a narrow subset of buyers.

Avoid Over-Personalization - Good ABM features messages and stories that cover the most common buying situations applicable to all potential category buyers.

Avoid Hypertargeting - Good ABM seeks to reach both large and small buyers.

The authors summarize their position in unequivocal terms:  ". . . broadly targeting a massive set of customers with the same message isn't a bad marketing strategy. It's the most effective marketing strategy. It's how almost every brand in human history has been built. . . It's an old strategy, yes, but it's old for a reason - it works."

What's Wrong With This Picture?

It would be easy to dismiss this article as expressing views on account-based marketing that are held by only a very small minority of B2B marketers. I disagree with most of the points made in the article, but I also think it's worthwhile to place the authors' views in context.

Jon Lombardo and Peter Weinberg are both "Global Leads" at The B2B Institute, a think tank funded by LinkedIn. For the past several years, The B2B Institute has been a strong proponent of brand marketing by B2B companies, and it has published several content resources by brand marketing advocates such as Les Binet and Peter Field (e.g. The 5 Principles Of Growth In B2B Marketing). 

The B2B Institute has also published several papers written by researchers at the Ehrenberg-Bass Institute for Marketing Science. (Note:  Byron Sharp, the author of How Brands Grow, is probably the most widely-known marketing thought leader working at Ehrenberg-Bass.) The Ehrenberg-Bass approach to marketing emphasizes the importance of brand building and more specifically, the importance of concepts such as mental availability, distinctiveness, and brand salience.

I find much of the content published by The B2B Institute to be persuasive and compelling, and I agree that most B2B companies are probably under-investing in long-term, broad-reach brand marketing and over-investing in short-term, highly-targeted demand generation marketing.

I suspect that Lombardo and Weinberg were motivated by this belief in writing the article. It's also not surprising that the marketing principles discussed in the Marketing Week article line up closely with the perspectives of Binet, Field and Ehrenberg-Bass. But the attack on "bad ABM" is ultimately misguided, and what the authors call "good ABM" really isn't ABM at all.

When ABM is used under the right circumstances and in the right ways, it can be a vital part of a B2B company's marketing efforts. The effectiveness of account-based marketing has been clearly demonstrated. B2B marketers just need to remember that ABM isn't the only type of marketing they need to be using. That's the point Lombardo and Weinberg should have emphasized.

Image courtesy of emiliokuffer via Flickr (CC).

New Insights on Real-World ABM Strategies and Practices

SiriusDecisions recently published an e-book that describes some of the major findings from its 2019 State of Account-Based Marketing Study. The 2019 study involved 120 "ABM leaders" drawn from several industries. Forty-two percent of the study respondents had been running "full" ABM programs for more than a year, while 58% were still running pilot programs.

The SiriusDecisions study provides several useful insights about real-world ABM strategies and practices. I found three of the study findings to be particularly interesting, and here are the "headline" versions of those findings:

• "Named-account ABM" was the most popular model of ABM used by participants in the 2019 study.
• The average budget for ABM pilot programs was about $200,000 (excluding personnel costs), while the average budget for mature ABM programs was about $620.000.
• Study participants identified executive briefings, in-person sales interactions, company-hosted events, and industry events as the most widely-used and effective delivery mechanisms for ABM content.

Let's look a little closer at these findings.

Varieties of ABM

SiriusDecisions recognizes three types of ABM:

• Large-account ABM - "A very small number of large existing or targeted accounts"
• Named-account ABM - "A moderate or larger number of defined existing or targeted accounts"
• Industry/segment ABM - "A moderate or larger number of new or existing accounts in the same vertical or other specific segment"

The most popular variety of ABM used by participants in the 2019 study was named-account ABM (60% of participants). Fifty-six percent of the study participants said they are using industry/segment ABM, and 54% reported using large-account ABM.

These results closely resemble the findings of the 2018 ABM Benchmark Study by ITSMA and the ABM Leadership Alliance (the "ITSMA study"). ITSMA also recognizes three forms of ABM, and although the ITSMA model doesn't match up exactly with the SiriusDecisions framework, it is similar.

In the ITSMA study, 60% of the participants reported using one-to-few ABM, which is similar to named-account and industry/segment ABM in the SiriusDecisions framework. Fifty-six percent of the participants said they were using one-to-one ABM, which is virtually identical to large-account ABM in the SiriusDecisions model.

The SiriusDecisions e-book states that many companies are using more than one type of ABM, and the ITSMA study confirms that many businesses are using a blended ABM strategy. Forty-six percent of the participants in the ITSMA study reported using more than one variety of ABM.

Successful ABM Requires a Significant Investment

Both the SiriusDecisions study and the ITSMA study found that successful ABM programs require a substantial financial commitment. As noted earlier, the SiriusDecisions study found that the average annual budget for mature ABM programs is about $620,000.

The ITSMA study reported similar levels of financial investment, although it used a somewhat different approach.

• One-to-one ABM - The median number of accounts in the program was 14, and the average spend per account was $36,000, which results in a total average program investment of $504,000.
• One-to-few ABM - The median number of accounts in the program was 80 (4 clusters of 20), and the average spend per account as $2,750 ($55,000 per cluster), which results in a total average program investment of $220,000.

It's important to keep in mind that these budgetary numbers are averages. As SiriusDecisions wrote in the e-book, "ABM budgets vary widely depending on organization size, from small organizations running ABM pilots on less than $100,000 . . . to multibillion-dollar enterprises with ABM budgets up to several million dollars."

The Human Touch Matters in ABM

One of the most interesting findings in the SiriusDecisions study relates to the importance of the human touch in successful ABM. SiriusDecisions asked study participants what types of content they are using with ABM accounts, how that content is delivered, and how effective each type of content and each method of delivery is.

Study respondents identified four content delivery mechanisms that are above average in both usage and effectiveness. All four of these mechanisms - executive briefings, in-person sales interactions, company-hosted events, and industry events - are human-based mechanisms.

This finding shouldn't be surprising. Despite all of the advances in communication technologies, human-to-human interactions still provide the best way to achieve rich communication and understanding. At its core, ABM is a marketing strategy that focuses primarily on a relatively small number of high-value customers and prospects. So it's understandable that ABM leaders rely on human-to-human interactions and believe they are highly effective.

Image courtesy of Missy Schmidt via Flickr CC.

The Benefits and Limitations of Look-Alike Modeling

Demand Gen Report recently published a white paper describing the benefits of using look-alike modeling powered by artificial intelligence (AI) to improve lead generation performance. The white paper argues that B2B marketers can use "AI-fueled" look-alike modeling to get more qualified leads that convert at higher rates.

The principles underlying look-alike modeling aren't new. For years, astute B2B marketers have been identifying important attributes of their best existing customers and using those attributes to create a profile of their "ideal prospect." Then, they would use this ideal prospect profile to identify target audiences for outbound lead generation programs and otherwise guide lead generation efforts.

The current incarnation of look-alike modeling does essentially the same thing, but in a more sophisticated way using AI-powered data analytics.

Several technology providers now offer solutions that include or support look-alike modeling, and most of these solutions take similar approaches to the look-alike modeling process.

• They extract data regarding a company's existing customers from the company's internal technology systems including, but not necessarily limited to, the CRM and marketing automation solutions.
• Most solution providers have developed or obtained access to extensive databases regarding business organizations. The modeling solution will combine the company's internal customer data with any additional data regarding these customers in the provider's database. This enables the solution to create a more detailed picture of the attributes of the company's existing customers.
• The modeling solution then uses an algorithm to analyze the combination of internal and external customer data to identify the attributes that the company's existing customers have in common. The result of this analysis is usually called a customer data model.
• The solution then runs the company's customer data model against the provider's database of businesses to identify companies that resemble the model.

The major advantage of AI-powered look-alike modeling is that it incorporates far more data points than humans can realistically use when the process is done manually. Therefore, AI-powered modeling enables marketers to build a richer and deeper customer data model, and it does a better job of identifying companies that are likely to be good prospects.

Look-alike modeling can be an effective tool for improving B2B demand generation performance, but like any business tool or methodology, it has some limitations.

First, for look-alike modeling to be effective, a company needs to have enough existing customers to build a customer data model that's reliably predictive. One provider of look-alike modeling has indicated that a company needs at least 500 existing customers to build a reliable model. While 500 may not the the absolute minimum, effective look-alike modeling does require a company to have a substantial number of existing customers, and a start-up or young business may not be able to meet this requirement.

Second, look-alike modeling can be less effective when a company is marketing new products or services. If a new product or service appeals to a different type of customer than the company's other products or services, a customer data model based on the company's existing customers may not identify the right prospects for the new product or service.

The important point here is that look-alike modeling is a powerful tool for improving demand generation performance, particularly when it's enhanced with artificial intelligence. But B2B marketers should also remember that like any business methodology, look-alike modeling has a few important limitations.

Image Source:  Flickr.com

ABM Supports (But Doesn't Create) Better Sales-Marketing Alignment

Some pundits contend that account-based marketing will create better alignment between marketing and sales. In reality, ABM can be a catalyst for improving sales-marketing alignment, but it won't cause such improved alignment to magically materialize. The adoption of ABM will quickly uncover weaknesses in the relationship between your marketing and sales teams, and that's a good thing. Here's why.

One of the key requirements for successful account-based marketing is coordinated efforts by business functions that have historically operated more or less independently. The need for teamwork routinely involves marketing, business development, and sales, and when ABM is used to expand relationships with existing customers, it will also extend to the customer success/customer service functions.

To reap the maximum benefits from ABM, marketing, business development, and sales must jointly develop an engagement plan for each target account. This account plan will usually span several weeks to several months, and will likely include activities by all three functions that must be closely coordinated. In addition, these business functions must be ready to make on-the-fly adjustments to the account plan based on actual buyer responses and changing business conditions at each account.

Therefore, successful ABM requires multiple business functions to work collaboratively on an ongoing basis. This level of coordination is challenging for many companies because it represents a major change in how they have traditionally engaged and managed sales leads.

In many B2B companies, the demand generation process involves a series of "hand-offs" from one business function to another. In essence, the process assumes that marketing, business development, and sales will engage potential buyers sequentially. The metaphor often used is a relay race in which each member of the relay team runs for a specified distance, and then passes the baton to the next runner.

The relay race approach has never been the best way to manage demand generation, and it is particularly problematic when used with ABM. The adoption of ABM has an effect that is similar to reducing the work-in-process inventories in a manufacturing process.

ABM "Lowers the Water Level"

In the discipline of lean manufacturing, inventory is one of the seven primary sources of waste, and most lean practitioners are always looking for ways to reduce inventory levels. To explain one role that inventories play, lean experts use a "rocks in the river" analogy.

In this analogy, inventory is like the water level in a river. As long as the water level is high enough, boats on the river will easily float over any rocks in the stream bed. The high water level makes the rocks invisible and also eliminates the danger they would otherwise pose for boats navigating the river. But if the water level is lowered, the rocks become visible, and the danger they pose becomes clear.

Lean experts say that inventory in a manufacturing system often conceals problems in the manufacturing process. High inventory levels also alleviate the immediate pain caused by the problems, but at a high cost. When inventory levels are lowered, the real problems become visible, and the ramifications of those problems become apparent. So in lean manufacturing, reducing inventories ("lowering the water level") not only eliminates waste, it also points company managers to the real problems that need to be solved.

The adoption of account-based marketing works in a similar way. Because successful ABM demands an unprecedented level of collaboration and coordination across multiple business functions, any lack of collaboration or coordination will quickly become visible. And this will enable company leaders to address the specific problems that are holding back the success of their ABM program.

The bottom line is, ABM can be a catalyst for improving the relationship between marketing, sales, and other business functions because it will make weaknesses in those relationships visible and addressable.

Image courtesy of monikomad via Flickr CC.

Where Account-Based Marketing Stands in 2018

Account-based marketing was one of the most significant trends in B2B marketing in 2018. It has been the primary focus of numerous conferences and webinars, and the subject of dozens of articles and blog posts. ABM was also addressed in several research studies during 2018, and with less than two  months remaining in the year, I think it's appropriate to look at where ABM stands, as revealed by the 2018 research findings.

ABM Adoption

With a few exceptions, the research findings show that ABM has been adopted by a majority of B2B companies. For example:

• In the 2018 ABM Benchmark Survey by Demand Gen Report, 85% of respondents said they are using ABM.
• In the ABM Outlook Survey 2018 by Engagio, 69% of respondents reported having an ABM program in place.
• In the State of Pipeline Marketing 2018 survey by Bizible (and others), 70% of the respondents said they are using ABM.
• But in The 6th Annual B2B Marketing Data Report by Dun & Bradstreet, only 38% of survey respondents said that ABM is part of their go-to-market strategy.

ABM Maturity

The research also shows that most companies are still in the early stages of using ABM. For example:

• In the 2018 ABM Benchmark Study by ITSMA and the ABM Leadership Alliance, 84% of survey respondents said they have been using ABM for two years or less. Fifty-four percent said less than one year.
• Fifty-two percent of survey respondents reported using ABM for one year or less. (Demand Gen Report ABM Benchmark Survey)
• Forty-five percent of survey respondents said they had "just started" their ABM program. (Engagio ABM Outlook Survey)

ROI from ABM

The 2018 research revealed a widespread perception that ABM produces a better return on investment than other approaches to marketing. For example:

• Forty-five percent of survey respondents said the ROI from their ABM program is more than double the ROI from other marketing efforts. (ITSMA ABM Benchmark Study)
• In the Account-Based Marketing ROI Research Report by Lenati, 44% of survey respondents described the ROI from ABM (compared to other marketing initiatives) as "much higher," and another 37% said the ROI from ABM is "somewhat higher."

ABM and Traditional Demand Generation

Most companies appear to be using a combination of ABM and "traditional" demand generation marketing.

• Fifty-five percent of survey respondents said they use a mix of both ABM and traditional demand generation. (Engagio ABM Outlook Survey)
• Sixty-four percent of survey respondents said that between 25% and 75% of their total marketing is ABM. (Bizible State of Pipeline Marketing survey)

ABM Budgets

The 2018 research reveals that companies are committing significant financial resources to their ABM efforts. For example:

• Survey respondents reported that approximately 28% of their total marketing budget is or will be devoted to ABM. (Mean) (ITSMA ABM Benchmark Study)
• Survey respondents said that 29% of their total marketing budget would be dedicated to ABM in 2018. (Average) (Engagio ABM Outlook Survey)

Emerging Trends in 2018

One of the emerging trends in ABM this year appears to be that a growing number of companies are implementing more than one "variety" of account-based marketing. Most ABM thought leaders and experienced practitioners recognize three types of ABM - one-to-one, one-to-few, and one-to-many. In the ITSMA/ABM Leadership Alliance 2018 ABM Benchmark Study, 46% of the survey respondents reported using more than one type of ABM, up from 35% in the 2017 edition of the study.

In addition, this research found that one-to-few ABM has become the most popular type of ABM. In the 2018 study, 60% of the survey respondents reported using one-to-few ABM, compared to 56% using one-to-one ABM, and 52% using one-to-many ABM.

How Will ABM Evolve in 2019?

Earlier this year, Gartner argued that the term "content marketing" will soon become obsolete. I believe something similar may happen with account-based marketing, although the process isn't likely to be completed next year.

More specifically, I think the lines between one-to-few/one-to-many ABM and "traditional" demand generation will continue to blur, and that these forms of ABM will become just "the way marketing is done" by many B2B companies. The exception - if there is one - will be companies that focus on very broad markets (such as, for example, SMBs or a combination of SMBs and consumers).

I would also suggest that one-to-one ABM will be assimilated into the larger practice of strategic account management, and that ABM marketers will function as members of account management teams that also include representatives from sales, business development, and customer success/customer service.

Image courtesy of Richard Matthews via Flickr CC.