Is Account-Based Marketing Right for Your Business?

One of the hot topics in B2B marketing circles today is account-based marketing (ABM). ITSMA (the Information Technology Services Marketing Association) led the development of account-based marketing about a decade ago. Although it started in the technology sector, ABM is now used by many kinds of B2B companies.

ITSMA defines account-based marketing as:  "A structured approach to developing and implementing highly customized marketing campaigns to markets of one, i.e. accounts, partners, or prospects." (emphasis added) By this definition, the distinguishing characteristic of account-based marketing is that it entails the development of a unique marketing strategy and communications program for each target account.

Recently, some marketing consultants and software companies have been arguing for a broader view of account-based marketing. For example, SiriusDecisions has identified four varieties of ABM - large-account marketing, named-account marketing, industry-account marketing, and customer marketing. For a description of these four varieties of ABM, read this post at the SiriusDecisions blog.

Firms that advocate the broader view use the term account-based marketing to describe marketing programs that focus on a specific group of named accounts, but do not necessarily involve the implementation of a unique marketing program for each target account. While these programs are often based on solid marketing principles and can be very effective, they are not true account-based marketing, at least in the original sense of the concept. In this post, I'm using the term account-based marketing as it was defined by ITSMA.

It's now clear that account-based marketing can be highly effective in the right circumstances, but is ABM right for your business?

Your answer to this question largely depends on the attributes of your universe of existing and potential customers. True account-based marketing is typically used only for very high-value customers and prospects because it's expensive to execute. For example:

• ABM requires both marketing and sales personnel to be deeply involved in the development and execution of each account plan.
• Many of the activities involved in ABM cannot be automated because they require the exercise of human judgment.
• Account-based marketing will usually require the development of unique marketing and sales content resources for each target account.

Because of the costs associated with account-based marketing, most companies that use ABM do so selectively. The diagram below illustrates how account value and the diversity of account needs influence which approach to marketing is most appropriate.

The lower left corner of the diagram represents accounts (existing customers and prospects) with relatively low value and relatively homogeneous needs. A mass marketing approach (i.e. "one size fits all") is probably most appropriate for this group of accounts. Note, however, that this group represents a small part of the total universe of accounts.

The top portion of the diagram represents very high-value accounts. These are the types of accounts that are suitable for account based marketing, even when their needs are fairly homogeneous. In most companies, these accounts also represent a fairly small portion of the total account universe.

As the diagram illustrates, targeted marketing (which may, in fact, focus on a specific group or set of named accounts) is the most appropriate marketing approach to use for most accounts. As I'm using the term, targeted marketing refers to the use of customized marketing messages for market segments and buyer personas, but not for individual accounts. When targeted marketing is done correctly, it enables a company to obtain many of the benefits of account-based marketing at a significantly lower cost.

So what's the bottom line? If you're a B2B company with a few existing customers who are "too big to lose," and/or if you can identify a small number of potential customers who would provide exceptionally high value to your company, then consider implementing account-based marketing for those selected accounts, and use targeted marketing programs for the rest.

How to Know if Your Marketing Strategy is Working

The foundation of all effective marketing efforts is a sound marketing strategy. Most marketing leaders feel fairly comfortable formulating strategy, but many find it difficult to measure how well their marketing strategy is actually working. The solution for this perennial challenge is a marketing Balanced Scorecard.

When Robert Kaplan and David Norton introduced the Balanced Scorecard in the early 1990's, they saw it as simply a better way to measure organizational performance. However, many early adopters started using the Balanced Scorecard as a tool for implementing business strategy. They recognized that if the objectives and measures included in their Balanced Scorecard were derived from their strategy, the scorecard would become an effective tool for describing the strategy in
measurable terms. Therefore, the Balanced Scorecard quickly evolved from a pure performance measurement system to a tool for managing strategy.

This is my third post about using a Balanced Scorecard to measure and manage marketing performance. In my last post, I described the four "perspectives" used in a Balanced Scorecard. In this post, I'll describe how a Balanced Scorecard can help you determine how well your marketing strategy is working.

The key to using a Balanced Scorecard to manage marketing strategy is something called a strategy map. A strategy map is essentially a set of linked strategic objectives that are organized using the four Balanced Scorecard perspectives. The diagram below depicts a high-level, generic version of a Balanced Scorecard strategy map for marketing.



Each of the rectangles in a Balanced Scorecard strategy map will contain objectives that are derived from your company's marketing strategy. In the above diagram, the rectangles contain descriptions of the kinds of objectives that would be included. For example, in the internal process perspective, one set of objectives will relate to the campaigns or programs that marketers design and execute.

In a Balanced Scorecard strategy map, the lines connecting the rectangles represent the cause-and-effect relationships that exist among your company's strategic marketing objectives. These causal relationships define the "logic" of your marketing strategy, and they tie the objectives together to create a cohesive strategy. Describing these cause-and-effect relationships is one of the most critical steps in building a sound marketing strategy, and using a strategy map forces you to make these relationships explicit and visible.

In a Balanced Scorecard strategy map, the cause-and-effect lines indicate that achieving one objective is what enables another objective to be achieved. For example, the above diagram is indicating that if a company successfully achieves its customer value proposition objectives, the company will achieve its objectives relating to customer acquisition and customer loyalty. And, if the company achieves its customer acquisition and customer loyalty objectives, it will be able to reach is revenue growth objectives.

The most powerful argument for using a Balanced Scorecard to measure and manage marketing performance is that it provides a mechanism for demonstrating and documenting how individual marketing activities fit into and support your marketing strategy, and for connecting individual marketing activities and programs to ultimate business outcomes. The objectives and measures used in the customer, internal process, and learning and growth perspectives are leading indicators of the business outcomes that define marketing success. So, by monitoring your progress toward achieving all of the objectives included in your strategy map, and by testing the validity of the cause-and effect relationships you've defined in your strategy map, you are also measuring the effectiveness of your marketing strategy.

How a Balanced Scorecard Measures Current and Future Marketing Performance

In my last post, I argued that marketers should use a Balanced Scorecard to measure and manage marketing performance. The Balanced Scorecard was introduced by Robert Kaplan and David Norton in the early 1990's, and it's become one of the most popular and effective business management tools. In the Management Tools and Trends 2013 survey by Bain & Company, business leaders from around the world ranked the Balanced Scorecard as the fifth most widely-used management tool.

The Balanced Scorecard was created to address the deficiencies of performance management systems that rely exclusively on financial performance metrics. One of the main shortcomings of financial accounting measures is that they are lagging indicators. They measure the financial consequences of actions taken in the past, but they can't measure how today's activities will affect future performance.

To address these deficiencies, a Balanced Scorecard uses both financial and non-financial metrics, and it includes measures of both leading and lagging performance indicators. This framework enables company leaders to monitor both current performance and the factors that drive future
performance.

These capabilities make the Balanced Scorecard a powerful tool for measuring and managing marketing performance. A Balanced Scorecard measures marketing performance across four perspectives - financial, customer, internal process, and learning and growth. The financial perspective measures the current performance of the overall marketing function, while the other three perspectives measure the drivers of future performance. The diagram below shows the basic architecture of a Balanced Scorecard.

A thorough explanation of how the Balanced Scorecard is used for marketing would require a book, not a blog post. In this post, I'll briefly describe the four perspectives of a marketing Balanced Scorecard. In my next post, I'll describe how you can use a Balanced Scorecard to measure the effectiveness of your marketing strategy.

The Four Perspectives of a Balanced Scorecard

Financial Perspective - As noted earlier, the financial perspective of a Balanced Scorecard measures the current financial performance of the marketing function. When a Balanced Scorecard is used for marketing, the ultimate financial measure is usually return on marketing investment.
This perspective will also typically include objectives and measures relating to revenue growth and the operational efficiency of the marketing function. For example, most marketing Balanced Scorecards will measure overall revenue growth. Depending on a company's growth strategy, this perspective may also contain specific objectives and measures pertaining to certain sources of revenue growth, such as growth from specific customer groups, products, or geographic market areas.

Customer Perspective - The customer perspective of a marketing Balanced Scorecard will contain a set of objectives and measures relating to customer acquisition and to customer retention, growth, and satisfaction. This perspective will also typically include objectives and measures that focus on the most important aspects of your customer value proposition. Some of the measures commonly found in this perspective include number of new customers acquired (or number of new customers of a particular type) and average deal size. The "logic" of a Balanced Scorecard is that if a company achieves the objectives included in this perspective, the company will achieve the revenue growth objectives in the financial perspective.

Internal Process Perspective - This perspective will contain objectives and measures relating to the internal activities and processes that are critical to (a) understanding your current and potential customers, and (b) communicating your value propositions to prospects and customers. Some of these processes relate to how you gather and use data from and about your customers and prospects, and some will relate to how you design and execute marketing campaigns and programs. So, for example, this perspective is where you track the performance of lead generation and lead nurturing programs. The internal process perspective will also include objectives and measures relating to the operational processes in the marketing function that affect efficiency and productivity.

Learning and Growth Perspective - The fourth and final perspective of a Balanced Scorecard is the learning and growth perspective. This perspective measures the intangible assets that your company must posses in order to perform your critical internal processes with a high level of competence. This perspective will typically contain objectives and measures relating to three types of intangible assets - human capabilities, technological capabilities, and organizational/cultural attributes.

So, how do you determine what objectives and measures should be included in a Balanced Scorecard? In my next post, I'll explain why objectives and measures should be derived from your marketing strategy. When this is done, the Balanced Scorecard becomes a powerful tool for managing your strategy and measuring its effectiveness.

Why Marketing Needs a Balanced Scorecard

Earlier this year, ITSMA, VisionEdge Marketing, and Forrester Research surveyed marketing leaders about how they demonstrate marketing's value to the business. The survey revealed that marketers are producing more performance data than ever, but that most of the data doesn't resonate with senior company leaders. For example, the survey found that only 9% of CEO's and 6% of CFO's rely on marketing data to make business decisions.

The study authors contend that most marketing metrics don't do a good job of communicating the value of marketing for three reasons.

• They measure marketing activities, but not important business outcomes.
• They measure operational efficiency, but not the effectiveness of marketing.
• They measure past performance, but they don't provide predictive insights about future outcomes.

Measuring the impact that marketing has on company revenues and profits is a critical aspect of managing marketing performance, but an effective performance management system for marketing must also perform several other functions. For example:

• It must measure the performance of individual marketing activities and programs so that marketers can make investment and marketing mix decisions that will maximize results.
• It must enable marketers and other business leaders to evaluate how well their company's marketing strategy is working.
• It must support both strategic and tactical decision making.
• It must enable marketing leaders to measure the efficiency and effectiveness of operational marketing activities and processes.

In order to perform all of these functions, a performance management system for marketing will necessarily include several types of metrics, including some of the kinds of metrics that are now being criticized. Specifically, a comprehensive marketing performance management system will include:

• Financial and non-financial measures
• Metrics for leading and lagging performance indicators
• Measures that focus on the strategic impact of marketing and metrics that support tactical decision making
• Measures of ultimate business outcomes and measures of activities, outputs, and intermediate outcomes
• Revenue and cost metrics

To prove the value of marketing to C-level executives and manage the marketing function effectively, marketing leaders need a balanced scorecard for marketing. Since its introduction by Robert Kaplan and David Norton in the early 1990's, the balanced scorecard has become one of the most widely-used and effective tools in the business management arsenal.

In my next post, I'll describe what a balanced scorecard for marketing looks like.

How to Build a Better Profile of Your Ideal Customer

Most readers of this blog are probably familiar with ideal customer profiles. An ideal customer profile is a description of the kinds of companies that would make the best customers for your business. The goal of creating and using an ICP is to focus your marketing and sales efforts on those prospects with the greatest likelihood of becoming good customers and to avoid wasting valuable resources on prospects that aren't a good fit.

Most companies base their ideal customer profile(s) on the characteristics of their existing customers. They first identify their "best" customers (which usually means their largest and/or most profitable customers), and then they identify what those "best" customers have in common. Most ideal customer profiles use "firmographic" attributes such as:

• Annual revenues
• Number of employees
• Industry vertical
• Location

Some companies will also include other attributes when possible, such as:

• The "footprint" of the organization (local, regional, national, global)
• The most relevant organizational unit or department
• The business situation (for example, is the company in growth or decline)

While this process for creating an ideal customer profile is used by many companies, it doesn't go quite far enough. When I work with clients to develop ICP's, I ask them to consider three additional questions as we go through the process just described. Answering these questions will add depth and context to your ICP and ultimately make your ICP more insightful and useful.

Here are the three questions I add to the conventional process:

• What kinds of companies have derived significant (i.e. above-average) value from using our product or service, and why have these companies obtained greater value?
• What kinds of companies will be receptive to our marketing and sales efforts and thus be more likely to buy from us?
• What kinds of companies can we acquire as customers at an acceptable cost?

Of these three questions, the first is the most important. Companies that have derived exceptional value from using your product or service are likely to be among your largest and most profitable customers. Common sense says that similar types of companies will make your best prospects.

Understanding what is driving the exceptional value may enable you to expand the definition of your ideal customer. For example, you may find that the companies deriving exceptional value are primarily found in one industry. However, when you identify why those companies are obtaining greater value, you may find that the same issue or challenge also exists in other types of organizations that you do not currently serve. So, by answering the why question, you may well uncover an entirely new group of "ideal" prospects.

Why There's Still So Much Bad Content

In a recent article at LinkedIn, Joe Pulizzi, the Founder and Executive Director of the Content Marketing Institute, observed that most of the marketing content produced by companies is "flat out awful." He wrote, "In many cases, the content is self-serving, not useful and, maybe the worst, pointless."

Pulizzi argues that companies produce bad content for three reasons.

• The vast majority of companies do not have a formal content strategy.
• The content marketing efforts at most companies lack focus. Many marketers feel compelled to develop content around all of the products and services they offer. The result is often content that is too broad (and too shallow) to be effective.
• In many companies, no one is accountable for the overall content marketing program.

I agree that the lack of strategy, focus, and/or accountability can result in "awful" marketing content. I also believe, however, that there's a more fundamental problem contributing to the continuing use of bad content.

We now know that most effective B2B marketing content is primarily educational and non-promotional. The goal of content marketing is to provide potential buyers information that is insightful, useful, and valuable, and thereby demonstrate your company's expertise, credibility, and trustworthiness.

The problem is, this approach runs counter to the basic paradigm of marketing that's existed for decades. For years, we've been trained to think that the best way to sell more stuff is to effectively promote our brand and our products or services. In the traditional paradigm of marketing, content is primarily about us - our company or our products or services.

Shifting from promotional content to content that's primarily educational and non-promotional is a difficult and counterintuitive change to make for most marketers.

In his new book, Ctrl Alt Delete, Mitch Joel provides an example that illustrates just how entrenched the traditional marketing mindset still is. Joel writes:

"Last year, I was in a business meeting when the idea for an iPhone app came up. It was a smart idea (you know, the kind of idea that you wish you had thought of). The chief marketing officer smiled during the presentation, put his hand up to ask a question, removed the glasses from his eyes and placed them on his notebook, folded his hands, leaned forward, and said, 'It's genius. . . but can we put our four key brand messages in there as well, because if we don't force people to look at them, what's the point of this app?'"

Companies are still producing "awful" content primarily because many marketers can't resist the urge to "always be promoting." Strategy, focus, and accountability are all important to building an effective content marketing program, but the starting point is adopting a different mindset about what constitutes good content and what role content plays in the marketing function.

What Content Marketers Can Learn from French Cooking

Research shows that producing enough content is now the greatest challenge facing B2B content marketers. (B2B Content Marketing:  2013 Benchmarks, Budgets, and Trends - North America) More than producing engaging content. More than lack of budget.

The volume of content that's required to fuel effective marketing programs is growing exponentially for several reasons, including:

• The need to make content relevant for individual buyers at every stage of the buying process
• The short lifespan of content resources (particularly social media content)
• The need to publish content on a frequent basis

To create enough content on a timely basis, you need an approach to content development that will  maximize the results you get from your content creation efforts. Believe it or not, B2B content marketers can boost the efficiency of content development by taking a lesson from French cooking.

In classic French cuisine, there are five mother sauces - Béchamel, Veloute, Espagnole, Hollandaise, and Tomate (tomato). These five mother sauces provide the foundation for virtually all the sauces used in traditional French cooking. To create other sauces, you simply add the appropriate ingredients to one of the mother sauces. For example, you make Mornay sauce by adding Gruyere and Parmesan cheese to a Béchamel sauce, and you make Bearnaise sauce by adding white wine, shallots, tarragon, and peppercorns to a Hollandaise sauce.

The same concept can be used to manage B2B content development. Here's how the "mother sauce" approach to content development works.

Identify Value Propositions

As with most important marketing issues, the process starts with identifying the value propositions that are essential to your company's go-to-market strategy. Value propositions describe how your products or services create value for customers, and they provide the foundation for your content marketing efforts. Most of the content resources you develop should be based on the value propositions you offer. If you work for a small or mid-size company, you should be able to identify four to eight value propositions that encompass the significant ways that your solutions create value.

Develop the "Mother" Resources

Once you have identified your critical go-to-market value propositions, the next step is to develop one or two substantial content resources for each value proposition. These core resources are the content equivalent of the mother sauces. They will usually be longer-form resources such as white papers or e-books, and they will provide a thorough description of each critical value proposition. In some cases, these mother resources may be more like "working papers" than finished content assets. For example, you may decide to create versions of your mother resources for specific industries or buyer personas, and if you do, you may never actually publish the mother resources in their original form.

Make Each Mother Resource the Matriarch of a Large Content Family

Each mother resource should provide a fertile source for many "child" content assets. For example, with a little creativity, you should be able to use a mother white paper or e-book as the basis for:

• A full-length webinar or 2 to 3 shorter webcasts or videos
• 2 to 3 (or more) articles for online or offline publications
• 3 to 6 (or more) posts for your blog
• A dozen or more social media updates (Twitter, LinkedIn, Facebook, etc.)

This approach won't eliminate all of the work relating to content development. It doesn't constitute an "Easy" button. However, it will focus your work and enable you to get the biggest possible "bang" from your content development efforts.

Image By:  Dinner Series (www.flickr.com)