I plead guilty to enjoying a cold beer or two, and I’ve watched with amazement as the decade-long bull market in the craft beer industry shows no signs of abating.
Account-based marketing (ABM) is red hot today, and for good reason. According to ITSMA, 84 percent of marketers are seeing higher ROI with ABM than other marketing programs. But before you jump on the bandwagon, it’s important to recognize that successful ABM starts by diligently selecting your account and contact targets.
You could have your sales team select the accounts, but ABM should ultimately be driven by marketing because they own the target selection across industry, market, and role. In other words, marketing should define the ideal customer and know the addressable market. Having both of those identified and well-defined is a prerequisite to ABM. Without them, ABM is a guessing game and will do little for your overall growth.
Build the Foundation Before You Move In
Defining your ideal customer profile (ICP) is the first step toward building an ABM foundation for success. ICP is the qualification criteria you use to gauge whether a prospect is the best fit for your company. Typical criteria includes firmographic data (e.g. industry, size, geography), target titles and roles, and even qualitative measures, like is the company innovative or are they an industry laggard.
Once you know your ICP, you can use that to identify your total addressable market (TAM) and determine the size of your target market. TAM lets you know how many companies fit your ICP, and lets you estimate just how big of a market opportunity is in front of you. Conversely, TAM also helps you avoid wasting time on irrelevant leads. If an account doesn’t fit your ICP, then they’re not in your TAM and your targeted marketing and sales efforts shouldn’t consider (and definitely shouldn’t waste time or money on) those accounts.
TAM is also frequently used to validate the size of a market and even forecast next year’s bookings targets. Using your TAM and market penetration estimates, you can further forecast revenue. If you’re building your case for investing in ABM, this is a good method to use (and a great way to get sales involved). And, having your ICP and TAM locked down and well-defined gives you even more credibility as you go to your executive team for funding.
ABM = ICP + TAM
ABM brings it all together by providing the business framework for putting your ICP and TAM to work targeting and executing with precision. A recent InsideView survey showed that only 25 percent of companies doing ABM have already defined their ICP and TAM. That means three-quarters of companies aren’t fully realizing the benefits of ABM, and many may even be falling well short of their expectations.
Targeting specific accounts is still shooting in the dark. ABM needs a foundation, and that foundation is knowing who to target and why you’re targeting them. Here are three reasons ICP and TAM are critical to a successful ABM program:
1. Know your targets – and have the data to reach them.
How do you ensure that you’re targeting the right accounts? If you knew the name of every account that fit your ICP, then you’d have your list of targets. You might not have them all in your sales and marketing database, but you’d know which accounts in your database were relevant and which weren’t, and you’d know which accounts to target with campaigns to fill the gaps.
If you find that your gaps loom large over your coverage, don’t worry. Most companies do not have complete coverage of their TAM, especially when ABM is just getting ramped up. Many of InsideView’s own customers discover they have as little as 10 percent of their TAM identified. That missing gap is called whitespace. Once you identify your whitespace, you can begin importing net new targets and correcting, cleaning, and adding missing data to targets already in your database.
2. Keep your target data current.
During the normal course of ABM execution, your account priorities may change, markets may shift a bit, and you may uncover new information that helps you hone the ideal customers, roles, or events that signal a need. You’ll also run into instances where people quit or move roles, or where companies reorganize and change responsibilities. Keeping your data fresh is the only way to ensure consistently accurate targeting.
Say your “tier 1” targets all have revenue above $500 million. As you learn more, you find that sales cycles are significantly shorter for companies under $1 billion in revenue. You might then shift tier 1 targets to $500 million to $1 billion in revenue, then consider those with revenue exceeding $1 billion as tier 2. Having recent and accurate revenue data on every target is the only way you can quickly realign your efforts and target the best accounts with an even more tailored pitch.
3. Use ABM to align sales and marketing for maximum success.
As mentioned at the outset, ABM should be driven by marketing, but that certainly doesn’t mean marketing should do it alone. First and foremost, sales should be selling, engaging with prospects, navigating hierarchies, and closing deals. That’s their job. But sales reps have a huge amount of market, industry, and other knowledge that must be included as marketing develops the ICP and targets individual accounts.
The early stages of ABM can be significantly improved by working with and listening to the experiences of sales. For example, maybe marketing has been targeting VP-levels, but sales has found that, if they ever get to talk with the VP, they are usually kicked down to the director-level. And as ABM progresses, marketing will be working more closely with sales teams on individual accounts. When both sides have a stake in developing the ABM strategy, they’re sure to collaborate on all the core elements that bring key deals across the finish line.
Get Ready to Jump In
While many companies are still selling to the same old accounts in their CRM and marketing databases, modern companies are focused on finding and targeting precisely the right accounts. Putting in the work to granularly identify your ICP and scope your TAM will not only increase ABM success, it will enable you to modernize your entire go-to-market strategy.
In Part 2 on Tuesday: Maximize Growth by Targeting Your Total Addressable Market
With over 20 years in technology marketing leadership roles, Joe Andrews currently serves as the VP of Products & Solutions Marketing at InsideView responsible for evolving the company go-to-market strategy and leading the company’s expansion to new market segments and solution offerings.