Account-based marketing (ABM), also known as key account marketing, is a strategic approach to business marketing in which an organisation considers and communicates with individual prospect or customer accounts as markets of one. The popularity of this approach is growing, with companies such as BearingPoint, HP, Kilroy Travels, Progress Software and Xerox reported to be leading the way.
Account-based marketing has grown since the mid-1990s as a demonstration of the trend away from mass marketing towards more targeted approaches. It parallels the movement in business-to-consumer marketing away from mass marketing where organisations try to sell individual products to as many new prospects as possible to 1:1 marketing where they concentrate on selling as many products as possible to one customer at a time.
While business marketing is typically organised by industry, product/solution or channel (direct/social/PR), account-based marketing brings all of these together to focus on individual accounts.
Background and differences with traditional business marketing
In the marketing of complex business propositions, account-based marketing plays a key role in expanding business within existing customer accounts (where, for example, wider industry marketing would not be targeted enough to appeal to an existing customer). In scenarios where the initial sale has taken several months, it is reported that account-based marketing delivers a dramatic increase in the long-term value of the customer. ABM can also be applied to key prospect accounts in support of the first sale. For example, Northrop Grumman, in which it contributed to the completion of a successful $2 billion deal.
Research demonstrates that buyers are looking for their existing suppliers to keep them updated with relevant propositions, but are often disappointed with this. In UK research, existing suppliers came top of all the different information channels that IT buyers use to look for new solutions – but more than 50% felt that marketing by their suppliers was poor. The research also demonstrates how much easier it is for organisations to generate more sales from existing customers than from new customers - 77 per cent of decision-makers say that marketing from new suppliers is poorly targeted and makes it easy to justify staying with their current supplier. By treating each account individually, account-based marketing activity can be targeted more accurately to address the audience and is more likely to be considered relevant than untargeted direct marketing activity.
The roles of sales and marketing teams
ABM is a strong example of the alignment of sales and marketing teams. In the aligned model, organizations able to unite tactical marketing efforts with defined sales goals and use feedback from sales to identify new potential markets. For ABM to succeed, joint workshops and a close working relationship between sales and marketing are essential.
Marketing will also take an increased role in developing intelligence on key accounts – as proposed by Peppers and Rogers (1993): “When two marketers are competing for the same customer’s business, all other things being equal, the marketer with the greatest scope of information about that particular customer […] will be the more efficient competitor.”
Account-based marketing and the IT industry
Organizations which are seeing the greatest current benefit from account-based marketing are IT, Services and Consulting companies. With complex propositions, long sales cycles and large customers, these organizations are ideal candidates for the approach.It is, though, spreading into other sectors. Many suppliers have woken up to the fact that the revenues of some of their customers exceed the GDP of some nation states. They are changing the amount of their resourcing accordingly.
Organizations supporting sales and marketing efforts in the IT industry – including the Information Technology Services Marketing Association (ITSMA), The Marketing Practice and VAZT Global, Inc.(VAZT)  have developed a great deal of the intellectual capital and practical tools shaping the direction of ABM.The first to codify the trend was probably Bev Burgess when she was European MD of the ITSMA. She co-created the approach with organisations like Fujitsu, BT, HP and Accenture. Others have adapted it and modified it since
Choosing the key account
Key accounts are accounts that are identified within organisations as being a focus for account-based marketing. Not all accounts meet the requirements to be designated as a strategic or key account and organisations need to be careful about which accounts to focus on for their account-based marketing efforts or risk losing a valuable client. When choosing, organisations should look at revenue history, account history, margins and profitability as well as the viability that the client in question would be interested in a long-term relationship. Lastly, ask what the client and your company have in common. This will help solidify the approach that the client cannot find this kind of service anywhere else.
There are also some red flags that will help you recognize that a relationship with a key account is about to change:.
- Business that regularly would have come to your company goes elsewhere;
- A re-organisation within the company could force a change in your relationship;
- If both involved companies aren’t seeing ROI from the relationship;
- If you’re not achieving the mutual goals.
There are a number of different frameworks for account-based marketing campaigns but, in general, the following approach is used:
- Create the strategic framework: methodology for selecting the accounts that will be focused on and framework of objectives and measures for the ABM programme
- Planning workshop: joint marketing and sales session around each account to agree goals and explore understanding of the account and relevant propositions
- Required research: marketing activity to build a more complete picture of the structure of the target organisation and its requirements
- Create plan: bringing together existing corporate marketing activities with new account-specific communications to achieve account-specific goals
- Execute: build a joint sales and marketing team to deliver on the plan
- Review: apply measures such as the value of sales, amount of potential revenue in the sales pipeline, coverage of communications in the account, perception-shifts or appointments made
In terms of specific marketing activities that form part of account-based marketing programmes, the following provides a basis for selecting the appropriate tactics for any specific account
- Intelligence – marketing’s role in profiling the target account and contacts within it to identify relevant propositions and communication preferences
- Awareness – in target accounts where awareness of the supplier is low, regular communications have a role to play in creating a more favourable perception
- Campaigning – in large target accounts, lead generation campaigns can be run to uncover opportunities and appoint meetings
- Sales – marketing has a role to play in supporting sales bids to improve conversion rates and shorten the sales cycle
- Advocacy – the cycle is completed when customers become advocates and are used to drive further incremental business
- Account-based marketing: How it can help your company improve demand, awareness and profitability
- Peppers and Rogers; The One-to-One Future (1993); Page 23
- How Northrop Grumman Used Account-Based Marketing to Win a $2B Deal
- The Marketing Practice's Decision-Maker Index research into account-based marketing perceptions
- Kotler, Rackham and Krishnaswamy; Ending the War Between Sales and Marketing (2006) Harvard Business Review
- Peppers and Rogers; The One-to-One Future (1993); Page 140
- IT Sales and Marketing Association
- Account-based marketing campaign template
- Building relationships with key accounts
- "Fast Forward: Choosing and Working With Strategic Accounts" (PDF). Retrieved 2009-02-11.