That’s a deep, profound cultural shift that benefits from starting with alignment around the question of “what are we solving for?”. This third blog addresses that issue and more.

3) Agree on common measurements and analytics:

• • Exec staff, sales and marketing all need to agree on a common pipeline definition: What are the pipeline stages everyone agrees to use from raw lead to close and post-sale?
    • A typical lead and sales pipeline might look like this:
      1. Raw lead (i.e. a name or an IP address if it’s an online lead)
      2. Lead (complete information, they have been identified)
      3. Marketing Qualified Lead (“MQL”; the lead has a minimum score)
      4. Sales Qualified Lead (“SQL”; a lead that is deemed ready for sales)
      5. Sales Accepted Lead (“SAL”; a lead that a rep has accepted and has converted to an opportunity within the CRM system)
      6. Developing (sales has contacted opportunity, established need)
      7. Proposing (sales is formulating a proposal for the opportunity)
      8. Negotiating (sales is in contract negotiations with the prospect)
      9. Closed Won (the deal was won)
      10. Closed Lost (the deal was lost)
    • Measurements then are what percentage of leads progresses from one stage to the next in the pipeline, what percentage gets returned to nurturing or to a prior stage, and how fast are the conversions happening. For example, how quickly is a typical lead moving from one stage to the next. The complexity then starts when these statistics need to be generated for all marketing campaigns, lead sources, sales reps, territories, segments, and so on, to ensure sources of slowdown or friction are constantly eliminated, and patterns of rapid potential growth are identified.
  • Throughout these pipeline stages, different organizations touch leads. The handoffs between these organizations need to be precisely defined in terms of desired quantities and lead quality.
    • Getting these handoff criteria right is crucially important if the ABM system is to function smoothly. To illustrate how complex things can get, these organizations could typically be involved in owning / managing the above 10 stages:
      1. Marketing Operations – Raw lead
      2. Marketing – Lead, MQL, SQL
      3. Sales – SAL
      4. Sales, SEs – Developing, Proposing, Negotiating, Closed Won
      5. Customer Success – Closed Won, Closed Lost
    • A crucially important handoff is from marketing to sales. This often becomes an emotional issue because sales reps bet their livelihood on the leads that marketing generates for them, and in turn marketing / sales development gets paid by the number of leads that sales accepts. We have always made it a practice to put a heavy emphasis on marketing producing the SALs, i.e. leads that sales is willing to accept. This breeds a lead quality consciousness that if marketing were to get paid on SQLs (i.e. the leads they submit to sales, be they accepted or not) would not be there. We always train our demand generation teams that supply sales with lead flow to ensure they understand that we reward success (i.e. SALs) and not just effort (i.e. SQLs).

4) Jointly work thought leadership and compelling, differentiated content and sales narratives:

• • Technology startups are founded to disrupt existing sectors. More and more this has become the Silicon Valley’s raison d’être, which for B2B startups means that they must compellingly explain why they do what they do better than anyone else in concise, easy to understand language. Getting their messaging right is non-trivial and requires a lot of understanding of the marketplace, the competition, and a good sense for what not only is logically defensible but also emotionally compelling. We have found it useful when all parties involved in external communications collaborate on how best to craft the associated narratives.
  • The sales team typically has a keen understanding of what sells today, what customers are looking for, and often have become masters at knowing how to sell “what’s on the truck” now (i.e. the available offerings). Marketing, on the other hand, often views the market more strategically, looking at competitive differentiation, what the analysts say, and so forth, and thus often has more of a sense of “the larger story”. The overall messaging benefits when both, sales and marketing collaborate constructively on the formulation of a compelling “why us” story.

5) Agree and execute on a joint events strategy:

• • Finally, marketing and sales collaborate on a joint approach to maximizing the lead generation potential of events like tradeshows, public speaking events, and conferences where the startup can interact with buyers and influencers. Attending events, especially if there is a booth to be set up and manned, is an expensive proposition and thus maximizing the leads developed from events is key to getting a good ROI out of the events.
  • However, this requires the marketing team to closely work with sales who usually staffs the booth, and who meets with prospects. So, both organizations need to cooperate on which events the company should attend at what funding level, who goes where, which event formats work best, and who staffs the booth.

If these five conditions are fulfilled and everyone works together, then ABM can be a work of art. The upsides are a large volume of high-quality leads and lower cost pipeline, and after the initial investments the ROI is compelling. We have seen the “marketing yield” (i.e. $ pipeline generated per $ of non-personnel marketing spend) go from 3X to 11X and higher once ABM was implemented.

However, there also are potential downsides that need to be managed: An ABM system is more complex and takes time to ramp up. Targetable segments need to be precisely identified, and targeted with content and contacts they find compelling, then those prospects need to be nurtured with content. Systems need to be implemented, new content and artifacts created, and so on.

So, compared to, say, a tele-sales cold calling operation, an ABM system will not produce leads as quickly. But, within 6 to 9 months, depending on the size of the operation, it will outperform those more traditional go-to-market approaches, and will do so more cost-effectively. At one security company, we saw costs per qualified lead and per deal decline by 36% and 67% respectively over the first twelve months of the program, while increasing quarterly output of new business deals by 40%.

For anyone interested in further reading about Account Based Marketing, here are some additional links:

• https://en.wikipedia.org/wiki/Account-based_marketing
• http://www.heinzmarketing.com/2016/07/lead-based-marketing-vs-account-based-marketing-heinz-marketing
• http://www.heinzmarketing.com/2016/05/is-abm-right-for-your-business
• http://www.huffingtonpost.com/vala-afshar/accountbased-marketing-ma_b_10004668.html
• https://business.linkedin.com/marketing-solutions/blog/linkedin-b2b-marketing/2016/what-is-account-based-marketing–10-definitions-from-the-experts

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Which brings us to the next key to success, namely the cultural changes needing to go along with implementing an ABM system:

2. ABM drives cultural changes throughout the organization:

One of the aspects of implementing new processes is navigating the transition to becoming data driven. There are two challenges here. One is obvious, while the second is subtle:

• The more obvious challenge pertains to the mechanics oflearning the pipeline models the organization uses; understand and knowing how to interpret the various metrics used at each pipeline / sales stage; as well as knowing how to use the available software tools to obtain and interpret the data.
• The subtle challenge is the fact that the use of these systems implies a profound cultural shift away from political or emotion-driven decision making to data-driven decision making. Which in turn drives the need for the management team as well as sales and marketing to be analytically trained to utilize these systems and base their actions and decisions on the data underlying their pipeline.

The ability to navigate this transition to becoming data driven is most important among the executive staff. If the CEO and her / his team base their decision on fair and rational assessment of the underlying facts and act on the data, understand analytics and reward honest reporting, and have a clear grasp of the needed budgets to navigate this transition, then the impact ABM and the underlying systems can have on organizations is profound.

Implementing ABM in the sales organization means three things:

• Sales reps need to get into the habit of inputting accurate information and data into the sales and marketing automation systems. This data includes pricing, likely close dates, probability of moving to the next sales stage or to closure, lead sources, and contact information. If the entered data is inaccurate, the whole effort will be for naught.
• Related to the above issue, is a shift in thinking. All too often sales reps are uncomfortable at having their performance measured accurately. If sales management makes it clear that transparency is being valued and if someone’s pipeline is soft, they can expect help and coaching instead of a verbal lashing, then reps will use the ABM systems more willingly.
• Third, sales reps need to accept SLAs (i.e. Service Level Agreements) or a minimum time within which they need to respond to and dispose of an incoming opportunity from the demand generation team. This way they are the lucky recipient of a rapid and growing opportunity pipeline. Once they get into the habit of responding quickly, their commission checks at the end of the quarter will benefit just by the sheer law of numbers (we’re assuming processes to assure lead quality are in place and demand generation teams are training in them).

Life within marketing will change dramatically in an ABM world as well:

• Gone are the days of marketing being immune from measurable accountability, and or the days when if PR, events or branding initiatives were collectively deemed successful, then marketing was considered as having done a good job. The shift now, however, is away from such earlier focus to measurable results, preferably with pipeline impact. For example, how many social media likes or even leads were generated by a contributed article, or what was the revenue contribution of a series of speaking events, and so on.
• Marketing professionals must become increasingly analytical. They need to understand the new lead flows and the associated systems used to measure progression through the various lead stages and identify observable behaviors of emerging leads. When we work with marketing teams new to ABM, we often ask them to take Excel classes, for example, and we expose them to basic analytical techniques and terms such as “MECE” or regression analysis to understand the pipeline contribution of various artifacts, and cohort analyses to model lead flows and needed budgets over time.
• These analytical techniques are needed to assess whether new campaigns, pieces of content, or initiatives are working in terms of awareness building or lead generation potential. This also implies the need for experimentation and agile, “fail fast” approaches where new ideas get tested and, if needed, get modified or even aborted to give some other initiative a chance. Often marketing organizations are not used to the rapid pace of change that’s needed to optimize marketing-generated pipeline funnels.

All involved organizations (i.e. executive staff, sales, marketing, operations) need to meet for weekly analytics meetings to understand and interpret the previous week’s and month’s data to interpret what worked, what didn’t, and what should be planned for going forward. If needed, updates to the cohort model and the resulting marketing budget should also be initiated at these regular gatherings. As part of these series of regular meetings, sales and marketing need to agree on common definitions for what constitutes qualified leads and lead criteria. For example, when can a lead be considered qualified and sales ready?

Don’t turn that dial, we’ll be back with more …

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• Plummeting software prices: Cloud solutions are being sold at lower prices than ever before, motivating the need to replace more expensive techniques like enterprise selling or cold-calling with cost-reduced sales and marketing processes.
• Customer journeys are changing: It is a rare customer that has not done online research about the product they’re about to purchase. A recent article in McKinsey & Company’s “Marketing & Sales Insights” series provides compelling data on how even for large, key accounts the digital buying journey has changed the way they purchase, making old school selling insufficient.
• The sophistication of marketing automation software: Innovation started with the likes of Hubspot and Marketo and has now evolved to include many other tools. As have the myriad of vendors that support ABM through a wealth of online behavioral data that tracks – and intercepts – eventual prospects’ digital journeys.
• Cost-optimized demand generation processes: The above trends drive the need for deeper behavioral analytics as well as much more cost-optimized demand generation. Which in turn necessitate closer cooperation between sales and marketing. This sales-marketing alignment will help focus precisely defined customer segments, even down to a prospect in a market of 1.

Successful implementation of such high volume, high quality, and low-cost processes is doomed if sales and marketing cannot figure out how to work together. This blog is based on our experience with five concrete approaches that we employed to align marketing and sales. The results were impressive in that our teams were able to produce 75% of accepted sales opportunities within 9 to 18 months, all the while supporting business growth.

What were those keys to success?

1) Executive staff and sales and marketing teams need to be familiar with the basics of ABM:

• It all starts with setting realistic expectations with the board and executives. While modern demand generation approaches are more cost-efficient and result in high-quality leads, the process and infrastructure requirements are complex. Therefore, it’s important to set realistic expectations for how quickly results can be generated; what is involved in setting up these systems; and, more importantly, how much will need to be invested for how long before management and the investors see upticks in growth.
• Second, sales and marketing teams need to meet frequently to understand the system to be built and learn each other’s languages. This ranges from how the two teams perceive market realities (for example, sales reps will see the political landscape of a prospect, while the marketing folks will home in on the prospect’s standing in their respective market place), on to communication and interpersonal differences (for example, salespeople tend to be more extroverted, while marketers quite often are more introverted; sales reps usually place a higher value on incentive compensation, while marketing folks derive motivation also from intrinsic rewards; etc.). Bridging these perceptions and communication differences requires patience and self-awareness.
• Last but certainly not least, the CEO and the board need to embrace analytics, and promote a data-driven and transparent approach to managing the opportunity pipeline. This implies learning how to use and analyze the data that the new systems provide. Since many executives have cut their teeth in the enterprise selling days of software sales in the 1990s or earlier, when selling was art more than science, some find the wealth of data in modern systems overwhelming to use and difficult to understand.

Don’t turn that dial, we’ll be back with 2 more blogs on aligning sales and marketing …

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Compare and contrast: “Predictable Revenue” vs. ‘’Account Based Marketing”

It’s useful to begin with framing the alternatives and explain the forces that led to the development of the two principal approaches we’re discussing here: Predictable Revenue (i.e. mostly outbound prospecting and the associated marketing campaigns) vs. ABM (i.e. mostly inbound, online lead nurturing and account-focused selling). Both are industry-accepted terms which we explain below.

Predictable Revenue is a formulaic process to create consistent, year-over-year growth to be able to predict how much revenue a business is consistently generating. Typically, it involves calling into a highly defined database of prospects that are well segmented to match the target criteria of prospects that are likely to become buyers. There are multiple parts of predictable revenue generation: inbound (web), marketing campaigns (webinars, events, etc.), channel partners, and finally outbound SDRs.

The folks doing the calling are “Sales Development Reps” (SDRs) who don’t close deals, but instead pass on “qualified leads” to sales reps who will close them. By making this a repeatable process it can be improved and optimized, and the actual sales reps can focus on what they do best, closing deals (vs. having to prospect for them). So, sales productivity goes up all around.

Account Based Marketing, on the other hand, is a strategy to create sustainable growth within the most important accounts. It is intended to be a collaborative approach between sales, marketing, and customer success. Another aspect is the targeting of specific accounts and decision-maker groups within those accounts, not just by sales but also by marketing.

ABM gives marketers the ability to build scalable, personalized campaigns, measure their results against a set of KPIs, and prove revenue contribution. Instead of creating thousands of low-quality leads, ABM is about identifying the best opportunities up front and dedicating resources to those accounts. That up-front identification of targets is done online, and therefore ABM is fast becoming the marketing approach of choice for cloud software companies. Cloud software is researched, tried out, bought, and consumed all online. Why not market to potential buyers where they’re looking at you?

What do Predictable Revenue vs. Account Based Marketing have in common?

There is a common core that led to the development of both methodologies: Predictable Revenue and ABM are successive attempts at creating more cost-efficient and effective demand generation approaches that are profitable given plummeting software prices. Gone are the days of million Dollar ASPs (Average Selling Prices) from the on-premise enterprise software days; as software prices fell to the hundreds of thousands, and lately to the tens of thousands of Dollars, lower cost and higher productivity ways to sell, but still at a profit, had to be developed.

Predictable Revenue does that by optimizing productivity of the sales process, but ABM takes it a step further by largely automating the initial interaction with prospects when they’re online. Here is a table that highlights some key aspects and compares the two approaches:

* Please note, the pipeline yield estimates are from our own experience; as mentioned at the beginning, there is little in way of hard data out there that compares the spend efficiency of both approaches.

So, which approach(es) do I go with?

In our experience it all depends. It’s a bit like in politics, the ultimate implementation works most efficiently if there is a constructive, dynamic balance between the two approaches. They both have their strengths and weakness. Key to success is knowing how to optimize spend, i.e. how to balance investments both near-term and over the long haul between the two approaches.

Spoiler alert: In our experience, you have to start with Predictable Revenue-type prospecting because you need to create pipeline quickly to keep the investors and CFO happy. However, you also implement a heavy dose of analytics to know where you’re wasting money and where not. That then tells you where you can take costs out of the current efforts (e.g. an easy one is automating the SDR workflow so they can spend more time on the phones, or cutting non-productive events or reducing spending, say, on PR or branding that doesn’t have direct lead generation potential) so you can then re-invest that money in transitioning to / complementing the outbound process with ABM over time. All within your existing, overall marketing spend budget (that saves the CEO the budget-request pilgrimage to the investors after they hired you; CEOs tend to hate doing that ?).

Also, because of its rapid time to spool up, Predictable Revenue is better at opening new markets since all you need is a good database, a bunch of SDRs, and telephone lines. But over time ABM helps a) make the demand generation more efficient, and b) it intercepts potential buyers online and establishes a brand relationship with them there. Which is where most customer journeys start these days.

So, putting all your demand generation eggs into SDRs and outbound prospecting initially should get revenues flowing quickly. But it’s inefficient over the long haul and will cause missing the demand generation spend benchmarks that investors might be judging your startup with. Please note that those benchmarks are likely to implicitly incorporate the savings inherent in the more cost-efficient ABM approaches since they’ll look at marketing and sales spend rates (typically as percent of revenue) of best-in-class companies in your software cohort. Those leaders often are already using ABM.

On the flipside, putting it all in ABM approaches will cause near-term spend go up (e.g. subscription fees for software to build out the MarTech stack, online advertising, syndication, etc.). Yet the pipeline growth is sluggish since it depends on nurturing online browsing and shopping behavior over time until enough lead score is accumulated for a target prospect to become qualified enough to be passed to the SDR team.

So, it’s not either / or, it’s both. Disagree with our theses? Please send us your comments.

For anyone interested in further reading about Account Based Marketing, here are additional links:

• https://en.wikipedia.org/wiki/Account-based_marketing
• https://technologyadvice.com/account-based-marketing-software
• https://blog.hubspot.com/sales/predictable-revenue-summary

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The post Is ABM a panacea or too hard? Know thy demand gen ROI! – Blog 2 of 2 appeared first on Premonio.

Namely the question that I had been discussing with my other executives for a while; they had basically asked: “We’ve given you budget for the last 2 years and waited patiently for you to build this amazing marketing engine that’s producing good, new pipeline. However, why was that a better investment for us than just hiring a crop of Sales Development Reps (“SDRs”), buying a big lead database, and start cold-calling?”. At first, I had tried giving them the usual techie answers of online lead nurturing, revenue attribution, better conversion rates, and so on. But they did not understand and thus didn’t believe it.

So, being a marketer, I stepped back and thought, well, if my internal customers can’t wrap their minds around what I do, maybe I should learn how to better explain the benefits of ABM, especially its ROI. It is reasonably easy to calculate ROI on an aggregate level (e.g. for a CAC / ARR calculation) since one doesn’t need to do a detailed cost allocation analysis, never mind the needed revenue attribution work. However, my colleagues’ question was deeper and really dealt with the larger question of ROI optimization – and metrics to help with that – across the entire demand generation funnel.

Hence my question to the ABM expert seated next to me over dinner. He understood the question right away and said that other than the long-term brand building benefit that comes from a stronger online presence through ABM, he wasn’t aware of any benchmarking data that quantified the ROI of ABM.

Fast forward to a recent webinar by another MarTech expert during which I asked the same question. His answer was that the incremental ROI data is “directional at best”, discussed that it’s basically a revenue attribution question, and said that you’d have to be satisfied with getting 80/20 answers. Now I had the answers from two of the industry’s foremost ABM experts, and the absence of hard benchmarking data that they both mentioned got me thinking. Being a determined analyst, I pressed on and launched my own online research. And those results were equally non-quantitative.

Okay, back to the CMO dinner I started this blog with. After more red wine and desserts were making their way across the table, the initially erudite conversation about digital marketing had progressed to the more heart-felt commiserating with the other CMOs about “how sales just don’t get it”. It was a bit cathartic to know that I wasn’t the only one battling it out with old school sales execs, DNA and cultural differences, and all.

But in the back of my mind, I realized that until marketers in general and the MarTech community, in particular, know how to provide that quantified answer, the questioning from sales and the CFOs will continue. And justifiably so. Getting an ABM system stood up is expensive and requires patience; why undertake the expense if you can’t quantify what they’ll get for it?

Marketing needs to be accountable. So does ABM and MarTech. But how?

Hence this blog. Because my colleagues asked the spot-on right question, which goes at the perennial problem marketers have had to justify their existence: What are the hard numbers marketing can be held accountable to? The promise of the dramatic growth of marketing analytics, digital marketing, and so on over the last decade has been astounding. Yet, somehow in all that techno-frothiness, no one seems to want to answer THE question every investor, CEO or CFO (and the head of sales) do want a quantified answer from the CMO to: “If I give you your requested $X Million, what will I get for it? And why is that better than the next best alternative?”.

Generally, we’ve found that the marketing metric most acceptable to sales leaders is the closable pipeline for the quarter, i.e. sales qualified pipeline that has a close date within the current quarter. For enterprise sales, the metric of a closable pipeline for a future quarter is also relevant. That’s just for starters. Having developed approaches to answering that question on several occasions, which starts with the precise framing of what the underlying demand generation problem is that needs to get solved, I see this as the marketing industry “intellectual white space”.

In fact, it has gotten me so fired up that a few of us are launching a new offering to provide hard, quantitative answers to this and the surrounding questions. It can be done. Don’t turn that dial; return to this blog for part 2, and for more explorations on how to provide the needed analytics.

Don’t turn that dial, we’ll be back with more …

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So, both, the number of CROs and the number of ABM literate professionals, are probably lower bounds for some true number of executives and non-executives skilled and interested in ABM. But what matters to our central thesis in this blog, namely that the punditry’s ABM vision is outpacing today’s business reality, is the ratio of CROs to skilled marketing automation professionals. It’s a surrogate measure for the maturity of ABM’s readiness for the market. The supply of skilled experts and technicians doesn’t seem to match the CRO hiring record. As an interesting side observation: Only in the marketing consulting services vertical is the number of skilled professionals greater than the number of CROs. J

If we assume that the average CRO / CMO has about 3 to 5 marketing automation experts on staff, this would mean that if ABM implementations (as evidenced by the number of identifiable, skilled marketing automation professionals) were to keep pace with the strategic intent of moving toward ABM (as evidenced by the presence of a CRO), then we’d expect at least 900 to 1,500 identifiable, deep ABM experts. Our sample could only find 10 to 17% of that number.

Which brings us to our central concern: There is too much ABM hype out there in the blogosphere without talking about how to pragmatically make it work in any sort of credible way. Hyping the ABM vision might drive up the online ratings of bloggers or distributors of the hype, but it doesn’t do the industry a service by providing actionable information. Too often the blogs are either self-serving (e.g. vendor or consultants’ blogs trying to market their offerings). Or they’re devoid of practical details that come from “been there, done that” experience to make their writings relevant to real world implementers.

Most importantly, they too often don’t express an understanding of how the executive and budgetary approval processes for such strategic initiatives work in the real world. For example, most are completely silent on useful arguments with which to communicate the near-term ROI that needs to be demonstrated to warrant ABM’s growing share of the corporate budget.

Never mind talking about how to deliver the pipeline growth that sales needs in the next two quarters, to hit the corporate revenue goals that need to be met so ABM can continue to be funded. For example, what are other sources of budget that could be tapped into while the ABM machinery is still being built?

We’ll give you a hint. Nationwide, general PR programs, re-branding exercises or international events budgets often are sacred cow marketing spend, yet with unclear lead production potential that can be converted to ABM use without missing a revenue generation beat.

They also often miss providing practical tips on how practitioners can go to their management to overcome objections around timing, costs, and skilled resource requirements for successful ABM rollouts.

They don’t answer questions regarding metrics and dashboards and how they will be built to make the ABM machinery measurable and accountable, and are those metrics agreeable to all stakeholders? Or what are the handoff criteria for when a lead can become an MQL, SQL, or SAL? And do those criteria incent passing through high volumes of low quality leads, or do they encourage responsible handoffs of high quality leads?

Closely tied to the above issue are compensation guidelines on who to pay how much for lead production at what stage in the funnel. If not done well, compensation squabbles can scuttle an ABM implementation.

ABM is a great invention but by simply hyping its promise without also addressing the true, Monday morning challenges faced by organizations trying to fund, recruit and scale an ABM infrastructure, the punditry risks doing this marvelous invention a disservice. As in business, over-selling risks high attrition rates. By now, the core sale around the vision of ABM has been made for any serious sales or marketing professional actively following the evolution of modern pipeline generation techniques. What’s needed are concrete best practices on how to make these implementations successful on time and on budget.

So, we believe that less hype, and more factual research and meaningful implementation tips and tricks would do the industry good as that information would reduce adoption barriers for the serious practitioner. But that’s a lot harder to write about, and hence less often found.

Disagree with our thesis? Please send us your comments.

In the meantime, for some further reading, here are links to some useful articles:

How to make ABM work:

• Great questions and info for what it takes to make ABM work – http://bit.ly/2jRezoI
• This article is not too deep but it mentions that ABM is not a panacea – http://bit.ly/2jqewQO
• Some duh in here, but also some good talking points – http://bit.ly/2k2xcW9
• http://bit.ly/2iLK6qm – Another mention of the ITSMA survey, and includes a link to Laura Ramos, VP and Principal Analyst atForrester Research

Issues around ABM

• Note the industry map in the second half of this article – http://bit.ly/2k2BuNb
• A bit of a Marketo plug but a good read – http://bit.ly/2jBgCQ0
• Some hype but also some good areas for sales and marketing cooperation – http://bit.ly/2k2xrAu

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