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Account-Based Marketing vs Lead Generation: Which is better?

The Information Technology Services Marketing Association (ITSMA) established ABM as a ground-breaking and successful strategy for concentrating on high-value accounts in 2003. You need close coordination between your sales and marketing departments to discover specific prospects, create a targeted message, organize sales activities, and track success.

When both teams work towards the same goals, they form a more cohesive and open partnership. Once sales and marketing are linked, the generally complicated and lengthy B2B sales cycle is improved.

Defining ABM 

A systematic approach to corporate marketing that emphasizes account awareness and treats each prospect or client account as a separate market is known as account-based marketing (ABM), also known as account marketing.

Account-based marketing can assist businesses with:

  • Making accounts more relevant
  • Engaging in deals earlier and more intensely
  • Connecting marketing initiatives to account strategy
  • Getting the most out of your marketing budget
  • Identifying targeted contacts at specific organizations in a targeted industry to inspire customers with compelling content

Business marketing is sometimes divided up by industry, product or solution, or channel (direct, social, PR), whereas account-based marketing unites all of these to focus on specific accounts. As markets become more uniform, customers see fewer differences between suppliers and their competitors, with pricing being the only obvious differential.

How ABM implementation is expanding

ABM was one of the most popular buzzwords in business-to-business (B2B) marketing in 2016. As the concept gained traction, B2B marketers began to increase their investment in ABM. According to SiriusDecisions’ 2016 State of Account Based Marketing Study, 27% of survey respondents allocated 11% to 30% of their total marketing budget to ABM, up from 19% in 2015.

More than 70% of participants in the same poll reported increasing their budgets for ABM in 2016. According to research, expenditure will continue to rise in 2017.

Deal size climbed by 26%, and the close rate increased by a remarkable 75%, according to Demandbase, an ABM technology supplier. 84% of marketers who responded to a recent ITSMA survey stated that ABM had a higher ROI than other marketing strategies.

What is Lead Generation?

Lead generation in marketing is the beginning of consumer interest or inquiry about a company’s goods or services. A lead is a customer’s (who has expressed interest in a particular good or service) contact information and demographic data.

Leads may originate from several sources or activities, such as digitally via the Internet, personally through recommendations, by telephone calls from the business or telemarketers, via adverts, and at events.

  • Direct traffic, search engines, and site referrals were the three most used online lead generation sources in 2014, making up 93% of all leads, according to a survey. 
  • In 2018, Chief Marketer discovered that the top three strategies for B2B marketers were email, live events, and content marketing.
  • Gartner noted an increase in social and SEO for B2B marketers following the COVID-19 pandemic in 2020, but B2C marketers preferred digital advertising.

Lead management and lead generation are frequently combined to process leads through the sales funnel. Pipeline marketing refers to this collection of activities, which can also divide into a marketing flow and a sales pipeline.

Pros of Account-Based Marketing

Improving personalized experience

Contrary to conventional marketing strategies, account-based marketing encourages and necessitates close collaboration between the sales and marketing teams to speed up the process. By unifying their sales and marketing teams, businesses should be able to focus on specific customers and provide each account with a more personalized approach. Additionally, companies with well-coordinated marketing and sales teams have higher customer retention rates and sales success than those using conventional marketing strategies.

Improve coordination between marketing and sales

From a marketing perspective, getting to know the key players in your targeted accounts will help you create campaigns and content that add more value. It is unquestionably advantageous if a small number of influential accounts make up a large portion of your target market. It could be a tremendous help in developing brand ambassadors for your business, particularly when it comes to strengthening ties with present customers.

Your customer and you will get more connected. As trust increases, as well as the relationship is maintained, it will make it easier for you to understand your customers better, enabling you to make your personalization efforts even more effective. Throughout the relationship, you should gather information about your customer and their activities. 

Increased ROI

It is about how effective marketing strategies influence the business’s overall revenue. ABM has reportedly assisted marketers in increasing ROI more than conventional marketing techniques, according to 89% of them. Account-based marketing’s data-driven methodology makes it easier to calculate ROI and link it to sales than other B2B marketing strategies. B2B marketers who switched to ABM from traditional marketing strategies reported a 208% increase in revenue and a 50% increase in average deal size.

Easily interpretable tracking and reporting

ABM prioritizes accounts above mere prospects. Your evaluation and reporting should also take into account the fact that ABM measurements are different from conventional demand-generation marketing analytics. The first step in ABM reporting is to set the stage for your customers by defining goals and KPIs for your campaigns. ABM ultimately involves coordinating teams to close more sales in a shorter amount of time. Focusing on three crucial elements will help you determine the effectiveness of your ABM strategy: effective and efficient spending, coordination between marketing and sales, and quicker deal closure.

Marketing and sales are always focused on single target accounts thanks to an effective ABM strategy. You may use your time and money more effectively by concentrating on a collection of customers that are prioritized and data-driven. A successful ABM strategy produces higher success rates and shorter sales cycles.

ABM does have advantages and pitfalls, just like any other marketing strategy.

Cons of Account-Based Marketing

Resource consumption

To implement ABM, your sales and marketing teams must work together, and all marketing teams must modify their procedures, materials, and plans to align with the ABM objectives. It requires a lot of effort spread out over a long time.

Time-consuming

ABM takes time, especially when creating customized content and planning for individual clients or groups. It means that each set of target customers would have a significant lead time for preparation before running and nurturing these leads. When you factor in conversation lead time and the entire decision-making process associated with enterprise clients, you’ll need to plan ABM well in advance to hit your revenue targets.

Alignment across the board is necessary for a successful ABM campaign

ABM, by definition, requires a concerted response between marketing, sales, and all marketing teams, including content, performance marketing, and email, to name a few. 

It is easier said than done. Every team involved would need to align themselves with a common goal, which is already hard considering team KPIs differ within marketing.

Is ABM the right choice for your business?

The answer is yes if:

  • You provide goods or services to other companies (B2B Companies)
  • Your customers and you have a continuous commercial connection
  • You address a particular issue for a sector, a job function, or a stage of business development
  • Your deal sizes are bigger ($25,000+)
  • Your sales cycle is longer (4 Weeks at least)

Pros of Lead Generation ‍

Accelerate slow days or seasons

When you’re having problems attracting new customers, lead generation services can help, provided you must balance the overall benefits with the disadvantages listed below. Is it worth paying for these services if they are likely to cost you more money than the jobs they bring in?

Visibility for smaller businesses

New market segments or small businesses could possess the web presence required to generate new leads organically. Generating leads can make you more visible to potential customers who might not find you as you build your web presence. It can thus act as a bridge to get you where you need to go.

Cons of Lead Generation

Overindulging in quantity

Finding quality leads when you pay for them could take some time. When their goal is investigation rather than purchase, tire kickers and window shoppers are prone to slip through the cracks and be wrongly categorized as leads. As a result, even though you might get a lot of potential customers, all of them might not be good ones. The bad news is that you still have to pay for them. 

Paying for leads doesn’t ensure work

Typically, whether a lead is qualified or not, you must pay for it. That’s all there is to it. In the end, this frequently results in a low ROI.

For instance, several specialty contractors and business owners have criticized less specificity in business categories on lead generation websites. Consider the stained-glass artist to categorize herself under the general heading “windows” and who later received leads of clients who needed their high-rise windows cleaned—something she doesn’t do. However, she was still required to pay for those leads.

Your leads are not exclusive to you

When you use lead generation companies, additional people will get your leads. As other local business owners who offer services similar to yours will receive those leads, you will be in direct competition with them. Therefore, you’ll have to compete with your rivals to win them over, even if the potential customer is qualified and interested in employing someone like you. A dedicated employee who can handle or follow up on those leads in real time is often out of budget for many businesses.

lead conversion requires a lot of work

You can bet that the person in need of those services is receiving a barrage of calls, emails, texts, and other types of communication because your leads are going to your rivals. It implies that when you speak with your next customer, they may already be irritated, which can leave them with a negative impression of your company. Their primary deciding factors are price and service quality, and it colors-too challenging for you to balance the actual “cost” of that lead with the profit from the job.

Is Lead Generation the right choice for your business?

Lead generation undoubtedly has its place in the marketing world, but if you’re looking for a consistent, long-term strategy, it shouldn’t be your only source. You should focus on increasing your web presence and improving your search engine optimization (SEO) so your future clients can find you.

Which is better for your company: lead generation or account-based marketing?

Depending on what you’re selling, who you’re selling to, and where you are in your business, the answer to this question will vary ( do you have the sufficient budget and team for a targeted account strategy)?

There is no requirement that it be either/or. You can launch lead generation campaigns and use ABM to close or grow significant deals.

For instance, DocuSign developed an ABM campaign to raise the number of dialogues with high-value accounts and click-through rates.

It meant conducting a targeted ad campaign with tailored content for each industry and buying stage for over 450 enterprise accounts across six industries.

It was a great success, increasing page views by 300%, engagement rates by 59%, and sales pipeline by 22%.

However, it didn’t come at the expense of efforts to generate inbound leads. DocuSign continues to provide monthly films, weekly blog pieces, and daily social media postings with insightful material.

As a general guideline, remember that:

For an average customer value (> $30,000) and a small target market, ABM is reasonable. It is a smaller customer base to target. An organized, highly personalized method aids in filtering out outside noise because of its value from a financial or strategic standpoint.

There is no certainty that the T-Mobile buying team would have been interested in GumGum’s lead generation campaign if it contained blogging about Batman. Specifically for the CEO and stakeholders, a comic book had to be made to impress the customer.

For a small average customer value ($10,000) and a sizable target market, it makes sense to generate leads. You have a better chance of creating demand with inbound marketing if the industry is big and there are many options already available. Lower CLV and ACV also indicate that churn is probably higher. Low-touch tactics are used to convert more prospects and assist increase email and CRM lists.

Here are some additional elements to consider when choosing:

The difficulty of the purchasing process

Account-based sales cycles are more complex than a sales cycle targeting one person. 

Selling to a Fortune 500 company will likely involve engaging multiple stakeholders and adhering to compliance and security complexities. 

The sales cycle will be longer than a small business owner deciding for themselves. But the customer is worth more, and the target approach of ABM is warranted.

If the buying cycle is less complicated, it is easier to start self-service demand creation campaigns and let customers educate themselves using your customized content.

The product’s level of complexity

You will have to work more to market your product if it is more difficult to describe how it operates and how to utilize it.

For instance, LiveRamp, a data connectivity platform, used ABM to safeguard meetings with 15 illustrious clients.

With the help of LiveRamp’s software, “businesses and their partners can better connect, control, and activate data to alter consumer experiences and deliver more valuable business outcomes.”

It’s a sophisticated product that offers advantages to several users. The most effective way to convey its genuine potential is through carefully targeted campaigns that inform the company’s leadership. ABM is reasonable.

Pricing 

  • ABM consumes more resources and necessitates substantial infrastructure and software investments to support sales and post-sales activities.
  • Your expenses can be covered if the consumer is putting a considerable sum into your solution.
  • When a product is sold for less money and depends on a larger number of customers, its strategic value must be taken into account.
  • A more expensive ABM strategy may be worthwhile in the long run, for instance, if acquiring a major player in your market can be used as leverage to bring in additional big names.
  • Most of the time, lead generation helps low-value products maintain minimal marketing and sales costs and large profit margins.

Conclusion

Lead generation and account-based marketing are both essential for accelerating growth. Your immediate goals, as well as your long- and short-term goals, will determine the ideal method for you.

Cast a wide net with lead generation if your objective is to quickly acquire a large number of potential consumers.

Narrow your focus and use ABM’s individualized approach to open the door for long-lasting interactions if you want to acquire high-quality leads that are valuable in the long run.

In either scenario, concentrate on providing content marketing that offers clear advantages to your audience. Describe what sets you apart from others and what you have that they don’t. This should be evident in all you do. Whether you’re marketing to one person or 100,000, conversions are won by clearly articulating your unique offer.

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