Sunday, January 15, 2017
From all indications, account-based marketing is quickly becoming a core marketing strategy for many B2B companies. The growing popularity of ABM is largely the result of a widespread perception that it can produce a higher ROI than any other approach to marketing.
There's also a tremendous amount of hype surrounding ABM, and this hype can obscure or minimize some of the challenges associated with ABM. To put it bluntly, some of the tasks required for ABM are more complicated and/or require more work than many marketers anticipate.
One of these tasks is selecting and prioritizing ABM target accounts. Most ABM experts agree that account selection is the most critical component of any ABM program. Companies typically choose their target accounts by identifying businesses that closely resemble their existing customers, a technique that's known as look-alike modeling. The basic idea behind look-alike modeling is that companies that closely resemble your existing customers will be more likely to purchase your products or services.
It's important to recognize, however, that buying potential alone doesn't make a company an attractive account for ABM. The other necessary attribute is that the prospective target account must have the potential to be a highly profitable customer for your company. For ABM purposes, the best measure of potential profitability is customer lifetime value (CLV), which can be defined as the present value of the total profits that you expect to earn from the prospective account over the full duration of the customer relationship.
Estimating the CLV of prospective ABM target accounts is a critical part of the account selection process because of basic economics. New customers will contribute to profitable growth only if the profits they create exceed the costs you incur to acquire them. Therefore, the estimated CLV of a prospective customer establishes the ceiling for how much you should invest to acquire that customer.
The implementation of ABM may or may not require an increase in your overall demand generation budget, but your customer acquisition spending - on a per account basis - will be higher for ABM accounts. You need reasonable CLV estimates in order to effectively manage your ABM customer acquisition costs.
The CLV of prospective target accounts becomes even more important if you are implementing more than one variety of ABM. Most ABM thought leaders recognize three varieties of ABM. Strategic ABM involves a very small number of target accounts and is very resource intensive. ABM Lite focuses on groups of identified accounts that share similar business attributes and needs. It involves more accounts, but is less resource intensive than Strategic ABM. Programmatic ABM emphasizes the use of new technologies to apply ABM-inspired techniques to a large number of accounts, and it is the least resource-intensive variety of ABM.
As you might expect, the costs associated with the three varieties of ABM will differ significantly. For example, over the course of a year, you may well spend more on your Strategic ABM program - which might involve, say, 10 or so accounts - than you spend on your ABM Lite program - which might involve 50 to 100 accounts. Having a reasonably accurate estimate of the CLV of your prospective target accounts helps you place each account in the right ABM tier.
Many ABM technology solutions leverage predictive analytics to both streamline and enhance the look-alike modeling aspect of ABM account selection. Mastering the economics of ABM account selection still requires some manual work and a good deal of human judgment.
Illustration courtesy of Emillo Kuffer via Flickr CC.
Saturday, January 7, 2017
Mark Ritson, a marketing professor at the Melbourne Business School in Australia, recently published a column at Marketing Week titled "Is content marketing a load of bollocks?" As you might expect, the column created quite a stir in the content marketing world.
Professor Ritson makes two arguments in his column. First, he contends that content marketing isn't really different from "regular" marketing communications. And second, he argues that most of the content produced by content marketers is ineffective. He writes, "A study by software firm Beckon recently revealed that although the amount of content being marketed has tripled in the past year, there has been no increase in engagement. Just 5% of the total content produced generated 90% of the customer engagement meaning that 19 out of 20 pieces of content marketing have little if any impact."
It shouldn't be surprising that most content marketing advocates don't share Professor Ritson's view. Most proponents of content marketing will readily acknowledge that content marketing efforts are often ineffective, but they argue that's because many companies aren't doing content marketing correctly. They contend that many companies are still producing bad content, or are haphazardly creating content without having a sound content marketing strategy. Supporters argue that content marketing is effective when it's done the right way.
Recent research provides support for both points of view. The Beckon study cited by Mark Ritson echos the findings of earlier research by TrackMaven, which also found that content volume is increasing while content engagement is decreasing.
On the other hand, the 2017 B2B content marketing survey by the Content Marketing Institute and MarketingProfs (published a few weeks ago) found that doing the right things in the right ways will have a major impact on content marketing success. In this research, survey respondents who rated their company's content marketing efforts as extremely or very successful were also more likely to say that their company:
- Has a documented content marketing strategy
- Is extremely or very committed to content marketing
- Is clear on what an effective/successful content marketing program looks like
- Measures content marketing ROI
The reality is, marketing leaders can do a great deal to improve their odds of achieving success with content marketing. But it's equally true that the ability of any company to achieve content marketing success is also affected by competitive forces that are beyond the company's control.
In a post published in January of last year, I argued that content marketing success would be harder to achieve in 2016 for three reasons:
- The amount of content available to potential buyers has increased dramatically, and the competition for buyer attention has become more intense.
- The growing use of content marketing best practices tends to make content marketing programs look alike, which makes differentiation more difficult.
- While companies are still producing a lot of bad content, there's also a growing volume of good content available in the marketplace, which allows potential buyers to be more choosy about the content they consume. This makes it more challenging to consistently produce content that will win mindshare.
These competitive forces are more potent today than they were a year ago, which means that achieving content marketing success will only become more challenging.
It addition, increasing competition in the content marketplace means that marketing and business leaders must have realistic expectations for what content marketing can achieve. The important question for B2B marketers is: Will a well-conceived and well-executed content marketing program be more effective at driving profitable revenue growth for my company than alternative marketing methods? For most B2B companies - particularly those that offer complex and/or expensive products or services - the answer to this question will almost certainly be yes.
The 2015 version of Gartner's Hype Cycle for Digital Marketing showed content marketing on the decline - having passed the peak of inflated expectations and beginning the slide toward the trough of disillusionment. The 2016 version of the hype cycle put content marketing even closer to the trough of disillusionment, which suggests that content marketing is in for a couple more years of rough sailing.
But what's really important is that once content marketing passes through the trough of disillusionment, it will emerge onto a slope of enlightenment and move toward the plateau of productivity where marketers will have a realistic view of what content marketing can accomplish and what is truly required to build effective content marketing programs.
Illustration courtesy of DigitalRalph via Flickr CC.
Illustration courtesy of DigitalRalph via Flickr CC.
Tuesday, December 27, 2016
This will be my last post of 2016, and I want to thank everyone who has spent some of his or her valuable time reading this blog. My goal for this blog has always been to provide content that readers will find to be thought-provoking and useful, and I've been immensely gratified by how this blog has been received. In 2016, our total pageviews more than doubled over the 2015 level.
For the past few years, I've used my last post of the year to share which posts have been most widely read. The ranking is based on cumulative total reads, so older posts obviously have a built-in advantage. So, in case you missed any of them, here are our five most popular posts:
- An Inconvenient Truth About B2B Demand Generation
- Why Content Marketing is the Best Way to Build the Brand
- Use an Importance-Performance Matrix to Get Marketing and Sales Talking
- Customer Experience is the New Competitive Battleground in B2B
- What Separates Top-Performing Marketers From the Field
Happy New Year, everyone!
Illustration courtesy of Republic of Korea via Flickr CC.
Sunday, December 18, 2016
By this point, most B2B marketers are well into their planning for 2017, and it appears that many marketers will have healthy marketing budgets in the coming year. Several research studies have found that a majority of marketers are expecting their budgets to increase in 2017.
For example, in the August 2016 edition of The CMO Survey (sponsored by Deloitte, the American Marketing Association, and Duke University's Fuqua School of Business), respondents, on average, expected their marketing budgets to increase by 7.2% over the ensuing 12 months. While these results do not cover all of 2017, they still indicate that marketing budgets are likely to rise in the first several months of the coming year.
In the CMO Spend Survey 2016-2017 by Gartner, 57% of survey respondents said they expect their marketing budget to increase in 2017, while only 14% expect their marketing budget to decrease next year.
Where Will Spending Grow in 2017?
So, where will marketers be increasing their spending in 2017?
Marketing Technology - Given the growing dependence of marketing on technology, it shouldn't be surprising that marketers expect to be spending more on martech in 2017. In the State of Marketing Technology 2017 study by Walker Sands Communications and chiefmartec.com, 70% of survey respondents said they expect their marketing technology budget to increase slightly (50%) or greatly (20%) in 2017, and only 2% expect a decrease.
Content Marketing - Recent research also indicates that marketers will be spending more in 2017 on content development and content marketing. In the 2017 edition of the content marketing survey by the Content Marketing Institute and MarketingProfs, 70% of B2B respondents, and 73% of B2C respondents said they expect to create more content in 2017 than they did in 2016. On the specific issue of content marketing spending, 39% of B2B respondents, and 42% of B2C respondents said they expect their content marketing budget to increase over the next 12 months.
Account-Based Marketing - It also seems clear that marketers will be spending more in 2017 on account-based marketing activities and programs. The growing popularity of ABM is now well established, and research shows that B2B companies are investing more in their ABM efforts. In the 2016 State of Account Based Marketing (ABM) Study by SiriusDecisions, 27% of survey respondents said they were devoting between 11% and 30% of their total marketing budget to ABM. That was up from 19% in the 2015 edition of the study.
And fully 73% of the survey respondents in the SiriusDecisions study said they were spending more or significantly more on ABM in 2016, compared to 2015. It's likely that these spending patterns will continue in 2017, although the rate of spending growth may slow.
Predictive Analytics - In the B2B marketing world, the use of predictive analytics is closely tied to the use of ABM. Therefore, as more and more companies implement ABM, the use of predictive analytics is also likely to increase. In the 2016 Hype Cycle for Digital Marketing and Advertising, Gartner puts "Predictive B2B Marketing Analytics" at the peak of inflated expectations. Gartner has observed that the market for B2B predictive analytics remains immature, but the firm also says that "the return on investment is often so compelling that many B2B companies are likely to consider adoption over the next two or three years."
Image courtesy of Louise McLaren via Flickr CC.
Sunday, December 11, 2016
U.S. marketers are increasing their spending on marketing technologies, most say they have adopted best-of-breed solutions (as opposed to all-in-one technology suites from a single vendor), and most also say they are doing a pretty good job of extracting value from their marketing technology investments.
These are a few of the findings of the State of Marketing Technology 2017 study by Walker Sands Communications (with contributions by Scott Brinker). This study was based on an online survey of 335 U.S. marketers that was fielded during September and October 2016. Walker Sands conducted a similar survey last year, which makes some year-over-year comparisons possible. While the Walker Sands research didn't focus exclusively on B2B marketers, it's likely that many of the study findings will apply to B2B companies.
When Walker Sands surveyed marketers last year, many were frustrated with the state of marketing technology at their company. Only 50% of respondents said their company was investing the right amount in marketing technology, and only 58% said their technology was up-to-date and adequate.
This year, surveyed marketers were much more positive. Seventy-one percent of respondents now believe that their company is investing the right amount in martech, and 69% said their technology is up-to-date and sufficient to help them do their jobs more effectively.
This positive attitude is reflected in budget expectations for 2017. Fifty percent of respondents said they expect their company's martech budget to increase slightly in 2017, and another 20% said their company's martech budget would increase greatly next year.
Marketers also believe that they are now facing fewer obstacles when it comes to adopting marketing technologies. The table below shows how participants in the 2016 and 2017 studies responded when they were asked: "What's holding your company back from implementing new marketing technology?"
Despite the progress, however, over half (56%) of the respondents in the latest survey still believe that the martech landscape is evolving faster than their companies' implementation and use of marketing technology tools.
Over the past few years, it's become clear that marketing success depends on the effective use of technology. The Walker Sands research indicates that most marketers are doing a better job of adopting new technology tools, even if they can't completely keep up with the pace of martech innovation.
Top image courtesy of Grzegorz Jereczek via Flickr CC.
Sunday, December 4, 2016
Over the past few years, it's become abundantly clear that delivering outstanding experiences to existing and potential customers is critical for competitive success. There's a widespread recognition among marketers and other company leaders that customer experience has become a new basis of competition for B2B companies.
Numerous research studies have shown that company leaders now view customer experience as an important driver of revenue growth and competitive advantage. For example, in the B2B Digital Trends 2016-2017 report by Econsultancy (in association with Adobe), which was based on a survey of 1,141 B2B marketing, digital, and e-commerce professionals, respondents identified optimizing the customer experience as their most exciting opportunity in 2016 and for the next five years.
Several research studies have also clearly demonstrated that delivering great customer experiences drives superior financial performance. For example, annual research by Forrester has found a strong correlation between superior customer experience and superior revenue growth across more than a dozen industry groups.
But despite the undeniable importance of customer experience, and all of the recent attention it's received, there is compelling evidence that most B2B companies are still struggling to provide the kinds of experiences that their customers increasingly expect.
- A recent report by Gallup stated that only 29% of B2B customers are strongly committed to the companies they do business with, which means that B2B companies are at some risk of losing 71% of their customers.
- A 2015 survey of 1,350 B2B executives by Accenture found that only 23% of B2B companies excel at delivering great customer experiences, while the majority of B2B companies are "idling in customer experience mediocrity."
Part of the problem is that managing customer relationships is still a fragmented process in most B2B companies. In a recent survey of marketing professionals in 750 mid-size B2B companies, Gleanster Research divided the customer experience lifecycle into five stages and asked survey participants who "owned" each stage. Survey respondents said that marketing owned two stages (awareness and acquisition), sales owned two (conversion and expansion), and service owned one (retention).
The reality is, consistently providing great customer experiences is a complex, multi-faceted undertaking that involves several business functions in a company. But it's also true that if a company wants to achieve customer experience success, it must have a person (or function) who is responsible for coordinating the work involved in customer experience delivery.
In many ways, marketing is best suited to orchestrate the overall customer experience, but this will be a new type of role for most marketing leaders. To succeed, he or she must coordinate the work of several business functions that have operated more or less independently in the past.
In an earlier post, I discussed how marketing leaders can eliminate silos within the marketing function by building a team of teams. That strategy becomes essential when you need to tear down the walls that usually exist between marketing and other business functions that must work together effectively to achieve customer experience success.
Illustration courtesy of The United States Army Band via Flickr CC.
Illustration courtesy of The United States Army Band via Flickr CC.
Sunday, November 27, 2016
A few years ago, the noted behavioral economist and best-selling author Dan Ariely described big data in a rather memorable way. He said, "Big data is like teenage sex: everyone talks about it, nobody really knows how to do it, everyone thinks everyone else is doing it, so everyone claims they are doing it."
With a few minor tweaks, Ariely's description of big data can be applied to account-based marketing:
- ABM has been one of the hottest topics in the B2B marketing and sales world for the past couple of years. Virtually all B2B marketers are aware of ABM, and the odds are that most are thinking, if not actually talking, about it.
- Most B2B companies are just beginning to learn how to do ABM. In the 2016 State of Account Based Marketing Study by SiriusDecisions, 42% of survey respondents said they had been using ABM for less than six months.
- A large and growing number of B2B marketers claim they are doing (or planning to do) ABM. In a survey last fall by Demand Metric, 71% of respondents said they are using ABM, testing ABM, or interested in adopting ABM.
The allure of account-based marketing is easy to understand. According to research by ITSMA, most B2B marketers believe that ABM produces a higher ROI that any other approach to marketing. Users of ABM claim that it provides several important benefits. In the Demand Metric survey mentioned earlier, a majority of ABM users said that it produces increased engagement with target accounts (83%), better sales/marketing alignment (69%), better qualified prospects (66%), more pipeline opportunities (55%), and increased conversion rates (55%).
There's a great deal of hype surrounding account-based marketing, and much of it is justified. However, the hype also tends to obscure or minimize some of the real-world challenges associated with doing ABM well. Successful account-based marketing requires a sound strategy, sufficient financial resources, the right mix of human skills, appropriate technology tools, a high level of cross-functional teamwork, and a long-term commitment.
Beginning in January, I'll be devoting several posts here to the challenging - and often under-appreciated - issues that can make or break an ABM program. In these posts, I'll discuss how to select and prioritize ABM target accounts, how to identify what resources you'll need to build and sustain a successful ABM effort, how to develop the insights regarding target accounts that are required for effective ABM, and how to create the level of customized/personalized content that's needed for ABM success.
These discussions aren't designed to dissuade anyone from adopting ABM. On the contrary, my goal is to provide insights that will help companies become ABM success stories.
Illustration courtesy of Rob Lee via Flickr CC.
Illustration courtesy of Rob Lee via Flickr CC.