Not every new idea is a good idea.
Unless, of course, you work in marketing. In the marketing industry, every new idea is smart and every old idea is stupid. New strategies, new platforms, new creative, new agencies, new management. If it’s a new idea, it must be the right idea!
The problem is that old ideas are much more likely to be right than new ideas. Why? Because old ideas have withstood the toughest test of all – the test of time. Unlike humans, ideas tend to age in reverse, and grow more robust as the decades pass. It’s called the ‘Lindy effect‘.
So what does the Lindy effect tells us about account-based marketing, the most beloved new idea in the B2B marketing industry? Well, given its newness, we reflexively assumed ABM must be a terrible idea. However, as painful as it is – and it is very painful – today we must concede that ABM is not a terrible idea. In fact, ABM is a pretty decent idea, you do it right.
The problem is that today, almost no one in B2B is doing ABM right.
What bad ABM looks like
So what is account-based marketing, exactly?
ABM is a strategy in which the marketing department delivers personalised communications to best-fit accounts, which are prioritised based on data from the sales team. According to enthusiasts, ABM is a much more efficient approach than the ‘outdated’ alternative: targeting a massive number of buyers with one-size-fits-all creative.
This seems to be the most commonly accepted definition of ABM, so it’s what we will henceforth refer to as ‘bad ABM’.
What’s so bad about bad ABM, you ask?
Well, bad ABM is actually three bad ideas – personalisation, hypertargeting and loyalty marketing – mashed together into one unholy monstrosity. We must slay this Frankenstein before it eats the brains and budgets of any more B2B marketers.
Bad ABM: The personalisation problem
Bad ABM assumes that every account is a special snowflake with unique needs. And it assumes that if you develop artisanal, hand-crafted marketing for each individual account, you will achieve better performance. These are both very unsafe assumptions.
Whether you sell cloud computing or management consulting, your customers probably share common challenges. Their costs are too high, their revenue is too low, their sales are too slow. Why should we obsess over minor differences, instead of focusing on major similarities? The ‘law of duplicate purchase‘ suggests that markets are not as segmented as marketers believe and, therefore, customer segments should be grouped together, not divided apart.
Meanwhile, personalised creative does not outperform generalised creative, despite many unsubstantiated claims to the contrary. The most effective creative tends to be ‘impersonalised’. Just look at the most successful movies, books, songs and ads, which speak to universal preferences, not individual tastes.
From a creative perspective, developing 100 ads for 100 different customers is about 100 times more difficult and 100 times more expensive than developing one ad for 100,000 customers. Any benefits from personalisation are almost certainly cancelled out by the increased complexity.
Bad ABM: The hypertargeting trap
Bad ABM also assumes that targeting the ‘right customers’ is more profitable than targeting all customers. But the best available evidence suggests that B2B brands grow by reaching every buyer in the category, not by hypertargeting a narrow sub-segment of buyers.
From a targeting perspective, trying to identify who works at which companies is a fool’s errand, at least in most media channels. Keep in mind that programmatic vendors can’t even guess our gender correctly more than 50% of the time. ABM assumes we live in a world of perfect third-party data. In reality, we are living through an epic sub-prime data crisis. Again, any benefits of hypertargeting are almost certainly cancelled out by the increased complexity.
Bad ABM: The loyalty lie
Bad ABM assumes that marketers will achieve more growth by spearfishing for big, high-spending accounts, instead of wasting money trawling for many ‘small fish’. This is a logical assumption. It just happens to be dead wrong, based on actual sales data.
For various reasons, light buyers are just as important as heavy buyers, and maybe even more important. For starters, there are many more light buyers in a category than heavy buyers. Half of Coke customers in the UK only buy one or two cans a year; the largest segment on LinkedIn is small businesses, not gigantic enterprise accounts. Meanwhile, heavy buyers are already aware of all the brands in a category, and usually maxed out on spending. That means marketing interventions that target big accounts will have a limited effect on sales.
Finally, we must call bullshit on marketers’ ability to identify the best-fit accounts. Just because your sales ops team has put some cheap maths into a janky Excel spreadsheet does not mean that you should bet the farm on their ‘propensity model’. As someone clever once said, “more fiction has been written in Excel than Word”. Instead, bet on diversification, a more profitable approach in both finance and in marketing.
Bad ABM is actually three bad ideas – personalisation, hypertargeting and loyalty marketing – mashed together into one unholy monstrosity.
What good ABM looks like
Here is the essential problem with bad ABM: broadly targeting a massive set of customers with the same message isn’t a bad marketing strategy. It’s the most effective marketing strategy. It’s how almost every brand in human history has been built, from Coca Cola to IBM. It’s an old strategy, yes, but it’s old for a reason – it works.
This time-tested approach should be the foundation of your ABM strategy.
So what exactly does ‘good ABM’ look like?
Good ABM: Target the category
Instead of targeting individual accounts, good ABM targets every account that could possibly buy from you, now and in the future. Upload a big account list to LinkedIn, layer on light targeting and move on. Big account lists contain big numbers of customers, and big numbers of customers are worth big sums of money. Small segments are a waste of time and money.
Good ABM: Three to five messages, relevant to every account
Instead of delivering personalised communications, good ABM features messages and stories that cover the most common buying situations (or ‘category entry points’) for customers big and small. Developing three to five good ads requires good market research, or, if you’re low on budget, you can interview your sales teams and identify common challenges on their accounts.
Good ABM: Big list, not big fish
Instead of trying to spearfish only the biggest fish today, good ABM casts a wide net and tries to catch all kinds of fish over long periods of time. Good ABM recognizes that there’s significant churn between accounts, it’s difficult to predict who will buy, and today’s small accounts grow into tomorrow’s big accounts. Acknowledge the inherent uncertainty in your category.
So let your competitors flounder around with bad ABM.
Instead, make a contrarian bet on good ABM with broad targeting, broad messaging and broad timing. It’s a new twist on an old idea – and those are the best ideas.