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Is ABM a panacea or too hard? Know thy demand gen ROI! – Blog 1 of 2

A few weeks ago, I was invited to a networking dinner for Silicon Valley technology CMOS; we had come to listen to a well-known expert on ABM (aka “Account-Based Marketing”) to speak on digital marketing, a hot topic these days. In fact, I was fortunate enough to sit next to him during dinner and have an in-depth conversation about digital marketing and the latest trends. So, after the initial pleasantries, I figured I’d put him on the spot and ask him a difficult question.

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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