The Latest from the ABM Experts

Terminus Blog

May 4, 2018

How Should You Budget For ABM?

Category: Other

In this guest post, Sam Melnick, VP of Marketing for Marketing Performance Management firm Allocadia, provides a framework for thinking about the best way to allocate budget for Account-Based Marketing.

Marketers, how much of that limited budget are you allocating to Account-Based Marketing?

I bet the answer will vary dramatically given your organization’s size, industry, maturity with ABM, business model, and more.

However, “what should I budget for ABM?” is a question I’m hearing more and more lately, as B2B organizations reach critical mass in their adoption of this wildly effective go-to-market strategy.

Here at Allocadia, we’re big believers in the promise of ABM, as a large portion of our target audience is comprised of enterprise organizations. (We help customers like Microsoft, GE Digital, VMware, Philips, Red Hat, CA Technologies and more optimize their marketing performance.)

Collaborating to better serve specific accounts allows for our marketing team to focus on the partnership we have with Sales and improve the experience for our customers. And, like many teams, we are under pressure to deliver results in a high-growth environment. That means we must think strategically about where each marketing budget dollar is spent.

One of the driving forces behind our adoption of ABM is a kind of mantra we live by (and, one that our customers live by as well):

“Every dollar spent should drive the best possible impact for my business.”

I wish I could tell you to dedicate 5-8% of your budget to ABM-related activities. The truth is, there is no right answer. To answer the question “how much should we budget for ABM?” you need the right mindset in place, first.

ABM is a strategy, just one of many ways to execute marketing, or “do marketing.”

To make investment decisions with confidence requires marketers to effectively “run marketing” – that is, to have strong control over their plans, investments, and results. (This is the discipline increasingly becoming known as Marketing Performance Management.) Within an MPM mindset, marketers can think holistically — they’re not limited by one single view of marketing.

ABM is a perfect example of how complicated marketing spend can be, and why the only way to answer the looming question of budget (AKA “what should I spend on ANY tactic?!”) is to adopt the practices of MPM, first.

Spendimonium

We call this problem “spendimonium” as the number of channels, tools, and individual line items spent in marketing only continues to grow. The fact is — HOW you manage your investments comes down to WHAT you’re using to manage your money.

Our industry benchmarking research proved this to be true. High-growth organizations leverage marketing performance management software 3.5X more often than static or negative-growth organizations, while 80% of companies expecting flat to negative revenue growth report they use tools like Excel, PowerPoint and CRM that weren’t meant for planning and budgeting, or do not use any tools at all.

I realize I’m employed by an MPM technology company, so you’re right to take my POV with a grain of salt. But, just consider what’s involved in budgeting for ABM; field events, direct mail collateral, content created for a specific industry or account, ads served up to specific accounts, a trade show where target accounts are attending, intent data to better target accounts, research done on accounts, sales enablement resources to train your sellers in ABM best practices, SWAG.

What’s more, a single trade show sponsorship (and all its related costs for the booth, travel, and more) might be intended to drive 50% ABM and 50% traditional demand generation.

But wait, don’t forget customer success. Particularly in the SaaS world, where customers mean more than ever before, ABM is a critical part of post-sale optimization. Often, marketers forget to roll customer success into their ABM budget allocation.

The bottom line? If you’re still using Excel to manage your marketing budget, there’s no agile or reliable way to determine what tactics, technology, or data are related to ABM.

Complex spend requires complex control.

B2B marketing must be viewed in a matrix fashion. It’s not a candy machine. You can’t put a quarter in and get a gumball out.

High-level ROI is simple enough – return divided by cost. But, how do you understand what resources and spend have gone towards business objectives – such as penetration and engagement of Tier 1 vs Tier 2 accounts?

Modern marketers need a real-time, tagged taxonomy so they’re speaking the same language as the rest of the business. For many organizations, this is a single place where the entire marketing organization can track and manage their spend and resources. They have processes in place to add multiple dimensions, tags, and metadata against what they’re activating in the market because at the end of the day, it’s anything but a linear process.

Marketing leaders need different views of their plan, investment, and results data to answer questions like:

  • How much am I solely spending on ABM?
  • How much am I spending on my entire portfolio?
  • What will the impact be from that?
  • What revenue can we expect to get from each target account tier?

With so many ways to slice and dice a budget (some view it by journey, by sales funnel, or by company objectives), marketers need to pivot their resources.

It’s easy to want to buy technology related to ABM. I highly suggest you do! But, you have to respect both the “R” and the “I” of ROI. You have to respect the planning as much as the execution.

You have to run marketing in order to be the most effective when you do marketing.

Random acts of ABM are easy to do but rarely perform as well as they could. Answering the question of “what do I budget for ABM” requires being purposeful and understanding exactly how you’re putting your limited resources against the strategic business goal to penetrate target accounts, and expand them over time.

It’s not easy, but it’s the smart way to make any decisions in marketing with confidence that they’ll ultimately help you reach your business goals.

So, what are you spending on ABM?

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