Relationships are one of the underlying principles and key differentiators of account-based marketing (ABM), where the goal is making meaningful connections and progressing opportunities with the right accounts rather than driving lead volume. As such, ABM programs can’t be held up against the traditional lead funnel, otherwise even the best-performing programs can, on the surface, appear ineffective.
Because ABM emphasizes quality over quantity and touches every stage of the account lifecycle, it requires a new funnel –– one that prioritizes engagement, acceleration and expansion rather than MQLs and SQLs. What does this look like in action?
Why the old funnel doesn’t measure up
Before we dig into how, let’s look at why the traditional funnel isn’t an effective measure for ABM and even today’s B2B buying process for that matter. First, where most other marketing strategies require you cast a wide net to generate as many leads at the top of the funnel as possible, ABM is based on initiating or increasing meaningful engagement with a list of strategic target accounts. Thus, the top of the funnel will remain static rather than continually expand.
Additionally, the demand-centric measurement model focuses more on the individual lead rather than looking holistically at the entire account. And finally, the traditional funnel is primarily built to measure the progression of an MQL to an SQL rather than track how marketing and sales are working as one team to deepen engagement with target accounts across the entire lifecycle.
New funnel, new metrics
The ABM funnel starts with your target accounts. This is the total number of accounts marketing and sales have agreed to target with account-based programs for a specified duration of time –– typically a quarter. This will include prospects and existing accounts, and is typically built and segmented based on fit, intent and other ranking attributes defined by your team. (Side note: If you’re targeting new and current accounts, you’ll want to run two funnels as you’ll likely be implementing different programs across each.)
The number of accounts should also remain static throughout the duration of the program. This is because the primary goal is to identify how many from the target account list have progressed through meaningful engagement to opportunity and eventually to success –– and how many haven’t. This level of insight can alert you to what’s working and what’s not, and which accounts to prioritize throughout each stage.
Metric to track at this stage: Account Engagement Rate % = Engaged Accounts / Total Target Accounts
The next stage is engaged accounts, which includes the accounts from your target account list that have engaged with your company. This stage can also be called marketing qualified accounts (MQAs), and can essentially take the place of the MQL stage of the lead-based funnel. Engagement can include website visits, interactions at trade shows, information requests, ad click-throughs, or sharing or commenting on your social content.
In more advanced stages, you may break this out into multiple levels to better track superficial interactions versus deeper, more meaningful engagement. To measure this engagement, you will need an account-based analytics tool that is able to track known and anonymous contact activity on your site back to individual accounts.
Metric to track at this stage: Account Opportunity Rate % = Opportunity Accounts / Total Target Accounts
Ideally, at this point, engaged accounts will progress to the opportunity stage to become opportunity accounts. These are accounts from your target account list that are in an active sales cycle and should have a forecasted deal value associated with them. These numbers will be used to determine your total ABM pipeline.
Metric to track at this stage: Total Pipeline $ and Win Rate % = Won Deals / Total Target Accounts
The next stage needs little explanation. These are target accounts with closed-won deals. In other words…success! The won account stage is used to track not just win rate, but also the dollar value of each deal and the velocity with which they closed, on average. Deal velocity is important to ABM planning as it can help you understand your sales cycle as well as how changes in activities, channels or verticals can affect deal velocity.
Metric to track at this stage: Total Revenue and Average Deal Velocity
Keep in mind, with these new stages there will also be new conversion metrics to better understand how your programs are performing to determine where to focus your efforts and which accounts to prioritize. With the ABM funnel, you won’t be reporting on cost per lead or lead conversion rates –– you’ll be looking at engagement metrics and how those correlate to velocity and won deals.
What this looks like in action
To put these into context with an example, let’s assume you’re targeting 100 accounts, and you have 60 accounts engage with you. Of these, 25 turns into opportunities and seven close.
- Total Accounts=100
- Engagement Rate=60%
- Opportunity Rate=25%
- Win Rate=7%
With these new metrics, you’ll get a better understanding of how effective your programs are and where you may need to adjust your efforts. Unlike the traditional funnel, you will no longer be reporting on cost per lead or lead conversion rates, since the focus is on the outcome. This isn’t to say that traditional lead-gen metrics are irrelevant, especially if you are simultaneously running inbound or demand-gen strategies.
What the ABM funnel does is help you focus on business outcomes rather lead conversions. When you shift your organizational thinking to focus on, measure and report on business outcomes, you instantly align your organization to act and think like one team.