How to budget for account-based marketing (ABM)
What's the cost of account-based marketing? Mike Boogaard explores the factors that influence ABM budget and how you can allocate your funds effectively
If you’re planning your first account-based marketing (ABM) campaign, it’s inevitable one of your toughest decisions will centre around your budget and spending strategy. But, here’s the problem: there are no set metrics or formulas that can give you a precise value that you should spend per account.
Some businesses have created ABM ROI calculators (you can try ours here), but even these are just guidelines. It's impossible for a formula to capture all the unique factors that influence the marketing and sales success of your particular product or solution. The number of variables that can affect the success (and therefore budget) mean each campaign needs to be looked at and judged on its own merits.
A new way of marketing requires a new way of budgeting
When you follow a traditional budgeting methodology, you rarely think about spending at the account level; you’re more likely to split your budget according to the different strategies and activities than think about how much you spend on an individual account.
While that’s fine in a one-to-many (programmatic ABM) scenario, it breaks down in one-to-few or one-to-one; to succeed, you must adapt the way you budget. If you want to market at the account level, you have to budget at the account level.
Unless your budget is very large, you'll have to narrow the number of accounts you target compared to programmatic methods, then budget accordingly. For example, a business with a £100,000 ABM budget and 100 target accounts might achieve a better ROI if they split that budget across just 10 or 20 accounts, rather than trying to target all 100. Trying to convince the traditional thinking marketer of this is not easy (fewer eggs in smaller baskets is scary). But ABM is all about less being more.
Should you take a budget-first or an accounts-first approach?
This is truly the hardest question in ABM budgeting. Most businesses take a budget-first approach; they start with a budget and then try to work out how they can use that budget most effectively. This can work, but it isn’t the best method.
Ideally, businesses should start with an accounts-first approach. You look at the accounts you most want to win and then work through the strategy on how best to do so. Then you calculate how much you need to spend per account to make that possible. Only then do you look at the budget to determine how many accounts you can pursue. It’s less about how much you spend and more about calculating revenue per account, then investing appropriately to achieve that return.
Which factors affect your ABM budget?
When you focus on a select number of accounts, the complexity of the process increases and factors you might have previously ignored (when using a programmatic method) become important.
These factors can be broadly split into two groups – those that affect the number of individuals you need to target at an organisation, and those that affect how much you need to spend targeting them. You must consider both.
Factors that affect the number of individuals you need to target:
- Decision-makers and influencers – How many people are involved in the buying process? Typically, the number of decision-makers and influencers increases as the cost/complexity of the product or service increases.
- Departments affected – Depending on the complexity of your product or service (or the complexity of account you are trying to target), you need to consider how many departments are involved. Each department might (will) need a nuanced approach that speaks to their needs and interest.
- Size of business – A simple but general rule: the bigger the business, the more decision-makers and influencers.
Factors that affect your spend per individual:
- Brand awareness and perception – Are these individuals already aware of your brand, or are you trying to create a relationship from scratch? Do they have a positive and accurate perception of your brand or do you need to reposition?
- Product complexity – The more complex the product/solution, the more communication may be needed to get people to understand it/what makes it preferred.
- Need – If your target client just switched to a new solution last year, it’s going to be a much tougher/longer sell to get them interested in your offering.
- Competition – The more competitors targeting these individuals, the more effort you’ll need to put in to differentiate and capture their attention.
If you’re starting your ABM programme from scratch, you might also need to consider the cost of training employees or hiring new ones, and the cost of any new software you need to run your campaigns.
Allocating your budget effectively
When you’re targeting a limited number of accounts, the way you allocate your budget is much more important. Targeting the wrong businesses or spending too much in one area could destroy your ROI – but you might not realise it until it’s too late.
Insights versus engagement
Spending on insights involves getting to know what the account is all about, exploring their intent and problems in detail so that you can create a perspective and content that delivers the right message to that client. Your engagement spending is what goes into creating and distributing that content.
Most businesses will need to balance spending between the two – you can’t do without either – but in some scenarios, it’s better to focus more on one than the other. For example, if your target accounts are all very similar (same size, same industry, same problems), you may spend less on insights as you get a feel for the market.
Conversely, if your target accounts are all completely different, you’ll need to invest more in insights so you provide relevance for each account.
The vital importance account selection plays in a successful campaign
ABM typically implies going after fewer accounts with a more personalised approach and message (the fewer eggs in smaller bespoke baskets), so getting the account selection right is vital. No matter how small or large your budget is, skimp on the account selection process and your campaign will fail. Rigorously analyse your ideal accounts, get detailed on your ideal customer profile and do not let vanity creep into account selection. Make sure the selection is a science and not guesswork.
3 simple principles for ABM budgeting success
Setting your initial budget doesn’t have to be hard if you logically work through the factors and inputs. We advise businesses follow these three principles to maximize their chances of success:
- Never start with both a budget and the number of accounts in mind. Dividing your budget between all the accounts you want without considering the other factors involved can result in your investment per account being ineffective.
- Never let your budget dictate the accounts you go after. Always target the businesses that are most likely to make a purchase, even if that means targeting fewer. Focus on them, measure your success, then build a business case for a larger budget.
- Invest in appropriate skills and personnel. Don’t waste time and money mismanaging your budget when bringing a partner or new hire on board could give you the experience you need. For businesses serious about investing in ABM this strategy is cheaper in the long-run.
How to calculate your budget
Reading this article, you were probably hoping to get an idea of actual number, right? Sorry to disappoint. As mentioned, there are just too many factors involved in ABM budgeting to give any meaningful indicators.
As an example of the diversity in ABM strategy and budgets, I have been involved in 1-to-1 campaigns, where the client spent £50,000 to go after quite literally one account (good news, they landed the client). Other programmes clients have spent between £1500 and £4000 per account with programmes targeting between 50 to 150 accounts.