Measuring ROI from ABM

Over the last few years, there has been a significant push to embark on Account-Based Marketing (ABM) programmes, whether one-to-one focused programmes, one-to-few or one-to-many. ABM is evolving quickly and more marketers are using this to revolutionalise B2B marketing. 

In 2021, 70% of marketers report using an ABM programme which is a 15% increase since 2020. Although increasing, many marketers struggle with proving the ROI of ABM. Why is demonstrating ROI such a challenge? A problem we’d like to tackle in this article.

Do you remember the saying that Rome wasn’t built in a day? Let’s apply the same logic with ABM. Don’t expect to be closing deals as quickly as you can snap your fingers. The fact is that far too many marketers are attempting to prove ROI far too quickly. The average B2B sales cycle lasts 6 months and that increases to 2 – 3 years for ABM programmes.

The pressure to prove the impossible

There is a lot of pressure for marketers to prove ROI within months of their ABM programmes as they are likely to have budget allocation discussions on a monthly basis. So how can marketers deliver on their promises, analyse, and measure their ABM programme effectively? 

Strategies can vary widely from company to company, so there is no one-size-fits-all approach to calculating ABM ROI. For marketers who want to save a lot of aches and pains when pursuing ABM tactics, here’s what to do.

Understand your Total Addressable Market (TAM)

Without fully understanding your market, you can’t figure out the best accounts. If you’ve been struggling to see ABM results, re-evaluating your TAM could be a helpful option.

TAM indicates the breadth and depth of your opportunities. It defines the whole universe that you can go after, including how much potential revenue your target audience can generate for your business. It helps you define the metrics of success for your ABM campaigns. 

By knowing the size and shape of the market you’re selling to, you can break up your TAM into various sub-markets. Then, you and your organisation can analyse which sub-markets to pursue – and which to avoid.

Starting broad and using a bit of backward math is the tried and true way of setting up some metrics. It tells you:

  • how much of the market is available
  • how many deals you need to grow your market share 
  • how much pipeline you need to build to achieve some of those goals

So, what are the early indicators of ABM success? 

It takes time for ABM to start influencing leads, pipeline and revenue. However, the business impact of ABM can be measured from day one. Focus on engagement and activity metrics as the campaign starts to get off the ground. Ideally, these metrics should be specific to your target accounts. These could include: 

  • Website traffic 
  • Email performance 
  • Ad performance 
  • Funnel point metrics 
  • Overall account engagement

These can all be useful to track because they can work as an indicator of early signs of success and can be used to keep the programme on track and your team motivated. Sales will also be able to take advantage of the ABM data as soon as you provide access to it. So it’s important to start telling the story from the early stages of the ABM journey. 

Useful tip: Track these metrics closely, pay attention to the numbers and look for patterns and falling-off points so you can adjust the strategy along the way. 

Win rate 

ABM may generate fewer leads at the top of the funnel than lead and demand generation campaigns, but it delivers greater results in the funnel such as average deal size and win rates. After all, ABM is always about quality, not quantity. 

A method for evaluating overall ABM effectiveness is to compare the pipeline and revenue performance of target accounts to non-targeted accounts. This could be a random sample of existing customers or a handpicked look-alike group. 

As you are planning your ABM strategy, we recommend making both a short-term and long-term plan. The key to success is an open collaboration with key stakeholders to determine the approach that makes the most sense — and offers the greatest ROI — for your business.

Pipeline velocity 

How quickly do your target accounts move from marketing qualified accounts to the final stage of your ABM funnel? Sales and marketing can work together to increase velocity through the funnel by educating and engaging the entire buyer committee. 

Use this formula to calculate your pipeline velocity: 

({No. of opportunities * Average deal size * Conversion rate} / Sales cycle length {in days})

This will help you understand how much potential revenue you can generate per day. If the revenue is too low, you’ll need to work on a plan to improve the pipeline velocity.

Are you ready to boost your Account-Based Marketing programme?

If you’re delivering one-to-one, one-to-few or one-to-many, we’ve got a track record to enable you to close that high-value prospect. Contact us today.

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