BCG moving beyond ABM to account based engagement

Moving Beyond ABM to Account-Based Engagement

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Moving Beyond ABM to Account-Based Engagement In collaboration with Robert Archacki, Phillip Andersen, Scott Rhodes, and Basir Mustaghni May 2020

AT A GLANCE Many companies have turned to account-based marketing (ABM) to connect with their B2B customers more effectively. But ABM has been difficult to implement. That’s because it’s usually led by marketing, without sufficient buy-in from sales and service. The term account-based engagement better conveys the cross-functional integration necessary to seize opportunities in the complex ecosystem of large accounts. Account-Based Engagement Creates Value BCG research shows that ABE, done well, delivers impressive results. Companies that have overcome the hurdles and climbed the ABE maturity curve have realized faster pipeline growth, higher close rates, larger average deal sizes, and greater customer retention. Lessons from the ABE Leaders Start with pilots that involve a small group of accounts and don’t require a big investment in new infrastructure. Target the right accounts and align marketing, sales, and service on goals for specific accounts. Build infrastructure and capabili- ties to scale ABE. And recognize that rolling out ABE is a large-scale change initiative. 2 Moving Beyond ABM to Account-Based Engagement

omething is amiss with the state of B2B marketing. Most companies acknowl- Sedge that there is a huge opportunity to engage customers much more effective- ly as buying behavior shifts online. Many have tried to accomplish this with account-based marketing (ABM), which concentrates the efforts of the marketing, sales, and service teams on engaging high-priority accounts in a more personalized way—fully leveraging the breadth of digital channels to augment traditional offline sales efforts—to improve business results. But, for many, ABM has proven difficult to implement, and initial efforts have fre- quently failed. That’s because ABM is usually marketing-led, without sufficient buy- in from the sales and service organizations. In fact, the term account-based market- ing is a misnomer. Alignment and integration across marketing, sales, and service are essential to personalize account engagement and optimize end-to-end customer journeys. The term account-based engagement (ABE) more effectively captures the require- ments and coordination needed to deliver highly personalized and integrated pre- 1 It conveys the cross-functional integration and post-sales customer experiences. necessary to shift the paradigm from just generating and closing leads to orchestrat- ing opportunities in the complex ecosystem of larger accounts. To identify what it takes to succeed with ABE, BCG interviewed 34 senior execu- tives at 21 technology, manufacturing, and business services companies that recent- The term account- ly implemented ABE programs. We found that ABE, done well, delivers impressive based engagement results, although most have struggled with initial efforts to implement it. Our study conveys the shows that companies that have persisted and successfully managed ABE imple- cross-functional mentation challenges have realized faster pipeline growth, higher close rates, larger integration necessary average deal sizes, and greater customer retention. Indeed, every company should to orchestrate learn from the experiences of the ABE trailblazers. opportunities in the complex ecosystem of What Is Account-Based Engagement? large accounts. Over the past decade, most B2B buyers have enthusiastically embraced the internet to research options, evaluate vendors, and, sometimes, buy goods and services. This digital shift has catalyzed technological advances that are helping B2B marketers engage with buyers more effectively through online channels such as email, conver- sational messaging, social media, display advertising, and websites. It has also re- sulted in an explosion of data that is helping companies understand customer en- gagement and surface indicators of buying intent that B2B marketers can use to Boston Consulting Group 3

personalize customer journeys. Marketing platforms have played an important role in automating lead generation, capture, nurture, and prioritization to provide marketing-qualified leads to sales in the B2B market to great success. However, the data suggests that current B2B marketing practices must be improved to deliver better results. Look at the overwhelming evidence: More than 80% of the 2 Almost 50% of market- visitors to a website are unlikely to be potential customers. 3 ing budgets is wasted on generating leads that companies don’t contact. And more than 60% of marketing and sales executives complain that inconsistent messaging has a negative impact on B2B customers.4 Moreover, 60% of companies admit that generating customer responses is “somewhat or very challenging,” while 40% say 5, 6 that the challenge of getting responses from prospects has increased sharply. There’s a huge opportunity for B2B sellers to engage with buyers more effectively. B2B sellers must They need to address buyers’ specific needs better by personalizing their engage- address buyers’ ment with them and integrating digital experiences with offline sales communica- specific needs better tions. It becomes challenging because sellers must navigate the complex ecosystems by personalizing their of decision makers and influencers that characterize buying behavior in large orga- engagement and nizations. Clearly, traditional demand generation, which primarily focuses on one- integrating digital to-many marketing with generalized messaging and individual lead nurturing, experiences with needs to be improved for the complex ecosystems of larger accounts. offline communications. Tackling this challenge has traditionally been the promise of ABM, which helps sell- ers focus on engaging each account in a more personalized way to improve the cus- tomer experience and deliver better business results. ABM’s promise is compelling, as is evident from the recent rise of interest in the topic; Google’s Search Volume Index for the term account-based marketing skyrocketed tenfold from 2015 to 2020. Yet ABM has been a challenge for many companies. Many companies have struggled to define what ABM means in the context of their business models and how it should be applied by region, product category, and cus- tomer segment. As a senior Salesforce marketing executive described it, “There’s a lot of hype around this topic. We had to help our executives understand what it really is and define what it meant for Salesforce. Explaining it and selling it can be very tough otherwise.” Using the term account-based engagement (ABE), rather than account-based market- ing, shifts the focus to aligning marketing with sales and service and better commu- nicates what is critical for success. This helps clarify and position what’s required for senior marketing, sales, and service executives and their organizations to be suc- cessful with this strategy and adapt the approach for their business models. At its core, ABE focuses on aligning marketing, sales, and service on the strategy and tactics to win accounts, retain customers, and grow sales through targeted and personalized omnichannel engagement. That’s how we define ABE. B2B sellers can now also use rapidly improving technology and data to target a broader range of ac- count sizes and segments than was previously economically feasible. In addition, most companies will need to support traditional lead generation, which focuses on capturing, nurturing, and closing all inbound leads. 4 Moving Beyond ABM to Account-Based Engagement

Over time, two distinct types of ABE have emerged: strategic and scaled. (See Ex- hibit 1 and the sidebar “How Salesforce Successfully Implemented Scaled and Stra- tegic ABE.”) Strategic ABE focuses on the needs of a B2B seller’s largest and most strategic accounts. Indeed, personalized engagement with strategic accounts isn’t new; most companies have created account teams with dedicated sales and service staff that address the needs of these accounts in a highly personalized way. What’s new, though, is the closer integration of marketing into the account team. That en- ables marketing to leverage more fully the power of digital channels and custom- ized content to personalize account engagement in ways that amplify the efforts of the sales and service teams. This more personalized interaction must be informed by a deeper understanding of the customer’s pain points and business strategy, which, if done effectively, deepens the relationship. While strategic ABE typically focuses on tens of accounts, scaled ABE extends the benefits of personalization to hundreds or even thousands. Both use innovations in B2B marketing, sales, and service technologies for more personalized account en- gagement, but scaled ABE does so to greatly expand ABE’s benefits cost-effectively. Strategic ABE is one-to-one and more sales-led; scaled ABE is one-to-many or one- to-few, and more marketing-led. The manner in which a company decides to deploy the two approaches across product categories, customer segments, and geographic Exhibit 1 | Strategic ABE and Scaled ABE Strategic account-based engagement • Top strategic accounts (10s of accounts) • Sales led, marketing supported • One-to-one engagement supported by personalized content and digital omnichannel journeys tied to account goals and Strategic plans, targeting key decision makers and inﬂuencers • Balanced online and oﬄine tactics accounts Personalized Scaled account-based engagement engagement to drive sales at target • Target accounts (100s or 1000s of accounts) accounts or segments • Marketing and sales driven, enabled via ABE technology Key elements: and data • Account identiﬁcation Target • One-to-few or one-to-many engagement with named and prioritization accounts accounts to deliver sales opportunities • Engagement and • Personalization by segments, targeting identiﬁed personalization strategy accounts in segments and key personas • Execution and • Mostly online with some oﬄine tactics performance tracking Traditional lead generation • All remaining prospects or accounts (1000s of accounts) • Focus on inbound marketing, leveraging automated Remaining addressable marketing technology to deliver marketing-qualiﬁed market leads to sales • Not targeting named accounts • Focus on segment-, product-, or proﬁle-based personalization • Predominantly online, with limited oﬄine tactics Sources: BCG discussions with B2B marketing and sales executives, Sep 2019-Jan 2020, Demandbase, Engagio. Boston Consulting Group 5

HOW SALESFORCE SUCCESSFULLY IMPLEMENTED SCALED AND STRATEGIC ABE Salesforce, the cloud-based customer Cary, director of account-based relationship management solution marketing, described the effort: “To company, has been an early ABE get going, we had to engage directly leader. Four years ago, it launched a with the sales and service teams; it scaled ABE program with a one-to-few was almost like a group therapy approach and has successfully expand- session. The key was aligning with the ed it with a one-to-one strategic ABE account executives. We needed to program over the past year. break down some walls there.” The company initially targeted 300 To support ABE, Salesforce uses accounts. Brianna Dinsmore, senior corporate marketing centers of excel- director of account-based marketing, lence, which provide scale and exper- explained: “We started with a one-to- tise for email and nurture marketing, few approach to make the business data and analytics, technology, case to get executive buy-in for the creative, and industry and product program. So, showing the approach marketing, which have been instru- could work at scale was important.” mental in launching and expanding ABE. Salesforce has benefited from a Salesforce began by focusing on un- unified culture, which emphasizes the derserved accounts in manufacturing integration of marketing, sales, and subindustries. Marketers aligned with services. The teams have worked the subindustry sectors to understand closely together from inception, using customer needs better so campaigns personalized actions in key channels, could be personalized for target ac- such as events, to drive the cadence counts in each. The approach focused and messaging to turn customers into on events, an area of strength for evangelists. Salesforce. The company targeted senior executives in high-priority Salesforce has navigated the complex- accounts and created event experienc- ities of running multiple ABE pro- es personalized to their needs. grams in a large matrixed organiza- tion. Its scaled ABE initiative In 2019, Salesforce expanded its ABE increased unique visitors to Sales- program to include one-to-one force.com by 212% and close rates by engagement with its largest accounts. 15%. In addition, it attained 100% ABE For instance, the company targeted 35 account coverage with high-value high-potential retail and consumer engagement (marketing activations or sector accounts for hyper-personalized responses with statistically significant marketing that included account- impacts on revenue). Salesforce’s specific next-best actions and custom- strategic ABE program, though more ized content. Marketing works closely recent, has increased pipeline with sales and service to orchestrate generation by 45% year-over-year and activities across touchpoints, using average deal size by 53% year-over- digital engagement that is connected year from the top 15 retail and to offline sales engagement. Lindsay consumer industry accounts. 6 Moving Beyond ABM to Account-Based Engagement

regions to achieve its goals—such as the acquisition of new accounts, cross-selling to existing accounts, expansion to new buying centers, and retention of existing accounts—is critical for success. How Account-Based Engagement Creates Value ABE often drives value simply because it serves as a forcing function that ensures closer collaboration across typically compartmentalized departments. (See the side- bar “Unifying Marketing, Sales, and Service to Succeed with ABE.”) All too fre- quently, there’s a divide between marketing and sales, in particular, characterized by friction and mistrust. In the words of a vice president of product marketing at a global technology company, “Managing across the marketing and sales divide is one of the most daunting problems in B2B today. The functions are often discon- nected, with marketing typically responsible for top-of-funnel and sales for bottom-of-funnel.” Traditionally, marketing has viewed its role in B2B as executing broad-based cam- paigns, whose success is measured by click-through and open rates, and, ultimately, For most companies, leads generated for sales. Sales has owned account strategy and engagement, pipe- ABE represents a line development, and revenue growth, while the service team has focused on after- major change in how sales support and issue response to maximize customer satisfaction and retention. they deal with their Because these functions often operate in silos, their goals are frequently not aligned most important with what really matters: optimizing the customer experience to engender custom- accounts. er trust and advocacy in order to maximize long-term account revenues and mar- gins. B2B sellers can attain those objectives only by working cross-functionally to provide seamless, end-to-end customer experiences that deepen existing relation- ships and help develop new ones. Unless functional silos are broken down, ABE programs will never succeed. (See Exhibit 2.) For most companies, ABE will prove to be a new go-to-market strategy, representing a major change in how they deal with their most important accounts. ABE drives value by shifting the focus from the performance of campaigns and the volume of leads generated to the quality of engagement, growth in opportunities, increase in revenues, and the enablement of success with key accounts. A marketing director at a global software firm emphasized: “Marketing must dive deeper into research to develop personalized stories that speak to buyers for each account or segment of accounts. It must influence them at a more emotional level by hitting on their key pain points with consistent messaging across the buying team.” ABE can be used to acquire new customers but is also frequently used to expand relationships with existing customers. A general manager for a major technology company commented that the approach is “a very effective tool for highly sophisti- cated cross-selling within existing accounts, which requires significant collaboration on communication and messaging.” A vice president of product marketing at a ma- jor software firm expanded on the use of nurture marketing for ABE to build exist- ing customer relationships: “Marketing automation can play an important role in engaging existing accounts and expanding relationships. At times, business opportu- nities get stuck and need to be nurtured. These opportunities can be aggregated by the marketing automation platform to provide a better view of what’s going on.” Boston Consulting Group 7

Exhibit 2 | ABE Acts as a Forcing Function to Align Marketing, Sales, and Service Marketing role Sales role Service role • Analytics to drive data-driven • Relationship-based customer insights • Customer product usage/ customer insights and prioritization and prioritization support-based customer insights • Online buying journey design • Account sales engagement plans • Customer success plans • Omnichannel personalization and • Sales engagement strategy and • Customer engagement campaigns tactics • Service tactics and performance • Full funnel digital engagement and • Sales execution and performance measurement performance measurement measurement • Service intelligence back to • Marketing intelligence to sales • Opportunity development, deal marketing and sales • Pipeline contribution, sales conversion, account penetration • Customer satisfaction, retention, acceleration, account penetration cross-/up-sell support Account-Based Engagement: Shared Responsibility for Cross-Functional Integration • Aligning on ABE • Joint account planning • Building integrated infrastructure, goals and approaches based on customer insights data, and analytics • Developing ways of working that • Seamless, integrated, personalized • End-to-end performance measurement promote cross-functional alignment, customer experiences leveraging for ABE accounts (reporting on communication, and collaboration customer intelligence across functions engagement, pipeline, revenue, retention) Source: BCG discussions with B2B marketing and sales executives, Sep 2019-Jan 2020. Moreover, ABE can be deployed across the customer journey to drive more benefits, such as increased customer satisfaction, retention, advocacy, and, ultimately, growth in customer lifetime value. That level of integration isn’t easy to accomplish but is well worth the effort. In the words of a former head of marketing and AI for a ma- jor information services company: “We recognize that a paradigm shift is happen- ing. Customer expectations are changing, which affects marketing, sales, and ser- vice. That required a massive shift in our thinking and took vast effort across all three functions to respond. It ultimately provided tremendous benefits.” Most studies find that ABE programs deliver results. Among marketers who use such programs, 97% say they experienced a higher return on investment, according to the Altera Group. In its 2019 benchmarking study, the Information Technology Services Marketing Association (ITSMA) found that 92% of respondents using ac- count-based programs saw a positive impact on account engagement, 83% wit- nessed a positive impact on pipeline growth, and 72% reported an uplift in revenue growth. And, according to an earlier ITSMA study, these programs delivered “the highest return on investment of any B2B marketing strategy or tactic, primarily through higher close rates and average deal size, and, ultimately, greater customer lifetime value.” ABE’s value will only rise as companies scale their programs. Our study confirms this: we found a great deal of anecdotal evidence that the ABE leaders have real- ized major gains in account engagement, customer acquisition, pipeline growth, 8 Moving Beyond ABM to Account-Based Engagement

UNIFYING MARKETING, SALES, AND SERVICE TO SUCCEED WITH ABE Orchestrating the marketing, sales, performance reviews are critical to and service functions is challenging, ensure that the account teams are on but it’s critical if ABE is to succeed. As track to achieve their goals and, if they the former global marketing head for aren’t, can respond in an agile fashion. an information services provider “As joint account planning became pointed out: “Marketing cannot be foundational, we implemented weekly beneficial unless it is aligned with account pit stops with sales for quick sales and service. The three parts feedback and discussion on what was, must be working together, speaking and wasn’t, working,” said the former the same language to accounts.” senior marketing head of a business services company. Marketing, sales, and service execu- tives must first agree on the ABE Novel approaches may be required. program’s goals. They must decide, The vice president of global brand for instance, if the primary goal is and digital marketing for a technology account acquisition, expansion of services company implementing a existing accounts, or improving strategic ABE program described the retention. They must also align on the approach: “We moved to having one account segments to target—for marketing person acting as a mini- instance, top strategic accounts, large CMO, across six account teams, to accounts, or midsize accounts—and, help drive brand awareness, develop therefore, whether they should use customized content, and drive strategic or scaled ABE or both. analytics.” The approach enabled Finally, there must be agreement marketing to better understand the about which accounts to target, account sales strategy and to execute supported by plans that will achieve a marketing plan that directly account-specific business objectives. connected to sales. Institutionalizing the alignment process Marketing, sales, and service must through joint planning efforts in which also align on the key decision makers all three functions participate is a best and influencers to target, and the practice. As the former director of right approach and channels to use in enterprise marketing for a global order to optimize engagement across software company commented: “Gain- the customer buying journey. This ing alignment requires discipline around requires research on the customer joint ac count planning that many buying process to understand better companies don’t have. We used two-day which buyer roles are involved at bootcamps to align with customers and which stages in the process. A develop proof-of-concepts that would marketing director with a global work best with executives as part of our software company commented: “We account planning process.” found that a typical sale required 15 to 17 touches to close, including Once account goals and plans are digital, event, and sales interactions established, communication and across the buying team.” Boston Consulting Group 9

UNIFYING MARKETING, SALES, AND SERVICE TO SUCCEED WITH ABE (continued) In addition, infrastructure, such as director of corporate marketing with a technology, data, and process, serves global software firm added: “We as the connective tissue across worked closely with various centers of functions. Given the rising impor- excellence to build infrastructure, tance of managing technology, data, help with data analytics and metrics, and analytics, companies have found and drive process integration. It that the use of centralized structures, proved critical to scale our program.” such as demand centers or centers of excellence, helps ensure that scale Addressing the organizational and economies, expertise, and cross-func- change management elements is tional orchestration are fully utilized. critical, particularly communications A senior director of marketing to drive organizational buy-in. “We technology at a global networking started our communications plan as company expanded on this point: “We one-to-many but quickly decided we recently implemented a demand needed to move it to one-to-one,” center to integrate marketing and commented Tracy Eiler, InsideView’s sales. Now we’re looking at leveraging chief marketing officer. “It was a lot this structure as way to relaunch our more work but was well worth it to get account-based program with much the buy-in we needed. We also learned tighter sales buy-in and stronger a great deal more about accounts and program management.” A senior where the opportunities resided.” close rates and funnel velocity, deal sizes, cross-selling, retention, and revenue growth. (See Exhibit 3.) Tackling the Challenges Along the ABE Maturity Curve ABE is easy to start but difficult to sustain. Most companies can start ABE programs by focusing on a few strategic accounts or on a product segment or region where ac- count teams are open to experimentation. At this level, ABE doesn’t require major investments in technology or data, beyond the basic CRM and marketing automa- tion necessary to engage with the most strategic accounts. Engagement programs, custom content, and measurement can be handled at lower scale manually. Howev- er, most companies will need to transform their go-to-market models significantly if they are to expand their ABE programs across their enterprises, which will likely re- quire additional investment in infrastructure and change management. In moving up the ABE maturity curve, companies often make a few mistakes. First, many companies stumble because they don’t recognize that ABE is, at its core, a strategy; that it’s a fundamentally new way of going to market. Instead, they treat ABE as if it were just a set of new tools. Second, many companies scale their pro- grams too quickly, biting off more than they can chew as they launch their program. Rather than starting with controlled pilots, they implement ABE for too many ac- 10 Moving Beyond ABM to Account-Based Engagement

Exhibit 3 | The Leaders Are Driving Value with ABE Programs Increased target account Improved Accelerated Higher close rate engagement. acquisition. pipeline growth. and speed. 10% to 15% improvement in Marketing contributed 65% of 50% increase in 2X improvement in close rate engagement metrics through a new logos versus a target of 35% marketing-inﬂuenced pipeline performance and 35% faster focus on “waking up” for new cloud business through with zero incremental marketing deal closings for ABE versus underserved accounts (biotech ABE initiatives (enterprise budget (data management non-ABE accounts (technology products company) software company) company) services company) Larger deal Improved Improved customer Higher revenue size. cross-selling. retention. growth. 2x increase in average deal size Sold ﬁve technologies on Reversed declining retention 50% revenue growth in targeted by shifting mix to enterprise average after the initial sale with rates and grew revenue in a accounts for second half of year customers with larger deals and ABE accounts within 3 years, up declining market (business after launching ABE (networking doing a better job up-selling from 1.5 technologies for information company) equipment company) midsized accounts (data and non-ABE accounts analytics company) (communications hardware and software company) Source: BCG discussions with B2B marketing and sales executives, Sep 2019-Jan 2020. counts and at an enterprise-wide level from the start. Third, many companies un- derestimate the organizational complexity associated with ABE. Managing this complexity requires a thoughtful plan and perseverance. Fourth, and most import- ant, many companies approach ABE as marketing-led, without sufficient support and buy-in from key executives in their sales and service organizations. For all these reasons, many companies fail at their first attempt at ABE. More than 50% of the ABE programs we identified failed initially; that was true of both the strategic and scaled varieties. In both cases, companies told us that the overwhelm- ing reason for failure was the lack of sales support and alignment with marketing. While data issues and poor measurement also plagued 50% of the strategic ABE programs that failed, the lack of clarity around strategy affected almost 60% of scaled ABE programs. (See Exhibit 4.) However, many of the companies learned from their experiences and, eventually, succeeded with their ABE programs. Ulti- mately, 67% of the strategic ABE programs and 75% of the scaled ABE programs covered in our discussions went on to succeed after companies regrouped to address these challenges. Companies will benefit from assessing the current maturity of their ABE programs in relation to their long-term aspirations. Doing so will help develop a path to scale the program in the most expedient way. It will also help identify the immediate next steps, which will be a function of the company’s position on the maturity curve, its longer-term goals, and its organizational and operational challenges. Our study suggests three phases of ABE maturity. (See Exhibit 5.) Boston Consulting Group 11

Exhibit 4 | Why More Than 50% of ABE Programs Initially Fail STRATEGIC ABE (Programs Included in Study: 11) SCALED ABE (Programs Included in Study: 12) 45% 63% 42% 75% 55% 37% 58% 25% Initial launch Over time Initial lau nch Over time (<1 year ) (>1 year) (<1 year ) (>1 year) Primary Reasons for Failure (%) Primary Reasons for Failure(%) Cross-functional alignment/lack of sales support 83 Cross-functional alignment/lack of sales support 72 Data issues/poor measurement 50 Unclear strategy/focus on tool implementation 57 Poor senior executive support 33 Data issues/poor measurement 43 Insuﬃcient marketing expertise/capabilities 33 Tech issues/fragmentation 43 Insuﬃcient budget allocated 17 Expanded too quickly/too many accounts 29 Successful/positive results Failed/signiﬁcant challenges Source: BCG discussions with B2B marketing and sales executives, Sep 2019-Jan 2020. Phase 1: Getting the Basics in Place. Most companies can get going with ABE quickly by focusing on getting the basics in place and starting with pilots that target a few accounts. During this phase, companies are in the early stages of aligning the market- ing, sales, and service functions. They are usually focused on getting agreement on the right set of accounts to prioritize as well as the program’s overarching goals. Operationally, the marketing, sales, and service functions are just starting to work together but are not yet integrated. The approach is often still lead-focused, using web and email personalization. Companies may also be starting to aggregate leads by account to get a more holistic view of the opportunities within each of them. Most companies haven’t yet built out their technology platform fully to support ABE but will have basic marketing automation and CRM in place and will have ad- dressed data quality issues, so they have a clean view of their accounts. At this stage, often the measurement of ABE efforts is not fully automated and may still be focused on campaign performance rather than systematically measuring the return on investments in the program. Nonetheless, these early efforts can bear fruit. Companies at this stage often see a sharp increase in engagement at select accounts, driving an uptick in sales interac- tions, deal velocity, and pipeline growth rates. Phase 2: Scaling ABE Capabilities. Companies start to shift gears to build the core capabilities and infrastructure needed to scale ABE to a broader group of accounts during this phase. This typically includes expanding a strategic ABE program to more accounts and launching a scaled ABE program. 12 Moving Beyond ABM to Account-Based Engagement

Exhibit 5 | Navigating the ABE Maturity Curve Phase 1 Phase 2 Phase 3 Getting the basics in place Scaling ABE capabilities Achieving operational integration 1 1 (48% of companies) (48% of companies) (4% of companies) • Focus on fewer accounts, • Expanding number of • Likely doing both strategic ABE Approach likely either one-to-one or accounts, adding elements and fully scaled ABE one-to-few ABE of scaled ABE • Marketing, sales and service • Marketing, sales, and service • Full, systematic marketing, sales, Organizational alignment on ABE objectives, coordinated execution and service integration alignment target accounts, and overall • ABE program oﬃce in place • Use of more centralized implementation plan approaches • Pilots launched • Building infrastructure to • More complex program • Marketing, sales, and service scale, e.g. tech, data, content, management coordinating, but still manual processes • Fully integrated tech and • Sales-driven account • Use of buying committee processes with integrated Operations prioritization targeting customer data • Bottom of funnel focus; still • Use of predictive models for • Greater use of data/tech for lead oriented, aggregating by account prioritization real-time, personalized account • Advanced web/email engagement • Basic web/email personalization personalization with greater • Full funnel omnichannel digital omnichannel optimization and oﬄine optimization • Leveraging marketing • Using account-based ads, web • Use of integrated tools and data to Tech platforms automation, CRM, and personalization, and sales enable account-based lead-to-account mapping automation to scale orchestration engagement • Campaign/engagement focused • Goal achievement for target • Revenue tracking with advanced • Progress on data cleaning and accounts attribution to measure ABE Measurement integration • Cross-funnel measurement program ROI across activities • Rules-based attribution modeling • Increased account engagement • Demonstrable impact on • New growth trajectory for business and sales interactions revenue growth at priority • Increased share of wallet, higher Results • Initial impacts on deal velocity accounts customer satisfaction, and greater and pipeline growth • Improving win rate and lifetime value average deal size Sources: BCG discussions with B2B marketing and sales executives, Sep 2019-Jan 2020; BCG case experience. 1 Percentage of companies interviewed as a part the study at each stage of maturity. By now, marketing, sales, and service are coordinating operational activities more effectively. Companies have also started putting the infrastructure in place, consist- ing of the initial efforts to build and integrate the technology stack, implementing more sophisticated data management and integration approaches, creating scalable content processes, and linking activities and communications across functions. Do- ing so provides more sophisticated capabilities, such as the ability to generate in- Boston Consulting Group 13

sights from customer data, target key members of buying committees, use predic- tive analytics for account prioritization, orchestrate and measure customer journeys more effectively, and optimize digital omnichannel engagement across the funnel. During this phase, companies are also developing measurement capabilities, so they are effectively measuring goal achievement by account, tracking the performance of groups with ABE initiatives compared with control groups, and attributing reve- nue to the activities that contributed the most, initially by using rules-based ap- proaches. At this stage, companies typically see tangible growth in revenues from ABE programs, with rising win rates and larger deal sizes. Phase 3: Achieving Operational Integration. Companies at this phase are typically executing ABE programs at full tilt, often strategic and scaled programs simultane- ously, depending on the customer segments they are targeting. Marketing, sales, and service are fully integrated and working cohesively to personalize engagement with target accounts. By this time, companies have figured out the operational balance between centralization and decentralization. Most have moved in the direction of centralization, better utilizing the capabilities of demand centers or centers of excellence to support their ABE programs. Doing so helps organizations take advantage of scale efficiencies and build expertise in managing technology, data, and analytics as well as optimizing key processes such as content develop- The ABE leaders have ment and campaign management. worked their way up the maturity ladder Companies are now making greater use of technology and data for real-time per- by ensuring that sonalization. They are also better coordinating the customer buying journey across marketing, sales, and online and offline touchpoints, often orchestrating the process across many mem- service have an equal bers of the buying team and the influencer network. They have also addressed the voice at the table. customer data challenge and created a tightly integrated marketing, sales, and ser- vice technology stack, which is critical to ensure alignment across those teams. Companies at this stage are tracking the returns on investments in ABE programs with attribution techniques for allocating revenues to the activities that generated them, using advanced statistical and AI-based approaches. As companies achieve operational integration, the results of ABE start accelerating. Companies usually see increases in share of wallet, customer satisfaction, and cus- tomer lifetime value from the accounts they’ve targeted. We haven’t seen many companies make it this far, but some are making good progress and are close. Many executives admit that it’s difficult to achieve full cross-functional operational integration. The ABE leaders, we find, have worked their way up the maturity lad- der by ensuring that marketing, sales, and service have an equal voice at the table and respect for one another’s contributions. Without this, failure is inevitable. In fact, achieving the organizational and cultural shifts necessary to ensure success with ABE is often more important and difficult than building the technology and data infrastructure to support it. It demands understanding clearly how each func- tion contributes to business goals such as revenue growth, customer retention, and lifetime value optimization, and major changes in the ways B2B companies work cross-functionally, often requiring sophisticated program management, full-scale change management, and exceptional leadership. 14 Moving Beyond ABM to Account-Based Engagement

Lessons from the ABE Leaders As part of our study, we identified companies that have successfully implemented and grown ABE programs. These emerging ABE leaders have made significant prog- ress in connecting strategy and execution across the divides between marketing, sales, and service to deliver better customer experiences to their most important ac- counts, which has paid off with improved business results. While the ABE pioneers have taken different approaches, some common lessons can be learned from their paths to success. Don’t wait; start small. Most companies can start ABE programs immediately for a small group of accounts or a particular product segment without making large investments in new infrastructure. They can set up pilots that, for instance, focus on closing high-priority deals, cross-selling in a small number of accounts, or penetrat- ing a few underserved segments. At this scale, the program’s success will not hinge on investing in technology to automate engagement or data analytics. Measure- ment can be done manually, if need be, and the pilots’ results can be used to build the business case to win executive support for a larger rollout of the ABE program. DXC Technology, a B2B technology services company, learned the importance of starting small the hard way. Seven years ago, it launched a full-scale program from the outset, targeting around 400 accounts. The program didn’t take off as planned, so the company had to pull back. Nick Panayi, DXC’s former vice president of glob- al brand, digital marketing, and demand generation (and IPsoft’s CMO since July 2019) explained frankly: “We set out several years ago to prove that an account- based approach could work. But we made the mistake of viewing it as a set of tools and capabilities, and targeted way too many accounts at the start. Sales did not see value and did not buy in, so we failed.” DXC’s marketing programs team then regrouped and relaunched the program as Most companies can pursuit marketing, targeting only the most strategic deals the company wanted to launch ABE programs close. It worked closely with sales to identify those deals and embedded a mini- for a small group of chief marketing officer in each deal team for the duration of the pursuit. The mini- accounts without CMO acted as the point of contact for building custom content for each deal, often large investments in using customized microsites. Over time, DXC saw web traffic from the strategic ac- new infrastructure. counts rise by 33%. As sales increasingly bought into ABE, and as deal win rates in- creased, sales gave marketing a 99% approval rating on value created. Now, DXC is planning to scale its ABE program to cover 80 accounts, using its earlier invest- ments and learnings to ensure success. Align on goals; stage the rollout. The launch of every ABE program should start by ensuring a match between a company’s ideal customer profile and the total ad- dressable market. In doing this, companies must develop a list of specific ac- counts—and the people at those accounts—that companies should target. Not targeting the right accounts means precious sales and marketing resources will be wasted in pursuit of the wrong targets. Then, companies must develop data-driven insights about customer buying behav- iors and pain points, which should inform the goals and strategies for each account. It’s also critical to gain alignment across marketing, sales, and service to determine Boston Consulting Group 15

how the company should roll out the program and what the goals should be for specific accounts. InsideView, a software-as-a-service targeting intelligence platform company, started its ABE journey by conducting deep research to understand why it won or lost deals. Tracy Eiler, InsideView’s CMO, explained: “Initially we thought that only peo- ple on the buying team were involved in a purchase, but we found that, on average, 34 people in the target organization interacted with the marketing campaign. This was a lightbulb moment for us; it became clear that we needed to have a better un- derstanding of all the people involved.” In response, InsideView launched an ABE program to develop a more orchestrated approach for multichannel personalization, which significantly affected its market- ing, sales, and operations teams. The program initially focused on personalized en- gagement with 250 accounts. The company found this to be too broad, so, in the next phase, it focused more on companies in subindustry sectors characterized by In rolling out ABE high renewal rates for its services. Expanding in these subsectors increased profit- across the ability. In the third and current phase, InsideView has focused on driving new cus- organization, tomer acquisition by warming up prospects to help land sales meetings with them. technology and data infrastructure InsideView found that change management was critical. Its sales staff, in particular, becomes important. needed persuading, so Eiler decided to meet with many of them personally. “Our account managers have personal relationships with their accounts,” Eiler noted. “We needed to show them that marketing wasn’t going to just come in and do something that wouldn’t match their cadence of communication. We had to create a safer environment for meeting with our sellers to encourage understanding and sharing. It was critical to build those relationships as we rolled out our program.” As a result of the ABE program, InsideView grew its business in the enterprise segment faster than in the small business segment last year, resulting in a doubling of the av- erage deal size and improvements in account stickiness. Build infrastructure and capabilities to scale. As companies look to roll out ABE programs across the organization, targeting a large number of accounts in more segments or industry verticals, building the infrastructure, particularly technology and data infrastructure, becomes important. That forms the backbone for the information flows and collaboration that connect the marketing, sales, and service functions, and enables the company to use data more effectively to deliver person- alized customer engagement across the buying process. When VMWare, a leading cloud-computing and virtualization software and services provider, began to deploy SaaS and cloud services, it realized that their marketing required a different approach. The company was targeting different roles and, in some cases, different companies than it ever had. For instance, VMWare had to shift from targeting infrastructure executives to cloud engineers and architects as well, and, in some cases, new buying centers. Michael King, VMWare’s senior director of cloud marketing, expanded on the challenge: “We couldn’t reach the new buyers one-to-one; that approach wasn’t scalable. So we started by targeting 1,600 accounts that were already engaging with our content. Then, we grouped people by titles, and personalized our engagement with them.” 16 Moving Beyond ABM to Account-Based Engagement

VMWare had to build capabilities from scratch to support the new program. It built a new stack that was more attuned to the needs of the ABE program and created new technology and data teams that worked closely with the corporate digital team. These teams now serve as an innovation hub that rolls out key learnings to the rest of the company. Thanks to its ABE efforts, VMWare’s cloud business has seen deal velocity improve from 12 to 18 months to 6 to 9 months, on average, while the close rate for the ABE deals is three times that of other deals. Transform to integrate across functions. For most companies, implementing an ABE program turns into a transformation of the marketing, sales, and service functions. It demands bridging organizational silos, adopting new ways of working together, building new capabilities, and managing large-scale change initiatives. Implementing ABE can prove to be extremely challenging, particularly across a large, matrixed organization. Thomson Reuters, the Toronto-headquartered global business services company, had to approach ABE with a sense of urgency in the case of its legal division. A very high proportion of its subscription-based business required negotiating periodic re- newals with large buyers. So the company decided to launch an ABE program, the For most companies, initial focus of which was retention and upselling. implementing ABE turns into a Almost immediately, Thomson Reuters figured out that the customer experience transformation of across marketing, sales, and client management played a major part in renewal de- marketing, sales, and cisions, and that addressing cross-functional fragmentation was critical. Jillian Gart- service. ner, Thomson Reuter’s director of account-based marketing for the legal division, described the company’s approach: “Including the client management organization was an absolutely critical element of our program for both one-to-one and one-to- few. The client management group had important account intelligence and relation- ships that were critical to our success. For us, connecting across organizational di- vides started at the top. Our marketing leadership team worked closely with the sales and client management leadership to gain buy-in for the program at the high- est levels.” The program became successful over time, getting positive customer feedback and having a large impact on the business’s bottom line. Thomson Reuters expanded its initial efforts to cover additional products and loca- tions, using its early successes to build the business case to expand the program. It found that it could scale more effectively by utilizing centralized capabilities to man- age data and technology and grouping similar accounts into segments to personalize on a one-to-few basis. Consequently, Thomson Reuters has been able to dramatically increase renewals and consistently grow revenues at above-market rates. BE holds enormous promise for B2B companies. Those that don’t invest in Abuilding ABE programs risk falling behind rivals, providing subpar experiences for their best customers, and missing opportunities they may not even be aware of. There’s no excuse for not getting going with a pilot right away, although scaling an ABE program to include a larger number of accounts spanning geographic areas, customer segments, and product categories will require careful planning, commit- ted execution, and large-scale change management. Boston Consulting Group 17

At its core, ABE is all about integrating marketing, sales, and service tightly, break- ing through the cultural divisions in organizations, and engaging more deeply and effectively with the customers that will matter most for your business success mov- ing forward. This new approach must be rooted in a deeper understanding of the higher expectations that customers have of being engaged by sellers in ways that reflect and anticipate their needs. Companies that rise to this challenge will be re- warded with higher retention, advocacy, and lifetime business value from their cus- tomer relationships. What could be more important than that? Notes 1. The term was originally proposed by Forrester in its June 2018 report, “Not Yet the New Normal: ABM Must Evolve to Account-Based Engagement.” 2. Demandbase, 2019. 3. Conversica, 2015. 4. Kapost, 2018. 5. Demand Gen Report/Path Factory, 2019. 6. HubSpot State of Inbound, 2018 18 Moving Beyond ABM to Account-Based Engagement

About the Authors Robert Archacki is a partner and associate director in the Austin office of Boston Consulting Group and leads the firm’s work in B2B marketing. You may contact him by email at archacki. [email protected]. Phillip Andersen is a managing director and partner in BCG’s Seattle office and a core member of the Marketing, Sales & Pricing practice. You may contact him by email at [email protected]. Scott Rhodes is an associate director in the firm’s Austin office with a focus on next-generation sales. You may contact him by email at [email protected]. Basir Mustaghni is a managing director and partner in BCG’s Frankfurt office and a core mem- ber of the Marketing, Sales & Pricing practice. You may contact him by email at mustaghni.basir@ bcg.com. For Further Contact If you would like to discuss this report, please contact one of the authors. Boston Consulting Group 19

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