Account-based marketing and sales have been around for some time now. But it has taken a long time before it was recognized as being critical especially for companies in high-value high-tech industries to get noticed by new prospects and increase sales revenue in existing accounts.
There are also many high-tech companies that use traditional marketing strategies, to find out too late that they don’t seem to be working or fit their profile. Proving in a way what the engineers have been saying all along (see above): we don’t need marketing or sales.
Long sales cycles and limited customers are a few of the reasons why traditional marketing doesn’t work in high-value, high-tech industries.
But what does work? Gartner predicted that as of 2020 ABS will become the basis of sales for most high technology vendors.
In this post, I will focus on proven effective account-based marketing and sales solutions for high-tech companies which I have used in several industries, from aerospace to IT, and from travel tech to digital media environments.
It centers around selling new and existing products into existing accounts. It presumes you already have customers or ‘accounts’ to sell to (whether it is a new or existing product or service).
In a next post, I will start going deeper into account-based ‘go-to-market’ strategies where you need to sell your new and existing products to new customers.
This information will not only be useful for large corporations, but also for small start-ups and SMEs selling or wanting to sell into larger enterprises.
The #1 High-Tech Issue: Engineers Think Marketing and Sales is Not Needed
The world of high-technology is full of the brightest engineers with the best ideas, totally convinced they are creating the ‘best’ products and services. Whether they’re just starting up or been around for a long time now, they often believe marketing and sales are ‘nice-to-have’, ‘unnecessary overhead’ and don’t pay enough attention to it.
Many high tech companies consider their technology and product to be the absolute best
around. But this is not enough to make it on the market. In order for a new technological
innovation to make a significant impact, it should identify and satisfy a specific human need
in a new and cost-effective way.
The problem is that – even if they may have the best product, most innovative design or best service on the planet – it won’t matter much if it never gets noticed and therefor it does not get sold.
Also, centering your B2B sales and marketing messages only on your products doesn’t work. your customers are looking for high customer engagement. They are not doing business with your company. They want to do business with you and your teams, real-life human beings.
Traditional B2B Marketing Doesn’t Work Well in High-Tech Industries
The approach in B2B has always been to standardize products and services that work horizontally across different industries with up to thousands of customers and then apply traditional marketing instruments like promotion, advertising, and lead generation.
The disadvantages in this approach are that:
- Competition is high in this segment, so marketing costs can go through the roof;
- Promotion involves a lot of the company’s organization, from sales to engineering to services;
- You continuously need to bring in new, effective innovations or methodologies, to outperform the competition.
However, high-value high-tech companies are more concerned with ‘engineering-to-order products and services. They, therefore, need to focus on the needs of vertical and very specific segments. Also, in such multi-million industries, there are not so many customers.
In the very competitive market of high-tech:
- The sales cycles are complex, are long, and expensive
- It is difficult to get good quality leads
- Companies have a hard time to distinguish themselves from technologies that ‘look similar’
- Business decision-makers are hard to convince
- Global competitors with slow-quality solutions but lots of marketing money are a real threat.
Traditional B2B marketing and promotion isn’t as cost-effective in this segment. In addition, customers are looking for their existing suppliers to keep them updated with relevant propositions, but are often disappointed with this. Existing suppliers often come top of all the different information channels that customers use to look for new solutions. But the majority feels that marketing by their own suppliers is poor.
This doesn’t mean it can’t be applied at all. It can be used for example when:
- A company enters a new market if it is difficult to reach the decision-makers in other ways (see also my post on ‘go-to-market’ strategies)
- A small firm faces large corporations that are difficult to navigate, or decision making is done by committees, and where management turn-over is high and organizations often change
- The company needs to promote itself because is looking for investors.
However, for high-value, high-risk, high-tech companies selling complex products and services business-to-business, ‘account-based marketing’ and/or ‘account-based sales’ are the most effective to maximize revenues and contract value.
While traditional business marketing is typically organized by industry, product/solution, or channel (direct/social/PR), account-based marketing brings all of these together to focus on individual prospects or (existing) accounts.
By treating each account individually, account-based marketing and sales can be targeted more accurately to address the relevant segments and is more likely to be considered relevant than untargeted direct marketing activity.
Your Potential Customers Have Already Done Most of the Research into Solutions
Customers have a problem, and they’re looking for a solution. The buying process starts online. Decision-makers hear about you from other parties in their network or reading about you in an article. Also social media, LinkedIn are consulted.
So to maximize the return on investment (ROI) and value from your marketing and sales initiatives, you need to:
- Engage earlier in the buying process of your prospect or customer.
- Only targeting high-value and accounts more likely to close the deal.
- Aligning strategic marketing programs with strategies from sales and account management.
This is where account-based marketing and sales come in.
Account-Based Marketing and Sales is Made for High-Tech Companies
I had my first sales courses in what now is called ‘account-based selling’ 30 years ago when I was selling aircraft and 10 years later I redid them with my sales and contract teams when I joined a international information technology services company.
The courses were based on the Large Account Management Process℠ (LAMP®) and Strategic Selling® books of Miller-Heiman Group (now part of Korn-Ferry) by Robert Miller and Stephen Heiman, who today are seen as a kind of founding fathers for everything now called account-based marketing and selling.
The terms ‘account-based marketing’ (ABM) and ‘account-based sales’ (ABS) are often used interchangeably. There have been some attempts to define the differences between the two terms (as you can see with a simple search on the Internet).
However, especially in high-tech industries where products and services are inextricably linked, the boundaries between the two are vague. Also, if you consider sales to be a marketing function and since marketing anyway also always is involved in ABS, there is no real benefit in treating them separately.
Account-based marketing doesn’t work if it is not completely integrated with sales.
So, for simplicity’s sake, I will treat account-based marketing and selling in this article as one and the same approach. When I use the term ‘account-based marketing’ or ‘account-based sales’ separately from hereon I am generally referring to both.
What is Account-Based Marketing and Sales?
Account-based marketing and sales is a business-to-business (B2B) marketing and sales strategy that concentrates resources on a set of target or key accounts or specific decision-makers within a market or industry (micro-) segment, called ‘fields of play’ in Miller-Heiman’s LAMP and Strategic Selling models.
The goal of account-based sales is to increase sales volumes by involving all the customer’s key persons and decision-makers in the transaction. In some industries, this can go up to 8 people and committees make purchasing decisions, and many more involved in the purchasing process itself.
A good example is commercial aircraft sales where the following people, departments, and functions working in or outside the airline can be involved in one and the same purchasing decision:
- Purchasing department or committee
- Operations
- Flight crews (pilots and flight assistants!)
- Technical department
- Marketing
- CEO and CFO
And in the case of (partially or wholly) state-owned companies it can even go up to::
- Ministry of Transport
- Ministry of Economic Affairs
But also for services like B2B enterprise software-as-a-service like CRM or CLM there may be multiple decision-makers involved:
- IT
- Marketing
- Sales
- Finance
- Customer/Product Support
- Engineering/R&D
- and so on.
The account-based sales and marketing strategy is managed by the marketing and sales departments but requires the teamwork of all departments involved in the sales of goods or services, as well as coaches and sponsorship from top management.
For example, in high-technology companies, it is essential to link research and development capabilities superior to marketing to effectively anticipate, analyze, and exploit market opportunities.
Account-based marketing and sales can help high-tech companies of any size to:
- Determine the importance of accounts for a company (where should you focus on resources?)
- Engage earlier and higher in the customer’s organization with opportunities (who are the decisionmakers?)
- Align marketing and sales activity with account buying strategies (how do our organizations fit?)
- Get the best value out of marketing and sales (for both you and your customers).
Account-Based Cross-Selling and Upselling
With long-term customer relationships, complex propositions, extended sales cycles, and large customers, these organizations are ideal candidates for the account-based marketing and sales approach.
Account-based marketing and sales play a key role in expanding business within existing customer accounts .
The idea is that after the initial sale – which in high-tech environments often can take several months – account-based marketing and sales will deliver an increase in the long-term value of the customer.
Marketing to existing customer accounts to encourage upselling and cross-selling is one of the keys to getting the most value from your largest accounts over the lifetime of the contracts you have with this customer.
It is much easier for you to generate more sales from existing customers than from new customers.
Marketing from new suppliers is often poorly targeted and makes it easy to justify staying with their current supplier who (should) know you much better.
Choosing the Strategic Key Account/Field of Play
Key accounts – or ‘fields of play’ as they are called by Miller-Heiman – are crucial accounts or segments thereof that are identified within organizations as being a focus for account-based marketing and sales.
Not all accounts are strategic or key accounts. You need to be careful in deciding which accounts you will target as part of your account-based marketing and sales efforts. By making wrong choices you could be throwing away valuable customers.
Aspects to consider when choosing:
- Revenue history
- Account history
- Margins and profitability
- The probability that your customer in question is interested in a long-term relationship
- Commonalties between you and your customer.
The goal is growing and keeping a loyal base of customers through an efficient marketing strategy.
Account-based Selling is One of the Most Important Activities of a Successful High-Tech Company
In an already 30 year old but still relevant article in the Harvard Business Review the main characteristics of successful high-tech companies were described. Such companies and I quote:
- Market and sell two or three times as many new products as their competitors
- Include two to three times more technical innovations into each new product s
- Introduce products to the market two times faster than their competitors’
- Adapt their business model quickly whenever there is a significant change in the environment.
- Have a geographical size of their markets that is double that of their competitors
- Have created great brands which are reflected in everything the company does.
More importantly, their focus is completely on bringing actual value to their customer:
- All the companies made marketing and sales their main objective.
- They knew their customers intimately and tracked their demand in real-time.
- Their main concern was the market and not the product.
- All research and development activities, manufacturing, sales, and after-sales services aimed to satisfy the customers better and faster.
Successful high-tech companies always make sure that any major marketing and sales programs will have a positive impact on the bottom line.
Benefits of Account-Based Marketing and Sales
Here are the reasons why account-based marketing and selling is the right solution for you:
- Increase in revenues: account-based marketing and selling only focuses on essential accounts, increasing the potential for more revenue.
- Focus on decision-makers: account-based marketing and sales allow you to focus on specific people, the relevant decision-makers within the customer’s organization.
- Increased return on time (ROT): it leads to speeding up proposal-, sales-, and negotiation cycles.
- Reduction of marketing and sales costs: it’s efficient and shortens the usually long sales cycle of lead generation, prospecting, and outreach – you’ll be spending less time and marketing and selling resources on projects that have little to no business value.
- Reduction of risk: if the customer knows you better, you can explain better and at an earlier stage when things go wrong and early notification reduces the probability your customers will be claiming for penalties, liquidated damages.
So account-based marketing and sales is an important factor in the contract lifecycle – from the first stages of a sales-case up to contract close-out – to build up contract value and maximize profits.
DO OUR CONTRACT VALUE QUICK SCAN
A 30-minute phone call to get a better impression of your proposal and contract drafting capabilities and tools and some first advise how to reduce contract value leakage