How Account Based Marketing is reinventing GTM
The above diagram illustrates the evolution of B2B GTM.
In the early days of Storm, GTM success meant hiring superstar sales reps with deep rolodexes. That changed dramatically with Demand Generation, where marketing could generate large number of qualified leads for sales. We are seeing a similar change with the emergence of Account Based Marketing, where sales becomes even more productive by working closely with marketing on a single account.
After seeing companies succeed or fail solely based on their GTM strategy, we at Storm Ventures spend a lot of time thinking about and investing in new GTM ideas. For example, we have invested in BlueShift, Cloudwords, Engagio, Marketo, Pipedrive, Prosperworks, Salesloft and YesPath.
GTM 1.0 — The Superstar Sales Rep (Silo’s)
In GTM 1.0, marketing directly generated few leads for sales and would focus on building brand (something considered soft by the rest of the company). In the meantime, sales would need to generate their own leads by prospecting. The top sales people were the superstars within the company. Prospecting though is very expensive. Prospecting is labor intensive and requires experienced sales people (who are very expensive). Experience generally meant a great sales rolodex, which takes a long time to develop.
This GTM strategy is illustrated on the left:
By focusing on brand, marketing should theoretically drive leads and influence buying decisions. But, that linkage was just theoretical and anecdotal, since there was no effective measurement and attribution of such leads and influence. Also, sales would question that linkage, since they would prefer to elevate their own importance (ie, their own efforts in prospecting and closing) and marginalize marketing’s role.
Because of the missing linkage, most marketing and sales teams operated as independent silos in GTM 1.0.
GTM 2.0 — Demand Generation (lots of leads for sales)
Buyer behavior changed with Google. With search, buyers could easily learn about their problem and potential solutions by themselves. Before search, accessing that content was very difficult, and buyers had to rely on their favorite sales person for that content. Also, to gain access to that content over the internet, potential buyers were willing to provide their real names and real contact information (such as email addresses).
Realizing this change in buyer behavior and leveraging the contact information, smart companies soon realized that they could influence the buyers by listening to them and providing them with the right content when and where the buyer wanted to consume it. That became known as lead nurturing (Marketo resource). According to Marketo, “companies that excel at lead nurturing generate 50% more sales ready leads at a 33% lower cost, and nurtured leads makes 47% larger purchases than non-nurtured leads.”
Lead nurturing is most effective in greenfield opportunities where there are lots of potential leads to nurture. Concurrent with the advent of lead nurturing, companies could acquire a large number of potential leads using digital marketing techniques, such as search engine marketing, search engine optimization, social marketing, webinars, display advertising, mobile marketing, and other online marketing techniques.
Companies could thus accelerate growth by combining lead nurturing with digital marketing. That became known as Demand Generation, and the underlying technology was marketing automation. The leaders were Eloqua, Hubspot and Marketo.
This GTM strategy is illustrated on the left, where lead nurturing combined with digital marketing would generate 80% of the sales pipeline.
Companies could scale demand generation with technology (such as marketing automation) and digital marketing programs (such as targeted advertising and content creation) rather than with headcount. In other words, they could nurture vast numbers of raw leads and hand off only the qualified leads to sales — all with minimal increase in headcount. In contrast, scaling prospecting requires a linear increase in ramped sales headcount, which is very expensive and risky. As investors, we strongly prefer business models who scale with technology rather than expensive headcount.
Demand generation is very effective for nurturing a large number of potential leads and handing off the qualified leads to sales. But, could marketing be helpful even after the handoff to sales?
Also, this hand off works very well if the lead is the single decision maker. But, what if the potential customer has more than a single decision maker — more than a single lead?
GTM 3.0 — Account Based Marketing (Close the Account)
If the customer has multiple decision influencers, the company can consolidate all of the influencers into a single account and build consensus among them to buy the product by implementing an integrated sales and marketing strategy. This integrated account strategy is illustrated below:
The sales rep will have regular direct communications with his primary contact at the buyer, but not with all the“other influencers” within the customer. Account Based Marketing (ABM) enables the company to influence those other influencers by using marketing technology similar to demand generation (ie, digitally listening, analyzing and nurturing), but applied on a single account (rather than on a lead). For example, YesPath picks the best content for each decision-maker, distributing it the only way that works–over multiple channels in concert.
The GTM 3.0 strategy using ABM is illustrated on the left, which should drive a higher conversion rate.
ABM must be closely integrated with the sales rep, since this is not a hand off. But, integrating marketing and sales for a single account is non trivial. Manytimes, sales people complain about marketing interfering in their accounts. Engagio integrates marketing and sales even further with Account Based Everything. ABE is a strategy to orchestrate personalized marketing, sales and success efforts to land and expand named accounts.
In contrast to GTM 2.0 (which is optimized for new customer acquisition), GTM 3.0 can also be applied to sales following the first close, such as expands, upsells, cross-sells and renewals. This GTM strategy is illustrated on the left, where the company can leverage the customer data generated by the customer’s use of the product after the first sale.
We know that GTM strategies will continue to evolve. What is the future GTM? After investing in Com2us (a mobile game company), I think the best GTM model is based on free-to-play games, where the product is closely integrated with sales and marketing based on analyzing real time usage data.
