Update May 15 2017
The topic of this post comes front and center with news that The Inbound Marketing Company HubSpot is investing in Terminus, a key player in Account Based Marketing and the originators of the #FlipMyFunnel event series. With forthcoming product integrations, it also represents a marriage of sorts between #MarTech & #AdTech, top of mind for me following conversations at last week's MarTech Conference in San Francisco.
Inbound Marketing and Account Based Marketing are usually seen as opposite sides of the spectrum of B2B demand generation strategies – but in reality the two have much in common and complement each other well.
The best Inbound program benefits from Account Based Marketing (or similar targeted outbound strategies) to feed short-term demand until Inbound results are realized, while the best Account Based Marketing programs will leverage key principles of Inbound Marketing.
With that in mind, I present Ten Truths about Inbound Marketing vs. Account Based Marketing, to understand the differences, the overlap and how they can work together for scalable demand creation.
#1 - Once fully realized, an Inbound Marketing strategy should yield lower customer acquisition costs than Account Based Marketing…
The main business rationale behind an Inbound Marketing strategy is significantly reducing cost per lead and customer acquisition costs. Account Based Marketing on the other hand says that there is value in investing more resources and program $ to build more in depth and targeted programs that puts a premium on a very specific target audience.
#2 - …. So therefore Inbound Marketing is attractive for companies with a lower average order value.
For this reason, businesses whose economics demand low customer acquisition costs based on their AOV should strongly consider the merits of what an Inbound Marketing strategy can deliver. The threshold for this will depend on multiple factors including the company’s ability to invest $ and resources for a long term payoff; I’ve generally considered the thresholds for Inbound vs. Account Based marketing as the leading strategy to be somewhere between $10-20K average order value for licensed software or $1-2k/month recurring for SaaS software.
#3 - Account Based Marketing should yield higher conversion rates through each step of the marketing funnel.
Both account based marketing and inbound marketing make strong cases for their method to yield strong conversion rates through the marketing funnel (e.g. MQI to MQL, MQL to Opportunity, Opportunity to Win).
Account Based Marketing suggests that a highly targeted audience will yield high conversion rates because there is full alignment with sales that this account is one who has a strong fit for your product or service.
Meanwhile Inbound Marketing suggests that conversion rates will be strong because a prospect who comes to you will be already educated and more ready to accelerate through their buying process. A counter-force on Inbound Marketing conversion rates however is that inbound marketing casts a wider net such that a lower percentage of leads will be in your true target profile. So for that reason conversion rates should be higher on the Account Based Marketing side.
#4 – The impact of Inbound Marketing is on a longer time horizon than Account Based Marketing.
Inbound Marketing is not the right strategy to drive short term results – if you are looking at driving results say within a 12-month time frame, temper expectations on Inbound and ensure there are other demand strategies to complement it while the Inbound tailwind can be built.
That said, Account Based Marketing isn’t an overnight fix -- as strategies, data, assets and programs need to be developed -- but in the category of expected timeframe for impact on Pipeline I’d rank Account Based Marketing a step ahead of Inbound.
#5 – Both Inbound Marketing and Account Based Marketing require a tight definition of target audience.
Now we get to some of the key attributes these two approaches share. A tight definition of target audience is critical to success for both.
In the case of Inbound Marketing, this is a market segment (usually defined by a set of people – roles, within certain types of companies) for whom there is an opportunity for the business to develop a stronger community within that segment with their brand as a central resource. Being crystal clear on that audience is a prerequisite to success.
And in the case of Account Based Marketing, working with Sales to define a set of target accounts for whom your product/service can offer significant value is a key input to build demand.
#6 – Both Inbound Marketing and Account Based Marketing require an in depth understanding of how customer’s buy – the customer buying process.
It’s more than just knowing who you want to target – and in the case of both of these a truly winning strategy will be differentiated by just how well you understand (and have aligned your go to market team) around how and why customers buy.
In the case of Inbound, these insights will inform what questions customers need to answer for every step through their buying process – starting with the awareness phase of just getting to understand their problems and then why it’s important to change. This content and the way it’s architected to nurture buyers through their buying process will be what creates scale and velocity for the Inbound program.
In the case of Account Based Marketing, understanding the buying process, the roles involved and how they interact – will be key for both breaking through the clutter and getting the attention of that company. And then once engaged, this will also be key for creating velocity through the buying process, by engaging the various roles to ensure they understand problems they are facing, how they are relevant to them and how to address most effectively.
#7 – High quality, relevant content is crucial to success for both Inbound Marketing and Account Based Marketing.
No matter how you cut it, high quality content will be required for both. In the case of Inbound, it’s the content that serves as the bait to attract your audience and move them through the buying process. The exact same principles apply to account based marketing – there is just typically more investment applied to attract the attention of that audience to initiate awareness vs. relying on them to find you when they are ready.
#8 – Both Inbound Marketing and Account Based Marketing require close alignment with Sales to be successful.
Another must-have for both. Inbound Marketing is more than just generating that inbound lead – it’s every step through that buying process to ensure buyers are accelerated through their buying process. Alignment with sales is critical both around expectations for the time horizon for the impact of Inbound and how to most effectively engage Inbound leads.
In the case of Account Based Marketing, alignment on who to target and how to engage them is a fundamental – the premise is hyper-targeting will yield overall efficiencies and pay off what will be a higher cost per lead.
#9 – Companies employing an Inbound strategy, should look to complement that with an Outbound strategy (that may or may not involve the extreme of account based marketing) to drive demand while Inbound impact develops.
Here’s the rub. For those companies employing an “Inbound First” strategy, there’s a time horizon, often more than a full year associated with seeing meaningful results – so ways to leverage their inbound content through outbound programs such as account based marketing or similar will be crucial to drive short term demand.
#10 – Companies employing an Account Based Marketing strategy should leverage “Inbound principles” for account based success.
And likewise Account Based Marketing success will require many of the same principles of Inbound Marketing –in fact much of the content one creates for an Inbound marketing strategy can be applied and leveraged for an account based marketing strategy – while it doesn’t “speak to the account” it will be effective in speaking directly to that role/persona through each stage of the buying process.
For more on the interplay between these two strategies, see my article “When Inbound Marketing Isn’t Enough”.