ABM Vs Traditional Lead Generation Which is Better

April 3, 2024
by
Blogs and Insights from Siva Cotipalli

As a B2B marketer in a technology company, you learn about "the funnel" early on in your career, which is an upside-down pyramid representing the different stages a customer goes through, according to traditional marketing.

However, there is an approach that flips this conventional funnel upside down – literally. It's called account-based marketing (ABM). ABM requires a narrower focus for higher impact and often leads to better results. The benefits of account based marketing are multi-fold, such as greater efficiency and higher return on investment.

Before you abandon your current strategy and discard your latest marketing materials, you should understand how ABM works and how it differs from traditional marketing. With this knowledge, you will be well-equipped to determine whether this approach aligns with your business needs.

What is Account-Based Marketing?

Account-based marketing, often called ABM, is a strategy where you concentrate on particular high-value customers by creating content and offers specifically for them. After deciding which customers to target, the marketing and sales teams work together to meet each customer's unique needs.

In simple terms, ABM aims to pursue the ideal customer by putting a lot of marketing effort into reaching specific individuals or businesses. This approach is highly focused.

What is Traditional Lead Generation Marketing?

Attracting potential customers is a key strategy in inbound marketing and is sometimes used in outbound marketing as well.

At its core, attracting potential customers aims to draw in the ideal prospects for a specific product or service with enticing campaigns. This could be an offer like a 'free e-book' or an 'exclusive webinar' that they can get by providing their email address. After grabbing the prospect's attention, the next step is to foster this relationship gradually and guide them through the sales funnel.

By nurturing a strong bond with the potential customer, the goal is to eventually turn them into paying customers and encourage their loyalty to the brand.

Different from Account-Based Marketing, traditional lead generation aims to draw in a broad pool of interested prospects rather than focusing on a few selected ones.

ABM Adoption Takes Off

In the past decade, account-based marketing (ABM) became a major trend in the B2B marketing space. It started to catch on, leading B2B marketers to put more of their budget into ABM. 

As per the ITSM survey, 28% of the 2022 marketing budget is dedicated to ABM, and 71% of companies will increase ABM spending in 2023, up 13.1% year on year.

Now, you might wonder what's driving the rapid uptake of ABM. Simply put, the results it delivers. Early adopters of ABM got a lift across several key sales metrics, including a 28% increase in overall account engagement and a 25% rise in the marketing-qualified lead (MQL) to sales-accepted lead (SAL) conversion rates[2]. Moreover, according to a survey by ITSMA, 97% of marketers reported that ABM brought in a higher return on investment (ROI) than other marketing strategies.

How Do ABM and Traditional Lead Generation Differ?

In account-based marketing (ABM), marketing teams create a list of potential accounts (customer logos)and launch campaigns to engage them. These teams prefer a direct, outbound method to directly reach their selected leads over a broader inbound approach.

If you are aiming for more focused efforts, then ABM is a wise choice because it tends to produce more qualified leads than traditional lead-generation methods. Many businesses operate within a set budget, and sticking to a traditional lead generation approach can heavily drain company resources. 

Let's look at how these methods differ:

TL;DR

ABM Vs Lead Generation Comparison

Focus on Leads

Traditional lead gen takes a broad approach, while ABM precisely targets high-value accounts.

The advantages of ABM for B2B Tech/SaaS include:

  • Attracts leads more likely to convert by personalizing interactions
  • Focuses on quality over quantity of leads
  • Nurtures existing contacts for cross-selling/upselling
  • Aligns marketing/sales efforts on specific valued accounts

Rather than seeking volume, ABM accounts for the lengthy B2B sales cycles. By concentrating resources on the right accounts, tech companies can maximize opportunities with "best-fit" prospects and customers using ABM.

Clicks

While traditional lead gen methods drive more overall clicks, ABM aligns marketing strategies with sales efforts to generate clicks from accounts representing better potential revenue. For B2B tech sales cycles, the quality of interactions matters more than sheer click volume.

Conversions

With ABM, you are targeting your total addressable market of ideal customer profiles. By developing tailored motions for each strategic account, you maximize relevance and accelerate buying journeys. The data backs it up - companies leveraging ABM see up to 208% higher marketing-attributed deal velocity.

Relationship Between Marketing and Sales

In account-based marketing, marketing and sales teams work closely together, as their collaboration is crucial for ABM's success. They jointly identify key accounts and then create customized campaigns to engage those accounts.

On the other hand, in traditional lead generation marketing, the marketing and sales departments often  operate independently, which can complicate the process. Even when leads are passed from marketing to sales, the lack of coordination disrupts the workflow.

Scalability

Traditional lead generation strategies are known for their scalability. Since ABM involves more detailed work and effort in targeting specific leads, it's considered less scalable compared to traditional methods.

Traditional lead generation aims at reaching a broader audience, which makes it easier and less time-consuming to scale up since it doesn't require as much customization.

Personalization

Winning customers has become tougher than ever due to the increase in competition and the decreasing attention span of your customers. This makes personalization an important factor that sets brands apart to grab the attention of potential customers. When it comes to personalization, managing it across a broad audience is challenging, which is why it's more feasible in an ABM strategy.

Scale of Sales

Traditional lead generation focuses on creating as many leads as possible, often resulting in smaller deals per individual account. While these can add up to significant revenue, for big, enterprise-level contracts, you are better off with account-based marketing strategies.

Because by targeting specific accounts, you are more likely to land high-value contracts. ABM also allows for expanding relationships with existing high-priority customers.

Distribution Channels

The ways you share your content or messages change drastically depending on your strategy. With traditional lead generation, marketers often rely on organic methods like blogs, articles, and social media posts.

On the flip side, account-based marketing (ABM) goes for a more direct, focused approach. Marketers reach out through emails, direct mail, and personal interactions on social platforms.

Customer Impression

Traditional lead generation strategies don't fully capture customers' interest because they are broad and not specifically targeted. They meet customer needs during the buying process, but that's about it.

ABM, however, invests heavily in personalized interactions targeted at specific customers. This effort leaves a positive impression, leading to customer satisfaction and increasing the likelihood of them returning for more purchases. This satisfaction comes from consistently receiving content and interactions that are directly relevant to them.

Customer Lifetime Value

Getting more people interested in your business through traditional ways of finding new leads is effective for reaching more people. However, this also means you end up with a lot of leads who aren't really interested. Often, these customer relationships don't last beyond their first purchase.

On the other hand, account-based marketing (ABM) focuses on finding better-qualified leads, which helps keep customers for longer. ABM is all about carefully building and maintaining relationships with customers.

By using ABM, you can really make your relationships with customers count and aim for long-term connections. It might take a significant upfront investment, but it pays off over time.

Return on Investment (ROI)

Putting money into traditional ways of generating leads usually doesn't cost much. For instance, posting on social media is free if you do it without paid ads, and it really helps more people learn about your brand without spending anything.

But starting with ABM is a different story. It requires a lot of money, time, and extra effort because it's all about focusing on specific customers. This means you need to tailor your approach to each client, which involves a lot of research and careful analysis.

Is Account-Based Marketing Better for B2B?



Actually, whenever a business owner asks us for the best strategy for their B2B company, we usually suggest ABM.

But, there are important things to think about before you jump into using account based marketing tactics. You need to be sure it's a good match for you and your team!

Here are some factors to consider:

  1. First off, ABM works best for companies that sell high value products or services that are very specific to certain industries. If your business targets a very specific group of important customers, then this marketing strategy is perfect for you!
  2. Also, if what you're selling needs a lot of effort to start using (like a complex software-as-a-service platform), ABM should be your top choice for marketing.
  3. Finally, if your business can't really count on strong support from your marketing and sales teams, or if you can't make personalized content for specific accounts, you might want to think twice about ABM. This approach requires a lot of effort and commitment, so it's best when everyone is involved. But here's the good news: If you do it right, the payoff is huge.

Can B2B Still Benefit from Lead Generation?

Absolutely! In fact, lead generation works hand in hand with account-based marketing (ABM). It really comes down to how your business operates and what you are selling.

Think about these points:

  • Do you have extra money to put into lead-generation efforts?
  • How large is your potential customer base? Is it large enough that spending money on lead generation would be a good investment?
  • Do you have a way to keep potential customers interested as they learn more about your product or service (like a series of emails)?

If combining lead generation with your ABM strategy makes sense for your business, then you should definitely consider it!

How to Transition Your Company to an ABM Strategy?

If you are thinking account-based marketing (ABM) is a good match for your company, here's what you need to know to incorporate it into your marketing efforts.

Identify Your Ideal Customer Customer

A big part of ABM is knowing exactly who your 'ideal customer' is. This means figuring out which businesses would get the most out of what you are offering.

Take Khameleon Software as an example. They make software for project-focused businesses like office furniture stores. For them, the perfect customer would be companies in the office furniture sector, like Haworth Office Furniture.

Once you have pinpointed your ideal customer, you can start making content and deals that speak directly to these key accounts.

Get Sales and Marketing Teams Working Together

The next step is to make sure your sales and marketing teams are working towards the same goal. You will be focusing on high-value accounts that have the potential to bring in a lot of business.

With ABM, you are starting with a specific list of accounts, flipping the usual sales process on its head. This means you need to have everything organized before you start targeting these accounts. Your sales team will play a big role right from the start, even more than they might with other marketing approaches.

Collect Detailed Information on Your Target Accounts

Here, you might think about whether you want to use special ABM tools, like tools that predict trends or programs that add detailed information to your business data. These tools can give you in-depth info about the businesses you are targeting, helping you collect important data that will improve your strategy.

Account Based Marketing Services

ProGrowth provides a variety of ABM services that help your team excel. Whether you're looking to fully manage an ABM program or just need certain services, you can choose what's right for your business. As an ABM agency, our services include:

  • ABM & Content Strategy
  • ABM Account Research & Profiling
    Intent data from decision makers and buying committee
  • Target Database Building for ABM
  • Content Creation for ABM
  • Social Listening for ABM
  • ABM Ad Campaigns
  • Appointment setting and cold emailing for targeted accounts
  • Email & Marketing Automation for ABM
  • ABM Reporting Setup

ABM changes how marketing and sales teams collaborate, and we have been at the forefront of introducing ABM to many of our clients. We are excited to help you set up the necessary procedures and use technology and automation to develop ABM strategies that result in more closed deals.

Interested in finding out how we can assist you in implementing ABM? Just get in touch with us.

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