Behind The Brilliance: Budgeting for ABM with Sam Melnick
So, you’ve decided to invest in ABM – congrats, you’re in for an exciting journey! But now, you’ve got a lot of work ahead of you. One of the first items on your list: get budget for your ABM program.
We get questions around budgeting all the time. Where should this budget come from? How much do I need? How to do I prove ROI? Etc.
That’s why in this edition of Behind the Brilliance, I asked Sam Melnick, VP of Marketing at Allocadia, to join me in a conversation about this important topic. Allocadia is a leader in Marketing Performance Management (MPM) software, helping marketers plan strategically, invest with purpose, and measure impact. Sam is a leader in MPM software, managing over $20B in marketing spend to-date. He was also recognized as a top 50 most influential marketing technology professional, so there’s no better person to help out on this topic.
Without further adieu, here’s my conversation with Sam.
Brandon: Where should organizations be getting budget for ABM?
Sam: It all starts with a plan and having a company determine their corporate and team objectives before kicking off any kind of new program or process. The team must first decide “should ABM be part of my plan?” Next, they should determine (and show!) how ABM will help the company hit their goals. The desired goals of an ABM program will then roll down from that exercise. From there, the organization can determine the proper amount of budget for ABM based on how it will impact corporate objectives.
It’s up to each organization to decide where that budget comes from. It could be a shift in demand gen spend in marketing, or could be new budget that has been allocated to the department. Sometimes even sales will “fund” the ABM programs budget (at times like these it I still important to track this spend accurately!). But ultimately a team’s budget should represent their overarching strategy, so if ABM is going to be a crucial part of the marketing team’s approach, it should have the proper amount of funding.
In Engagio’s 2018 state of ABM survey, out of the companies doing ABM, roughly 20% of the marketing budget is being allocated to ABM programs.
Brandon: How should organizations be thinking about budgeting if they’re just getting a pilot program going?
Sam: It’s a little harder determining your budget with an ABM pilot program because, by nature, a pilot is additive to the rest of the programs a marketing team is running. However, it ultimately still comes back to what a team thinks the impact of any program will be, then ensuring the right amount of budget is being set aside to achieve that impact.
An important action to make sure you take if you’re running a pilot is to explicitly track resources (both dollars and people) so you can accurately gauge ROI (or the effort it took to drive to your success metrics) and thus the success of the program.
One way we’ve seen customers doing this is looking at outcomes – whether that is engagement with key accounts, increase in traffic, or measuring pipeline created. Compare the expected outcomes of a pilot to the expected outcomes of other established programs that you’re running. Use that as a percentage basis in terms of the impact each program will have, and allocate future budgets based on those percentages as you launch the full ABM program.
Brandon: How do you allocate your budget?
Sam: This is a “personal” decision on your ABM strategy. If you are going after 10-15 core accounts, budgets may be heavily weighted towards people, high-value personalized direct marketing, and events.
If you have a 3 tiered strategy around ABM and it’s wide-ranging, the mix of your budget will probably more evenly distributed.
However, as Marcia Trask, a friend and Allocadia customer at New Relic, says, “Your budget your ultimate expression of strategy.” Thus, it’s important to be very thoughtful where you’re placing your bets around ABM as it should mirror your strategy.
Brandon: Which factors affect your ABM budget?
Sam: The core factors of determining what is included in an ABM budget are dependent on what outcomes you’re looking to get out of an ABM program. Are you looking to drive net new logos, or increase cross-sell/up-sell? Different tactics are required for each strategy, and your budget needs to be allocated to those individual programs that will achieve team goals.
Another factor of ABM budgets is whether or not other teams are contributing to certain programs. When your organization is account-centric, all teams should be working together to engage the right accounts and contacts. In some instances, budget could come from other teams (partners, sales, etc.), and marketing becomes the facilitator of various campaigns and programs.
The last factor is how much are you planning to generate and influence from ABM. That will give you the right overall investment levels.
Brandon: How can teams prove ROI and right for more budget?
Sam: This is one thing I’m really passionate about: the ‘I’ in ROI can mean different things to different teams. The ‘I’ can stand for investments, intent, impact, etc. Often marketing teams get so wrapped up in getting credit for certain opportunities, or looking only at the returns side only and ignoring the investments side of their programs, that they lose sight of their true goals (and 50% of the equation!). Teams need to lay out a plan, create strategies and tactics that support that plan, get budget allocated properly across all activities, and agree on what the expected or intended outcomes should be. As I said at the beginning, it really all starts with the plan.
After you have this, only then will your team have all of the data it needs to measure “ROI” they originally promised they would deliver. When teams start delivering on the overarching goals they set out to achieve, they are able to have more strategic conversations about why they need more budget, and can tell leadership exactly where and why they will spend that additional budget.
Brandon: What budgeting advice do you have for organizations just getting started with ABM?
Sam: Here’s what I recommend:
- Make a plan! That’s always the first step. Align your ABM strategy to the entire revenue strategy so you can show which part of the revenue plan your ABM programs are going to address. This will help you determine the proper strategies, and you can allocate the proper amount of budget to programs.
- Commit to tracking both the investment into your ABM strategy and returns. Too many teams just focus on returns, but if you are not being efficient with ABM (or any strategy for that matter), it won’t matter as you will be wasting resources.
- Create a budget that gives you a little bit of flexibility in terms of your specific tactics. When teams are making the shift from lead to account-focused programs, there are often unforeseen issues that can arise, since its a learning process for every company. You don’t want to be caught midway through a pilot and not have any additional budget available for a targeted ad blast that will help you hit your final target numbers or something else along those lines.
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