Account-Based Marketing (ABM) has revolutionized the B2B landscape, allowing companies to engage and nurture relationships with high-value accounts more effectively. However, to gauge the success of these targeted efforts, businesses need to continuously monitor KPIs through tracking specific metrics. These provide an objective evaluation of ABM performance, align marketing strategies with broader business objectives, and enable data-driven decision-making.
According to our first-party research, 58% of marketers plan to increase spending on ABM over the next 12 months. This statistic emphasizes the importance of leveraging the right ABM metrics to demonstrate the full benefits of ABM to key stakeholders.
This article will delve into the range of metrics and KPIs in ABM, providing an in-depth understanding of how each one contributes to the overall effectiveness of your ABM programs.
- Total Addressable Market (TAM)
- Account Engagement Score
- Account Penetration Rate
- Account Progression Rate
- Customer Lifetime Value (CLV)
- Average Deal Size
- Revenue Generated from Target Accounts
- Sales Cycle Length
- Account Churn Rate
- Customer Acquisition Cost (CAC)
- Pipeline Velocity
- Deal Conversion Rate
- Customer Satisfaction and Retention
Reading time: 9 minutes
Using metrics to qualify accounts
Since ABM involves devoting substantial resources to a single targeted account, it’s important to have a robust and accurate process for identifying the best individual accounts to pursue. It’s no wonder 83% of marketers are using lookalike strategies based on already qualified accounts, to ensure they are targeting those with the greatest propensity to purchase. But how do you determine what an ideal account looks like?
Adopting specific parameters for an MQA (marketing qualified account) is a key way of measuring sales readiness. For instance, you should consider:
- Having more than one engaged contact
- Meeting a threshold number of hours of contact time
It’s also important that you create an ideal customer profile (ICP) – a set of segmentation criteria that best represents your most profitable (and servable) customers. This ICP will serve as a benchmark for assessing potential leads, taking into account various criteria such as annual budget, annual turnover, and the sectors or industries served.
How to establish macro objectives
Everything can be tracked, analyzed and optimized in the interest of better performance, so it’s important to measure the metrics that are relevant for your specific objectives. Big data is great, but it can often be overwhelming. With ABM you can start simple, with metrics around reach and response and then move onto:
- Penetration of accounts
- Engagement rate of the DMU
- Uplift by account
- Account revenue potential
Think of ABM as a journey with many different tactics to deliver ROI from your accounts. But in order to do so, you need to separate out your high-value opportunities from the low-value and build that into your planning.
According to our ABM Research Report, 40% of marketers use close rate as a measurement of their ABM efforts. This number seems a lot lower than many would anticipate and this could be as a result of the lengthening sales cycle in the last decade. Data from MarketingSherpa’s 2009 B2B Benchmark Study showed that 57% of sales cycles take less than 3 months. Fast forward to 2024, and the volume of B2B sales cycles that take place within 3 months has increased significantly to 75%.
This change in the sales cycle indicates that marketing professionals are addressing the increasing need to create more targeted messaging. By measuring the time it takes for these accounts to close, marketers will be able to determine whether accounts receiving customized content convert faster.
Consider introducing metrics as a way to keep track of progress against top-level objectives. Start by measuring the reach to your target accounts, or specific contacts in those accounts, to give you a percentage or a conversion rate by account. This is a good starting point to build on.
The three Rs of ABM metrics
The three Rs – Reputation, Relationships, and Revenue – form the foundation of ABM metrics. They serve as the umbrella categories under which various ABM KPIs can be grouped.
- Reputation: This refers to the perception of your brand among your target accounts. Metrics like brand awareness, brand lift, social media engagement, campaign engagement, ad recall, intent to buy, and web traffic can be used to measure reputation.
- Relationships: This involves the connections established with your target accounts. Metrics such as the number of contacts within each account, the number of sales conversations, and the level of engagement can be used to gauge the strength of these relationships.
- Revenue: The ultimate objective of any business effort, revenue is the most concrete measure of ABM success. Metrics such as customer lifetime value (CLV), average deal size, and revenue generated from target accounts can be used to measure the financial impact of ABM efforts.
13 ABM metrics and KPIs to track
Keeping the three Rs of ABM in mind, here are 13 ABM metrics and KPIs that will benefit your team:
1. Total Addressable Market (TAM)
TAM represents the revenue potential for a particular product or service, providing a clear estimate of the size of the opportunity. Calculating TAM involves multiplying your average sale price by the number of potential customers. This metric provides valuable insights, enabling businesses to identify growth targets and assess their current market share.
Total Addressable Market = Average sale price x total number of potential customers.
2. Account Engagement Score
Engagement refers to how interested and enthusiastic a prospect is and their appetite for purchasing your product or service solution. This score looks at the percentage of accounts that are meaningfully engaged with your brand. However, measuring it can be complex and the metrics used will vary depending on your business, industry and target accounts. Start by looking at:
- Number of calls and meetings with contacts
- Time spent on calls or in person
- Proactive engagement with you on social media, web or offline
- Introductions the customer makes to other leads, internal or external
A high account engagement score is indicative of a strong relationship with the target account.
Account Engagement Rate = (Engaged accounts / target accounts) x100.
3. Account Penetration Rate
This KPI measures the extent to which an ABM program has successfully reached the target accounts. It indicates the percentage of decision-makers or key contacts within the target accounts where a relationship exists or is being built. A high account penetration rate shows that your ABM efforts are effectively engaging the key decision-makers within the target accounts.
Account Penetration Rate = (Current no. of accounts / target no. of accounts) x 100.
4. Account Progression Rate
This metric tracks the movement of target accounts through the buyer’s journey. It measures the percentage of accounts that advance from one stage to the next – from initial contact to opportunity creation, and from opportunity to closed deal. A high account progression rate shows that your ABM strategies are effectively driving target accounts towards conversion.
Account Progression Rate = (Subtract no. of accounts from a set period, from the no. of accounts now) / original no. of accounts.
5. Customer Lifetime Value (CLV)
CLV measures the total revenue generated by a customer throughout their relationship with your company. It helps assess the value of target accounts and the success of ABM efforts in driving long-term revenue. A high CLV indicates that your ABM strategies are effectively nurturing relationships and enhancing customer loyalty.
Customer Lifetime Value = Customer value x average customer lifespan.
6. Average Deal Size
This metric evaluates the average value of deals closed with target accounts. It helps assess the impact of ABM on deal size, as personalized and targeted efforts often result in larger deals due to the focus on high-value accounts. A larger average deal size indicates that your ABM strategies are effectively targeting and converting high-value accounts.
Average Deal Size = Total revenue / closed-won opportunities in a set period (i.e. a month, quarter, year).
7. Revenue Generated from Target Accounts
This KPI measures the total revenue generated from the target accounts. It reflects the overall success of your ABM program in driving revenue growth. A high revenue generated from target accounts shows that your ABM strategies are effectively converting target accounts into customers and driving revenue growth.
8. Sales Cycle Length
This metric tracks the average duration it takes to close deals with target accounts. It helps assess the effectiveness of ABM strategies in accelerating the sales cycle and reducing the time to convert target accounts into customers. A shorter sales cycle length shows that your ABM strategies are effectively reducing the overall time to conversion.
Sales Cycle Length = Total no. days to close a deal / total no. of won deals in a set period.
9. Account Churn Rate
This KPI measures the rate at which target accounts end their relationship with your company. It helps identify potential issues or gaps in your ABM efforts, enabling proactive measures to retain and nurture accounts. A lower account churn rate indicates that your ABM strategies are effectively retaining and satisfying target accounts.
Account Churn Rate = (Lost customers / total customers to begin with) x100.
10. Customer Acquisition Cost (CAC)
CAC indicates the sales and marketing costs spent to acquire a new customer. It is a key indicator of the efficiency and cost-effectiveness of ABM efforts. A lower CAC indicates that your ABM strategies are effectively acquiring new customers at a lower cost.
Customer Acquisition Cost = (Cost of Sales + cost of Marketing) / No. of new customers acquired.
11. Pipeline Velocity
Pipeline velocity measures the speed at which target accounts move through the sales pipeline. It calculates the average time it takes to progress from one stage to another. A faster pipeline velocity shows that your ABM strategies are effectively moving target accounts through the sales pipeline.
Pipeline Velocity = (SQLs in the pipeline x average deal size x overall win rate) / length of sales cycle (days).
12. Deal Conversion Rate
Also known as the win rate, this KPI measures the percentage of total opportunities that were successfully converted. A high deal conversion rate shows that your ABM strategies are effectively converting opportunities into successful deals.
Deal Conversion Rate = (Total no. of closed won deals / total no. of opportunities) x100.
13. Customer Satisfaction and Retention
This metric evaluates factors such as customer feedback, net promoter score, and customer retention rates to assess the success of your ABM campaign in building strong customer relationships. High customer satisfaction and retention show that your ABM strategies are effectively enhancing customer loyalty and satisfaction.
Operational performance
Tracking the right metrics can help you view performance on an account-by-account basis, as well as your ABM efforts as a whole, to see how it performs over time. Are your teams becoming more efficient at finding and converting leads? Are your odds of achieving conversion up from where they used to be? Consider:
- Speed – how long does it take to identify a lead and make first contact?
- Conversion rates – how often does a new contact result in a sale?
- Value per deal – how large are the sales, and are the volumes trending upwards?
Final thoughts
However you employ metrics in your ABM campaign, it’s important to tailor them to your needs and make sure they are working for you and not the other way around. Metrics are only valuable if you can act on the insights they provide. That is why continuously monitoring your KPIs through tracking specific metrics and making necessary improvements is so vital to ABM success. If a certain measurement isn’t helping you to perform, don’t hesitate to take it off your radar.
Ready to take your ABM strategies to the next level? Inbox Insight’s ABM services offer the expertise and tools you need to effectively engage and nurture high-value accounts. Speak to one of our specialists today.
